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                                                                   EXHIBIT 10.25
                             BASIC LEASE INFORMATION
                                   OFFICE NET

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LEASE DATE:                                   December 17, 1999
(same as date in first paragraph of Lease)

TENANT:                                       Brocade Communications Systems, Inc., a Delaware
                                              corporation

TENANT'S NOTICE ADDRESS:                      1901 Guadalupe Parkway
                                              San Jose, California 95131


TENANT'S BILLING ADDRESS:                     1901 Guadalupe Parkway
                                              San Jose, California 95131


TENANT CONTACT: Mr. Victor Rinkle,            PHONE NUMBER:     408/487-8100
                Vice President, Operations    FAX NUMBER:       408/487-8101

LANDLORD:                                     Spieker Properties, L.P., a California limited
                                              partnership

LANDLORD'S NOTICE ADDRESS:                    1735 Technology Drive, Suite 125
                                              San Jose, CA  95110


LANDLORD'S REMITTANCE ADDRESS:                P.O. Box 45587 Dept. #12196
                                              San Francisco, CA 94145-0587

PROJECT DESCRIPTION:                          That certain Class A office project located on
                                              the parcel bounded by Airport Parkway on the
                                              north, Technology Drive on the East, Guadalupe
                                              Parkway on the West and Skyport Drive on the
                                              South, situated in the County of Santa Clara,
                                              City of San Jose, State of California.

BUILDING                                      DESCRIPTION: That certain real property commonly
                                              known as Concourse VI, and located at 1745
                                              Technology Drive, San Jose, California, and as
                                              depicted on Exhibit B attached hereto.

PREMISES:                                     Approximately two hundred ten thousand six hundred
                                              seventy-seven (210,677) rentable square feet,
                                              which consists of one hundred percent (100%) of
                                              the Building and as depicted on Exhibit B
                                              attached hereto.

TEMPORARY PREMISES:                           Approximately seven thousand eight hundred sixty
                                              four (7,864) rentable square feet at the building
                                              located at 2055 Gateway Place, San Jose,
                                              California (the "PHASE I TEMPORARY PREMISES
                                              BUILDING"), and as depicted on Exhibit D,
                                              attached hereto.

                                              Approximately thirty-nine thousand forty-three
                                              (39,043) rentable square feet at the building
                                              located at 1741 Technology Drive, San Jose,
                                              California (the "PHASE II TEMPORARY PREMISES
                                              BUILDING"), and as depicted on Exhibit E,
                                              attached hereto. Approximately twenty-seven
                                              thousand seven (27,007) rentable square feet are
                                              located on the 5th floor of the Temporary
                                              Premises Building and approximately twelve
                                              thousand thirty-six (12,036) rentable square
                                              feet are located on the 2nd floor of the
                                              Temporary Premises Building.

PERMITTED USE:                                General office and administrative, and up to
                                              twenty percent (20%) of the rentable area of the
                                              Premises may be used for communications
                                              laboratory purposes.

OCCUPANCY DENSITY:                            4.5 per 1,000 rentable square feet of the Premises.

PARKING DENSITY:                              3.6 spaces per 1,000 usable square feet of the
                                              Premises.

PARKING                                       CHARGE: Initially at $0 per space/per month for
                                              nonreserved parking spaces during the initial
                                              Term of this Lease, thereafter subject to
                                              adjustment pursuant to Paragraph 37 hereof.

SCHEDULED TERM COMMENCEMENT DATE:             September 1, 2000, subject to adjustment pursuant
                                              to the terms of this Lease.

SCHEDULED LENGTH OF TERM:                     One hundred twenty (120) months following the
                                              Term Commencement Date.
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SCHEDULED TERM EXPIRATION DATE:               August 31, 2010, subject to adjustment pursuant
                                              to the terms of this Lease.

BASE RENT:                                    With respect to the Premises, see Paragraph 39. A
                                              hereof. With respect to each of the Phase I
                                              Temporary Premises and the Phase II Temporary
                                              Premises, see Paragraph 39.D(1) and (2) hereof.

SECURITY DEPOSIT:                             Six Million One Hundred Ninety-Three Thousand
                                              Nine Hundred Four Dollars and No/100
                                              ($6,193,904.00) Letter of Credit delivered in
                                              accordance with the terms of Paragraph 39.E
                                              (subject to adjustment as provided in Paragraphs
                                              39.E and 19 hereof).

TENANT'S NAICS CODE:                          51121

TENANT'S PROPORTIONATE SHARE OF BUILDING:     100.00%

TENANT'S PROPORTIONATE SHARE OF PROJECT:      23.73%
</TABLE>

The foregoing Basic Lease Information is incorporated into and made a part of
this Lease. Each reference in this Lease to any of the Basic Lease Information
shall mean the respective information above and shall be construed to
incorporate all of the terms provided under the particular Lease paragraph
pertaining to such information. In the event of any conflict between the Basic
Lease Information and the Lease, the latter shall control.

<TABLE>
<S>                                               <C>
LANDLORD                                          TENANT

Spieker Properties, L.P.,                         Brocade Communications Systems, Inc.
a California limited partnership                  a Delaware corporation

By:  Spieker Properties, Inc.,
     a Maryland corporation,                      By:
     its general partner                               -----------------------------------
                                                       Michael J. Byrd
                                                       Its:  Vice President, Finance,
                                                       Chief Financial Officer

     By:                                          By:
         --------------------------------              -----------------------------------
         John W. Petersen                              Victor Rinkle
         Its:  Vice President                          Its:  Vice President, Operations
</TABLE>


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                                TABLE OF CONTENTS

<TABLE>
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                                                                             PAGE
                                                                             ----
<S>                                                                          <C>
    Basic Lease Information.................................................   1
    Table of Contents.......................................................   3
1.  Premises................................................................   4
2.  Possession and Lease Commencement.......................................   4
3.  Term....................................................................   4
4.  Use.....................................................................   4
5.  Rules and Regulations...................................................   6
6.  Rent....................................................................   6
7.  Operating Expenses......................................................   6
8.  Insurance and Indemnification...........................................   8
9.  Waiver of Subrogation...................................................   9
10. Landlord's Repairs and Maintenance......................................  10
11. Tenant's Repairs and Maintenance........................................  10
12. Alterations.............................................................  10
13. Signs...................................................................  11
14. Inspection/Posting Notices..............................................  12
15. Services and Utilities..................................................  12
16. Subordination...........................................................  13
17. Financial Statements....................................................  13
18. Estoppel Certificate....................................................  13
19. Security Deposit........................................................  13
20. Limitation of Tenant's Remedies.........................................  13
21. Assignment and Subletting...............................................  14
22. Authority of Tenant.....................................................  15
23. Condemnation............................................................  15
24. Casualty Damage.........................................................  15
25. Holding Over............................................................  16
26. Default.................................................................  16
27. Liens...................................................................  18
28. Substitution............................................................  18
29. Transfers by Landlord...................................................  18
30. Right of Landlord to Perform Tenant's Covenants.........................  18
31. Waiver..................................................................  18
32. Notices.................................................................  18
33. Attorney's Fees.........................................................  19
34. Successors and Assigns..................................................  19
35. Force Majeure...........................................................  19
36. Surrender of Premises...................................................  19
37. Parking.................................................................  19
38. Miscellaneous...........................................................  20
39. Additional Provisions...................................................  21
40. Jury Trial Waiver.......................................................  24
    Signatures..............................................................  24


Exhibits:
    Exhibit A................................              Rules and Regulations
    Exhibit B................................    Site Plan, Property Description
    Exhibit C................................       Lease Improvement Agreement
    Exhibit D................................        Phase I Temporary Premises
    Exhibit E................................        Phase II Temporary Premises
</TABLE>

    Additional Exhibits as Required


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<PAGE>   4
                                      LEASE

THIS LEASE is made as of the 17th day of December, 1999, by and between Spieker
Properties, L.P., a California limited partnership (hereinafter called
"LANDLORD"), and Brocade Communications Systems, Inc., a Delaware corporation
(hereinafter called "TENANT").

                                   1. PREMISES

    Landlord leases to Tenant and Tenant leases from Landlord, upon the terms
and conditions hereinafter set forth, those premises (the "PREMISES") outlined
in red on EXHIBIT B and described in the Basic Lease Information. The Premises
shall be all or part of a building (the "BUILDING") and of a project (the
"PROJECT"), which may consist of more than one building and additional
facilities, as described in the Basic Lease Information. The Building and
Project are outlined in blue and green respectively on EXHIBIT B. Landlord and
Tenant acknowledge that physical changes may occur from time to time in the
Premises, Building or Project, and that the number of buildings and additional
facilities which constitute the Project may change from time to time, which may
result in an adjustment in Tenant's Proportionate Share, as defined in the Basic
Lease Information, as provided in Paragraph 7.A.

                      2. POSSESSION AND LEASE COMMENCEMENT

A. INTENTIONALLY OMITTED.

B. CONSTRUCTION OF IMPROVEMENTS. The term commencement date ("TERM COMMENCEMENT
DATE") shall be the earlier of the date on which: (1) Tenant commences business
operations in the Premises, as evidenced by, among other things, the presence in
all or a portion of the Premises of business files and, during normal business
hours, employees (excluding employees or other agents of Tenant installing and
testing Tenant's equipment, furniture and fixtures); or (2) substantial
completion of the Base Building Work and Tenant Improvements as described in
EXHIBIT C attached hereto, or (3) September 1, 2000. If for any reason Landlord
cannot deliver possession of the Premises to Tenant on the scheduled Term
Commencement Date, Landlord shall not be subject to any liability therefor, nor
shall Landlord be in default hereunder nor shall such failure affect the
validity of this Lease, and Tenant agrees to accept possession of the Premises
at such time as such improvements have been substantially completed, which date
shall then be deemed the Term Commencement Date. Tenant shall not be liable for
any Rent for any period prior to the Term Commencement Date (but without
affecting any obligations of Tenant under any improvement agreement appended to
this Lease). In the event of any dispute as to substantial completion of work
performed or required to be performed by Landlord, the certificate of Landlord's
architect or general contractor shall be conclusive. Substantial completion (as
defined in EXHIBIT C hereto) shall have occurred notwithstanding Tenant's
submission of a punchlist to Landlord, which Tenant shall submit, if at all,
within fifteen (15) business days after the Term Commencement Date or otherwise
in accordance with any improvement agreement appended to this Lease. After the
Term Commencement Date and upon Landlord's request, Tenant shall promptly
execute and return to Landlord a "Start-Up Letter" in which Tenant shall agree,
among other things, to acceptance of the Premises (subject to Landlord's
obligation to correct punchlist items as submitted by Tenant to Landlord in
accordance with the term of this Paragraph 2.B) and to the determination of the
Term Commencement Date, in accordance with the terms of this Lease, but Tenant's
failure or refusal to do so shall not negate Tenant's acceptance of the Premises
or affect determination of the Term Commencement Date.

C. DELIVERY OF POSSESSION. Landlord shall deliver possession of the Premises to
Tenant with Base Building Work substantially complete (except for life safety
testing) on or before July 6, 2000. In the event Landlord fails to deliver
possession of the Premises to Tenant on or before July 6, 2000, Landlord shall
grant to Tenant, for each day after July 6, 2000 until the day Landlord delivers
possession of the Premises to Tenant with the Base Building Work substantially
complete, a credit against Base Rent in an amount equal to the daily amount of
Base Rent in effect for the first month of the Term of this Lease. The credit
described in the preceding sentence shall be granted against Tenant's obligation
to pay Base Rent in the second month of the Term. Tenant may terminate this
Lease by delivering written notice to Landlord on or before January 31, 2001 if:
(i) Landlord has not substantially completed the Base Building Work (as defined
in EXHIBIT C) to be constructed by Landlord as described in EXHIBIT C to this
Lease by December 31, 2000); (ii) Tenant has given Landlord at least twenty (20)
days' prior written notice ("TENANT'S TERMINATION NOTICE PERIOD") of Landlord's
failure to do so, except for punchlist items, and except for delays caused by
Tenant or other third parties (including delays caused by the contractor or
anyone else performing services on behalf of Tenant) or by events beyond
Landlord's control and other force majeure events, including, but not limited
to, strikes, material shortages, delays of governmental agencies and Acts of
God, which delays will not be cause for termination hereunder; and (iii)
Landlord has not, as of the expiration of Tenant's Termination Notice Period,
substantially completed the Premises and delivered possession of the Premises to
Tenant. In the event of such termination, Landlord shall return any Security
Deposit to Tenant as well as any other sums paid hereunder by Tenant to
Landlord. All obligations of Tenant and Landlord under this Lease shall
thereafter terminate and no party shall have any further obligations under this
Lease.

                                     3. TERM

    The term of this Lease (the "TERM") shall commence on the Term Commencement
Date and continue in full force and effect for the number of months specified as
the Scheduled Length of Term in the Basic Lease Information or until this Lease
is terminated as otherwise provided herein. If the Term Commencement Date is a
date other than the first day of the calendar month, the Term shall be the
number of months of the Length of Term in addition to the remainder of the
calendar month following the Term Commencement Date.

                                     4. USE

A. GENERAL. Tenant shall use the Premises for the permitted use specified in the
Basic Lease Information ("PERMITTED USE") and for no other use or purpose.
Tenant shall control Tenant's employees, agents, customers, visitors, invitees,
licensees, contractors, assignees and subtenants (collectively, "TENANT'S
PARTIES") in such a manner that Tenant and Tenant's Parties cumulatively do not
exceed the occupant density (the "OCCUPANCY DENSITY") or the parking density
(the "PARKING DENSITY") specified in the Basic Lease Information at any time.
Tenant shall pay the Parking Charge specified in the Basic Lease Information as
Additional Rent (as hereinafter defined) hereunder. So long as Tenant is
occupying the Premises, Tenant and Tenant's Parties shall have the nonexclusive
right to use, in common with other parties occupying the Building or Project,
the parking areas, driveways and other common areas of the Building and Project,
including at no cost to Tenant during the initial Term of this Lease, Landlord's
fitness facility, subject to the terms of this Lease and such rules and
regulations as Landlord may from time to time prescribe. Landlord reserves the
right, without notice or liability to Tenant, and without the same constituting
an actual or constructive eviction, to alter or modify the common areas from
time to time, including the location and configuration thereof, and the
amenities and facilities which Landlord may determine to provide from time to
time, provided that any such alteration or modification shall not materially
adversely affect Tenant's use of the Premises or the parking area as provided
hereunder, and provided further that any such alteration or modification shall
not detract from the first-class quality of the Building. In the event that any
alteration or modification of the common area materially and adversely affects
Tenant's use of the parking areas of the


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<PAGE>   5
Project, Landlord may provide to Tenant a reasonable alternate parking area for
Tenant's and Tenant's Parties' use. During the Term hereof, provided that Tenant
comply with the reasonable requirements of Landlord's security system, Tenant
shall have the right to access the Premises via Landlord's security system,
twenty-four (24) hours per day, three hundred sixty-five (365) days per calendar
year, in accordance with the terms and conditions of this Lease, subject to
Landlord's repair and maintenance obligations pursuant to this Lease which
obligations may require the performance of after-hours repair or maintenance
work by Landlord which work may temporarily prevent after-hours access to the
Building. As of the date of this Lease, Landlord employs a roving security
service covering the Project. Notwithstanding the foregoing, nothing in this
Lease shall be deemed to require that Landlord provide security services to
Tenant or any tenant of the Project at any time.

B. LIMITATIONS. Tenant shall not permit any odors, smoke, dust, gas, substances,
noise or vibrations to emanate from the Premises or from any portion of the
common areas as a result of Tenant's or any Tenant's Party's use thereof, nor
take any action which would constitute a nuisance or would disturb, obstruct or
endanger any other tenants or occupants of the Building or Project or elsewhere,
or interfere with their use of their respective premises or common areas.
Storage outside the Premises of materials, vehicles or any other items is
prohibited. Tenant shall not use or allow the Premises to be used for any
immoral, improper or unlawful purpose, nor shall Tenant cause or maintain or
permit any nuisance in, on or about the Premises. Tenant shall not commit or
suffer the commission of any waste in, on or about the Premises. Tenant shall
not allow any sale by auction upon the Premises, or place any loads upon the
floors, walls or ceilings which could endanger the structure, or place any
harmful substances in the drainage system of the Building or Project. No waste,
materials or refuse shall be dumped upon or permitted to remain outside the
Premises. Landlord shall not be responsible to Tenant for the non-compliance by
any other tenant or occupant of the Building or Project with any of the
above-referenced rules or any other terms or provisions of such tenant's or
occupant's lease or other contract.

C. COMPLIANCE WITH REGULATIONS. Subject to punchlist items, if any, provided by
Tenant to Landlord in accordance with Paragraph 2.B above, when entering the
Premises, Tenant accepts the Premises in the condition existing as of the date
of such entry. Tenant shall at its sole cost and expense strictly comply with
all existing or future applicable municipal, state and federal and other
governmental statutes, rules, requirements, regulations, laws and ordinances,
including zoning ordinances and regulations, and covenants, easements and
restrictions of record (to the extent Tenant has actual or constructive
knowledge of such restrictions of record) governing and relating to Tenant's
Permitted Use or other specific use by Tenant or Tenant's Parties, occupancy or
possession of the Premises, to Tenant's use of the common areas, or to the use,
storage, generation or disposal of Hazardous Materials (hereinafter defined) by
Tenant or Tenant's Parties (collectively "REGULATIONS"). Tenant hereby
acknowledges that Landlord has provided information regarding restrictions of
record existing as of the date of this Lease. Tenant shall at its sole cost and
expense obtain any and all licenses or permits necessary for Tenant's use of the
Premises. Tenant shall at its sole cost and expense promptly comply with the
requirements of any board of fire underwriters or other similar body now or
hereafter constituted. Tenant shall not do or permit anything to be done in, on,
under or about the Project or bring or keep anything which will in any way
increase the rate of any insurance upon the Premises, Building or Project or
upon any contents therein or cause a cancellation of said insurance or otherwise
affect said insurance in any manner. Tenant shall indemnify, defend (by counsel
reasonably acceptable to Landlord), protect and hold Landlord harmless from and
against any loss, cost, expense, damage, attorneys' fees or liability arising
out of the failure of Tenant to comply with any Regulation to the extent that
such compliance is required of Tenant under this Lease. Tenant's obligations
pursuant to the foregoing indemnity shall survive the expiration or earlier
termination of this Lease. Landlord represents that, on the date Landlord
delivers possession of the Premises to Tenant, the Premises shall comply in all
material respects with those Regulations applicable to real property located in
Santa Clara County and pertaining to the Premises. Landlord shall be responsible
for complying with Regulations (including ADA and Title 24 to the extent any
such compliance requirement of Landlord is expressly stated herein) pertaining
to the common areas of the Project prior to and except to the extent arising out
of Tenant's occupancy or use of the Premises or common areas or construction of
any Tenant Improvements or Alterations made by or on behalf of Tenant, whether
by Landlord or otherwise and whether performed before or after the Term
Commencement Date, or installation of any equipment, fixtures, furniture or
other personal property in or about the Premises. Tenant shall have the sole
responsibility for complying, at Tenant's cost, with any and all provisions of
the Americans with Disabilities Act of 1990, as it has been and may later be
amended ("ADA"), (i) with respect to the Premises; and (ii) with respect to the
common areas of the Project where in the case of this clause (ii) such
compliance has been brought about by: (A) any Tenant Improvements or Alterations
to the Premises or to the common areas made by or on behalf of Tenant, whether
by Landlord or otherwise, and performed after the Term Commencement Date; (B)
requirements of Tenant's employees, or any changes to Tenant's use of the
Premises; or (C) any architectural barriers caused by Tenant's installation of
any equipment, fixtures, furniture, or other personal property in or about the
Premises (items (i) and (ii) collectively, "TENANT'S ADA RESPONSIBILITIES").
Tenant shall indemnify, defend and hold Landlord, its agents and employees
harmless from and against any and all claims, damages, or liabilities
(including, without limitation, reasonable attorneys' fees and costs) arising
directly or indirectly from Tenant's failure to satisfy any of Tenant's ADA
Responsibilities. Landlord shall indemnify, defend and hold Tenant, its agents
and employees harmless from and against any and all claims, damages or
liabilities arising directly or indirectly from Landlord's failure to comply
with any obligations of a landlord under the ADA, other than such claims,
damages or liabilities arising from Tenant's failure to satisfy any of Tenant's
ADA Responsibilities; provided, however, that Landlord may treat costs of ADA
compliance with respect to the common areas of the Project to the extent
incurred after the date Landlord delivers possession of the Premises to Tenant
as an Operating Expense. Notwithstanding anything to the contrary contained in
Paragraph 7.A of this Lease, costs of ADA and Title 24 compliance brought about
by alterations to the common areas performed before the date Landlord delivers
possession of the Premises to Tenant for Tenant's construction of the Tenant
Improvements, or which are expressly made Landlord's responsibility under this
Lease, will be borne solely by Landlord and shall neither be treated as an
Operating Expense nor be the responsibility of Tenant, except to the extent
provided herein. Landlord represents that, as of the date Landlord delivers
possession of the Premises to Tenant, to the best of Landlord's actual
knowledge, the Premises and the Building shall comply in all material respects
with the ADA and Title 24 as the ADA and Title 24 have, as of the date Landlord
delivers possession of the Premises to Tenant, been interpreted in Santa Clara
County and pertain to the Premises and the Building. Notwithstanding anything to
the contrary contained in this Lease, regardless of whether the cost of
compliance with Regulations shall be borne by Tenant, or Tenant and other
tenants of the Project as an Operating Expense (as defined herein), Landlord
shall perform or cause to be performed any compliance with Regulations items as
described in this Lease which items are located in the common area or are
structural in nature; provided, however, that the costs of such compliance items
shall be allocated in accordance herewith

D. HAZARDOUS MATERIALS. As used in this Lease, "HAZARDOUS MATERIALS" shall
include, but not be limited to, hazardous, toxic and radioactive materials and
those substances defined as "hazardous substances," "hazardous materials,"
"hazardous wastes," "toxic substances," or other similar designations in any
Regulation. Tenant shall not cause, or allow any of Tenant's Parties to cause,
any Hazardous Materials to be handled, used, generated, stored, released or
disposed of in, on, under or about the Premises, the Building or the Project or
surrounding land or environment in violation of any Regulations. Tenant must
obtain Landlord's written consent prior to the introduction of any Hazardous
Materials onto the Project. Notwithstanding the foregoing, Tenant may handle,
store, use and dispose of products containing small quantities of Hazardous
Materials for "general office purposes" (such as toner for copiers) to the
extent customary and necessary for the Permitted Use of the Premises; provided
that Tenant shall always handle, store, use, and dispose of any such Hazardous
Materials in a safe and lawful manner and never allow such Hazardous Materials
to contaminate the Premises, Building, or Project or surrounding land or
environment. Tenant shall immediately notify Landlord in writing of any
Hazardous Materials' contamination of any portion of the Project of which Tenant
becomes aware, whether or not caused by Tenant. Landlord shall have the right at
all reasonable times and if Landlord determines in good faith that Tenant may
not be in compliance with this Paragraph 4.D to inspect the Premises and to
conduct tests and investigations to determine whether Tenant is in compliance
with the foregoing provisions,


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<PAGE>   6
the costs of all such inspections, tests and investigations to be borne by
Tenant. Tenant shall indemnify, defend (by counsel reasonably acceptable to
Landlord), protect and hold Landlord harmless from and against any and all
claims, liabilities, losses, costs, loss of rents, liens, damages, injuries or
expenses (including reasonable attorneys' and consultants' fees, and court
costs), demands, causes of action, or judgments directly or indirectly arising
out of or related to the use, generation, storage, release, or disposal of
Hazardous Materials by Tenant or any of Tenant's Parties in, on, under or about
the Premises, the Building or the Project or surrounding land or environment,
which indemnity shall include, without limitation, damages for personal or
bodily injury, property damage, damage to the environment or natural resources
occurring on or off the Premises, losses attributable to diminution in value or
adverse effects on marketability, the cost of any investigation, monitoring,
government oversight, repair, removal, remediation, restoration, abatement, and
disposal, and the preparation of any closure or other required plans, whether
such action is required or necessary prior to or following the expiration or
earlier termination of this Lease. Neither the consent by Landlord to the use,
generation, storage, release or disposal of Hazardous Materials nor the strict
compliance by Tenant with all laws pertaining to Hazardous Materials shall
excuse Tenant from Tenant's obligation of indemnification pursuant to this
Paragraph 4.D. Tenant's obligations pursuant to the foregoing indemnity shall
survive the expiration or earlier termination of this Lease.

                            5. RULES AND REGULATIONS

    Tenant shall faithfully observe and comply with the building rules and
regulations attached hereto as EXHIBIT A and any other rules and regulations and
any modifications or additions thereto which Landlord may from time to time
prescribe in writing for the purpose of maintaining the proper care,
cleanliness, safety, traffic flow and general order of the Premises or the
Building or Project. Tenant shall cause Tenant's Parties to comply with such
rules and regulations. Landlord shall not be responsible to Tenant for the
non-compliance by any other tenant or occupant of the Building or Project with
any of such rules and regulations, any other tenant's or occupant's lease or any
Regulations.

                                     6. RENT

A. BASE RENT. Tenant shall pay to Landlord and Landlord shall receive, without
notice or demand throughout the Term, Base Rent as specified in the Basic Lease
Information, payable in monthly installments in advance on or before the first
day of each calendar month, in lawful money of the United States, without
deduction or offset whatsoever, at the Remittance Address specified in the Basic
Lease Information or to such other place as Landlord may from time to time
designate in writing. Base Rent for the first full month of the Term for the
Premises shall be paid by Tenant upon Tenant's execution of this Lease. Such
payment of Base Rent for the first full month of the Term shall be applied to
the first full month of the Term by Landlord upon its receipt thereof so that,
upon such application by Landlord of such payment, no additional payment of Base
Rent allocable to the first full month of the Term shall be due from Tenant. If
the obligation for payment of Base Rent commences on a day other than the first
day of a month, then Base Rent shall be prorated and the prorated installment
shall be paid on the first day of the calendar month next succeeding the Term
Commencement Date. The Base Rent payable by Tenant hereunder is subject to
adjustment as provided elsewhere in this Lease, as applicable. As used herein,
the term "Base Rent" shall mean the Base Rent specified in the Basic Lease
Information as it may be so adjusted from time to time.

B. ADDITIONAL RENT. All monies other than Base Rent required to be paid by
Tenant hereunder, including, but not limited to, Tenant's Proportionate Share of
Operating Expenses, as specified in Paragraph 7 of this Lease, charges to be
paid by Tenant under Paragraph 15, the interest and late charge described in
Paragraphs 26.D. and E., and any monies spent by Landlord pursuant to Paragraph
30, shall be considered additional rent ("ADDITIONAL RENT"). "RENT" shall mean
Base Rent and Additional Rent.

                              7. OPERATING EXPENSES

A. OPERATING EXPENSES. In addition to the Base Rent required to be paid
hereunder, Tenant shall pay as Additional Rent, Tenant's Proportionate Share of
the Building and/or Project (as applicable), as defined in the Basic Lease
Information, of Operating Expenses (defined below) in the manner set forth
below. Tenant shall pay the applicable Tenant's Proportionate Share of each such
Operating Expenses. Landlord and Tenant acknowledge that if the number of
buildings which constitute the Project increases or decreases, or if physical
changes are made to the Premises, Building or Project or the configuration of
any thereof, Landlord may reasonably adjust Tenant's Proportionate Share of the
Building or Project to equitably and fairly reflect the change. Landlord's
determination of Tenant's Proportionate Share of the Building and of the Project
shall be conclusive so long as it is reasonably and consistently applied.
"OPERATING EXPENSES" shall mean all expenses and costs of every kind and nature
which Landlord shall pay or become obligated to pay, because of or in connection
with the ownership, management, maintenance, repair, preservation, replacement
and operation of the Building or Project and its supporting facilities and such
additional facilities now and in subsequent years as may be determined by
Landlord to be necessary or desirable to the Building and/or Project (as
determined in a reasonable manner) other than those expenses and costs which are
specifically attributable to Tenant or which are expressly made the financial
responsibility of Landlord or specific tenants of the Building or Project
pursuant to this Lease. Operating Expenses shall include, but are not limited
to, the following:

        (1) TAXES. All real property taxes and assessments, possessory interest
        taxes, sales taxes, personal property taxes, business or license taxes
        or fees, gross receipts taxes, service payments in lieu of such taxes or
        fees, annual or periodic license or use fees, excises, transit charges,
        and other impositions, general and special, ordinary and extraordinary,
        unforeseen as well as foreseen, of any kind (including fees "in-lieu" of
        any such tax or assessment) which are now or hereafter assessed, levied,
        charged, confirmed, or imposed by any public authority upon the Building
        or Project, its operations or the Rent (or any portion or component
        thereof), or any tax, assessment or fee imposed in substitution,
        partially or totally, of any of the above. Operating Expenses shall also
        include any taxes, assessments, reassessments, or other fees or
        impositions with respect to the development, leasing, management,
        maintenance, alteration, repair, use or occupancy of the Premises,
        Building or Project or any portion thereof, including, without
        limitation, by or for Tenant, and all increases therein or reassessments
        thereof whether the increases or reassessments result from increased
        rate and/or valuation (whether upon a transfer of the Building or
        Project or any portion thereof or any interest therein or for any other
        reason). Operating Expenses shall not include inheritance or estate
        taxes imposed upon or assessed against the interest of any person in the
        Building or the Project, or taxes computed upon the basis of the net
        income of any owners of any interest in the Building or the Project. If
        it shall not be lawful for Tenant to reimburse Landlord for all or any
        part of such taxes, the monthly rental payable to Landlord under this
        Lease shall be revised to net Landlord the same net rental after
        imposition of any such taxes by Landlord as would have been payable to
        Landlord prior to the payment of any such taxes.

        (2) INSURANCE. All insurance premiums and costs, including, but not
        limited to, any deductible amounts, premiums and other costs of
        insurance incurred by Landlord, including for the insurance coverage set
        forth in Paragraph 8.A. herein.

        (3) COMMON AREA MAINTENANCE.

               (a) Repairs, replacements, and general maintenance of and for the
               Building and Project and public and common areas and facilities
               of and comprising the Building and Project, including, but not
               limited to, the roof and roof membrane, windows, elevators,
               restrooms, conference rooms, health club facilities, lobbies,
               mezzanines, balconies, mechanical rooms, building exteriors,
               alarm systems, pest extermination, landscaped areas, parking and
               service areas,


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<PAGE>   7
               driveways, sidewalks, loading areas, fire sprinkler systems,
               sanitary and storm sewer lines, utility services,
               heating/ventilation/air conditioning systems, electrical,
               mechanical or other systems, telephone equipment and wiring
               servicing, plumbing, lighting, and any other items or areas which
               affect the operation or appearance of the Building or Project,
               which determination shall be at Landlord's discretion, except
               for: those items to the extent paid for by the proceeds of
               insurance or paid by Tenant or other third parties; and those
               items attributable solely or jointly to specific tenants of the
               Building or Project.

               (b) Repairs, replacements, and general maintenance shall include
               the cost of any improvements made to or assets acquired for the
               Project or Building that in Landlord's discretion may reduce any
               other Operating Expenses, including present or future repair
               work, are reasonably necessary for the health and safety of the
               occupants of the Building or Project, or for the operation of the
               Building systems, services and equipment, or are required to
               comply with any Regulation, such costs or allocable portions
               thereof to be amortized over such reasonable period as Landlord
               shall determine which period is substantially in accordance with
               generally accepted accounting principles, together with interest
               on the unamortized balance at the publicly announced "prime rate"
               charged by Wells Fargo Bank, N.A. (San Francisco) or its
               successor at the time such improvements or capital assets are
               constructed or acquired, plus two (2) percentage points, or in
               the absence of such prime rate, then at the U.S. Treasury
               six-month market note (or bond, if so designated) rate as
               published by any national financial publication selected by
               Landlord, plus four (4) percentage points, but in no event more
               than the lesser of (i) ten percent (10%) or (ii) the maximum rate
               permitted by law, plus reasonable financing charges.

               (c) Payment under or for any easement, license, permit, operating
               agreement, declaration, restrictive covenant or instrument
               relating to the Building or Project.

               (d) All expenses and rental related to services and costs of
               supplies, materials and equipment used in operating, managing and
               maintaining the Premises, Building and Project, the equipment
               therein and the adjacent sidewalks, driveways, parking and
               service areas, including, without limitation, expenses related to
               service agreements regarding security, fire and other alarm
               systems, janitorial services, window cleaning, elevator
               maintenance, Building exterior maintenance, landscaping and
               expenses related to the administration, management and operation
               of the Project, including without limitation salaries, wages and
               benefits and management office rent.

               (e) The cost of supplying any services and utilities which
               benefit all or a portion of the Premises, Building or Project,
               including without limitation services and utilities provided
               pursuant to Paragraph 15 hereof.

               (f) Legal expenses and the cost of audits by certified public
               accountants; provided, however, that legal expenses chargeable as
               Operating Expenses shall not include the cost of negotiating
               leases, collecting rents, evicting tenants nor shall it include
               costs incurred in legal proceedings with or against any tenant or
               to enforce the provisions of any lease.

               (g) A management and accounting cost recovery fee not to exceed
               four percent (4%) of the sum of the Project's revenues.

If the rentable area of the Building and/or Project is not fully occupied during
any fiscal year of the Term as determined by Landlord, an adjustment shall be
made in Landlord's discretion in computing the Operating Expenses for such year
so that Tenant pays an equitable portion of all variable items (e.g., utilities,
janitorial services and other component expenses that are affected by variations
in occupancy levels) of Operating Expenses, as reasonably determined by
Landlord; provided, however, that in no event shall Landlord be entitled to
collect in excess of one hundred percent (100%) of the total Operating Expenses
actually incurred by Landlord from all of the tenants in the Building or
Project, as the case may be.

Operating Expenses shall not include the cost of providing tenant improvements
or other specific costs incurred for the account of specific tenants of the
Building or Project other than Tenant, the initial construction cost of the
Building, or debt service on any mortgage or deed of trust recorded with respect
to the Project other than pursuant to Paragraph 7.A(3)(b) above. Moreover, if
Landlord does not provide janitorial service to the Premises, Operating Expenses
with respect to the Premises shall not include the cost of janitorial service.
In addition, notwithstanding anything in the definition of Operating Expenses in
this Lease to the contrary, Operating Expenses shall not include the following,
except to the extent specifically provided: costs of capital improvements,
replacements or equipment and any depreciation or amortization expenses thereon,
except to the extent included in Operating Expenses in Paragraph 7.A of this
Lease; marketing costs, including leasing commissions, attorneys' fees in
connection with the negotiation and preparation or enforcement of letters, deal
memos, letters of intent, leases, subleases and/or assignments, space planning
costs, and other costs and expenses incurred in connection with lease, sublease
and/or assignment negotiations and transactions with present or prospective
tenants or other occupants of the Building or the Project; except to the extent
included in Operating Expenses in Paragraph 7.A(3) above, interest, principal,
points and fees on debt or amortization payments on any mortgage or deed of
trust or any other debt instrument encumbering the Building or Project or the
land on which the Building or Project is situated; and advertising and
promotional expenditures; Landlord's general corporate overhead and general
administrative expenses not related to the operation of the Building or the
Project (including executive salaries), except as specifically set forth in
Paragraph 7.A of this Lease.

Notwithstanding anything herein to the contrary, in any instance wherein
Landlord, in Landlord's reasonable discretion, deems Tenant to be responsible
for any amounts greater than Tenant's Proportionate Share, Landlord shall have
the right to allocate costs in any manner Landlord reasonably deems appropriate.
Landlord shall not collect from the tenants of the Project an amount greater
than 100% of the Operating Expenses incurred in the Project.

The above enumeration of services and facilities shall not be deemed to impose
an obligation on Landlord to make available or provide such services or
facilities except to the extent if any that Landlord has specifically agreed
elsewhere in this Lease to make the same available or provide the same. Without
limiting the generality of the foregoing, Tenant acknowledges and agrees that it
shall be responsible for providing adequate security for its use of the
Premises, the Building and the Project and that Landlord shall have no
obligation or liability with respect thereto, except to the extent if any that
Landlord has specifically agreed elsewhere in this Lease to provide the same.

B. PAYMENT OF ESTIMATED OPERATING EXPENSES. "ESTIMATED OPERATING EXPENSES" for
any particular year shall mean Landlord's estimate of the Operating Expenses for
such fiscal year made with respect to such fiscal year as hereinafter provided.
Landlord shall have the right from time to time to revise its fiscal year and
interim accounting periods so long as the periods as so revised are reconciled
with prior periods in a reasonable manner. During the last month of each fiscal
year during the Term, or as soon thereafter as practicable, Landlord shall give
Tenant written notice of the Estimated Operating Expenses for the ensuing fiscal
year. Tenant shall pay Tenant's Proportionate Share of the Estimated Operating
Expenses with installments of Base Rent for the fiscal year to which the
Estimated Operating Expenses applies in monthly installments on the first day of
each calendar month during such year, in advance. Such payment


                                       7
<PAGE>   8
shall be construed to be Additional Rent for all purposes hereunder. If at any
time during the course of the fiscal year, Landlord reasonably determines that
Operating Expenses are projected to vary from the then Estimated Operating
Expenses by more than five percent (5%), Landlord may, by written notice to
Tenant, revise the Estimated Operating Expenses for the balance of such fiscal
year, and Tenant's monthly installments for the remainder of such year shall be
adjusted so that by the end of such fiscal year Tenant has paid to Landlord
Tenant's Proportionate Share of the revised Estimated Operating Expenses for
such year, such revised installment amounts to be Additional Rent for all
purposes hereunder.

C. COMPUTATION OF OPERATING EXPENSE ADJUSTMENT. "OPERATING EXPENSE ADJUSTMENT"
shall mean the difference between Estimated Operating Expenses and actual
Operating Expenses for any fiscal year determined as hereinafter provided.
Within one hundred twenty (120) days after the end of each fiscal year, or as
soon thereafter as practicable, Landlord shall deliver to Tenant a statement of
actual Operating Expenses for the fiscal year just ended, accompanied by a
computation of Operating Expense Adjustment. If such statement shows that
Tenant's payment based upon Estimated Operating Expenses is less than Tenant's
Proportionate Share of Operating Expenses, then Tenant shall pay to Landlord the
difference within thirty (30) days after receipt of such statement, such payment
to constitute Additional Rent for all purposes hereunder. If such statement
shows that Tenant's payments of Estimated Operating Expenses exceed Tenant's
Proportionate Share of Operating Expenses, then (provided that Tenant is not in
default under this Lease) Landlord shall pay to Tenant the difference within
thirty (30) days after delivery of such statement to Tenant. If this Lease has
been terminated or the Term hereof has expired prior to the date of such
statement, then the Operating Expense Adjustment shall be paid by the
appropriate party within thirty (30) days after the date of delivery of the
statement. Should this Lease commence or terminate at any time other than the
first day of the fiscal year, Tenant's Proportionate Share of the Operating
Expense Adjustment shall be prorated based on a month of 30 days and the number
of calendar months during such fiscal year that this Lease is in effect.
Notwithstanding anything to the contrary contained in Paragraph 7.A or 7.B,
Landlord's failure to provide any notices or statements within the time periods
specified in those paragraphs shall in no way excuse Tenant from its obligation
to pay Tenant's Proportionate Share of Operating Expenses. During the Term
hereof, and only in the event Landlord is holding a Letter of Credit (as defined
in Paragraph 39.E hereof) as a Security Deposit on behalf of Tenant, Landlord
shall credit to Tenant by way of an Operating Expense Adjustment an amount equal
to fifty percent (50%) of the annual fee charged by the issuing bank for the
Letter of Credit up to an amount not to exceed Fifteen Thousand Dollars
($15,000).

D. NET LEASE. This shall be a triple net Lease and Base Rent shall be paid to
Landlord absolutely net of all costs and expenses, except as specifically
provided to the contrary in this Lease. The provisions for payment of Operating
Expenses and the Operating Expense Adjustment are intended to pass on to Tenant
and reimburse Landlord for all costs and expenses of the nature described in
Paragraph 7.A. incurred in connection with the ownership, management,
maintenance, repair, preservation, replacement and operation of the Building
and/or Project and its supporting facilities and such additional facilities now
and in subsequent years as may be determined by Landlord to be necessary or
desirable to the Building and/or Project.

E. TENANT AUDIT. If Tenant shall dispute the amount set forth in any statement
provided by Landlord under Paragraph 7.B. or 7.C. above, Tenant shall have the
right, not later than thirty (30) days following receipt of such statement and
upon the condition that Tenant shall first deposit with Landlord the full amount
in dispute, to notify Landlord of such dispute and to request an audit in
writing, and within sixty (60) days after Landlord's receipt of such written
notice, to cause Landlord's books and records with respect to Operating Expenses
for such fiscal year to be audited by certified public accountants selected by
Tenant and subject to Landlord's reasonable right of approval. The Operating
Expense Adjustment shall be appropriately adjusted on the basis of such audit.
If such audit discloses a liability for a refund in excess of six percent (6%)
of Tenant's Proportionate Share of the Operating Expenses previously reported,
the cost of such audit shall be borne by Landlord; otherwise the cost of such
audit shall be paid by Tenant. If Tenant shall not request an audit in
accordance with the provisions of this Paragraph 7.E. within thirty (30) days
after receipt of Landlord's statement provided pursuant to Paragraph 7.B. or
7.C., such statement shall be final and binding for all purposes hereof. Tenant
acknowledges and agrees that any information revealed in the above described
audit may contain proprietary and sensitive information and that significant
damage could result to Landlord if such information were disclosed to any party
other than Tenant's auditors, Tenant's executives and financial managers and
Tenant's legal counsel, all of whom Tenant shall require to keep confidential
any information discovered through such audit, which requirement of
confidentiality shall survive the termination of this Lease. Except to the
extent required by an order of a court with proper jurisdiction, Tenant shall
not in any manner disclose, provide or make available any information revealed
by the audit to any person or entity without Landlord's prior written consent,
which consent may be withheld by Landlord in its sole and absolute discretion.
The information disclosed by the audit will be used by Tenant solely for the
purpose of evaluating Landlord's books and records in connection with this
Paragraph 7.E.

                        8. INSURANCE AND INDEMNIFICATION

A. LANDLORD'S INSURANCE. All insurance maintained by Landlord shall be for the
sole benefit of Landlord and under Landlord's sole control.

        (1) PROPERTY INSURANCE. Landlord agrees to maintain property insurance
        insuring the Building against damage or destruction due to risk
        including fire, vandalism, and malicious mischief in an amount not less
        than the replacement cost thereof, in the form and with deductibles and
        endorsements as selected by Landlord. At its election, Landlord may
        instead (but shall have no obligation to) obtain "All Risk" coverage,
        and may also obtain earthquake, pollution, and/or flood insurance in
        amounts selected by Landlord.

        (2) OPTIONAL INSURANCE. Landlord, at Landlord's option, may also (but
        shall have no obligation to) carry (i) insurance against loss of rent,
        in an amount equal to the amount of Base Rent and Additional Rent that
        Landlord could be required to abate to all Building tenants in the event
        of condemnation or casualty damage for a period of twelve (12) months;
        and (ii) liability insurance and such other insurance as Landlord may
        deem prudent or advisable, in such amounts and on such terms as Landlord
        shall determine. Landlord shall not be obligated to insure, and shall
        have no responsibility whatsoever for any damage to, any furniture,
        machinery, goods, inventory or supplies, or other personal property or
        fixtures which Tenant may keep or maintain in the Premises, or any
        leasehold improvements, additions or alterations within the Premises.

B. TENANT'S INSURANCE. Tenant shall procure at Tenant's sole cost and expense
and keep in effect from the date of this Lease and at all times until the end of
the Term the following:

        (1) PROPERTY INSURANCE. Insurance on all personal property and fixtures
        of Tenant and all improvements, additions or alterations made by or for
        Tenant to the Premises on an "All Risk" basis, insuring such property
        for the full replacement value of such property.

        (2) LIABILITY INSURANCE. Commercial General Liability insurance covering
        bodily injury and property damage liability occurring in or about the
        Premises or arising out of the use and occupancy of the Premises and the
        Project, and any part of either, and any areas adjacent thereto, and the
        business operated by Tenant or by any other occupant of the Premises.
        Such insurance shall include contractual liability insurance coverage
        insuring all of Tenant's indemnity obligations under this Lease. Such
        coverage shall have a minimum combined single limit of liability of at
        least Two Million Dollars ($2,000,000.00), and a minimum general
        aggregate limit of Three Million Dollars ($3,000,000.00), with an
        "Additional Insured - Managers or Lessors


                                       8
<PAGE>   9
        of Premises Endorsement." All such policies shall be written to apply to
        all bodily injury (including death), property damage or loss, personal
        and advertising injury and other covered loss, however occasioned,
        occurring during the policy term, shall be endorsed to add Landlord and
        any party holding an interest to which this Lease may be subordinated as
        an additional insured, and shall provide that such coverage shall be
        "PRIMARY" and non-contributing with any insurance maintained by
        Landlord, which shall be excess insurance only. Such coverage shall also
        contain endorsements including employees as additional insureds if not
        covered by Tenant's Commercial General Liability Insurance. All such
        insurance shall provide for the severability of interests of insureds;
        and shall be written on an "OCCURRENCE" basis, which shall afford
        coverage for all claims based on acts, omissions, injury and damage,
        which occurred or arose (or the onset of which occurred or arose) in
        whole or in part during the policy period.

        (3) WORKERS' COMPENSATION AND EMPLOYERS' LIABILITY INSURANCE. Workers'
        Compensation Insurance as required by any Regulation, and Employers'
        Liability Insurance in amounts not less than One Million Dollars
        ($1,000,000) each accident for bodily injury by accident; One Million
        Dollars ($1,000,000) policy limit for bodily injury by disease; and One
        Million Dollars ($1,000,000) each employee for bodily injury by disease.

        (4) COMMERCIAL AUTO LIABILITY INSURANCE. Commercial auto liability
        insurance with a combined limit of not less than One Million Dollars
        ($1,000,000) for bodily injury and property damage for each accident.
        Such insurance shall cover liability relating to any auto of Tenant
        (including owned, hired and non-owned autos, and automobiles used within
        the scope of employment under Tenant).

        (5) ALTERATIONS REQUIREMENTS. In the event Tenant shall desire to
        perform any Alterations, Tenant shall deliver to Landlord, prior to
        commencing such Alterations (i) evidence reasonably satisfactory to
        Landlord that Tenant carries "Builder's Risk" insurance covering
        construction of such Alterations in an amount and form approved by
        Landlord, (ii) such other insurance as Landlord shall
        nondiscriminatorily and reasonably require, and (iii) a lien and
        completion bond or other security in form and amount satisfactory to
        Landlord in Landlord's reasonable discretion (which amount of such bond
        or other security shall be approximately one hundred fifty percent
        (150%) of the total cost of completion of the portion of the Tenant
        Improvements for which Landlord requires such additional security).
        Landlord shall in no event be required to accept an instrument of
        security for purposes of the foregoing sentence which instrument of
        security is not customarily accepted by Landlord for such purposes in
        the ordinary course of Landlord's business operations.

        (6) GENERAL INSURANCE REQUIREMENTS. All coverages described in this
        Paragraph 8.B. shall be endorsed to (i) provide Landlord with thirty
        (30) days' notice of cancellation or change in terms; and (ii) waive all
        rights of subrogation by the insurance carrier against Landlord. If at
        any time during the Term the amount or coverage of insurance which
        Tenant is required to carry under this Paragraph 8.B. is, in Landlord's
        reasonable judgment, materially less than the amount or type of
        insurance coverage typically carried by owners or tenants of properties
        located in the general area in which the Premises are located which are
        similar to and operated for similar purposes as the Premises or if
        Tenant's use of the Premises should change with or without Landlord's
        consent, Landlord shall have the right to require Tenant to increase the
        amount or change the types of insurance coverage required under this
        Paragraph 8.B. All insurance policies required to be carried by Tenant
        under this Lease shall be written by companies rated A X or better in
        "Best's Insurance Guide" and authorized to do business in the State of
        California. With respect to the Tenant named hereunder (Brocade
        Communications Systems, Inc."), in any event deductible amounts under
        all insurance policies required to be carried by Tenant under this Lease
        shall not exceed One Hundred Thousand Dollars ($100,000.00) per
        occurrence, provided that Tenant maintains a tangible net worth of at
        least Fifty Million and No/100 Dollars ($50,000,000.00) as reasonably
        determined by Landlord, or, if Tenant's net worth is less than Fifty
        Million and No/100 Dollars ($50,000,000.00), such deductible amounts
        shall not exceed Twenty-Five Thousand and No/100 Dollars ($25,000.00)
        per occurrence. With respect to any other party which becomes "Tenant"
        under this Lease, by assignment or operation of law, or otherwise, in
        any event deductible amounts under all insurance policies required to be
        carried by Tenant under this Lease shall not exceed Five Thousand
        Dollars ($5,000.00) per occurrence. Tenant shall deliver to Landlord on
        or before the Term Commencement Date, and thereafter at least fifteen
        (15) days before the expiration dates of the expired policies, certified
        copies of Tenant's insurance policies, or a certificate evidencing the
        same issued by the insurer thereunder; and, if Tenant shall fail to
        procure such insurance, or to deliver such policies or certificates,
        Landlord may, at Landlord's option and in addition to Landlord's other
        remedies in the event of a default by Tenant hereunder, procure the same
        for the account of Tenant, and the cost thereof shall be paid to
        Landlord as Additional Rent.

C. INDEMNIFICATION. Tenant shall indemnify, defend by counsel reasonably
acceptable to Landlord, protect and hold Landlord, Spieker Properties, Inc., and
each of their respective directors, shareholders, partners, lenders, members,
managers, contractors, affiliates and employees (collectively, "LANDLORD
INDEMNITEES") harmless from and against any and all claims, liabilities, losses,
costs, loss of rents, liens, damages, injuries or expenses, including reasonable
attorneys' and consultants' fees and court costs, demands, causes of action, or
judgments, directly or indirectly arising out of or related to: (1) claims of
injury to or death of persons or damage to property or business loss occurring
or resulting directly or indirectly from the use or occupancy of the Premises,
Building or Project by Tenant or Tenant's Parties, or from activities or
failures to act of Tenant or Tenant's Parties; (2) claims arising from work or
labor performed, or for materials or supplies furnished to or at the request or
for the account of Tenant in connection with performance of any work done for
the account of Tenant within the Premises or Project; (3) claims arising from
any breach or default on the part of Tenant in the performance of any covenant
contained in this Lease; and (4) claims arising from the negligence or
intentional acts or omissions of Tenant or Tenant's Parties. The foregoing
indemnity by Tenant shall not be applicable to claims to the extent arising from
the gross negligence or willful misconduct of Landlord or Landlord's agents,
employees, or contractors or Landlord's breach of a material term of this Lease
beyond any applicable cure periods. Landlord shall not be liable to Tenant and
Tenant hereby waives all claims against Landlord for any injury to or death of,
or damage to any person or property or business loss in or about the Premises,
Building or Project by or from any cause whatsoever (other than Landlord's gross
negligence or willful misconduct or Landlord's breach of a material term of this
Lease beyond any applicable cure periods) and, without limiting the generality
of the foregoing, whether caused by water leakage of any character from the
roof, walls, basement or other portion of the Premises, Building or Project, or
caused by gas, fire, oil or electricity in, on or about the Premises, Building
or Project, acts of God or of third parties, or any matter outside of the
reasonable control of Landlord. The provisions of this Paragraph shall survive
the expiration or earlier termination of this Lease.

                            9. WAIVER OF SUBROGATION

    Landlord and Tenant each waives any claim, loss or cost it might have
against the other for any injury to or death of any person or persons, or damage
to or theft, destruction, loss, or loss of use of any property (a "LOSS"), to
the extent the same is insured against (or is required to be insured against
under the terms hereof) under any property damage insurance policy covering the
Building, the Premises, Landlord's or Tenant's fixtures, personal property,
leasehold improvements, or business, regardless of whether the negligence of the
other party caused such Loss.


                                       9
<PAGE>   10
                     10. LANDLORD'S REPAIRS AND MAINTENANCE

Landlord shall maintain in good repair, reasonable wear and tear excepted, the
structural soundness of the roof, foundations, and exterior walls of the
Building. The term "exterior walls" as used herein shall not include windows,
glass or plate glass, doors, special store fronts or office entries. Any damage
caused by or repairs necessitated by any negligence or act of Tenant or Tenant's
Parties may be repaired by Landlord at Landlord's option and Tenant's expense.
Tenant shall promptly give Landlord written notice of any defect or need of
repairs in such components of the Building for which Landlord is responsible
upon Tenant's knowledge of the same, after which Landlord shall have a
reasonable opportunity and the right to enter the Premises at all reasonable
times to repair same. Landlord shall make commercially reasonable efforts to
cause its agents, employees and contractors who enter the Premises to use
commercially reasonable efforts not to unreasonably interfere with Tenant's
Permitted Use of the Premises. Landlord's liability with respect to any defects,
repairs, or maintenance for which Landlord is responsible under any of the
provisions of this Lease shall be limited to the cost of such repairs or
maintenance, and there shall be no abatement of rent and no liability of
Landlord by reason of any injury to or interference with Tenant's business
arising from the making of repairs, alterations or improvements in or to any
portion of the Premises, the Building or the Project or to fixtures,
appurtenances or equipment in the Building, except as provided in Paragraph 24.
Subject to punchlist items described in Paragraph 2.B hereof, by taking
possession of the Premises, Tenant accepts them "as is," as being in good order,
condition and repair and the condition in which Landlord is obligated to deliver
them and suitable for the Permitted Use and Tenant's intended operations in the
Premises, whether or not any notice of acceptance is given. Landlord shall
promptly commence the correction of the punchlist items described in Paragraph
2.B hereof, if any, following Landlord's receipt of any such punchlist items
list in accordance with this Lease.

                      11. TENANT'S REPAIRS AND MAINTENANCE

    Tenant shall at all times during the Term at Tenant's expense maintain all
parts of the Premises and such portions of the Building as are within the
exclusive control of Tenant in a first-class, good, clean and secure condition
and promptly make all necessary repairs and replacements, as reasonably
determined by Landlord, with materials and workmanship of the same character,
kind and quality as the original. Notwithstanding anything to the contrary
contained herein, Tenant shall, at its expense, promptly repair any damage to
the Premises or the Building or Project resulting from or caused by any
negligence or act of Tenant or Tenant's Parties.

                                 12. ALTERATIONS

A. Tenant shall not make, or allow to be made, any alterations, physical
additions, improvements or partitions, including without limitation the
attachment of any fixtures or equipment, in, about or to the Premises
("ALTERATIONS") without obtaining the prior written consent of Landlord, which
consent shall not be unreasonably withheld or delayed with respect to proposed
Alterations which: (a) comply with all applicable Regulations; (b) are, in
Landlord's reasonable opinion, compatible with the Building or the Project and
its mechanical, plumbing, electrical, heating/ventilation/air conditioning
systems, and will not cause the Building or Project or such systems to be
required to be modified to comply with any Regulations (including, without
limitation, the Americans With Disabilities Act), unless Tenant in its sole
discretion agrees in writing to pay for all costs and expenses associated with
such compliance requirement (which agreement shall survive termination of this
Lease); and (c) will not interfere with the use and occupancy of any other
portion of the Building or Project by any other tenant or its invitees.
Specifically, but without limiting the generality of the foregoing, Landlord
shall have the right of written consent for all plans and specifications for the
proposed Alterations, construction means and methods, all appropriate permits
and licenses, any contractor or subcontractor to be employed on the work of
Alterations, and the time for performance of such work, and may impose
reasonable rules and regulations for contractors and subcontractors performing
such work. Tenant shall also supply to Landlord any documents and information
reasonably requested by Landlord in connection with Landlord's consideration of
a request for approval hereunder. Notwithstanding the foregoing, Tenant shall
have the right, without consent of, but upon at least ten (10) business days'
prior written notice (as provided under Paragraph 12.B below) to, Landlord, to
make non-structural, cosmetic Alterations within the interior of the Premises
(and which are not visible from the outside of the Premises), which do not
impair the value of the Building, and which cost, in the aggregate, less than
Twenty-Five Thousand Dollars ($25,000.00) in any twelve (12) month period during
the Term of this Lease, provided that such Alterations shall nevertheless be
subject to all of the remaining requirements of this Paragraph 12, including
without limitation, subparagraphs (a) through (c) above, other than the
requirement of Landlord's prior consent. In addition, all Alterations shall be
performed by duly licensed contractors or subcontractors reasonably acceptable
to Landlord, proof of insurance shall be submitted to Landlord as required under
Paragraph 8.B above, and Landlord reserves the right to impose reasonable rules
and regulations for contractors and subcontractors. Tenant shall, if requested
by Landlord, promptly furnish Landlord with complete as-built plans and
specifications for any Alterations performed by Tenant to the Premises, at
Tenant's sole cost and expense. Tenant shall cause all Alterations to be
accomplished in a first-class, good and workmanlike manner, and to comply with
all applicable Regulations and Paragraph 27 hereof. Tenant shall at Tenant's
sole expense, perform any additional work required under applicable Regulations
due to the Alterations hereunder. No review or consent by Landlord of or to any
proposed Alteration or additional work shall constitute a waiver of Tenant's
obligations under this Paragraph 12, nor constitute any warranty or
representation that the same complies with all applicable Regulations, for which
Tenant shall at all times be solely responsible. Tenant shall reimburse Landlord
for all costs which Landlord may incur in connection with granting approval to
Tenant for any such Alterations, including any costs or expenses which Landlord
may incur in electing to have outside architects and engineers review said plans
and specifications, and shall pay Landlord an administration fee of five percent
(5%) of the cost of the Alterations as Additional Rent hereunder. All such
Alterations shall remain the property of Tenant until the expiration or earlier
termination of this Lease, at which time they shall be and become the property
of Landlord; provided, however, that Landlord may, at Landlord's option, require
that Tenant, at Tenant's expense, remove any or all Alterations (excluding the
initial Tenant Improvements and any improvements installed by Landlord on behalf
of Tenant in the Phase I Temporary Premises or the Phase II Temporary Premises
(each as herein defined)) made by or on behalf of Tenant and restore the
Premises by the expiration or earlier termination of this Lease, to their
condition existing prior to the construction of any such Alterations, reasonable
wear and tear excepted. All such removals and restoration shall be accomplished
in a first-class and good and workmanlike manner so as not to cause any damage
to the Premises or Project whatsoever. If Tenant fails to remove such
Alterations or Tenant's trade fixtures or furniture or other personal property,
Landlord may keep and use them or remove any of them and cause them to be stored
or sold in accordance with applicable law, at Tenant's sole expense. In addition
to and wholly apart from Tenant's obligation to pay Tenant's Proportionate Share
of Operating Expenses, Tenant shall be responsible for and shall pay prior to
delinquency any taxes or governmental service fees, possessory interest taxes,
fees or charges in lieu of any such taxes, capital levies, or other charges
imposed upon, levied with respect to or assessed against its fixtures or
personal property, on the value of Alterations within the Premises, and on
Tenant's interest pursuant to this Lease, or any increase in any of the
foregoing based on such Alterations. To the extent that any such taxes are not
separately assessed or billed to Tenant, Tenant shall pay the amount thereof as
invoiced to Tenant by Landlord.

At Landlord's election and notwithstanding the foregoing, however, Tenant shall
pay to Landlord the cost of removing any such Alterations and restoring the
Premises to their original condition, such cost to include a reasonable charge
for Landlord's overhead and profit as provided above at the time Landlord grants
written consent to a requested Alteration; provided, however, that Landlord
shall not require that Tenant pay to Landlord the cost of removing any such
Alterations and restoring the Premises to their original condition as described
in the foregoing sentence if the following conditions precedent are satisfied by
Tenant: (i) Tenant (and not a sublessee or assignee of Tenant) shall be the
party for which the Alterations are requested and Tenant is in possession of the
portion of the Premises upon which the Alterations shall be made, and (ii) the
removal costs of such Alterations described above are determined by Landlord in
its


                                       10
<PAGE>   11
reasonable discretion to be less than a cumulative total of one hundred thousand
and no/100 dollars ($100,000.00) with respect to all existing Alterations which
Landlord may require to be removed pursuant to the terms of this Lease. Nothing
in the foregoing sentence shall be interpreted to relieve Tenant of its
obligations described in this Lease to remove Alterations and restore the
Premises at Tenant's cost in accordance with this Paragraph 12, Paragraph 36 and
with other applicable terms and conditions of this Lease. In the event that
Tenant does remove any such Alterations and restores the Premises in accordance
with the terms of this Lease, Landlord shall return any monies delivered by
Tenant to Landlord in accordance with the preceding sentence. In the event
Tenant fails to remove Alterations and restore the Premises in accordance with
the terms of this Lease, Landlord may perform the same on Tenant's behalf apply
monies collected by Landlord for such purpose to the removal and restoration or,
in the event Landlord does not require any such payment by Tenant, the amount
due from Tenant may be deducted from the Security Deposit or any other sums or
amounts held by Landlord under this Lease.

B. In compliance with Paragraph 27 hereof, at least ten (10) business days
before beginning construction of any Alteration, Tenant shall give Landlord
written notice of the expected commencement date of that construction to permit
Landlord to post and record a notice of non-responsibility. Upon substantial
completion of construction, if the law so provides, Tenant shall cause a timely
notice of completion to be recorded in the office of the recorder of the county
in which the Building is located.

C. Notwithstanding anything to the contrary contained in Paragraph 12.A, at the
time Landlord gives its consent for any Alterations, Tenant shall also be
notified whether or not Landlord will require that such Alterations be removed
upon the expiration or earlier termination of this Lease. Landlord shall respond
to Tenant's written request within fifteen (15) business days. In the event
Landlord fails to respond to Tenant's written request within such fifteen (15)
business day time period, Landlord shall not be in default hereof nor shall
Tenant be deemed to have received consent to the requested Alterations; however
Tenant is entitled to provide a second written request for consent to Landlord.
Landlord shall respond to Tenant's second written request for consent described
in this Paragraph 12.C within ten (10) business days after Landlord's receipt
thereof. In the event Landlord fails to so respond to Tenant's second written
request, Landlord shall be deemed to have consented to Tenant's request to make
Alterations; provided, however, that if the total cost of any proposed
Alterations by Tenant during the previous six (6) month period is equal to or
more than One Hundred Thousand Dollars ($100,000.00), Landlord shall be deemed
to have rejected Tenant's second request to make such Alterations.

                                    13. SIGNS

Tenant shall not place, install, affix, paint or maintain any signs, notices,
graphics or banners whatsoever or any window decor which is visible in or from
public view or corridors, the common areas or the exterior of the Premises or
the Building, in or on any exterior window or window fronting upon any common
areas or service area without Landlord's prior written approval which Landlord
shall have the right to withhold in its absolute and sole discretion; provided
that Tenant's name shall be included in any Building-standard door and directory
signage, if any, in accordance with Landlord's Building signage program,
including without limitation, payment by Tenant of any fee charged by Landlord
for maintaining such signage, which fee shall constitute Additional Rent
hereunder. Any installation of signs, notices, graphics or banners on or about
the Premises or Project approved by Landlord shall be subject to any Regulations
and to any other requirements imposed by Landlord. Tenant shall remove all such
signs or graphics by the expiration or any earlier termination of this Lease.
Such installations and removals shall be made in such manner as to avoid injury
to or defacement of the Premises, Building or Project and any other improvements
contained therein, and Tenant shall repair any injury or defacement including
without limitation discoloration caused by such installation or removal. Any
signage rights granted by Landlord to Tenant shall be exclusive to Tenant and
such rights shall not be assigned, subleased or otherwise conveyed without the
prior written approval of Landlord of which Landlord shall have the right to
withhold in its absolute and sole discretion. Tenant's signage rights under this
Paragraph are personal to the original Tenant named in this Lease and shall not
inure to the benefit of any assignees or subtenants. Notwithstanding anything
contained in this Paragraph 13 to the contrary, Tenant shall be entitled to two
(2) signs to be located as follows (a) one (1) sign on the upper-most portion of
the side of the Building facing Technology Drive, and (b) one (1) sign the
upper-most portion of the side of the Building facing Guadalupe Parkway, each in
a location reasonably determined by Landlord. Such signage right is personal to
Tenant and subject to the following terms and conditions:

        1.  Tenant shall submit plans and drawings for such signage to the City
            of San Jose and to any other public authorities having jurisdiction
            and shall obtain written approval from each such jurisdiction prior
            to installation, and shall fully comply with all applicable
            Regulations;

        2.  Tenant shall, at Tenant's sole cost and expense, design, construct
            and install such signage;

        3.  All signs shall be subject to Landlord's prior written approval,
            which Landlord shall have the right to withhold in its absolute and
            sole discretion;

        4.  Tenant shall maintain its signage in good condition and repair, and
            all costs of maintenance and repair shall be borne by Tenant.
            Maintenance shall include, without limitation, cleaning and, if such
            signage is illuminated, relamping at reasonable intervals. Tenant
            shall be responsible for any electrical energy used in connection
            with its signs;

        5.  At Landlord's option, Tenant's signage rights granted hereby may be
            revoked and terminated upon occurrence of any of the following
            events:

            (a) Tenant shall be in material default, as defined in Paragraph 26
                as determined by Landlord in its sole discretion, and shall not
                have cured said default for a period of ninety (90) days;

            (b) Except with respect to Permitted Transfers described in
                Paragraph 21.A(3) hereof, Tenant shall assign this Lease or
                sublet any portion of the Premises without Landlord's prior
                written consent in accordance with Paragraph 21, or Tenant
                occupies less than fifty percent (50%) of the Premises;

            (c) This Lease shall terminate or otherwise no longer be in effect.

        6.  Upon the expiration or earlier termination of this Lease if Tenant
            fails to remove its signage in accordance with this Paragraph 13, or
            at such other time that Tenant's signage rights are terminated
            pursuant to the terms hereof, Landlord shall cause Tenant's signage
            to be removed from the Building and the Building to be repaired and
            restored to the condition which existed prior to the installation of
            Tenant's signage (including, if necessary, the replacement of any
            precast concrete panels), all at the sole cost and expense of Tenant
            and otherwise in accordance with Paragraph 36 of this Lease, without
            further notice from Landlord notwithstanding anything to the
            contrary contained in this Lease. Tenant shall pay all costs and
            expenses for such removal and restoration within thirty (30) days
            following delivery of an invoice therefor.


                                       11
<PAGE>   12
                         14. INSPECTION/POSTING NOTICES

After reasonable notice, except in emergencies where no such notice shall be
required, Landlord and Landlord's agents and representatives, shall have the
right to enter the Premises to inspect the same, to clean, to perform such work
as may be permitted or required hereunder, to make repairs, improvements or
alterations to the Premises, Building or Project or to other tenant spaces
therein, to deal with emergencies, to post such notices as may be permitted or
required by law to prevent the perfection of liens against Landlord's interest
in the Project or to exhibit the Premises to prospective tenants, purchasers,
encumbrancers or to others, or for any other purpose as Landlord may deem
necessary or desirable; provided, however, that Landlord shall use reasonable
efforts not to unreasonably interfere with Tenant's business operations. Tenant
shall not be entitled to any abatement of Rent by reason of the exercise of any
such right of entry. Tenant waives any claim for damages for any injury or
inconvenience to or interference with Tenant's business, any loss of occupancy
or quiet enjoyment of the Premises, and any other loss occasioned thereby.
Landlord shall at all times have and retain a key with which to unlock all of
the doors in, upon and about the Premises, excluding Tenant's vaults and safes
or special security areas (designated in advance), and Landlord shall have the
right to use any and all means which Landlord may deem necessary or proper to
open said doors in an emergency, in order to obtain entry to any portion of the
Premises, and any entry to the Premises or portions thereof obtained by Landlord
by any of said means, or otherwise, shall not be construed to be a forcible or
unlawful entry into, or a detainer of, the Premises, or an eviction, actual or
constructive, of Tenant from the Premises or any portions thereof. At any time
within six (6) months prior to the expiration of the Term or following any
earlier termination of this Lease or agreement to terminate this Lease, Landlord
shall have the right to erect on the Premises, Building and/or Project a
suitable sign indicating that the Premises are available for lease.

                           15. SERVICES AND UTILITIES

A. Provided Tenant shall not be in default hereunder, and subject to the
provisions elsewhere herein contained and to the rules and regulations of the
Building, Landlord shall furnish to the Premises during ordinary business hours
of generally recognized business days, to be reasonably determined by Landlord
(but exclusive, in any event, of Saturdays, Sundays and legal holidays), water
for lavatory and drinking purposes and electricity, heat and air conditioning as
usually furnished or supplied for use of the Premises for reasonable and normal
office use as of the date Tenant takes possession of the Premises as determined
by Landlord (but not including above-standard or continuous cooling for
excessive heat-generating machines, excess lighting or equipment), janitorial
services during the times and in the manner that such services are, in
Landlord's judgment, customarily furnished in comparable office buildings in the
immediate market area, and elevator service, which shall mean service either by
nonattended automatic elevators or elevators with attendants, or both, at the
option of Landlord. Tenant acknowledges that Tenant has inspected and accepts
the water, electricity, heat and air conditioning and other utilities and
services being supplied or furnished to the Premises as of the date Tenant takes
possession of the Premises, as being sufficient for use of the Premises for
reasonable and normal office use in their present condition, "as is," and
suitable for the Permitted Use, and for Tenant's intended operations in the
Premises. Landlord shall have no obligation to provide additional or after-hours
electricity, heating or air conditioning, but if Landlord elects to provide such
services at Tenant's request, Tenant shall pay to Landlord, upon demand, a
reasonable charge for such services as reasonably determined by Landlord. Tenant
agrees to keep and cause to be kept closed all window covering when necessary
because of the sun's position, and Tenant also agrees at all times to cooperate
fully with Landlord and to abide by all of the regulations and requirements
which Landlord may reasonably prescribe for the proper functioning and
protection of electrical, heating, ventilating and air conditioning systems.
Wherever heat-generating machines, excess lighting or equipment are used in the
Premises which affect the temperature otherwise maintained by the air
conditioning system, Landlord reserves the right to install supplementary air
conditioning units in the Premises and the cost thereof, including the cost of
installation and the cost of operation and maintenance thereof, shall be paid by
Tenant to Landlord upon demand by Landlord.

B. Tenant shall not without written consent of Landlord use any apparatus,
equipment or device in the Premises, including without limitation, computers,
electronic data processing machines, copying machines, and other machines, using
excess lighting or using electric current, water, or any other resource in
excess of or which will in any way increase the amount of electricity, water, or
any other resource being furnished or supplied for the use of the Premises for
reasonable and normal office use, and the Permitted Use, in each case as of the
date Tenant takes possession of the Premises and as determined by Landlord, or
which will require additions or alterations to or interfere with the Building
power distribution systems; nor connect with electric current, except through
existing electrical outlets in the Premises or water pipes, any apparatus,
equipment or device for the purpose of using electrical current, water, or any
other resource. If Tenant shall require water or electric current or any other
resource in excess of that being furnished or supplied for the use of the
Premises as of the date Tenant takes possession of the Premises as determined by
Landlord, Tenant shall first procure the written consent of Landlord which
Landlord may refuse, to the use thereof, and Landlord may cause a special meter
to be installed in the Premises so as to measure the amount of water, electric
current or other resource consumed for any such other use. Tenant shall pay
directly to Landlord upon demand as an addition to and separate from payment of
Operating Expenses the cost of all such additional resources, energy, utility
service and meters (and of installation, maintenance and repair thereof and of
any additional circuits or other equipment necessary to furnish such additional
resources, energy, utility or service). Landlord may add to the separate or
metered charge a recovery of additional expense incurred in keeping account of
the excess water, electric current or other resource so consumed. Following
receipt of Tenant's request to do so, Landlord shall use good faith efforts to
restore any service specifically to be provided under Paragraph 15 that becomes
unavailable and which is in Landlord's reasonable control to restore; provided,
however, that Landlord shall in no case be liable for any damages directly or
indirectly resulting from nor shall the Rent or any monies owed Landlord under
this Lease herein reserved be abated by reason of: (a) the installation, use or
interruption of use of any equipment used in connection with the furnishing of
any such utilities or services, or any change in the character or means of
supplying or providing any such utilities or services or any supplier thereof;
(b) the failure to furnish or delay in furnishing any such utilities or services
when such failure or delay is caused by acts of God or the elements, labor
disturbances of any character, or otherwise or because of any interruption of
service due to Tenant's use of water, electric current or other resource in
excess of that being supplied or furnished for the use of the Premises as of the
date Tenant takes possession of the Premises; (c) the inadequacy, limitation,
curtailment, rationing or restriction on use of water, electricity, gas or any
other form of energy or any other service or utility whatsoever serving the
Premises or Project, whether by Regulation or otherwise; or (d) the partial or
total unavailability of any such utilities or services to the Premises or the
Building or the diminution in the quality or quantity thereof, whether by
Regulation or otherwise; or (e) any interruption in Tenant's business operations
as a result of any such occurrence; nor shall any such occurrence constitute an
actual or constructive eviction of Tenant or a breach of an implied warranty by
Landlord. Landlord shall further have no obligation to protect or preserve any
apparatus, equipment or device installed by Tenant in the Premises, including
without limitation by providing additional or after-hours heating or air
conditioning. Landlord shall be entitled to cooperate voluntarily and in a
reasonable manner with the efforts of national, state or local governmental
agencies or utility suppliers in reducing energy or other resource consumption.
The obligation to make services available hereunder shall be subject to the
limitations of any such voluntary, reasonable program. In addition, Landlord
reserves the right to change the supplier or provider of any such utility or
service from time to time. Tenant shall have the right to directly contract with
or otherwise obtain any electrical or janitorial service for or with respect to
the Premises or Tenant's operations therein from any supplier or provider of any
such service. Tenant shall cooperate with Landlord and any supplier or provider
of such services designated by Landlord from time to time to facilitate the
delivery of such services to Tenant at the Premises and to the Building and
Project, including without limitation allowing Landlord and Landlord's suppliers
or providers, and their respective agents and contractors, reasonable access to
the Premises for the purpose of installing, maintaining, repairing, replacing or
upgrading such service or any equipment or machinery associated therewith.


                                       12
<PAGE>   13
C. Tenant shall pay, upon demand, for all utilities furnished to the Premises,
or if not separately billed to or metered to Tenant, Tenant's Proportionate
Share of all charges jointly serving the Project in accordance with Paragraph 7.
All sums payable under this Paragraph 15 shall constitute Additional Rent
hereunder.

D. Tenant may contract separately with providers of telecommunications or
cellular products, systems or services for the Premises. Even though such
products, systems or services may be installed or provided by such providers in
the Building, in consideration for Landlord's permitting such providers to
provide such services to Tenant, Tenant agrees that Landlord and the Landlord
Indemnitees shall in no event be liable to Tenant or any Tenant Party for any
damages of any nature whatsoever arising out of or relating to the products,
systems or services provided by such providers (or any failure, interruption,
defect in or loss of the same) or any acts or omissions of such providers in
connection with the same or any interference in Tenant's business caused
thereby. Tenant waives and releases all rights and remedies against Landlord and
the Landlord Indemnitees that are inconsistent with the foregoing.

                                16. SUBORDINATION

Without the necessity of any additional document being executed by Tenant for
the purpose of effecting a subordination, this Lease shall be and is hereby
declared to be subject and subordinate at all times to: (a) all ground leases or
underlying leases which may now exist or hereafter be executed affecting the
Premises and/or the land upon which the Premises and Project are situated, or
both; and (b) any mortgage or deed of trust which may now exist or be placed
upon the Building, the Project and/or the land upon which the Premises or the
Project are situated, or said ground leases or underlying leases, or Landlord's
interest or estate in any of said items which is specified as security.
Notwithstanding the foregoing, Landlord shall have the right to subordinate or
cause to be subordinated any such ground leases or underlying leases or any such
liens to this Lease. If any ground lease or underlying lease terminates for any
reason or any mortgage or deed of trust is foreclosed or a conveyance in lieu of
foreclosure is made for any reason, Tenant shall, notwithstanding any
subordination, attorn to and become the Tenant of the successor in interest to
Landlord provided that Tenant shall not be disturbed in its possession under
this Lease by such successor in interest so long as Tenant is not in default
under this Lease. Within ten (10) days after request by Landlord, Tenant shall
execute and deliver any additional documents evidencing Tenant's attornment or
the subordination of this Lease with respect to any such ground leases or
underlying leases or any such mortgage or deed of trust, in the form requested
by Landlord or by any ground landlord, mortgagee, or beneficiary under a deed of
trust, subject to such nondisturbance requirement. If requested in writing by
Tenant, Landlord shall use commercially reasonable efforts to obtain a
subordination, nondisturbance and attornment agreement for the benefit of Tenant
reflecting the foregoing from any ground landlord, mortgagee or beneficiary, at
Tenant's expense, subject to such other terms and conditions as the ground
landlord, mortgagee or beneficiary may require.

                            17. FINANCIAL STATEMENTS

At the request of Landlord from time to time, Tenant shall provide to Landlord
Tenant's and any guarantor's current financial statements or other information
discussing financial worth of Tenant and any guarantor, which Landlord shall use
solely for purposes of this Lease and in connection with the ownership,
management, financing and disposition of the Project. Landlord shall not
disclose, provide or make available any confidential information revealed by
Tenant's private financial information to any person or entity without Tenant's
prior written consent.

                            18. ESTOPPEL CERTIFICATE

Tenant agrees from time to time, within ten (10) days after request of Landlord,
to deliver to Landlord, or Landlord's designee, an estoppel certificate stating
that this Lease is in full force and effect, that this Lease has not been
modified (or stating all modifications, written or oral, to this Lease), the
date to which Rent has been paid, the unexpired portion of this Lease, that
there are no current defaults by Landlord or Tenant under this Lease (or
specifying any such defaults), that the leasehold estate granted by this Lease
is the sole interest of Tenant in the Premises and/or the land at which the
Premises are situated, and such other matters pertaining to this Lease as may be
reasonably requested by Landlord or any mortgagee, beneficiary, purchaser or
prospective purchaser of the Building or Project or any interest therein.
Failure by Tenant to execute and deliver such certificate shall constitute an
acceptance of the Premises and acknowledgment by Tenant that the statements
included are true and correct without exception. Tenant agrees that if Tenant
fails to execute and deliver such certificate within such ten (10) day period,
Landlord may execute and deliver such certificate on Tenant's behalf and that
such certificate shall be binding on Tenant. Landlord and Tenant intend that any
statement delivered pursuant to this Paragraph may be relied upon by any
mortgagee, beneficiary, purchaser or prospective purchaser of the Building or
Project or any interest therein. The parties agree that Tenant's obligation to
furnish such estoppel certificates in a timely fashion is a material inducement
for Landlord's execution of this Lease, and shall be an event of default
(without any cure period that might be provided under Paragraph 26.A(3) of this
Lease) if Tenant fails to fully comply or makes any material misstatement in any
such certificate.

                              19. SECURITY DEPOSIT

Tenant agrees to deposit with Landlord upon execution of this Lease, a security
deposit as stated in the Basic Lease Information (the "SECURITY DEPOSIT"), which
sum shall be held and owned by Landlord, without obligation to pay interest, as
security for the performance of Tenant's covenants and obligations under this
Lease. The Security Deposit is not an advance rental deposit or a measure of
damages incurred by Landlord in case of Tenant's default. Upon the occurrence of
any event of default by Tenant, Landlord may from time to time, without
prejudice to any other remedy provided herein or by law, use such fund as a
credit to the extent necessary to credit against any arrears of Rent or other
payments due to Landlord hereunder, and any other damage, injury, expense or
liability caused by such event of default, and Tenant shall pay to Landlord, on
demand, the amount so applied in order to restore the Security Deposit to its
original amount. Although the Security Deposit shall be deemed the property of
Landlord, any remaining balance of such deposit shall be promptly returned by
Landlord to Tenant at such time after termination of this Lease that all of
Tenant's obligations under this Lease have been fulfilled to Landlord's
reasonable satisfaction, reduced by such amounts as may be required by Landlord
(i) to remedy defaults on the part of Tenant in the payment of Rent or other
obligations of Tenant under this Lease, (ii) to repair damage to the Premises,
Building or Project caused by Tenant or any Tenant's Parties, and (iii) to clean
the Premises to the extent Tenant fails to comply with Paragraph 36 hereof.
Landlord may use and commingle the Security Deposit with other funds of
Landlord. Tenant hereby waives the provisions of Section 1950.7 of the
California Civil Code, and all other provisions of any Regulations, now or
hereinafter in force, which restricts the amount or types of claim that a
landlord may make upon a security deposit or imposes upon a landlord (or its
successors) any obligation with respect to the handling or return of security
deposits.

                       20. LIMITATION OF TENANT'S REMEDIES

The obligations and liability of Landlord to Tenant for any default by Landlord
under the terms of this Lease are not personal obligations of Landlord or of the
individual or other partners of Landlord or its or their partners, directors,
officers, or shareholders, and Tenant agrees to look solely to Landlord's
interest in the Project for the recovery of any amount from Landlord, and shall
not look to other assets of Landlord nor seek recourse against the assets of the
individual or other partners of Landlord or its or their partners, directors,
officers or shareholders. Any lien obtained to enforce any such judgment and any
levy of execution thereon shall be subject and subordinate to any lien, mortgage
or deed of trust on the Project. Under no circumstances shall Tenant have the
right to offset against or recoup Rent or other payments due and to become due
to Landlord hereunder except as expressly provided in this Lease, which Rent and
other payments shall


                                       13
<PAGE>   14
be absolutely due and payable hereunder in accordance with the terms hereof. In
no case shall Landlord be liable to Tenant for any lost profits, damage to
business, or any form of special, indirect or consequential damage on account of
any breach of this Lease or otherwise, notwithstanding anything to the contrary
contained in this Lease.

                          21. ASSIGNMENT AND SUBLETTING

A.      (1) GENERAL. This Lease has been negotiated to be and is granted as
        an accommodation to Tenant. Accordingly, this Lease is personal to
        Tenant, and Tenant's rights granted hereunder do not include the right
        to assign this Lease or sublease the Premises, or to receive any excess,
        either in installments or lump sum, over the Rent which is expressly
        reserved by Landlord as hereinafter provided, except as otherwise
        expressly hereinafter provided. Tenant shall not assign or pledge this
        Lease or sublet the Premises or any part thereof, whether voluntarily or
        by operation of law, or permit the use or occupancy of the Premises or
        any part thereof by anyone other than Tenant, or suffer or permit any
        such assignment, pledge, subleasing or occupancy, without Landlord's
        prior written consent except as provided herein. If Tenant desires to
        assign this Lease or sublet any or all of the Premises in the case where
        Landlord's consent is required, Tenant shall give Landlord written
        notice (the "TRANSFER NOTICE") at least thirty (30) days prior to the
        anticipated effective date of the proposed assignment or sublease, which
        shall contain all of the information reasonably requested by Landlord to
        address Landlord's decision criteria specified hereinafter. Landlord
        shall then have a period of ten (10) business days following receipt of
        the Transfer Notice to notify Tenant in writing that Landlord elects
        either: (i) to terminate this Lease as to the space so affected as of
        the date so requested by Tenant; or (ii) to consent to the
        proposed assignment or sublease, subject, however, to Landlord's prior
        written consent of the proposed assignee or subtenant and of any related
        documents or agreements associated with the assignment or sublease. If
        Landlord should fail to notify Tenant in writing of such election within
        said period, Landlord shall be deemed to have waived option (i) above,
        but written consent by Landlord of the proposed assignee or subtenant
        shall still be required. If Landlord does not exercise option (i) above,
        Landlord's consent to a proposed assignment or sublease shall not be
        unreasonably withheld. Consent to any assignment or subletting shall not
        constitute consent to any subsequent transaction to which this Paragraph
        21 applies. Notwithstanding the foregoing, Landlord hereby waives its
        right to recapture a portion of the Premises, as such right is described
        in clause (i) above, in the following circumstance only: (X) Such
        proposed sublease shall commence during the first thirty-six (36) months
        of the Term of this Lease, and (Y) the term of such proposed sublease
        shall expire before the expiration of the forty-second (42nd) month
        following the Term Commencement Date and no extension options shall be
        granted in such sublease, and (Z) Tenant shall at all times during such
        period possess and occupy no less than fifty percent (50%) of the
        Premises. With respect to any sublease that occurs during the initial
        forty-two (42) months of the Term of this Lease, the standard of "sound
        financial condition" described as a condition to Landlord's consent
        shall be based upon a determination by Landlord, in its reasonable
        discretion, that such proposed transferee shall have a tangible net
        worth, evidenced by audited financial statements delivered to Landlord
        pursuant to the terms of this Lease, that is reasonably sufficient,
        taking into account all expected obligations of the transferee with
        respect to the proposed transfer and all of its other contingent and
        noncontingent obligations, to service when due the obligations of the
        transferee with respect to the proposed transfer.

(2)     CONDITIONS OF LANDLORD'S CONSENT. Without limiting the other instances
        in which it may be reasonable for Landlord to withhold Landlord's
        consent to an assignment or subletting, Landlord and Tenant acknowledge
        that it shall be reasonable for Landlord to withhold Landlord's consent
        in the following instances: if the proposed assignee does not agree to
        be bound by and assume the obligations of Tenant under this Lease in
        form and substance reasonably satisfactory to Landlord; the use of the
        Premises by such proposed assignee or subtenant would not be a Permitted
        Use or would violate any exclusivity or other arrangement which Landlord
        has with any other tenant or occupant or any Regulation or would
        increase the Occupancy Density or Parking Density of the Building or
        Project, or would otherwise result in an undesirable tenant mix for the
        Project as determined by Landlord; the proposed assignee or subtenant is
        not of sound financial condition as determined by Landlord in Landlord's
        sole discretion; the proposed assignee or subtenant is a governmental
        agency; the proposed assignee or subtenant does not have a good
        reputation as a tenant of property or a good business reputation; the
        proposed assignee or subtenant is a person with whom Landlord is
        negotiating to lease space in the Project or is a present tenant of the
        Project; the assignment or subletting would entail any Alterations which
        would lessen the value of the leasehold improvements in the Premises or
        use of any Hazardous Materials (except as expressly approved in this
        Lease) or other noxious use or use which may unreasonably disturb other
        tenants of the Project; or Tenant is in default of any obligation of
        Tenant under this Lease, or Tenant has defaulted under this Lease on
        three (3) or more occasions during any twelve (12) months preceding the
        date that Tenant shall request consent. Failure by or refusal of
        Landlord to consent to a proposed assignee or subtenant shall not cause
        a termination of this Lease. Upon a termination under Paragraph
        21.A(1)(i), Landlord may lease the Premises to any party, including
        parties with whom Tenant has negotiated an assignment or sublease,
        without incurring any liability to Tenant. At the option of Landlord, a
        surrender and termination of this Lease shall operate as an assignment
        to Landlord of some or all subleases or subtenancies. Landlord shall
        exercise this option by giving notice of that assignment to such
        subtenants on or before the effective date of the surrender and
        termination. In connection with each request for assignment or
        subletting, Tenant shall pay to Landlord Landlord's standard fee (which
        amount shall not exceed $1,500.00) for approving such requests, as well
        as all costs reasonably incurred by Landlord and all costs incurred by
        any mortgagee or ground lessor in approving each such request and
        effecting any such transfer, including, without limitation, reasonable
        attorneys' fees.

(3)     PERMITTED TRANSFERS. An "Affiliate" means any entity that (i) controls,
        is controlled by, or is under common control with Tenant (ii) results
        from the transfer of all or substantially all of Tenant's assets or
        stock, or (iii) results from the merger or consolidation of Tenant with
        another entity. "Control," as used in the previous sentence, means the
        direct or indirect ownership of more than fifty percent (50%) of the
        voting securities of an entity or possession of the right to vote more
        than fifty percent (50%) of the voting interest in the ordinary
        direction of the entity's affairs. Notwithstanding anything to the
        contrary contained in this Lease, Landlord's consent is not required for
        any assignment of this Lease or sublease of all or a portion of the
        Premises to an Affiliate so long as the following conditions are met:
        (a) at least five (5) days after any such assignment or sublease,
        Landlord receives written notice of such assignment or sublease (as well
        as any documents or information reasonably requested by Landlord
        regarding the transfer and the transferee in support of the requirements
        of this Paragraph 21.A(3)); (b) Tenant is not then in default under this
        Lease; (c) if the transfer is an assignment or any other transfer to an
        Affiliate other than a sublease, the intended assignee assumes in
        writing all of Tenant's obligations under this Lease relating to the
        Premises in form satisfactory to Landlord or, if the transfer is a
        sublease, the intended sublessee accepts the sublease in form
        satisfactory to Landlord; (d) the intended transferee has a tangible net
        worth, as evidenced by financial statements delivered to Landlord and
        certified by an independent certified public accountant in accordance
        with generally accepted accounting principles that are consistently
        applied, at least equal to Tenant as of the date of this Lease; (e) the
        Premises shall continue to be operated solely for the use specified in
        the Basic Lease Information; and (f) Tenant shall pay to Landlord
        Landlord's standard fee (which amount shall not exceed $1,500.00) for
        approving assignments and subleases and all costs reasonably incurred by
        Landlord and all costs incurred by any mortgagee or ground lessor for
        such assignment or subletting, including, without limitation, reasonable
        attorneys' fees. No transfer to an Affiliate in accordance with this
        subparagraph shall relieve Tenant named herein of any obligation under
        this Lease or alter the liability of Tenant named herein for the payment
        of Rent or for the performance of any other obligation to be performed
        by Tenant, including the obligations contained in Paragraph 25 with
        respect to any Affiliate.


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<PAGE>   15
B. BONUS RENT. Any Rent or other consideration realized by Tenant under any such
sublease or assignment in excess of the Rent payable hereunder, after
amortization of a reasonable brokerage commission and reasonable attorneys' fees
incurred by Tenant solely in connection with the sublease or assignment,
reasonable, actual out of pocket costs of tenant improvements made solely in
connection with the sublease or assignment and paid for by Tenant, and
reasonable, out-of-pocket marketing costs, shall be divided and paid, fifty
percent (50%) to Tenant, fifty percent (50%) to Landlord. In any subletting or
assignment undertaken by Tenant, Tenant shall diligently seek to obtain the
then-fair market rental amount (as reasonably determined by Landlord and Tenant)
available in the marketplace for comparable space available for leasing (using
as a basis for such determination other Landlord-owned Buildings and Projects of
the same stature and located in the same geographic area in which the Premises
are located).

C. CORPORATION. If Tenant is a corporation, a transfer of corporate shares by
sale, assignment, bequest, inheritance, operation of law or other disposition
(including such a transfer to or by a receiver or trustee in federal or state
bankruptcy, insolvency or other proceedings) resulting in a change in the
present control of such corporation or any of its parent corporations by the
person or persons owning a majority of said corporate shares, shall constitute
an assignment for purposes of this Lease. Notwithstanding anything to the
contrary in this Lease, the transfer of outstanding capital stock or other
listed equity interests, or the purchase of outstanding capital stock or other
listed equity interests, or the purchase of equity interests issued in an
initial public offering of stock, by persons or parties other than "insiders"
within the meaning of the Securities Exchange Act of 1934, as amended, through
the "over-the-counter" market or any recognized national or international
securities exchange shall not be included in determining whether control has
been transferred.

D. UNINCORPORATED ENTITY. If Tenant is a partnership, joint venture,
unincorporated limited liability company or other unincorporated business form,
a transfer of the interest of persons, firms or entities responsible for
managerial control of Tenant by sale, assignment, bequest, inheritance,
operation of law or other disposition, so as to result in a change in the
present control of said entity and/or of the underlying beneficial interests of
said entity and/or a change in the identity of the persons responsible for the
general credit obligations of said entity shall constitute an assignment for all
purposes of this Lease.

E. LIABILITY. No assignment or subletting by Tenant, permitted or otherwise,
shall relieve Tenant of any obligation under this Lease or any guarantor of this
Lease of any liability under its guaranty or alter the primary liability of the
Tenant named herein for the payment of Rent or for the performance of any other
obligations to be performed by Tenant, including obligations contained in
Paragraph 25 with respect to any assignee or subtenant. Landlord may collect
rent or other amounts or any portion thereof from any assignee, subtenant, or
other occupant of the Premises, permitted or otherwise, and apply the net rent
collected to the Rent payable hereunder, but no such collection shall be deemed
to be a waiver of this Paragraph 21, or the acceptance of the assignee,
subtenant or occupant as tenant, or a release of Tenant from the further
performance by Tenant of the obligations of Tenant under this Lease or of any
guarantor. Any assignment or subletting which conflicts with the provisions
hereof shall be void.

                                  22. AUTHORITY

Landlord represents and warrants that it has full right and authority to enter
into this Lease and to perform all of Landlord's obligations hereunder and that
all persons signing this Lease on its behalf are authorized to do. Tenant and
the person or persons, if any, signing on behalf of Tenant, jointly and
severally represent and warrant that Tenant has full right and authority to
enter into this Lease, and to perform all of Tenant's obligations hereunder, and
that all persons signing this Lease on its behalf are authorized to do so.

                                23. CONDEMNATION

A. CONDEMNATION RESULTING IN TERMINATION. If the whole or any substantial part
of the Premises should be taken or condemned for any public use under any
Regulation, or by right of eminent domain, or by private purchase in lieu
thereof, and the taking would prevent or materially interfere with the Permitted
Use of the Premises, either party shall have the right to terminate this Lease
at its option. If any material portion of the Building or Project is taken or
condemned for any public use under any Regulation, or by right of eminent
domain, or by private purchase in lieu thereof, Landlord may terminate this
Lease at its option. In either of such events, the Rent shall be abated during
the unexpired portion of this Lease, effective when the physical taking of said
Premises shall have occurred.

B. CONDEMNATION NOT RESULTING IN TERMINATION. If a portion of the Project of
which the Premises are a part should be taken or condemned for any public use
under any Regulation, or by right of eminent domain, or by private purchase in
lieu thereof, and the taking prevents or materially interferes with the
Permitted Use of the Premises, and this Lease is not terminated as provided in
Paragraph 23.A. above, the Rent payable hereunder during the unexpired portion
of this Lease shall be reduced, beginning on the date when the physical taking
shall have occurred, to such amount as may be fair and reasonable under all of
the circumstances, but only after giving Landlord credit for all sums received
or to be received by Tenant by the condemning authority, subject to the last
sentence of Paragraph 23.C of this Lease. Notwithstanding anything to the
contrary contained in this Paragraph, if the temporary use or occupancy of any
part of the Premises shall be taken or appropriated under power of eminent
domain during the Term, this Lease shall be and remain unaffected by such taking
or appropriation and Tenant shall continue to pay in full all Rent payable
hereunder by Tenant during the Term; in the event of any such temporary
appropriation or taking, Tenant shall be entitled to receive that portion of any
award which represents compensation for the use of or occupancy of the Premises
during the unexpired Term. In the event a portion or the whole of Tenant's
Premises shall be taken or appropriated under the power of eminent domain or
conveyed in lieu thereof and such restoration cannot be made, in Landlord's sole
opinion, within one hundred eight (180) days from the time of taking, Landlord
shall notify Tenant within sixty (60) days of such taking and Tenant shall have
the right to cancel this Lease by giving Landlord written notice of its
intention to cancel within thirty (30) days of the date of Landlord's notice.
If, however, within sixty (60) days after the date that the nature and extent of
the taking are finally determined, Landlord notifies Tenant that Landlord at its
cost will add on to the remaining Premises so that the area and the approximate
layout of the Premises will be substantially the same after the date of taking
as they were before the date of taking, and Landlord commences the restoration
immediately and completes the restoration within one hundred eighty (180) days
after Landlord so notifies Tenant, this Lease shall continue in full force and
effect without any reduction in Rent, except the abatement made pursuant to this
paragraph.

C. AWARD. Landlord shall be entitled to (and Tenant shall assign to Landlord)
any and all payment, income, rent, award or any interest therein whatsoever
which may be paid or made in connection with such taking or conveyance and
Tenant shall have no claim against Landlord or otherwise for any sums paid by
virtue of such proceedings, whether or not attributable to the value of any
unexpired portion of this Lease, except as expressly provided in this Lease.
Notwithstanding the foregoing, any compensation specifically and separately
awarded Tenant for Tenant's personal property and moving costs, shall be and
remain the property of Tenant.

D. WAIVER OF CCP Section 1265.130. Each party waives the provisions of
California Civil Code Procedure Section 1265.130 allowing either party to
petition the superior court to terminate this Lease as a result of a partial
taking.

                               24. CASUALTY DAMAGE

A. GENERAL. If the Premises or Building should be damaged or destroyed by fire,
tornado, or other casualty (collectively, "CASUALTY"), Tenant shall give
immediate written notice thereof to Landlord upon learning of the same. Within
thirty (30) days after Landlord's receipt of such notice, Landlord shall notify
Tenant whether in Landlord's good faith estimation material restoration of the


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<PAGE>   16
Premises can reasonably be made within one hundred eighty (180) days from the
date of such notice and receipt of required permits for such restoration.
Landlord's determination shall be binding on Tenant.

B. WITHIN 180 DAYS. If the Premises or Building should be damaged by Casualty to
such extent that material restoration can in Landlord's estimation be reasonably
completed within one hundred eighty (180) days after the date of such notice and
receipt of required permits for such restoration, this Lease shall not
terminate. Provided that insurance proceeds are received by Landlord to fully
repair the damage, Landlord shall proceed to rebuild and repair the Premises
diligently and in the manner determined by Landlord, except that Landlord shall
not be required to rebuild, repair or replace any part of any Alterations which
may have been placed on or about the Premises or paid for by Tenant. If the
Premises are untenantable in whole or in part following such damage, the Rent
payable hereunder during the period in which they are untenantable shall be
abated proportionately.

C. GREATER THAN 180 DAYS. If the Premises or Building should be damaged by
Casualty to such extent that material restoration cannot in Landlord's
estimation be reasonably completed within one hundred eighty (180) days after
the date of such notice and receipt of required permits for such rebuilding or
repair, and such damage materially and adversely interferes with the conduct of
Tenant's business in the Premises, then either Party shall have the right to
cancel this Lease by giving the other party written notice within ten (10) days
from the date of Landlord's notice that material restoration cannot in
Landlord's estimation be reasonably completed within such one hundred eighty
(180) day period. Said cancellation shall be effective thirty (30) days from the
first day that either party gives its notice to cancel. If neither party elects
to so cancel this Lease, Landlord shall proceed to rebuild and repair the
Premises diligently and in the manner determined by Landlord, except that
Landlord shall not be required to rebuild, repair or replace any part of any
Alterations which may have been placed on or about the Premises by Tenant. If
the Premises are untenantable in whole or in part following such damage, the
Rent payable hereunder during the period in which they are untenantable shall be
abated proportionately. Notwithstanding the above, Landlord shall not be
required to rebuild, repair or replace any part of any Alterations which may
have been placed, on or about the Premises or paid for by Tenant. If the
Premises are untenantable in whole or in part following such damage, the Rent
payable hereunder during the period in which they are untenantable shall be
abated proportionately, but only to the extent of rental abatement insurance
proceeds received by Landlord during the time and to the extent the Premises are
unfit for occupancy.

D. TENANT'S FAULT. Notwithstanding anything herein to the contrary, if the
Premises or any other portion of the Building are damaged by Casualty resulting
from the fault, negligence, or breach of this Lease by Tenant or any of Tenant's
Parties, Base Rent and Additional Rent shall not be diminished during the repair
of such damage and Tenant shall be liable to Landlord for the cost and expense
of the repair and restoration of the Building caused thereby to the extent such
cost and expense is not covered by insurance proceeds; provided that Tenant
shall not be liable for that portion of the repair costs for which Landlord was
obligated under the terms of this Lease to carry insurance but failed to carry
such insurance.

E. INSURANCE PROCEEDS. Notwithstanding anything herein to the contrary, if the
Premises or Building are damaged or destroyed and are not fully covered by the
insurance proceeds received by Landlord or if the holder of any indebtedness
secured by a mortgage or deed of trust covering the Premises requires that the
insurance proceeds be applied to such indebtedness, then, Landlord shall
promptly notify Tenant of the same and, in either case, Landlord shall have the
right to terminate this Lease by delivering written notice of termination to
Tenant within thirty (30) days after the date of notice to Landlord that said
damage or destruction is not fully covered by insurance or such requirement is
made by any such holder, as the case may be, whereupon this Lease shall
terminate thirty (30) days after Landlord delivers such notice. In the event
that the Premises are damaged or destroyed and are not fully covered by the
insurance proceeds received by Landlord or if the holder of any indebtedness
secured by a mortgage or deed of trust covering the Premises requires that the
insurance proceeds be applied to such indebtedness, and Landlord consequently
determines not to repair or restore the Premises, Tenant may terminate this
Lease by providing written notice of such termination to Landlord and such
termination shall be effective fifteen (15) days following Landlord's receipt of
such written notice from Tenant.

F. WAIVER. This Paragraph 24 shall be Tenant's sole and exclusive remedy in the
event of damage or destruction to the Premises or the Building. As a material
inducement to Landlord entering into this Lease, Tenant hereby waives any rights
it may have under Sections 1932, 1933(4), 1941 or 1942 of the Civil Code of
California with respect to any destruction of the Premises, Landlord's
obligation for tenantability of the Premises and Tenant's right to make repairs
and deduct the expenses of such repairs, or under any similar law, statute or
ordinance now or hereafter in effect.

G. TENANT'S PERSONAL PROPERTY. In the event of any damage or destruction of the
Premises or the Building, under no circumstances shall Landlord be required to
repair any injury or damage to, or make any repairs to or replacements of,
Tenant's personal property.

                                25. HOLDING OVER

Unless Landlord expressly consents in writing to Tenant's holding over, Tenant
shall be unlawfully and illegally in possession of the Premises, whether or not
Landlord accepts any rent from Tenant or any other person while Tenant remains
in possession of the Premises without Landlord's written consent. If Tenant
shall retain possession of the Premises or any portion thereof without
Landlord's consent following the expiration of this Lease or sooner termination
for any reason, then Tenant shall pay to Landlord for each day of such retention
the greater of the following: (i) one hundred seventy-five percent (175%) of the
amount of daily rental as of the last month prior to the date of expiration or
earlier termination, or (ii) the amount of the fair market rental as such amount
is reasonably determined by Landlord (Landlord shall use as a basis for its
determination other buildings and projects owned by Landlord, located in the
same geographic area as the Premises, and of the same class and stature as the
Building and Project). Tenant shall also indemnify, defend, protect and hold
Landlord harmless from any loss, liability or cost, including consequential and
incidental damages and reasonable attorneys' fees, incurred by Landlord
resulting from delay by Tenant in surrendering the Premises, including, without
limitation, any claims made by the succeeding tenant founded on such delay.
Acceptance of Rent by Landlord following expiration or earlier termination of
this Lease, or following demand by Landlord for possession of the Premises,
shall not constitute a renewal of this Lease, and nothing contained in this
Paragraph 25 shall waive Landlord's right of reentry or any other right.
Additionally, if upon expiration or earlier termination of this Lease, or
following demand by Landlord for possession of the Premises, Tenant has not
fulfilled its obligation with respect to repairs and cleanup of the Premises or
any other Tenant obligations as set forth in this Lease, then Landlord shall
have the right to perform any such obligations as it deems necessary at Tenant's
sole cost and expense, and any time required by Landlord to complete such
obligations shall be considered a period of holding over and the terms of this
Paragraph 25 shall apply. The provisions of this Paragraph 25 shall survive any
expiration or earlier termination of this Lease.

                                   26. DEFAULT

A. EVENTS OF DEFAULT. The occurrence of any of the following shall constitute an
event of default on the part of Tenant:

        (1) ABANDONMENT. Abandonment or vacation of the Premises for a
        continuous period in excess of five (5) days. Tenant waives any right to
        notice Tenant may have under Section 1951.3 of the Civil Code of the
        State of California, the terms of this Paragraph 26.A. being deemed such
        notice to Tenant as required by said Section 1951.3.


                                       16
<PAGE>   17
        (2) NONPAYMENT OF RENT. Failure to pay any installment of Rent or any
        other amount due and payable hereunder when said payment is due, such
        failure continuing for three (3) days after written notice of such
        failure, as to which time is of the essence, provided that Landlord
        shall not be required to provide such notice more than once during the
        twelve (12) month period commencing with the date of such notice. The
        second failure to pay any such amount within three (3) days after said
        payment is due during such 12-month period shall be an event of default
        hereunder without notice. Such notice shall replace rather than
        supplement any statutory notice required under Code of Civil Procedure
        Section 1161 or any similar or successor statute.

        (3) OTHER OBLIGATIONS. Failure to perform any obligation, agreement or
        covenant under this Lease other than those matters specified in
        subparagraphs (1) and (2) of this Paragraph 26.A., and in Paragraphs 8,
        16, 18 and 25, such failure continuing for thirty (30) days after
        written notice of such failure, as to which time is of the essence;
        provided, however, that in the event that any such cure cannot
        reasonably be completed within such thirty (30) day period and provided
        further that Tenant has commenced and is diligently pursuing such cure,
        Tenant shall have an additional period of fifteen (15) days to complete
        such cure. Notwithstanding anything to the contrary contained in this
        Lease, the following shall constitute an event of default under this
        Paragraph 26.A(3) without any such notice or lapse of time: (i) failure
        to provide an estoppel certificate when and as required under Paragraph
        18 hereof; (ii) failure to maintain insurance required under Paragraph 8
        hereof; (iii) failure to vacate the Premises upon the expiration or
        earlier termination of this Lease; (iv) failure to comply with any
        obligation under this Lease pertaining to Hazardous Materials; (v) any
        other matter provided for in another subparagraph of this Paragraph 26.A
        or for which another time limit is provided elsewhere in this Lease,
        including without limitation, under Exhibit C to this Lease.

        (4) GENERAL ASSIGNMENT. A general assignment by Tenant for the benefit
        of creditors.

        (5) BANKRUPTCY. The filing of any voluntary petition in bankruptcy by
        Tenant, or the filing of an involuntary petition by Tenant's creditors,
        which involuntary petition remains undischarged for a period of thirty
        (30) days. If under applicable law, the trustee in bankruptcy or Tenant
        has the right to affirm this Lease and continue to perform the
        obligations of Tenant hereunder, such trustee or Tenant shall, in such
        time period as may be permitted by the bankruptcy court having
        jurisdiction, cure all defaults of Tenant hereunder outstanding as of
        the date of the affirmance of this Lease and provide to Landlord such
        adequate assurances as may be necessary to ensure Landlord of the
        continued performance of Tenant's obligations under this Lease.

        (6) RECEIVERSHIP. The employment of a receiver to take possession of
        substantially all of Tenant's assets or Tenant's leasehold of the
        Premises, if such appointment remains undismissed or undischarged for a
        period of fifteen (15) days after the order therefor.

        (7) ATTACHMENT. The attachment, execution or other judicial seizure of
        all or substantially all of Tenant's assets or Tenant's leasehold of the
        Premises, if such attachment or other seizure remains undismissed or
        undischarged for a period of fifteen (15) days after the levy thereof.

        (8) INSOLVENCY. The admission by Tenant in writing of its inability to
        pay its debts as they become due.

B. REMEDIES UPON DEFAULT.

        (1) TERMINATION. In the event of the occurrence of any event of default,
        Landlord shall have the right to give a written termination notice to
        Tenant, and on the date specified in such notice, Tenant's right to
        possession shall terminate, and this Lease shall terminate unless on or
        before such date all Rent in arrears and all costs and expenses incurred
        by or on behalf of Landlord hereunder shall have been paid by Tenant and
        all other events of default of this Lease by Tenant at the time existing
        shall have been fully remedied to the satisfaction of Landlord. At any
        time after such termination, Landlord may recover possession of the
        Premises or any part thereof and expel and remove therefrom Tenant and
        any other person occupying the same, including any subtenant or
        subtenants notwithstanding Landlord's consent to any sublease, by any
        lawful means, and again repossess and enjoy the Premises without
        prejudice to any of the remedies that Landlord may have under this
        Lease, or at law or equity by any reason of Tenant's default or of such
        termination. Landlord hereby reserves the right, but shall not have the
        obligation, to recognize the continued possession of any subtenant. The
        delivery or surrender to Landlord by or on behalf of Tenant of keys,
        entry codes, or other means to bypass security at the Premises shall not
        terminate this Lease.

        (2) CONTINUATION AFTER DEFAULT. Even though an event of default may have
        occurred, this Lease shall continue in effect for so long as Landlord
        does not terminate Tenant's right to possession under Paragraph 26.B(1)
        hereof. Landlord shall have the remedy described in California Civil
        Code Section 1951.4 ("Landlord may continue this Lease in effect after
        Tenant's breach and abandonment and recover Rent as it becomes due, if
        Tenant has the right to sublet or assign, subject only to reasonable
        limitations"), or any successor code section. Accordingly, if Landlord
        does not elect to terminate this Lease on account of any event of
        default by Tenant, Landlord may enforce all of Landlord's rights and
        remedies under this Lease, including the right to recover Rent as it
        becomes due. Acts of maintenance, preservation or efforts to lease the
        Premises or the appointment of a receiver under application of Landlord
        to protect Landlord's interest under this Lease or other entry by
        Landlord upon the Premises shall not constitute an election to terminate
        Tenant's right to possession.

        (3) INCREASED SECURITY DEPOSIT. If Tenant is in default under Paragraph
        26.A(2) hereof and such default remains uncured for ten (10) days after
        such occurrence or such default occurs more than three times in any
        twelve (12) month period, Landlord may require that Tenant increase the
        Security Deposit to the amount of three times the current month's Rent
        at the time of the most recent default if the Security Deposit is less
        than the amount of three times the current month's Rent.

C. DAMAGES AFTER DEFAULT. Should Landlord terminate this Lease pursuant to the
provisions of Paragraph 26.B(1) hereof, Landlord shall have the rights and
remedies of a Landlord provided by Section 1951.2 of the Civil Code of the State
of California, or any successor code sections. Upon such termination, in
addition to any other rights and remedies to which Landlord may be entitled
under applicable law or at equity, Landlord shall be entitled to recover from
Tenant: (1) the worth at the time of award of the unpaid Rent and other amounts
which had been earned at the time of termination, (2) the worth at the time of
award of the amount by which the unpaid Rent and other amounts that would have
been earned after the date of termination until the time of award exceeds the
amount of such Rent loss that Tenant proves could have been reasonably avoided;
(3) the worth at the time of award of the amount by which the unpaid Rent and
other amounts for the balance of the Term after the time of award exceeds the
amount of such Rent loss that the Tenant proves could be reasonably avoided; and
(4) any other amount and court costs 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. The "worth at the time of award" as used in (1) and (2) above
shall be computed at the Applicable Interest Rate (defined below). The "worth at
the time of award" as used in (3) above shall be computed by discounting such
amount at the Federal Discount Rate of the Federal Reserve Bank of San Francisco
at the time of award plus one percent (1%). If this Lease provides for any
periods during the Term during which Tenant is not required to pay Base Rent or
if Tenant otherwise receives a Rent concession, then upon the occurrence of an
event of default, Tenant shall owe to Landlord the full amount of such Base Rent
or value of such Rent concession, plus interest at the Applicable Interest Rate,
calculated from the date that such Base Rent or Rent concession would have been
payable.


                                       17
<PAGE>   18
D. LATE CHARGE. In addition to its other remedies, Landlord shall have the right
without notice or demand to add to the amount of any payment required to be made
by Tenant hereunder, and which is not paid and received by Landlord on or before
the first day of each calendar month, an amount equal to an amount equal to six
percent (6%) of the delinquent amount, or $150.00, whichever amount is greater,
for each month or portion thereof that the delinquency remains outstanding to
compensate Landlord for the loss of the use of the amount not paid and the
administrative costs caused by the delinquency, the parties agreeing that
Landlord's damage by virtue of such delinquencies would be extremely difficult
and impracticable to compute and the amount stated herein represents a
reasonable estimate thereof. Any waiver by Landlord of any late charges or
failure to claim the same shall not constitute a waiver of other late charges or
any other remedies available to Landlord.

E. INTEREST. Interest shall accrue on all sums not paid when due hereunder at
the lesser of ten percent (10%) per annum or the maximum interest rate allowed
by law ("APPLICABLE INTEREST RATE") from the due date until paid.

F. REMEDIES CUMULATIVE. All of Landlord's rights, privileges and elections or
remedies are cumulative and not alternative, to the extent permitted by law and
except as otherwise provided herein.

G. REPLACEMENT OF STATUTORY NOTICE REQUIREMENTS. When this Lease requires
service of a notice, that notice shall replace rather than supplement any
equivalent or similar statutory notice, including any notice required by
California Code of Civil Procedure Section 1161 or any similar or successor
statute. When a statute requires service of a notice in a particular manner,
service of that notice (or a similar notice required by this Lease) in the
manner required by this Paragraph 26 shall replace and satisfy the statutory
service-of-notice procedures, including those required by California Code of
Civil Procedure Section 1162 or any similar or successor statute.

                                   27. LIENS

Tenant shall at all times keep the Premises and the Project free from liens
arising out of or related to work or services performed, materials or supplies
furnished or obligations incurred by or on behalf of Tenant or in connection
with work made, suffered or done by or on behalf of Tenant in or on the Premises
or Project. If Tenant shall not, within ten (10) days following the imposition
of any such lien, cause the same to be released of record by payment or posting
of a proper bond, Landlord shall have, in addition to all other remedies
provided herein and by law, the right, but not the obligation, to cause the same
to be released by such means as Landlord shall deem proper, including payment of
the claim giving rise to such lien. All sums paid by Landlord on behalf of
Tenant and all expenses incurred by Landlord in connection therefor shall be
payable to Landlord by Tenant on demand with interest at the Applicable Interest
Rate as Additional Rent. Landlord shall have the right at all times to post and
keep posted on the Premises any notices permitted or required by law, or which
Landlord shall deem proper, for the protection of Landlord, the Premises, the
Project and any other party having an interest therein, from mechanics' and
materialmen's liens, and Tenant shall give Landlord not less than ten (10)
business days prior written notice of the commencement of any work in the
Premises or Project which could lawfully give rise to a claim for mechanics' or
materialmen's liens to permit Landlord to post and record a timely notice of
non-responsibility, as Landlord may elect to proceed or as the law may from time
to time provide, for which purpose, if Landlord shall so determine, Landlord may
enter the Premises. Tenant shall not remove any such notice posted by Landlord
without Landlord's consent, and in any event not before completion of the work
which could lawfully give rise to a claim for mechanics' or materialmen's liens.

                            28. INTENTIONALLY OMITTED

                            29. TRANSFERS BY LANDLORD

In the event of a sale or conveyance by Landlord of the Building or a
foreclosure by any creditor of Landlord, the same shall operate to release
Landlord from any liability upon any of the covenants or conditions, express or
implied, herein contained in favor of Tenant, to the extent required to be
performed after the passing of title to Landlord's successor-in-interest. In
such event, Tenant agrees to look solely to the responsibility of the
successor-in-interest of Landlord under this Lease with respect to the
performance of the covenants and duties of "Landlord" to be performed after the
passing of title to Landlord's successor-in-interest. This Lease shall not be
affected by any such sale and Tenant agrees to attorn to the purchaser or
assignee. Landlord's successor(s)-in-interest shall not have liability to Tenant
with respect to the failure to perform any of the obligations of "Landlord," to
the extent required to be performed prior to the date such
successor(s)-in-interest became the owner of the Building.

               30. RIGHT OF LANDLORD TO PERFORM TENANT'S COVENANTS

All covenants and agreements to be performed by Tenant under any of the terms of
this Lease shall be performed by Tenant at Tenant's sole cost and expense and
without any abatement of Rent. If Tenant shall fail to pay any sum of money,
other than Base Rent, required to be paid by Tenant hereunder or shall fail to
perform any other act on Tenant's part to be performed hereunder, including
Tenant's obligations under Paragraph 11 hereof, and such failure shall continue
for fifteen (15) days after notice thereof by Landlord, in addition to the other
rights and remedies of Landlord, Landlord may make any such payment and perform
any such act on Tenant's part. In the case of an emergency, no prior
notification by Landlord shall be required. Landlord may take such actions
without any obligation and without releasing Tenant from any of Tenant's
obligations. All sums so paid by Landlord and all incidental costs incurred by
Landlord and interest thereon at the Applicable Interest Rate, from the date of
payment by Landlord, shall be paid to Landlord on demand as Additional Rent.

                                   31. WAIVER

If either Landlord or Tenant waives the performance of any term, covenant or
condition contained in this Lease, such waiver shall not be deemed to be a
waiver of any subsequent breach of the same or any other term, covenant or
condition contained herein, or constitute a course of dealing contrary to the
expressed terms of this Lease. The acceptance of Rent by Landlord (including,
without limitation, through any "lockbox") shall not constitute a waiver of any
preceding breach by Tenant of any term, covenant or condition of this Lease,
regardless of Landlord's knowledge of such preceding breach at the time Landlord
accepted such Rent. Failure by Landlord to enforce any of the terms, covenants
or conditions of this Lease for any length of time shall not be deemed to waive
or decrease the right of Landlord to insist thereafter upon strict performance
by Tenant. Waiver by Landlord of any term, covenant or condition contained in
this Lease may only be made by a written document signed by Landlord, based upon
full knowledge of the circumstances.

                                   32. NOTICES

Each provision of this Lease or of any applicable governmental laws, ordinances,
regulations and other requirements with reference to sending, mailing, or
delivery of any notice or the making of any payment by Landlord or Tenant to the
other shall be deemed to be complied with when and if the following steps are
taken:

A. RENT. All Rent and other payments required to be made by Tenant to Landlord
hereunder shall be payable to Landlord at Landlord's Remittance Address set
forth in the Basic Lease Information, or at such other address as Landlord may
specify from time to time by written notice delivered in accordance herewith.
Tenant's obligation to pay Rent and any other amounts to Landlord under the
terms of this Lease shall not be deemed satisfied until such Rent and other
amounts have been actually received by Landlord.


                                       18
<PAGE>   19
B. OTHER. All notices, demands, consents and approvals which may or are required
to be given by either party to the other hereunder shall be in writing and
either personally delivered, sent by commercial overnight courier, mailed,
certified or registered, postage prepaid or sent by facsimile with confirmed
receipt (and with an original sent by commercial overnight courier), and in each
case addressed to the party to be notified at the Notice Address for such party
as specified in the Basic Lease Information or to such other place as the party
to be notified may from time to time designate by at least fifteen (15) days
notice to the notifying party. Notices shall be deemed served upon receipt or
refusal to accept delivery. Tenant appoints as its agent to receive the service
of all default notices and notice of commencement of unlawful detainer
proceedings the person in charge of or apparently in charge of occupying the
Premises at the time, and, if there is no such person, then such service may be
made by attaching the same on the main entrance of the Premises.

C. REQUIRED NOTICES. Upon learning of the following circumstances, Tenant shall
promptly notify Landlord in writing of any notice of a violation or a potential
or alleged violation of any Regulation that relates to the Premises or the
Project, or of any inquiry, investigation, enforcement or other action that is
instituted or threatened by any governmental or regulatory agency against Tenant
or any other occupant of the Premises, or any claim that is instituted or
threatened by any third party that relates to the Premises or the Project.

                               33. ATTORNEYS' FEES

If Landlord places the enforcement of this Lease, or any part thereof, or the
collection of any Rent due, or to become due hereunder, or recovery of
possession of the Premises in the hands of an attorney, Tenant shall pay to
Landlord, upon demand, Landlord's reasonable attorneys' fees and court costs,
whether incurred without trial, at trial, appeal or review. In any action which
Landlord or Tenant brings to enforce its respective rights hereunder, the
unsuccessful party shall pay all costs incurred by the prevailing party
including reasonable attorneys' fees, to be fixed by the court, and said costs
and attorneys' fees shall be a part of the judgment in said action.

                           34. SUCCESSORS AND ASSIGNS

This Lease shall be binding upon and inure to the benefit of Landlord, its
successors and assigns, and shall be binding upon and inure to the benefit of
Tenant, its successors, and to the extent assignment is approved by Landlord as
provided hereunder, Tenant's assigns.

                                35. FORCE MAJEURE

If performance by a party of any portion of this Lease is made impossible by any
prevention, delay, or stoppage caused by strikes, lockouts, labor disputes, acts
of God, inability to obtain services, labor, or materials or reasonable
substitutes for those items, government actions, civil commotions, fire or other
casualty, or other causes beyond the reasonable control of the party obligated
to perform, performance by that party for a period equal to the period of that
prevention, delay, or stoppage is excused. Tenant's obligation to pay Rent,
however, is not excused by this Paragraph 35.

                            36. SURRENDER OF PREMISES

Tenant shall, upon expiration or sooner termination of this Lease, surrender the
Premises to Landlord in the same condition as existed on the date Tenant
originally took possession thereof, reasonable wear and tear excepted,
including, but not limited to, all interior walls cleaned, all holes in walls
repaired and all floors cleaned, waxed, and free of any Tenant-introduced
marking or painting, all to the reasonable satisfaction of Landlord. Tenant
shall remove all of its debris from the Project. At or before the time of
surrender, Tenant shall comply with the terms of Paragraph 12.A. hereof with
respect to Alterations to the Premises and all other matters addressed in such
Paragraph. If the Premises are not so surrendered at the expiration or sooner
termination of this Lease, the provisions of Paragraph 25 hereof shall apply.
All keys to the Premises or any part thereof shall be surrendered to Landlord
upon expiration or sooner termination of the Term. Tenant shall give written
notice to Landlord at least thirty (30) days prior to vacating the Premises and
shall meet with Landlord for a joint inspection of the Premises at the time of
vacating at a mutually agreeable time, but nothing contained herein shall be
construed as an extension of the Term or as a consent by Landlord to any holding
over by Tenant. In the event of Tenant's failure to participate in such joint
inspection, Landlord's inspection at or after Tenant's vacating the Premises
shall conclusively be deemed correct for purposes of determining Tenant's
responsibility for repairs and restoration. Any delay caused by Tenant's failure
to carry out its obligations under this Paragraph 36 beyond the term hereof,
shall constitute unlawful and illegal possession of Premises under Paragraph 25
hereof.

                                   37. PARKING

    So long as Tenant is occupying the Premises, Tenant and Tenant's Parties
shall have the right to use up to the number of parking spaces specified in the
Basic Lease Information on an unreserved, nonexclusive, first come, first served
basis, for passenger-size automobiles, in the parking areas in the Project
designated from time to time by Landlord for use in common by tenants of the
Building. The parking rights granted under this Paragraph 37 are personal to
Tenant and are not transferable except: (i) pursuant to the terms of a sublease
or assignment which expressly transfers such parking rights and which has been
approved in writing by Landlord in accordance with the terms of this Lease, (ii)
a Permitted Transfer, provided that Tenant notify Landlord in writing of such
transfer of parking privileges, or (iii) with the express written consent of
Landlord which consent shall be granted in Landlord's sole discretion.

    Tenant may request additional parking spaces from time to time and if
Landlord in its sole discretion agrees to make such additional spaces available
for use by Tenant, such spaces shall be provided on a month-to-month unreserved
and nonexclusive basis (unless otherwise agreed in writing by Landlord), and
subject to such parking charges as Landlord shall determine, and shall otherwise
be subject to such terms and conditions as Landlord may require.

    Tenant shall at all times comply and shall cause all Tenant's Parties and
visitors to comply with all Regulations and any rules and regulations
established from time to time by Landlord relating to parking at the Project,
including any keycard, sticker or other identification or entrance system, and
hours of operation, as applicable.

    Landlord shall have no liability for any damage to property or other items
located in the parking areas of the Project, nor for any personal injuries or
death arising out of the use of parking areas in the Project by Tenant or any
Tenant's Parties. Without limiting the foregoing, if Landlord arranges for the
parking areas to be operated by an independent contractor not affiliated with
Landlord, Tenant acknowledges that Landlord shall have no liability for claims
arising through acts or omissions of such independent contractor. In all events,
Tenant agrees to look first to its insurance carrier and to require that
Tenant's Parties look first to their respective insurance carriers for payment
of any losses sustained in connection with any use of the parking areas.

    Landlord reserves the right to assign specific spaces, and to reserve spaces
for visitors, small cars, disabled persons or for other tenants or guests, and
Tenant shall not park and shall not allow Tenant's Parties to park in any such
assigned or reserved spaces. Tenant may validate visitor parking by such method
as Landlord may approve, at the validation rate from time to time generally
applicable to visitor parking. Landlord also reserves the right to alter,
modify, relocate or close all or any portion of the parking areas in order to
make repairs or perform maintenance service, or to restripe or renovate the
parking areas, or if required by casualty, condemnation (subject to Tenant's
right of termination provided in Paragraph 23 hereof), act of God, Regulations
or for any other reason deemed reasonable by Landlord.


                                       19
<PAGE>   20
    After the initial Term hereof, Tenant shall pay to Landlord (or Landlord's
parking contractor, if so directed in writing by Landlord), as Additional Rent
hereunder, the monthly charges established from time to time by Landlord for
parking in such parking areas (which shall initially be the charge specified in
the Basic Lease Information, as applicable). Tenant shall pay to Landlord as
Additional Rent hereunder, the monthly charge established by Landlord then in
effect for any reserved parking spaces requested by Tenant and granted by
Landlord, if any. Landlord shall have no obligation to provide such reserved
parking to Tenant during the Term hereof or any extension hereto. Such parking
charges shall be payable in advance with Tenant's payment of Basic Rent. No
deductions from the monthly parking charge shall be made for days on which the
Tenant does not use any of the parking spaces entitled to be used by Tenant.

                                38. MISCELLANEOUS

A. GENERAL. The term "Tenant" or any pronoun used in place thereof shall
indicate and include the masculine or feminine, the singular or plural number,
individuals, firms or corporations, and their respective successors, executors,
administrators and permitted assigns, according to the context hereof.

B. TIME. Time is of the essence regarding this Lease and all of its provisions.

C. CHOICE OF LAW. This Lease shall in all respects be governed by the laws of
the State of California.

D. ENTIRE AGREEMENT. This Lease, together with its Exhibits, addenda and
attachments and the Basic Lease Information, contains all the agreements of the
parties hereto and supersedes any previous negotiations. There have been no
representations made by the Landlord or understandings made between the parties
other than those set forth in this Lease and its Exhibits, addenda and
attachments and the Basic Lease Information.

E. MODIFICATION. This Lease may not be modified except by a written instrument
signed by the parties hereto. Tenant accepts the area of the Premises as
specified in the Basic Lease Information as the approximate area of the Premises
for all purposes under this Lease, and acknowledges and agrees that no other
definition of the area (rentable, usable or otherwise) of the Premises shall
apply. Tenant shall in no event be entitled to a recalculation of the square
footage of the Premises, rentable, usable or otherwise, and no recalculation, if
made, irrespective of its purpose, shall reduce Tenant's obligations under this
Lease in any manner, including without limitation the amount of Base Rent
payable by Tenant or Tenant's Proportionate Share of the Building and of the
Project.

F. SEVERABILITY. If, for any reason whatsoever, any of the provisions hereof
shall be unenforceable or ineffective, all of the other provisions shall be and
remain in full force and effect.

G. RECORDATION. Tenant shall not record this Lease or a short form memorandum
hereof.

H. EXAMINATION OF LEASE. Submission of this Lease to Tenant does not constitute
an option or offer to lease and this Lease is not effective otherwise until
execution and delivery by both Landlord and Tenant.

I. ACCORD AND SATISFACTION. No payment by Tenant of a lesser amount than the
total Rent due nor any endorsement on any check or letter accompanying any check
or payment of Rent shall be deemed an accord and satisfaction of full payment of
Rent, and Landlord may accept such payment without prejudice to Landlord's right
to recover the balance of such Rent or to pursue other remedies. All offers by
or on behalf of Tenant of accord and satisfaction are hereby rejected in
advance.

J. EASEMENTS. Landlord may grant easements on the Project and dedicate for
public use portions of the Project without Tenant's consent; provided that no
such grant or dedication shall materially interfere with Tenant's Permitted Use
of the Premises. Upon Landlord's request, Tenant shall execute, acknowledge and
deliver to Landlord documents, instruments, maps and plats necessary to
effectuate Tenant's covenants hereunder.

K. DRAFTING AND DETERMINATION PRESUMPTION. The parties acknowledge that this
Lease has been agreed to by both the parties, that both Landlord and Tenant have
consulted with attorneys with respect to the terms of this Lease and that no
presumption shall be created against Landlord because Landlord drafted this
Lease. Except as otherwise specifically set forth in this Lease, with respect to
any consent, determination or estimation of Landlord required or allowed in this
Lease or requested of Landlord, Landlord's consent, determination or estimation
shall be given or made solely by Landlord in Landlord's good faith opinion,
whether or not objectively reasonable. If Landlord fails to respond to any
request for its consent within the time period, if any, specified in this Lease,
Landlord shall be deemed to have disapproved such request, except as otherwise
expressly provided in this Lease.

L. EXHIBITS. The Basic Lease Information, and the Exhibits, addenda and
attachments attached hereto are hereby incorporated herein by this reference and
made a part of this Lease as though fully set forth herein.

M. NO LIGHT, AIR OR VIEW EASEMENT. Any diminution or shutting off of light, air
or view by any structure which may be erected on lands adjacent to or in the
vicinity of the Building shall in no way affect this Lease or impose any
liability on Landlord.

N. NO THIRD PARTY BENEFIT. This Lease is a contract between Landlord and Tenant
and nothing herein is intended to create any third party benefit.

O. QUIET ENJOYMENT. Upon payment by Tenant of the Rent, and upon the observance
and performance of all of the other covenants, terms and conditions on Tenant's
part to be observed and performed, Tenant shall peaceably and quietly hold and
enjoy the Premises for the term hereby demised without hindrance or interruption
by Landlord or any other person or persons lawfully or equitably claiming by,
through or under Landlord, subject, nevertheless, to all of the other terms and
conditions of this Lease. Landlord shall not be liable for any hindrance,
interruption, interference or disturbance by other tenants or third persons, nor
shall Tenant be released from any obligations under this Lease because of such
hindrance, interruption, interference or disturbance.

P. COUNTERPARTS. This Lease may be executed in any number of counterparts, each
of which shall be deemed an original.

Q. MULTIPLE PARTIES. If more than one person or entity is named herein as
Tenant, such multiple parties shall have joint and several responsibility to
comply with the terms of this Lease.

R. PRORATIONS. Any Rent or other amounts payable to Landlord by Tenant hereunder
for any fractional month shall be prorated based on a month of 30 days. As used
herein, the term "fiscal year" shall mean the calendar year or such other fiscal
year as Landlord may deem appropriate.


                                       20
<PAGE>   21
                            39. ADDITIONAL PROVISIONS


A. RENT.

Subject to the provisions of Paragraphs 2.B, Base Rent, net of Operating
Expenses per Paragraph 7 of this Lease, for the Premises shall be as follows:

<TABLE>
<S>                                          <C>
From the Term Commencement Date through      $516,159.00 per month plus operating expenses per Paragraph 7 of
the end of the twelfth (12th) month          this Lease. Operating Expenses for calendar year 2000 are
following the Term Commencement Date:        estimated to be $183,289.00 per month.


Month 13 following the Term                  $531,643.00 per month plus operating expenses per Paragraph 7 of
Commencement Date through Month 24:          this Lease

Month 25 following the Term                  $547,593.00 per month plus operating expenses per Paragraph 7 of
Commencement Date through Month 36:          this Lease.

Month 37 following the Term                  $564,020.00 per month plus operating expenses per Paragraph 7 of
Commencement Date through Month 48:          this Lease.

Month 49 following the Term                  $580,941.00 per month plus operating expenses per Paragraph 7
of Commencement Date through Month 60:       this Lease.

Month 61 following the Term                  $598,369.00 per month plus operating expenses per Paragraph 7 of
Commencement Date through Month 72:          this Lease.

Month 73 following the Term                  $616,320.00 per month plus operating  expenses per Paragraph 7 of
Commencement Date through Month 84:          this Lease.

Month 84 following the Term                  $634,810.00 per month plus operating expenses per Paragraph 7 of
Commencement Date through Month 96:          this Lease.

Month 97 following the Term                  $653,854.00 per month plus operating expenses per Paragraph 7 of
Commencement Date through Month 108:         this Lease

Month 109 following the Term                 $673,470.00 per month plus operating expenses per Paragraph 7 of
Commencement Date through Month 120:         this Lease.
</TABLE>



B. EARLY ACCESS. Provided that Tenant does not interfere whatsoever with the
construction of the Base Building Work (each as described in EXHIBIT C hereto),
Landlord shall provide access to Tenant to the Premises on March 15, 2000,
during normal business hours after reasonable prior notice to Landlord for
purposes of installing furniture, fixtures and equipment (including network
cabling and telecommunications equipment to the extent such installation is
approved by Landlord in writing) and to commence construction of the Tenant
Improvements therein in the Premises, with all terms and conditions of this
Lease in full force and effect, excluding payment of Rent and Operating
Expenses. Any interference by Tenant or any of Tenant's Parties with the
construction of the Base Building Work shall constitute a Tenant Delay as
defined in EXHIBIT C and shall constitute a delay by Tenant for purposes of
Paragraph 3 hereof. Landlord and Tenant shall each reasonably cooperate with the
other to attempt to reasonably coordinate their respective construction
schedules to accommodate the early access by Tenant contemplated by this
Paragraph 39.B.

C. OPTION TO RENEW. Tenant shall, provided this Lease is in full force and
effect and Tenant is not and has not been in default under any of the terms and
conditions of this Lease, have two (2) successive options to renew this Lease
for a term of five (5) years each, for the Premises in "as is" condition and on
the same terms and conditions set forth in this Lease, except as modified by the
terms, covenants and conditions set forth below:

        (1)    If Tenant elects to exercise such option, then Tenant shall
               provide Landlord with written notice no earlier than the date
               which is Two Hundred Seventy (270) days prior to the expiration
               of the then current term of this Lease, but no later than 5:00
               p.m. (Pacific Standard Time) on the date which is one hundred
               eighty (180) days prior to the expiration of the then current
               term of this Lease. If Tenant fails to provide such notice,
               Tenant shall have no further or additional right to extend or
               renew the term of this Lease.

        (2)    The Base Rent in effect at the expiration of the then current
               term of this Lease shall be increased to reflect the current fair
               market rental for comparable space in the Building or Project and
               in other similar buildings in the same rental market as of the
               date the renewal term is to commence, taking into account the
               specific provisions of this Lease which will remain constant, and
               the Building amenities, location, identity, quality, age,
               conditions, term of lease, tenant improvements, services
               provided, and other pertinent items.

        (3)    Landlord shall advise Tenant of the new Base Rent for the
               Premises for the applicable renewal term which will be based on
               Landlord's determination of fair market rental value no later
               than fifteen (15) days after receipt of notice of Tenant's
               exercise of its option to renew. Tenant shall have forty-five
               (45) days after receipt of such notification from Landlord to
               accept the new Base Rent. If Tenant does not accept Landlord's
               determination of the new Base Rent within such forty-five (45)
               day period, this option shall be null and void, and Landlord
               shall have no further obligation to Tenant and may enter into a
               lease for the Premises with a third party on such terms and
               conditions as Landlord may determine in its sole discretion.

        (4)    Notwithstanding anything to the contrary contained in this
               Paragraph, in no event shall the Base Rent for any renewal term
               be less than the Base Rent in effect at the expiration of the
               previous term. In addition, Landlord shall have no obligation to
               provide or pay for any tenant improvements or brokerage
               commissions during any renewal term.

        (5)    Tenant's right to exercise any options to renew under this
               Paragraph shall be conditioned upon Tenant occupying the entire
               Premises and the same not being occupied by any assignee,
               subtenant or licensee other than Tenant or its affiliate at the
               time of exercise of any option and commencement of the renewal
               term. Tenant's exercise of any option to renew shall constitute a
               representation by Tenant to Landlord that as of the date of
               exercise of the option and the


                                       21
<PAGE>   22
               commencement of the applicable renewal term, Tenant does not
               intend to seek to assign this Lease in whole or in part, or
               sublet all or any portion of the Premises.

        (6)    Any exercise by Tenant of any option to renew under this
               Paragraph shall be irrevocable. If requested by Landlord, Tenant
               agrees to execute a lease amendment or, at Landlord's option, a
               new lease agreement on Landlord's then standard lease form for
               the Building reflecting the foregoing terms and conditions (which
               new lease form shall be reasonably acceptable to Tenant and shall
               provide to Tenant the benefit of its bargain contained herein),
               prior to the commencement of the renewal term. The options to
               renew granted under this Paragraph are not transferable; the
               parties hereto acknowledge and agree that they intend that each
               option to renew this Lease under this Paragraph shall be
               "personal" to the specific Tenant named in this Lease and that in
               no event will any assignee or sublessee have any rights to
               exercise such options to renew.

        (7)    If more than one renewal option is provided above, the exercise
               of each renewal option shall be contingent upon Tenant exercising
               the prior renewal option. Only one renewal option may be
               exercised at a time. As each renewal option provided for above is
               exercised, the number of renewal options remaining to be
               exercised is reduced by one and upon exercise of the last
               remaining renewal option Tenant shall have no further right to
               extend the term of this Lease.

D. TEMPORARY PREMISES.

        (1)    PHASE I TEMPORARY PREMISES. Prior to delivery by Landlord to
               Tenant of the Phase II Temporary Premises and the Premises,
               Landlord shall deliver to Tenant possession of the premises
               depicted on EXHIBIT D, attached hereto (the "PHASE I TEMPORARY
               PREMISES"), which Phase I Temporary Premises comprise
               approximately seven thousand eight hundred sixty-four (7,864)
               rentable square feet. The terms and conditions of this Lease
               shall apply to Tenant's possession and use of the Phase I
               Temporary Premises; provided, however, that Rent due and payable
               commencing on the Phase I Temporary Premises Term Commencement
               Date (as defined herein) through the date Tenant surrenders
               possession of the Phase I Temporary Premises to Landlord as
               provided herein shall be an amount equal to Twenty-Three Thousand
               Five Hundred Ninety-two and No/100 ($23,592.00) per month. If the
               obligation for payment of Base Rent for the Phase I Temporary
               Premises commences on a day other than the first day of a month,
               then such Base Rent shall be prorated and the prorated
               installment shall be paid on the first day of the calendar month
               next succeeding the Phase I Temporary Premises Term Commencement
               Date (as defined herein). The term commencement date ("PHASE I
               TEMPORARY PREMISES TERM COMMENCEMENT DATE") with respect to the
               Phase I Temporary Premises shall be the date Landlord delivers
               possession of the Phase I Temporary Premises to Tenant. Landlord
               hereby agrees to install Phase I Temporary Premises Building
               standard carpeting in the Phase I Temporary Premises prior to
               January 1, 2000. By taking possession of the Phase I Temporary
               Premises, Tenant accepts them "as is," as being in good order,
               condition and repair and the condition in which Landlord is
               obligated to deliver them and suitable for the Permitted Use
               (with respect to the Phase I Temporary Premises) and Tenant's
               intended operations in the Phase I Temporary Premises, whether or
               not any notice of acceptance is given. Landlord shall make
               commercially reasonable efforts to deliver possession of the
               Phase I Temporary Premises to Tenant on or before January 1,
               2000. Tenant's taking of possession of the Phase I Temporary
               Premises or any part thereof shall constitute Tenant's
               confirmation of substantial completion thereof for all purposes
               hereof. If for any reason Landlord cannot deliver possession of
               the Phase I Temporary Premises to Tenant on the scheduled Phase I
               Temporary Premises Term Commencement Date, Landlord shall not be
               subject to any liability therefor, nor shall Landlord be in
               default hereunder nor shall such failure affect the validity of
               this Lease, and unless the Premises have been delivered to
               Tenant, Tenant agrees to accept possession of the Phase I
               Temporary Premises at such time as such improvements have been
               substantially completed, which date shall then be deemed the
               Phase I Temporary Premises Term Commencement Date. Within thirty
               (30) days following substantial completion of the Tenant
               Improvements (as defined in EXHIBIT C hereto), Tenant shall
               surrender possession of the Temporary Premises in accordance with
               Paragraph 36 hereof.

        (2)    PHASE II TEMPORARY PREMISES. Prior to delivery by Landlord to
               Tenant of the Premises, Landlord shall deliver to Tenant
               possession of the premises depicted on EXHIBIT E, attached hereto
               (the "PHASE II TEMPORARY PREMISES"), which Phase II Temporary
               Premises comprise approximately thirty-nine thousand forty-three
               (39,043) rentable square feet. The terms and conditions of this
               Lease shall apply to Tenant's possession and use of the Phase II
               Temporary Premises; provided, however, that Base Rent due and
               payable commencing on the Phase II Temporary Premises Term
               Commencement Date (as defined herein) through the date Tenant
               surrenders possession of the Phase II Temporary Premises to
               Landlord as provided herein shall be an amount equal to
               Ninety-Five Thousand Six Hundred Fifty-Five and 35/100
               ($95,655.35) per month. If the obligation for payment of Base
               Rent for the Phase II Temporary Premises commences on a day other
               than the first day of a month, then such Base Rent shall be
               prorated and the prorated installment shall be paid on the first
               day of the calendar month next succeeding the Phase II Temporary
               Premises Term Commencement Date (as defined herein). The term
               commencement date ("PHASE II TEMPORARY PREMISES TERM COMMENCEMENT
               DATE") with respect to the Phase II Temporary Premises shall be
               the date Landlord delivers possession of the Phase II Temporary
               Premises. On or about January 31, 2000, Landlord shall provide to
               Tenant a written description of the tenant improvements to be
               constructed by Landlord in the Phase II Temporary Premises. By
               taking possession of the Phase II Temporary Premises, Tenant
               accepts them "as is," as being in good order, condition and
               repair and the condition in which Landlord is obligated to
               deliver them and suitable for the Permitted Use (with respect to
               the Phase II Temporary Premises) and Tenant's intended operations
               in the Phase II Temporary Premises, whether or not any notice of
               acceptance is given. Landlord shall make commercially reasonable
               efforts to deliver possession of the Phase II Temporary Premises
               to Tenant on or before April 1, 2000. Tenant's taking of
               possession of the Phase II Temporary Premises or any part thereof
               shall constitute Tenant's confirmation of substantial completion
               thereof for all purposes hereof, whether or not substantial
               completion of the Phase II Temporary Premises Building or Project
               shall have occurred. If for any reason Landlord cannot deliver
               possession of the Phase II Temporary Premises to Tenant on the
               scheduled Phase II Temporary Premises Term Commencement Date,
               Landlord shall not be subject to any liability therefor, nor
               shall Landlord be in default hereunder nor shall such failure
               affect the validity of this Lease, and unless the Phase II
               Temporary Premises have been delivered to Tenant, Tenant agrees
               to accept possession of the Phase II Temporary Premises at such
               time as such improvements have been substantially completed,
               which date shall then be deemed the Phase II Temporary Premises
               Term Commencement Date. Tenant shall not be liable for any Rent
               for any period prior to the Phase II Temporary Premises Term
               Commencement Date (but without affecting any obligations of
               Tenant under any improvement agreement appended to this Lease).
               In the event of any dispute as to substantial completion of work
               performed or required to be performed by Landlord with respect to
               the Phase II Temporary Premises, the certificate of Landlord's
               architect or general contractor shall be conclusive. Within
               thirty (30) days following substantial completion of the Tenant
               Improvements (as defined in EXHIBIT C hereto), Tenant shall
               surrender possession of the Phase II Temporary Premises in
               accordance with Paragraph 36 hereof.

E. LETTER OF CREDIT.

        (1)    DELIVERY OF LETTER OF CREDIT. In lieu of depositing a security
               deposit with Landlord, Tenant shall, on execution of this Lease,
               deliver to Landlord and cause to be in effect during the Lease
               Term an unconditional, irrevocable letter of credit


                                       22
<PAGE>   23
               ("LOC") in the amount specified for the Security Deposit in the
               Basic Lease Information, as it may be increased as provided in
               this Lease (the "LOC AMOUNT") for an initial term of the LOC of
               three (3) years and thereafter shall renew automatically from
               year to year through 30 days beyond the expiration date of this
               Lease or any extension thereto. The LOC shall be in a form
               acceptable to Landlord and shall be issued by an LOC bank
               selected by Tenant and acceptable to Landlord. The text of the
               LOC shall expressly state that the LOC shall survive the
               termination of this Lease. An LOC bank is a bank that accepts
               deposits, maintains accounts, has a local office that will
               negotiate a letter of credit, and the deposits of which are
               insured by the Federal Deposit Insurance Corporation. Tenant
               shall pay all expenses, points, or fees incurred by Tenant in
               obtaining the LOC. The LOC shall not be mortgaged, assigned or
               encumbered in any manner whatsoever by Tenant without the prior
               written consent of Landlord. Tenant acknowledges that Landlord
               has the right to transfer or mortgage its interest in the
               Project, the Building and in this Lease and Tenant agrees that in
               the event of any such transfer or mortgage, Landlord shall have
               the right to transfer or assign the LOC and/or the LOC Security
               Deposit (as defined below) to the transferee or mortgagee, and in
               the event of such transfer, Tenant shall look solely to such
               transferee or mortgagee for the return of the LOC and/or the LOC
               Security Deposit. The maximum amount of any transfer fee
               associated with such transfer shall not be in excess of
               reasonable transfer fees customarily required by issuing banks,
               which about shall be expressly stated in the terms of the LOC,
               and shall be payable by Landlord.

        (2)    REPLACEMENT OF LETTER OF CREDIT. Tenant may, from time to time,
               replace any existing LOC with a new LOC if the new LOC (a)
               becomes effective at least thirty (30) days before expiration of
               the LOC that it replaces; (b) is in the required LOC amount; (c)
               is issued by an LOC bank acceptable to Landlord; and (d)
               otherwise complies with the requirements of this Paragraph 39.E.

        (3)    LANDLORD'S RIGHT TO DRAW ON LETTER OF CREDIT. Landlord shall hold
               the LOC as security for the performance of Tenant's obligations
               under this Lease. If, after notice and failure to cure within any
               applicable period provided in this Lease, Tenant is in default
               pursuant to this Lease, Landlord may, without prejudice to any
               other remedy it has, draw on that portion of the LOC necessary to
               (a) pay Rent or other sum in default; (b) pay or reimburse
               Landlord for any amount that Landlord may spend or become
               obligated to spend in exercising Landlord's rights under
               Paragraph 30 (Right of Landlord to Perform Tenant's Covenant);
               and/or (c) compensate Landlord for any expense, loss, or damage
               that Landlord may suffer because of Tenant's default. If Tenant
               fails to renew or replace the LOC at least thirty (30) days
               before its expiration, Landlord may, without prejudice to any
               other remedy it has, draw on the entire amount of the LOC.

        (4)    LOC SECURITY DEPOSIT. Any amount of the LOC that is drawn on by
               Landlord but not applied by Landlord shall be held by Landlord as
               a security deposit (the "LOC SECURITY DEPOSIT") in accordance
               with Paragraph 19 of this Lease.

        (5)    RESTORATION OF LETTER OF CREDIT AND LOC SECURITY DEPOSIT. If
               Landlord draws on any portion of the LOC and/or applies all or
               any portion of such draw, Tenant shall, within five (5) business
               days after demand by Landlord, either (a) deposit cash with
               Landlord in an amount that, when added to the amount remaining
               under the LOC and the amount of any LOC Security Deposit, shall
               equal the LOC Amount then required under this Paragraph 39.E; or
               (b) reinstate the LOC to the full LOC Amount.

        (6)    REDUCTION OF LETTER OF CREDIT. At least fifteen (15) business
               days prior to the dates specified in each of clauses a. through
               d. below, Tenant shall deliver to Landlord for review Tenant's
               financial statements prepared in accordance with generally
               accepted accounting principles and audited by a nationally
               recognized public accounting firm acceptable to Landlord, and any
               other financial information requested by Landlord ("TENANT'S
               FINANCIAL INFORMATION") If: (i) Tenant has a tangible net worth,
               which "tangible net worth" shall be determined by Landlord in its
               sole discretion and shall mean assets less intangible assets and
               total liabilities, with intangible asserts including nonmaterial
               benefits such as goodwill, patents, copyrights, and trademarks,
               in excess of One Hundred Seventy five Million and No/100 Dollars
               ($175,000,000.00) as reflected in Tenant's Financial Information,
               which amount shall be determined by Landlord to its satisfaction
               prior to any reduction in the LOC Amount; and (ii) Tenant's
               Financial Information reflects four (4) consecutive calendar
               quarters of profitability, as determined by Landlord, during the
               time period immediately preceding Tenant's request for reduction
               in the LOC Amount described in this subparagraph during the time
               period immediately preceding Tenant's request for reduction in
               the LOC Amount, as such profitability is determined by Landlord,
               then the following reductions in the LOC Amount may be made in
               accordance with the terms of this Paragraph 39.E(6):


                      a.     At any time after the end of the thirty-sixth
                             (36th) month following the Term Commencement Date,
                             the LOC Amount may be reduced to an amount equal to
                             Four Million Six Hundred Forty-Five Thousand Four
                             Hundred Twenty Eight and No/100 Dollars
                             ($4,645,428.00);

                      b.     At any time after the end of the forty-eighth
                             (48th) month following the Term Commencement Date,
                             the LOC Amount may be reduced to an amount equal to
                             Three Million Ninety-Six Thousand Nine Hundred
                             Fifty-Two and No/100 Dollars ($3,960,952.00);

                      c.     At any time after the end of the sixtieth (60th)
                             month following the Term Commencement Date, the LOC
                             Amount may be reduced to an amount equal to One
                             Million Five Hundred Forty-Eight Thousand Four
                             Hundred Seventy-Six and No/100 Dollars
                             ($1,548,476.00);

                      d.     At any time after the end of the seventy-second
                             (72nd) month following the Term Commencement Date,
                             the LOC may be returned by Landlord to the issuing
                             bank for cancellation provided that Tenant has,
                             prior to such delivery by Landlord, delivered a
                             cash security Deposit (to be held by Landlord in
                             accordance with the terms of Paragraph 19 of this
                             Lease) an amount equal to Eight Hundred Fifty-Six
                             Thousand Seven Hundred Fifty-Nine and No/100
                             Dollars ($856,759.00).

               In the event that any of the above described reductions to the
               LOC Amount is made and, subsequently, Tenant fails to meet the
               corresponding profitability and tangible net worth condition
               precedent for a period of thirty (30) days following delivery by
               Landlord of written notice of any such failure, Tenant shall
               within two (2) business days, increase the face amount of the LOC
               to an amount equal to the LOC Amount existing prior to such
               reduction (including the reduction described in clause d. above).
               If Tenant fails to increase the LOC Amount as provided above,
               such failure shall constitute a default hereunder (which default
               shall not be subject to any cure rights afforded anywhere in this
               Lease and Landlord shall be entitled to draw on the LOC for the
               full LOC Amount and hold such


                                       23
<PAGE>   24
               LOC Amount as a Security Deposit in accordance with the terms of
               this Lease, and enforce all other rights available to Landlord
               pursuant to the terms of this Lease or under applicable law.

                              40. JURY TRIAL WAIVER

EACH PARTY HERETO (WHICH INCLUDES ANY ASSIGNEE, SUCCESSOR HEIR OR PERSONAL
REPRESENTATIVE OF A PARTY) SHALL NOT SEEK A JURY TRIAL, HEREBY WAIVES TRIAL BY
JURY, AND HEREBY FURTHER WAIVES ANY OBJECTION TO VENUE IN THE COUNTY IN WHICH
THE BUILDING IS LOCATED, AND AGREES AND CONSENTS TO PERSONAL JURISDICTION OF THE
COURTS OF THE STATE IN WHICH THE PROPERTY IS LOCATED, IN ANY ACTION OR
PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO AGAINST THE OTHER ON ANY
MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, THE
RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S USE OR OCCUPANCY OF THE PREMISES,
OR ANY CLAIM OF INJURY OR DAMAGE, OR THE ENFORCEMENT OF ANY REMEDY UNDER ANY
STATUTE, EMERGENCY OR OTHERWISE, WHETHER ANY OF THE FOREGOING IS BASED ON THIS
LEASE OR ON TORT LAW. EACH PARTY REPRESENTS THAT IT HAS HAD THE OPPORTUNITY TO
CONSULT WITH LEGAL COUNSEL CONCERNING THE EFFECT OF THIS PARAGRAPH 40. THE
PROVISIONS OF THIS PARAGRAPH 40 SHALL SURVIVE THE EXPIRATION OR EARLIER
TERMINATION OF THIS LEASE.



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


                             LANDLORD

                             Spieker Properties, L.P.,
                             a California limited partnership

                             By: Spieker Properties, Inc.,
                                 a Maryland corporation,
                                 its general partner


                                 By:____________________________________________
                                    John W. Petersen
                                    Its: Vice President

                             Date: December 17, 1999

                             TENANT

                             Brocade Communications Systems, Inc.,
                             a Delaware corporation


                             By: _______________________________________________
                                 Michael J. Byrd
                                 Its: Vice President, Finance, and
                                      Chief Financial Officer

                             Date: December 17, 1999


                             By: _______________________________________________
                                 Mr. Victor Rinkle,
                                 Its: Vice President, Operations

                             Date: December 17, 1999




                                       24
<PAGE>   25
                                    EXHIBIT A
                              RULES AND REGULATIONS


1.  Driveways, sidewalks, halls, passages, exits, entrances, elevators,
    escalators and stairways shall not be obstructed by tenants or used by
    tenants for any purpose other than for ingress to and egress from their
    respective premises. The driveways, sidewalks, halls, passages, exits,
    entrances, elevators and stairways are not for the use of the general public
    and Landlord shall in all cases retain the right to control and prevent
    access thereto by all persons whose presence, in the judgment of Landlord,
    shall be prejudicial to the safety, character, reputation and interests of
    the Building, the Project and its tenants, provided that nothing herein
    contained shall be construed to prevent such access to persons with whom any
    tenant normally deals in the ordinary course of such tenant's business
    unless such persons are engaged in illegal activities. No tenant, and no
    employees or invitees of any tenant, shall go upon the roof of any Building,
    except as authorized by Landlord. No tenant, and no employees or invitees of
    any tenant shall move any common area furniture without Landlord's consent.

2.  No sign, placard, banner, picture, name, advertisement or notice, visible
    from the exterior of the Premises or the Building or the common areas of the
    Building shall be inscribed, painted, affixed, installed or otherwise
    displayed by Tenant either on its Premises or any part of the Building or
    Project without the prior written consent of Landlord in Landlord's sole and
    absolute discretion. Landlord shall have the right to remove any such sign,
    placard, banner, picture, name, advertisement, or notice without notice to
    and at the expense of Tenant, which were installed or displayed in violation
    of this rule. If Landlord shall have given such consent to Tenant at any
    time, whether before or after the execution of Tenant's Lease, such consent
    shall in no way operate as a waiver or release of any of the provisions
    hereof or of the Lease, and shall be deemed to relate only to the particular
    sign, placard, banner, picture, name, advertisement or notice so consented
    to by Landlord and shall not be construed as dispensing with the necessity
    of obtaining the specific written consent of Landlord with respect to any
    other such sign, placard, banner, picture, name, advertisement or notice.

All approved signs or lettering on doors and walls shall be printed, painted,
    affixed or inscribed at the expense of Tenant by a person or vendor approved
    by Landlord and shall be removed by Tenant at the time of vacancy at
    Tenant's expense.

3.  The directory of the Building or Project will be provided exclusively for
    the display of the name and location of tenants only and Landlord reserves
    the right to charge for the use thereof and to exclude any other names
    therefrom.

4.  No curtains, draperies, blinds, shutters, shades, screens or other
    coverings, awnings, hangings or decorations shall be attached to, hung or
    placed in, or used in connection with, any window or door on the Premises
    without the prior written consent of Landlord. In any event with the prior
    written consent of Landlord, all such items shall be installed inboard of
    Landlord's standard window covering and shall in no way be visible from the
    exterior of the Building. All electrical ceiling fixtures hung in offices or
    spaces along the perimeter of the Building must be fluorescent or of a
    quality, type, design, and bulb color approved by Landlord. No articles
    shall be placed or kept on the window sills so as to be visible from the
    exterior of the Building. No articles shall be placed against glass
    partitions or doors which Landlord considers unsightly from outside Tenant's
    Premises.

5.  Landlord reserves the right to exclude from the Building and the Project,
    between the hours of 6 p.m. and 8 a.m. and at all hours on Saturdays,
    Sundays and legal holidays, all persons who are not tenants or their
    accompanied guests in the Building. Each tenant shall be responsible for all
    persons for whom it allows to enter the Building or the Project and shall be
    liable to Landlord for all acts of such persons.

Landlord and its agents shall not be liable for damages for any error concerning
    the admission to, or exclusion from, the Building or the Project of any
    person.

During the continuance of any invasion, mob, riot, public excitement or other
    circumstance rendering such action advisable in Landlord's opinion, Landlord
    reserves the right (but shall not be obligated) to prevent access to the
    Building and the Project during the continuance of that event by any means
    it considers appropriate for the safety of tenants and protection of the
    Building, property in the Building and the Project.

6.  All cleaning and janitorial services for the Building and the Premises shall
    be provided exclusively through Landlord. Except with the written consent of
    Landlord, no person or persons other than those approved by Landlord shall
    be permitted to enter the Building for the purpose of cleaning the same.
    Tenant shall not cause any unnecessary labor by reason of Tenant's
    carelessness or indifference in the preservation of good order and
    cleanliness of its Premises. Landlord shall in no way be responsible to
    Tenant for any loss of property on the Premises, however occurring, or for
    any damage done to Tenant's property by the janitor or any other employee or
    any other person.

7.  Tenant shall see that all doors of its Premises are closed and securely
    locked and must observe strict care and caution that all water faucets or
    water apparatus, coffee pots or other heat-generating devices are entirely
    shut off before Tenant or its employees leave the Premises, and that all
    utilities shall likewise be carefully shut off, so as to prevent waste or
    damage. Tenant shall be responsible for any damage or injuries sustained by
    other tenants or occupants of the Building or Project or by Landlord for
    noncompliance with this rule. On multiple-tenancy floors, all tenants shall
    keep the door or doors to the Building corridors closed at all times except
    for ingress and egress.

8.  Tenant shall not use any method of heating or air-conditioning other than
    that supplied by Landlord. As more specifically provided in Tenant's lease
    of the Premises, Tenant shall not waste electricity, water or
    air-conditioning and agrees to cooperate fully with Landlord to assure the
    most effective operation of the Building's heating and air-conditioning, and
    shall refrain from attempting to adjust any controls other than room
    thermostats installed for Tenant's use.

9.  Landlord will furnish Tenant free of charge with two keys to each door in
    the Premises. Landlord may make a reasonable charge for any additional keys,
    and Tenant shall not make or have made additional keys. Tenant shall not
    alter any lock or access device or install a new or additional lock or
    access device or bolt on any door of its Premises, without the prior written
    consent of Landlord. If Landlord shall give its consent, Tenant shall in
    each case furnish Landlord with a key for any such lock. Tenant, upon the
    termination of its tenancy, shall deliver to Landlord the keys for all doors
    which have been furnished to Tenant, and in the event of loss of any keys so
    furnished, shall pay Landlord therefor.

10. The restrooms, toilets, urinals, wash bowls and other apparatus shall not be
    used for any purpose other than that for which they were constructed and no
    foreign substance of any kind whatsoever shall be thrown into them. The
    expense of any breakage, stoppage, or damage resulting from violation of
    this rule shall be borne by the tenant who, or whose employees or invitees,
    shall have caused the breakage, stoppage, or damage.

11. Tenant shall not use or keep in or on the Premises, the Building or the
    Project any kerosene, gasoline, or inflammable or combustible fluid or
    material.


                                       25
<PAGE>   26
12. Tenant shall not use, keep or permit to be used or kept in its Premises any
    foul or noxious gas or substance. Tenant shall not allow the Premises to be
    occupied or used in a manner offensive or objectionable to Landlord or other
    occupants of the Building by reason of noise, odors and/or vibrations or
    interfere in any way with other tenants or those having business therein,
    nor shall any animals or birds be brought or kept in or about the Premises,
    the Building, or the Project.

13. No cooking shall be done or permitted by any tenant on the Premises, except
    that use by the tenant of Underwriters' Laboratory (UL) approved equipment,
    refrigerators and microwave ovens may be used in the Premises for the
    preparation of coffee, tea, hot chocolate and similar beverages, storing and
    heating food for tenants and their employees shall be permitted. All uses
    must be in accordance with all applicable federal, state and city laws,
    codes, ordinances, rules and regulations and the Lease.

14. Except with the prior written consent of Landlord, Tenant shall not sell, or
    permit the sale, at retail, of newspapers, magazines, periodicals, theater
    tickets or any other goods or merchandise in or on the Premises, nor shall
    Tenant carry on, or permit or allow any employee or other person to carry
    on, the business of stenography, typewriting or any similar business in or
    from the Premises for the service or accommodation of occupants of any other
    portion of the Building, nor shall the Premises be used for the storage of
    merchandise or for manufacturing of any kind, or the business of a public
    barber shop, beauty parlor, nor shall the Premises be used for any illegal,
    improper, immoral or objectionable purpose, or any business or activity
    other than that specifically provided for in such Tenant's Lease. Tenant
    shall not accept hairstyling, barbering, shoeshine, nail, massage or similar
    services in the Premises or common areas except as authorized by Landlord.

15. If Tenant requires telegraphic, telephonic, telecommunications, data
    processing, burglar alarm or similar services, it shall first obtain, and
    comply with, Landlord's instructions in their installation. The cost of
    purchasing, installation and maintenance of such services shall be borne
    solely by Tenant.

16. Landlord will direct electricians as to where and how telephone, telegraph
    and electrical wires are to be introduced or installed. No boring or cutting
    for wires will be allowed without the prior written consent of Landlord. The
    location of burglar alarms, telephones, call boxes and other office
    equipment affixed to the Premises shall be subject to the prior written
    approval of Landlord.

17. Tenant shall not install any radio or television antenna, satellite dish,
    loudspeaker or any other device on the exterior walls or the roof of the
    Building, without Landlord's consent. Tenant shall not interfere with radio
    or television broadcasting or reception from or in the Building, the Project
    or elsewhere.

18. Tenant shall not mark, or drive nails, screws or drill into the partitions,
    woodwork or drywall or in any way deface the Premises or any part thereof
    without Landlord's consent. Tenant may install nails and screws in areas of
    the Premises that have been identified for those purposes to Landlord by
    Tenant at the time those walls or partitions were installed in the Premises.
    Tenant shall not lay linoleum, tile, carpet or any other floor covering so
    that the same shall be affixed to the floor of its Premises in any manner
    except as approved in writing by Landlord. The expense of repairing any
    damage resulting from a violation of this rule or the removal of any floor
    covering shall be borne by the tenant by whom, or by whose contractors,
    employees or invitees, the damage shall have been caused.

19. No furniture, freight, equipment, materials, supplies, packages, merchandise
    or other property will be received in the Building or carried up or down the
    elevators except between such hours and in such elevators as shall be
    designated by Landlord.

Tenant shall not place a load upon any floor of its Premises which exceeds the
    load per square foot which such floor was designed to carry or which is
    allowed by law. Landlord shall have the right to prescribe the weight, size
    and position of all safes, furniture or other heavy equipment brought into
    the Building. Safes or other heavy objects shall, if considered necessary by
    Landlord, stand on wood strips of such thickness as determined by Landlord
    to be necessary to properly distribute the weight thereof. Landlord will not
    be responsible for loss of or damage to any such safe, equipment or property
    from any cause, and all damage done to the Building by moving or maintaining
    any such safe, equipment or other property shall be repaired at the expense
    of Tenant.

Business machines and mechanical equipment belonging to Tenant which cause noise
    or vibration that may be transmitted to the structure of the Building or to
    any space therein to such a degree as to be objectionable to Landlord or to
    any tenants in the Building shall be placed and maintained by Tenant, at
    Tenant's expense, on vibration eliminators or other devices sufficient to
    eliminate noise or vibration. The persons employed to move such equipment in
    or out of the Building must be acceptable to Landlord.

20. Tenant shall not install, maintain or operate upon its Premises any vending
    machine without the written consent of Landlord.

21. There shall not be used in any space, or in the public areas of the Project
    either by Tenant or others, any hand trucks except those equipped with
    rubber tires and side guards or such other material handling equipment as
    Landlord may approve. Tenants using hand trucks shall be required to use the
    freight elevator, or such elevator as Landlord shall designate. No other
    vehicles of any kind shall be brought by Tenant into or kept in or about its
    Premises.

22. Each tenant shall store all its trash and garbage within the interior of the
    Premises. Tenant shall not place in the trash boxes or receptacles any
    personal trash or any material that may not or cannot be disposed of in the
    ordinary and customary manner of removing and disposing of trash and garbage
    in the city, without violation of any law or ordinance governing such
    disposal. All trash, garbage and refuse disposal shall be made only through
    entry-ways and elevators provided for such purposes and at such times as
    Landlord shall designate. If the Building has implemented a building-wide
    recycling program for tenants, Tenant shall use good faith efforts to
    participate in said program.

23. Canvassing, soliciting, distribution of handbills or any other written
    material and peddling in the Building and the Project are prohibited and
    each tenant shall cooperate to prevent the same. No tenant shall make
    room-to-room solicitation of business from other tenants in the Building or
    the Project, without the written consent of Landlord.

24. Landlord shall have the right, exercisable without notice and without
    liability to any tenant, to change the name and address of the Building and
    the Project.

25. Landlord reserves the right to exclude or expel from the Project any person
    who, in Landlord's judgment, is under the influence of alcohol or drugs or
    who commits any act in violation of any of these Rules and Regulations.

26. Without the prior written consent of Landlord, Tenant shall not use the name
    of the Building or the Project or any photograph or other likeness of the
    Building or the Project in connection with, or in promoting or advertising,
    Tenant's business except that Tenant may include the Building's or Project's
    name in Tenant's address.

27. Tenant shall comply with all safety, fire protection and evacuation
    procedures and regulations established by Landlord or any governmental
    agency.


                                       26
<PAGE>   27
28. Tenant assumes any and all responsibility for protecting its Premises from
    theft, robbery and pilferage, which includes keeping doors locked and other
    means of entry to the Premises closed.

29. The requirements of Tenant will be attended to only upon appropriate
    application at the office of the Building by an authorized individual.
    Employees of Landlord shall not perform any work or do anything outside of
    their regular duties unless under special instructions from Landlord, and no
    employees of Landlord will admit any person (tenant or otherwise) to any
    office without specific instructions from Landlord.

30. Landlord reserves the right to designate the use of the parking spaces on
    the Project. Tenant or Tenant's guests shall park between designated parking
    lines only, and shall not occupy two parking spaces with one car. Parking
    spaces shall be for passenger vehicles only; no boats, trucks, trailers,
    recreational vehicles or other types of vehicles may be parked in the
    parking areas (except that trucks may be loaded and unloaded in designated
    loading areas). Vehicles in violation of the above shall be subject to
    tow-away, at vehicle owner's expense. Vehicles parked on the Project
    overnight without prior written consent of the Landlord shall be deemed
    abandoned and shall be subject to tow-away at vehicle owner's expense. No
    tenant of the Building shall park in visitor or reserved parking areas. Any
    tenant found parking in such designated visitor or reserved parking areas or
    unauthorized areas shall be subject to tow-away at vehicle owner's expense.
    The parking areas shall not be used to provide car wash, oil changes,
    detailing, automotive repair or other services unless otherwise approved or
    furnished by Landlord. Tenant will from time to time, upon the request of
    Landlord, supply Landlord with a list of license plate numbers of vehicles
    owned or operated by its employees or agents.

31. No smoking of any kind shall be permitted anywhere within the Building,
    including, without limitation, the Premises and those areas immediately
    adjacent to the entrances and exits to the Building, or any other area as
    Landlord elects. Smoking in the Project is only permitted in smoking areas
    identified by Landlord, which may be relocated from time to time.

32. If the Building furnishes common area conferences rooms for tenant usage,
    Landlord shall have the right to control each tenant's usage of the
    conference rooms, including limiting tenant usage so that the rooms are
    equally available to all tenants in the Building. Any common area amenities
    or facilities shall be provided from time to time at Landlord's discretion.

33. Tenant shall not swap or exchange building keys or cardkeys with other
    employees or tenants in the Building or the Project.

34. Tenant shall be responsible for the observance of all of the foregoing Rules
    and Regulations by Tenant's employees, agents, clients, customers, invitees
    and guests.

35. These Rules and Regulations are in addition to, and shall not be construed
    to in any way modify, alter or amend, in whole or in part, the terms,
    covenants, agreements and conditions of any lease of any premises in the
    Project.

36. Landlord may waive any one or more of these Rules and Regulations for the
    benefit of any particular tenant or tenants, but no such waiver by Landlord
    shall be construed as a waiver of such Rules and Regulations in favor of any
    other tenant or tenants, nor prevent Landlord from thereafter enforcing any
    such Rules and Regulations against any or all tenants of the Building.

37. Landlord reserves the right to make such other and reasonable rules and
    regulations as in its judgment may from time to time be needed for safety
    and security, for care and cleanliness of the Building and the Project and
    for the preservation of good order therein. Tenant agrees to abide by all
    such Rules and Regulations herein stated and any additional rules and
    regulations which are adopted.





                                       27
<PAGE>   28

                                    EXHIBIT B

                                (TO BE ATTACHED)





                                       28
<PAGE>   29

                                    EXHIBIT C

                           LEASE IMPROVEMENT AGREEMENT

               This Lease Improvement Agreement ("IMPROVEMENT AGREEMENT") sets
forth the terms and conditions relating to construction of the initial tenant
improvements described in the Plans to be prepared and approved as provided
below (the "TENANT IMPROVEMENTS") in the Premises. Capitalized terms used but
not otherwise defined herein shall have the meanings set forth in the Lease (the
"LEASE") to which this Improvement Agreement is attached and forms a part.

1.  Base Building Work. The "Base Building Work" described on SCHEDULE 1 to this
    EXHIBIT C, IF ANY, has been or will be performed by Landlord at Landlord's
    sole cost and expense and shall be constructed in a good and workman-like
    manner and the Premises shall be delivered to Tenant in compliance with
    Regulations as expressly stated in Paragraph 4.C. hereof.

2.  Plans and Specifications.

           2.1 Tenant shall retain the services of Devcon (the "SPACE PLANNER")
    to prepare a detailed space plan (the "SPACE PLAN") mutually satisfactory to
    Landlord and Tenant for the construction of the Tenant Improvements in the
    Premises. Tenant shall submit the Space Plan and any proposed revisions
    thereto to Landlord for Landlord's approval. In the event that Tenant fails
    to deliver an approved Space Plan on or before February 7, 2000, such
    failure shall constitute a Tenant Delay hereunder.

           2.2 Based on the approved Space Plan, Tenant shall cause the Space
    Planner to prepare detailed plans, specifications and working drawings
    mutually satisfactory to Landlord and Tenant for the construction of the
    Tenant Improvements (the "PLANS"). Landlord and Tenant shall diligently
    pursue the preparation of the Plans. Tenant shall submit the Plans and any
    proposed revisions thereto, including the estimated cost of the Tenant
    Improvements. All necessary revisions to the Space Plan and the Plans shall
    be made within two (2) business days after Landlord's response thereto. This
    procedure shall be repeated until Landlord ultimately approves the Space
    Plan and Plans. Landlord shall approve or disapprove the Plans and any
    proposed revisions thereto, including the estimated cost of the Tenant
    Improvements, in writing within three (3) business days after receipt
    thereof. If Landlord fails to approve or disapprove the Space Plan or the
    Plans or any revisions thereto within the time limits specified herein,
    Landlord shall be deemed to have disapproved the same. Tenant shall cause
    the final Plans and the cost estimate to be prepared and approved no later
    than March 30, 2000. In the event Tenant fails to prepare and approve the
    final Plans and the cost estimate on or before March 30, 2000, such failure
    shall constitute a Tenant Delay hereunder.

           2.3 Intentionally Omitted.

           2.4 Notwithstanding the foregoing, Tenant shall cause the Space
    Planner to deliver to Landlord on or before March 30, 2000 plans,
    specifications and working drawings for the construction of the Tenant
    Improvements which are sufficiently complete to enable the City of San Jose
    to issue any required permits.

           2.5 Tenant shall be responsible for ensuring that the Plans are
    compatible with the design, construction and equipment of the Building,
    comply with applicable Regulations and the Standards (defined below), and
    contain all such information as may be required to show locations, types and
    requirements for all heat loads, people loads, floor loads, power and
    plumbing, regular and special HVAC needs, telephone communications,
    telephone and electrical outlets, lighting, light fixtures and related
    power, and electrical and telephone switches, B.T.U. calculations,
    electrical requirements and special receptacle requirements. The Plans shall
    also include mechanical, electrical, plumbing, structural and engineering
    drawings mutually satisfactory to Landlord and Tenant which shall be
    prepared by Approved Design Engineers. Notwithstanding Landlord's
    preparation, review and approval of the Space Plan and the Plans and any
    revisions thereto, Landlord shall have no responsibility or liability
    whatsoever for any errors or omissions contained in the Space Plan or Plans
    or any revisions thereto, or to verify dimensions or conditions, or for the
    quality, design or compliance with applicable Regulations of any
    improvements described therein or constructed in accordance therewith.
    Tenant hereby waives all claims against Landlord relating to, or arising out
    of the design or construction of, the Tenant Improvements.

           2.6 Landlord may approve or disapprove the Space Plan or Plans or any
    proposed revision thereto submitted to Landlord in Landlord's sole
    discretion. Landlord shall not be deemed to have approved the Space Plan,
    the Plans, or any proposed revisions thereto, unless approved by Landlord in
    writing. Landlord shall approve or disapprove any Space Plan, Plans or
    proposed revisions thereto submitted to Landlord for Landlord's approval
    within three (3) business days after Landlord's receipt thereof. If Landlord
    has not approved in writing any Space Plan, Plans, or proposed revisions
    thereto submitted to Landlord within three (3) business days after
    Landlord's receipt thereof, Landlord shall be deemed to have disapproved the
    same.

3.  Specifications for Standard Tenant Improvements.

           3.1 Specifications and quantities of standard building components
    which will comprise and be used in the construction of the Tenant
    Improvements ("STANDARDS") are set forth in SCHEDULE 2 to this EXHIBIT C. As
    used herein, "STANDARDS" or "BUILDING Standards" shall mean the standards
    for a particular item selected from time to time by Landlord for the
    Building, including those set forth on SCHEDULE 2 of this EXHIBIT C, or such
    other standards of equal or better quality as may be mutually agreed between
    Landlord and Tenant in writing.

           3.2 No deviations from the Standards are permitted.

4.  Tenant Improvement Cost.

           4.1 The cost of the Tenant Improvements shall be paid for by Tenant,
    including, without limitation, the cost of: Standards; space plans and
    studies; architectural and engineering fees; permits, approvals and other
    governmental fees; labor, material, equipment and supplies; construction
    fees and other amounts payable to contractors or subcontractors; taxes;
    off-site improvements; remediation and preparation of the Premises for
    construction of the Tenant Improvements; taxes; filing and recording fees;
    premiums for insurance and bonds; attorneys' fees; financing costs; and all
    other costs expended or to be expended in the construction of the Tenant
    Improvements, including those costs incurred for construction of elements of
    the Tenant Improvements in the Premises, which construction was performed by
    Landlord prior to the execution of the Lease or for materials comprising the
    Tenant Improvements which were purchased by Landlord prior to the execution
    of the Lease; and an administration fee of One Hundred Eighty-Five Thousand
    and No/100 Dollars ($185,000.00); provided, however, that in the event that
    the Lease is modified to provide for an increase in the rentable square feet
    of the Premises which results in an increase in the total cost of the Tenant
    Improvements, the aforementioned administration fee shall be increased by an
    amount equal to three percent (3%) of the amount of such increase.


                                       29
<PAGE>   30
           4.2 Provided Tenant is not in default under the Lease, including this
    Improvement Agreement, Landlord shall contribute a one-time tenant
    improvement allowance not to exceed Thirty-One and 19/100 Dollars ($31.19)
    per rentable square foot of the Premises ("TENANT IMPROVEMENT ALLOWANCE")
    toward the cost of the initial Tenant Improvements. Provided Tenant is not
    then in default under the Lease, including this Improvement Agreement,
    during the construction of the Tenant Improvements, Landlord shall make
    monthly disbursements of the Tenant Improvement Allowance for the benefit of
    Tenant shall authorize the release of monies for the benefit of Tenant as
    follows:

               (a) Monthly Disbursements. On or before the twenty-first (21st)
                   day of the calendar month, during the construction of the
                   Tenant Improvements (or such other date as Landlord may
                   designate in writing), Tenant shall deliver to Landlord: (i)
                   a request for payment of Tenant's contractor, which request
                   shall be approved by Tenant, showing the schedule, by trade,
                   of percentage of completion of the Tenant Improvements,
                   detailing the portion of the work completed and the portion
                   not completed; (ii) invoices from any subcontractor, laborer,
                   materialmen, supplier and any other party which performed
                   work on Tenant's behalf pursuant to this Improvement
                   Agreement, including, but not limited to, labor rendered and
                   materials delivered to the Premises; (iii) executed
                   conditional mechanic's lien releases from all of the parties
                   submitting invoices with respect to the work performed and
                   for which payment is requested to be made, which releases
                   shall comply with the appropriate provisions of California
                   Civil Code 3262(d); (iv) executed unconditional mechanic's
                   lien releases from all of the parties with respect to work
                   performed and included on prior pay requests, which releases
                   shall comply with the appropriate provisions of California
                   Civil Code; and (v) all other information reasonably
                   requested by Landlord. Tenant's request for payment shall be
                   deemed Tenant's acceptance and approval of the specific work
                   furnished and or the materials actually supplied as set forth
                   in Tenant's payment request. Within ten (10) business days
                   thereafter, Landlord shall deliver a check (or transfer funds
                   electronically) to Tenant made jointly payable to Tenant's
                   contractor and Tenant in payment of the lesser of (A)
                   Landlord's proportionate share of the amount of such request
                   for payment by Tenant's contractor, as set forth in this
                   paragraph, less a ten percent (10%) retention (the aggregate
                   amount of such retentions to be known as the "FINAL
                   RETENTION"), and (B) the balance of any remaining available
                   portion of the Tenant Improvement Allowance (not including
                   the Final Retention), provided Landlord does not dispute any
                   request for payment based upon noncompliance with the Plans
                   and or Standards, or due to any substandard work, or for any
                   other reasonable cause. For purposes of this Improvement
                   Agreement, Landlord's proportionate share shall be the
                   product of the following: (X) the amount of the Tenant
                   Improvement Allowance over total cost of the Tenant
                   Improvements, as such total cost may from time to time
                   increase as provided herein, multiplied by (Y) the total
                   amount approved by Landlord in Tenant's written request for
                   payment as described above. Landlord's payment of such
                   amounts shall not be deemed Landlord's approval or acceptance
                   of the work furnished or materials supplied as set forth in
                   Tenant's payment request.

               (b) Final Retention. Subject to the provisions of this
                   Improvement Agreement, a check for the Final Retention
                   payable jointly to Tenant's contractor and Tenant shall be
                   delivered by Landlord to Tenant following the completion of
                   the construction of the Tenant Improvements and expiration of
                   the time for filing of any mechanics' liens claimed or which
                   might be filed on account of any work ordered by Tenant or
                   its contractor or any subcontractor; provided that (A) Tenant
                   delivers to Landlord properly executed and unconditional
                   mechanics lien releases in compliance with both California
                   Civil Code Section 3262(d)(2) and with Section 3262(d)(3) or
                   Section 3262(d)(4) (which mechanics' lien releases shall be
                   executed by the subcontractors, labor suppliers and
                   materialmen in addition to Tenant's contractor), and all
                   appropriate bills and supporting documentation for the work
                   ordered by Tenant or its contractor or any subcontractor, (B)
                   Landlord has determined that no substantial work exists which
                   adversely affects the mechanical, electrical, plumbing,
                   heating, ventilating and air conditioning, life-safety or
                   other systems of the Building or Project, the structure or
                   exterior appearance of the Building or Project, and (C) Space
                   Planner and Tenant's contractor deliver to Landlord a
                   certificate of completion, in a form reasonably acceptable to
                   Landlord certifying that the construction of the Tenant
                   Improvements has been substantially completed.

               (c) Other Terms. Landlord shall only be obligated to make
                   disbursements from the Tenant Improvement Allowance in
                   accordance with the terms of this Agreement.

           4.3 In the event the estimated cost of the design and construction of
    the Tenant Improvements exceeds the Tenant Improvement Allowance, Landlord's
    proportionate share pursuant to Paragraph 4.2.(a) above shall be adjusted
    accordingly. No credit shall be given to Tenant if the cost of the Tenant
    Improvements is less than the Tenant Improvement Allowance.

           4.4 If the cost of the Tenant Improvements increases after the
    Tenant's approval of the Plans due to the requirements of any governmental
    agency or applicable Regulation, Landlord's proportionate share pursuant to
    Paragraph 4.2.(a) above shall be adjusted accordingly.

           4.5 If Tenant requests any change(s) in the Plans after approval of
    the estimate of the cost of the Tenant Improvements and any such requested
    changes are approved by Landlord in writing in Landlord's sole discretion,
    and the cost of the Tenant Improvements increases as a result of such
    approved change(s). Landlord's proportionate share pursuant to Paragraph
    4.2.(a) above shall be adjusted accordingly.

           4.6 Notwithstanding anything to the contrary in this Improvement
    Agreement, in the event that the cost of the Tenant Improvements exceeds the
    Tenant Improvement Allowance, upon Tenant's written request, Landlord shall
    provide an additional amount not to exceed Four Dollars ($4.00) per rentable
    square foot (the "BASE RENT INCREASE FACTOR") toward the excess cost of the
    Tenant Improvements, which Base Rent Increase Factor shall be disbursed in
    accordance with the terms of this Paragraph 4. Tenant must provide such
    written request to Landlord prior to the Term Commencement Date defined in
    the Lease. In the event Tenant fails to so provide such written notice to
    Landlord, Tenant shall be deemed to waive its right to receive the Base Rent
    Increase Factor. The Base Rent Increase Factor shall be amortized over the
    initial Term of the Lease commencing upon disbursement of monies, at an
    interest rate of ten percent (10%) per annum, payable in monthly
    installments as Base Rent, in accordance with the terms of the Lease. If the
    costs of the Tenant Improvements does exceed the Tenant Improvement
    Allowance, and Tenant elects to receive the Base Increase Rent Factor
    pursuant to this Paragraph 4.6, Landlord and Tenant shall each execute a
    written amendment to the Lease, prepared by Landlord, to reflect the
    appropriate increase in the amount of Base Rent.

5.  Construction of Tenant Improvements.

           5.1 Within ten (10) days after Tenant's and Landlord's approval of
    the Plans including the estimate of the cost of the Tenant Improvements and
    Landlord's receipt of payment of any such estimated cost exceeding the
    amount of the Tenant Improvement Allowance, Tenant shall cause the
    contractor to proceed to secure a building permit and commence construction
    of the Tenant Improvements provided that the Building has in Landlord's
    discretion reached the stage of construction where it is appropriate to
    commence construction of the Tenant Improvements in the Premises.


                                       30
<PAGE>   31
           5.2 Tenant shall be responsible for obtaining all governmental
    approvals to the full extent necessary for the construction and installation
    of the Tenant Improvements and for Tenant's occupancy of the Premises, in
    compliance with all applicable Regulations. Tenant shall employ Devcon as
    the contractor or such other contractor or contractors as shall be approved
    by Landlord in writing to construct the Tenant Improvements in conformance
    with the approved Space Plan and Plans. The construction contracts between
    Tenant and the approved contractor shall be subject to Landlord's prior
    reasonable approval and shall provide for progress payments. The
    contractor(s) shall be duly licensed and Landlord's approval of the
    contractor(s) shall be conditioned, among other things, upon the
    contractor's reputation for quality of work, timeliness of performance,
    integrity and Landlord's prior experience with such contractor.

           5.3 Without limiting the provisions of Paragraph 35 of the Lease,
    Landlord shall not be liable for any direct or indirect damages suffered by
    Tenant as a result of delays in construction beyond Landlord's reasonable
    control, including, but not limited to, delays due to strikes or
    unavailability of materials or labor, or delays caused by Tenant (including
    delays by the Space Planner, the contractor or anyone else performing
    services on behalf of Landlord or Tenant).

           5.4 All work to be performed on the Premises by Tenant or Tenant's
    contractor or agents shall be subject to the following conditions:

                  (a) Such work shall proceed upon Landlord's written approval
    of Tenant's contractor, and public liability and property damage insurance
    carried by Tenant's contractor, and shall further be subject to the
    provisions of Paragraphs 12 and 27 of the Lease.

                  (b) All work shall be done in conformity with a valid building
    permit when required, a copy of which shall be furnished to Landlord before
    such work is commenced, and in any case, all such work shall be performed in
    a good and workmanlike and first-class manner, and in accordance with all
    applicable Regulations and the requirements and standards of any insurance
    underwriting board, inspection bureau or insurance carrier insuring the
    Premises pursuant to the Lease. Notwithstanding any failure by Landlord to
    object to any such work, Landlord shall have no responsibility for Tenant's
    failure to comply with all applicable Regulations. Tenant shall be
    responsible for ensuring that construction and installation of the Tenant
    Improvements will not affect the structural integrity of the Building.

                  (c) If required by Landlord or any lender of Landlord, all
    work by Tenant or Tenant's contractor shall be done with union labor in
    accordance with all union labor agreements applicable to the trades being
    employed.

                  (d) Landlord or Landlord's agents shall have the right to
    inspect the construction of the Tenant Improvements by Tenant during the
    progress thereof. If Landlord shall give notice of faulty construction or
    any other deviation from the approved Space Plan or Plans, Tenant shall
    cause its contractor to make corrections promptly. However, neither the
    privilege herein granted to Landlord to make such inspections, nor the
    making of such inspections by Landlord, shall operate as a waiver of any
    right of Landlord to require good and workmanlike construction and
    improvements erected in accordance with the approved Space Plan or Plans.

                  (e) Tenant shall cause its contractor to complete the Tenant
    Improvements as soon as reasonably possible but in any event on or before
    the Scheduled Term Commencement Date.

                  (f) Tenant's construction of the Tenant Improvements shall
    comply with the following: (i) the Tenant Improvements shall be constructed
    in strict accordance with the approved Space Plan or Plans; (ii) Tenant's
    and its contractor shall submit schedules of all work relating to the Tenant
    Improvements to Landlord for Landlord's approval within two (2) business
    days following the selection of the contractor and the approval of the
    Plans. Landlord shall within five (5) business days after receipt thereof
    inform Tenant of any changes which are necessary and Tenant's contractor
    shall adhere to such corrected schedule; and (iii) Tenant shall abide by all
    rules made by Landlord with respect to the use of freight, loading dock, and
    service elevators, storage of materials, coordination of work with the
    contractors of other tenants, and any other matter in connection with this
    Improvement Agreement, including, without limitation, the construction of
    the Tenant Improvements.

                  (g) Tenant or Tenant's contractor or agents shall arrange for
    necessary utility, hoisting and elevator service with Landlord's contractor
    and shall pay such reasonable charges for such services as may be charged by
    Tenant's or Landlord's contractor.

                  (h) Tenant's entry to the Premises for any purpose, including,
    without limitation, inspection or performance of Tenant construction by
    Tenant's agents, prior to the date Tenant's obligation to pay rent commences
    shall be subject to all the terms and conditions of the Lease except the
    payment of Rent. Tenant's entry shall mean entry by Tenant, its officers,
    contractors, licensees, agents, servants, employees, guests, invitees, or
    visitors.

                  (i) Tenant shall promptly reimburse Landlord upon demand for
    any reasonable expense actually incurred by the Landlord by reason of faulty
    work done by Tenant or its contractors or by reason of any delays caused by
    such work, or by reason of inadequate clean-up.

                  (j) Tenant hereby indemnifies and holds Landlord harmless with
    respect to any and all costs, losses, damages, injuries and liabilities
    relating in any way to any act or omission of Tenant or Tenant's contractor
    or agents, or anyone directly or indirectly employed by any of them, in
    connection with the Tenant Improvements and any breach of Tenant's
    obligations under this Improvement Agreement, or in connection with Tenant's
    non-payment of any amount arising out of the Tenant Improvements. Such
    indemnity by Tenant, as set forth above, shall also apply with respect to
    any and all costs, losses, damages, injuries, and liabilities related in any
    way to Landlord's performance or any ministerial acts reasonably necessary
    (i) to permit Tenant to complete the Tenant Improvements, and (ii) to enable
    Tenant to obtain any building permit or certificate of occupancy for the
    Premises.

                  (k) Tenant's contractor and the subcontractors utilized by
    Tenant's contractor shall guarantee to Tenant and for the benefit of
    Landlord that the portion of the Tenant Improvements for which it is
    responsible shall be free from any defects in workmanship and materials for
    a period of not less than one (1) year from the date of completion thereof.
    Each of Tenant's contractor and the subcontractors utilized by Tenant's
    contractor shall be responsible for the replacement or repair, without
    additional charge, of all work done or furnished in accordance with its
    contract that shall become defective within one (1) year after the later to
    occur of (i) completion of the work performed by such contractor of
    subcontractors and (ii) the Term Commencement Date. The correction of such
    work shall include, without additional charge, all additional expenses and
    damages incurred in connection with such removal or replacement of all or
    any part of the Tenant Improvements, and/or the Building and/or common areas
    that may be damaged or disturbed thereby. All such warranties or guarantees
    as to materials or workmanship of or with respect to the Tenant Improvements
    shall be contained in the construction contract or subcontract and shall be
    written such that such guarantees or warranties shall inure


                                       31
<PAGE>   32
    to the benefit of both Landlord and Tenant, as their respective interests
    may appear, and can be directly enforced by either. Tenant covenants to give
    to Landlord any assignment or other assurances which may be necessary to
    effect such rights of direct enforcement.

                  (l) Commencing upon the execution of the Lease, Tenant shall
    hold weekly meetings at a reasonable time with the Space Planner and the
    contractor regarding the progress of the preparation of the Plans and the
    construction of the Tenant Improvements, which meetings shall be held at a
    location designated by Tenant, and Landlord and/or its agents shall receive
    prior notice of, and shall have the right to attend, all such meetings, and
    upon Landlord's request, certain of Tenant's contractors shall attend such
    meetings. One such meeting each month shall include the review of
    contractor's current request for payment.

                  (m) Tenant and Tenant's contractors and all other parties
    performing work on the Premises on Tenant's behalf shall comply with the
    each of the Building rules and regulations as described in the Lease and
    with the contractor rules and regulations, attached hereto as SCHEDULE 3.
    Tenant shall be liable for any violation of the Building or the contractor
    rules and regulations by Tenant's contractors or any other party performing
    work on the Premises on Tenant's behalf.

6.  Insurance Requirements.

           6.1 All of Tenant's contractors shall carry worker's compensation
    insurance covering all of their respective employees, and shall also carry
    public liability insurance, including property damage, all with limits, in
    form and with companies as are required to be carried by Tenant as set forth
    in Paragraph 8 of the Lease.

           6.2 Tenant shall carry "Builder's All Risk" insurance in an amount
    approved by Landlord covering the construction of the Tenant Improvements,
    and such other insurance as Landlord may require, it being understood and
    agreed that the Tenant Improvements shall be insured by Tenant pursuant to
    Paragraph 8 of the Lease immediately upon completion thereof. Such insurance
    shall be in amounts and shall include such extended coverage endorsements as
    may be reasonably required by Landlord including, but not limited to, the
    requirement that all of Tenant's contractors shall carry excess liability
    and Products and Completed Operation coverage insurance, each in amounts not
    less than $500,000 per incident, $1,000,000 in aggregate, and in form and
    with companies as are required to be carried by Tenant as set forth in
    Paragraph 8 of the Lease.

           6.3 Certificates for all insurance carried pursuant to this
    Improvement Agreement must comply with the requirements of Paragraph 8 of
    the Lease and shall be delivered to Landlord before the commencement of
    construction of the Tenant Improvements and before the contractor's
    equipment is moved onto the site. In the event the Tenant Improvements are
    damaged by any cause during the course of the construction thereof, Tenant
    shall immediately repair the same at Tenant's sole cost and expense.
    Tenant's contractors shall maintain all of the foregoing insurance coverage
    in force until the Tenant Improvements are fully completed and accepted by
    Landlord, except for any Product and Completed Operation Coverage insurance
    required by Landlord, which is to be maintained for five (5) years following
    completion of the work and acceptance by Landlord and Tenant. All policies
    carried under this Paragraph 6 shall insure Landlord and Tenant, as their
    interests may appear, as well as the contractors. All insurance maintained
    by Tenant's contractors shall preclude subrogation claims by the insurer
    against anyone insured thereunder. Such insurance shall provide that it is
    primary insurance as respects the owner and that any other insurance
    maintained by owner is excess and noncontributing with the insurance
    required hereunder. Landlord may, in its discretion, require Tenant to
    obtain a lien and completion bond or some alternate form of security
    satisfactory to Landlord in an amount sufficient to ensure the lien-free
    completion of the Tenant Improvements and naming Landlord as a co-obligee.

7.  Completion and Rental Commencement Date.

           7.1 Tenant's obligation to pay Rent under the Lease shall commence on
    the Scheduled Term Commencement Date and the Scheduled Term Commencement
    Date shall be the Term Commencement Date notwithstanding anything to the
    contrary contained in Paragraph 2 of the Lease. However, except as otherwise
    provided herein, Landlord Delays (as defined below) shall extend the Term
    Commencement Date, but only in the event that substantial completion of the
    Tenant Improvements is actually delayed beyond September 1, 2000, despite
    Tenant's best efforts to adapt and compensate for such delays. In addition,
    no Landlord Delays shall be deemed to have occurred unless Tenant has
    provided notice, in compliance with the Lease, to Landlord specifying that a
    delay shall be deemed to have occurred because of actions, inactions or
    circumstances specified in the notice in reasonable detail. If such actions,
    inactions or circumstances are not cured by Landlord within one (1) business
    day after receipt of such notice ("COUNT DATE"), and if such actions,
    inaction or circumstances otherwise qualify as a Landlord Delay, then a
    Landlord Delay shall be deemed to have occurred commencing as of the Count
    Date. The Term Commencement Date shall be extended by one day for each day
    from the Count Date that a Landlord Delay has occurred, as calculated as
    provided above. The term "Landlord Delays," as such term may be used in this
    Improvement Agreement, shall mean any actual delays in the completion of the
    Tenant Improvements which are due to any act or omission of Landlord, its
    agents or contractors. Landlord Delays shall include but not be limited to:
    (i) delays in the giving of authorizations or approvals by Landlord beyond
    the periods provided in this Improvement Agreement, (ii) delays due to the
    acts or failures to act, of Landlord, its agents or contractors, where such
    acts or failures to act are required by the terms of this Improvement
    Agreement and actually result in a delay of the completion of the Tenant
    Improvements beyond September 1, 2000, provided that Tenant acts in a
    commercially reasonable manner to mitigate any such delay, and (iii) delays
    due to the unreasonable interference of Landlord, its agents or contractors
    with the completion of the Tenant Improvements. Notwithstanding anything to
    the contrary contained in this Improvement Agreement or in the Lease, if a
    Landlord Delay does occur but the Premises is substantially complete on or
    before September 1, 2000, then the Term Commencement Date shall not be
    extended and shall be the date described in Paragraph 2.B of the Lease. In
    the event a Landlord Delay shall not occur, then the Term Commencement Date
    shall be the date described in Paragraph 2.B of the Lease.

           7.2 Within ten (10) days after completion of construction of the
    Tenant Improvements, Tenant shall cause a Notice of Completion to be
    recorded in the office of the Recorder of the county in which the Building
    is located in accordance with Section 3093 of the Civil Code of the State of
    California or any successor statute, and shall furnish a copy thereof to
    Landlord upon such recordation. If Tenant fails to do so, Landlord may
    execute and file the same on behalf of Tenant as Tenant's agent for such
    purpose, at Tenant's sole cost and expense. At the conclusion of
    construction, (i) Tenant shall cause the Space Planner and the contractor
    (i) to update the approved working drawings as necessary to reflect all
    changes made to the approved working drawings during the course of
    construction, (ii) to certify to the best of their knowledge that the
    "record-set" of as-built drawings are true and correct, which certification
    shall survive the expiration or termination of the Lease, and (c) to deliver
    to Landlord two (2) sets of copies of such record set of drawings within
    ninety (90) days following issuance of a certificate of occupancy for the
    Premises, and (iii) Tenant shall deliver to Landlord a copy of all
    warranties, guarantees, and operating manuals and information relating to
    the improvements, equipment, and systems in the Premises.

           7.3 A default under this Improvement Agreement shall constitute a
    default under the Lease, and the parties shall be entitled to all rights and
    remedies under the Lease in the event of a default hereunder by the other
    party (notwithstanding that the Term thereof has not commenced).


                                       32
<PAGE>   33
           7.4 Without limiting the "as-is" provisions of the Lease, except for
    the Base Building Work to be constructed by Landlord pursuant to this
    Improvement Agreement, Tenant accepts the Premises in its "as-is" condition
    and acknowledges that it has had an opportunity to inspect the Premises
    prior to signing the Lease.

           7.5 For purposes of the Lease and this Improvement Agreement,
    "SUBSTANTIAL COMPLETION" shall have occurred when (i) Landlord's architect
    and Tenant's architect each state in writing that the Tenant Improvements
    are substantially complete in accordance with the terms of the Lease and
    this Improvement Agreement, and (ii) services and utilities are made
    available to the Building.




                                       33
<PAGE>   34
                                   SCHEDULE 1
                                  TO EXHIBIT C

                   BASE BUILDING WORK - 1745 Technology Drive, San Jose, CA


I.      PROJECT DESCRIPTION


<TABLE>
<S>                                  <C>
GENERAL:                             The Project Site is a parcel of land located on Technology Drive,
                                     between Skyport Road and Airport Parkway in San Jose, California.

SITE:                                15.45 Acres (parcel includes 1731, 1733, 1735, 1737, and
                                     1745 Technology Drive)

BUILDING AREAS:                      Net Rentable Area    210,677 RSF
                                     Parking              3.6 spaces / 1000 useable square feet

FLOORS:                              The total  number of floors  from  Lobby  Level to the top
                                     floor of office space will be eight. The typical office
                                     floor size for floors three through eight will be approximately
                                     26,268 RSF. A single core will serve each building floor.
                                     In addition, there will be a mechanical penthouse.

PRIMARY INTERIOR PLANNING CRITERIA:  Structural floor slab to structural floor slab dimensions will
                                     be set so as to allow the following floor-to-ceiling heights:
</TABLE>

<TABLE>
<CAPTION>

LEVEL            HEIGHT             HEIGHT                   SLAB TO SLAB      CEILING
-----            ------             ------                   ------------      -------
<S>             <C>                 <C>                    <C>                  <C>
                                        Ground Floor          16'0"              11'6"
                                        2 through 8           13'6"               9'0"
</TABLE>

II.     ARCHITECTURAL DESCRIPTION

<TABLE>
<S>                                  <C>
EXTERIOR WALLS:                      The exterior wall material will include glass, aluminum, polished
                                     stone and pre-cast concrete.

ACOUSTICAL:                          The air shaft walls at each level will contain acoustical insulation.
                                     The main trunk ductwork at each level will be wrapped with acoustical
                                     insulation. Major equipment components will be mounted on sound and
                                     vibration isolating devices.

ELEVATORS:                           There will be four passenger elevators in the core, one of which
                                     will have a swing door for freight.

INTERIOR FINISHES:                   The Main Lobby floor will be mostly stone and the walls will be a
                                     combination of stone, wood panels, and/or other materials.

                                     Typical floors will include drywall on all core walls. Exterior walls
                                     will receive stud framing but no drywall.

                                     Tenant elevator lobbies will include finishes of equal or better
                                     quality than the lobby on floors two through five of 1741 Technology
                                     Drive, San Jose, California.

                                     Toilet Room wall and floor finished will be ceramic tile and paint.
                                     Toilet partitions will be ceiling-mounted, painted metal. The
                                     lavatory tops will be polished stone.

                                     Elevator cabs will have wood veneer walls with stone base and
                                     carpeted floors.

ADA COMPLIANCE:                      The Project will be designed and constructed in compliance with the
                                     current Title 24 and American With Disabilities Act (ADA)
                                     requirements at the time of building permit issuance.

III.    STRUCTURAL DESCRIPTION

FOUNDATION:                          Precast driven piles supporting caps and grade beams with a
                                     concrete slab on grade.

OFFICE BUILDING STRUCTURE:           Concrete fill over metal deck supported by wide flange steel beams
                                     and columns.

LIVE LOADS:                          The general live load capacity of office area floor slabs will be
                                     100 lbs per sf.
</TABLE>


                                       34
<PAGE>   35

IV. MECHANICAL, PLUMBING, ELECTRICAL AND FIRE/SAFETY SYSTEMS DESCRIPTION

<TABLE>
<S>                                  <C>
MECHANICAL SYSTEM:                   The air conditioning system will consist of a variable
                                     air volume system with one factory furnished water-cooled VAV unit
                                     per floor. These will be supplied with condenser water from two
                                     closed circuit coolers and circulating pumps located in the
                                     penthouse.

                                     The heating system will be limited to a hot water loop with valves to
                                     each floor.

                                     The control system will include an electronic Direct Digital
                                     Temperature Control System. The sensing accuracy and component
                                     reliability of the Direct Digital Temperature Control System will
                                     allow heating and cooling systems to maintain consistently
                                     comfortable conditions throughout the tenant space.

                                     The mechanical systems are designed to deliver HVAC interior
                                     conditioning based on the following loads and outdoor conditions:

                                     Load:     Occupancy:    1 person/150 sf of useable
                                     area
                                               Electrical Consumption:
                                                      Lighting - 1.5 watts/usf
                                                      Tenant Power - 1.0 watts/usf
                                               Ventilation - 0.15 cfm/usf

                                     Winter:   Indoor 72~F dry bulb
                                               Outdoor 34~F dry bulb

                                     Summer:   Indoor 75~F dry bulb
                                               Relative Humidity not to exceed 50%
                                               Outdoor 84~F dry bulb
                                               Outdoor 64~F wet bulb

POWER SYSTEM:                        The electrical service will be supplied through primary underground
                                     circuits from Pacific Gas & Electric Company. The incoming electric
                                     service will be 480/277 volt, three phase, four wire running to the
                                     main switchboard area. The main switchgear will include 480/277 volt
                                     electric service to the typical floor will be fed from the main
                                     building bus risers. Dry-type transformers will reduce 480/277 volt
                                     service to 120/208 volt, three-phase, four wire service for special
                                     lighting and receptacle loads on all tenant floors. Transformer
                                     capacity will be designed to accommodate a connected load of 4.0
                                     watts per square foot of usable area.

PLUMBING SYSTEM:                     The plumbing system will consist of domestic hot and cold water
                                     supply, sanitary sewer and storm sewer piping systems. The system
                                     design will be in accordance with the City of San Jose Building Code
                                     and assures sufficient capacity to handle the occupancy of the
                                     Building. Plumbing fixtures, fittings and trim shall be high quality
                                     commercial type and will be coordinated with the architectural
                                     features of the Building.


TELEPHONE SYSTEM:                    Telephone closets for riser use shall be provided on each floor with
                                     pathways to main the telephone room.

FIRE PROTECTION SYSTEM:              Automatic sprinklers will be provided throughout the Building in
                                     accordance with NFPA #13, for light hazard occupancy design criteria.
                                     Sprinkler head drops, sprinkler head relocations and additional heads
                                     will be completed as part of tenant work. Firehose connections will
                                     be located in stairwells in accordance with code requirements.

STAIR/ELEVATOR                       The emergency egress stairwells and elevator shafts in the Building
SHAFT PRESSURIZATION:                will be served by pressurization systems. These systems will, in the
                                     event of an emergency condition, pressurize egress stairwells and
                                     elevator shafts to reduce the possibility of smoke entering the
                                     egress stairwell or elevator shaft.

EMERGENCY POWER SYSTEM:              Emergency power shall be provided by a permanently installed
                                     diesel-powered electrical generator set and, as required by code,
                                     power will automatically be supplied to support all stairwell and
                                     elevator shaft pressurization equipment, emergency lighting, fire
                                     alarm and communications systems, emergency use of elevators, fire
                                     pumps and ancillary emergency fire/safety equipment in the unlikely
                                     event of normal power source loss. In addition, after written request
                                     by Tenant, Landlord will provide additional emergency power equal to
                                     250 kW to the Building. Tenant shall pay any additional costs
                                     associated with the additional emergency power increase upon written
                                     request by Landlord.

FIRE ALARM AND                       The fire alarm and communication systems will be an addressable alarm
COMMUNICATION SYSTEMS                system with Title 24 ADA provisions. Annunciation, control and
                                     communication equipment will be located in the Fire Control Center to
                                     the
</TABLE>


                                       35
<PAGE>   36

<TABLE>
<S>                                  <C>
                                     Building with additional indicators located at the Security Desk and
                                     the Building Engineer's Office. The fire alarm system will have
                                     battery back-up and be UL listed as a system.

ACCESS CONTROL:                      All building entrances will be locked after hours.  After hours
                                     access will be via proximity card reader. The elevators shall have
                                     card key access system to each floor.
</TABLE>







                                       36
<PAGE>   37

                                   SCHEDULE 2
                                  TO EXHIBIT C

                               BUILDING STANDARDS


                1745 TECHNOLOGY DRIVE, SAN JOSE, CALIFORNIA 95110

               The following constitutes the Building Standard tenant
improvements ("Standards") in the quantities specified:


PARTITIONS

<TABLE>
<S>                     <C>
INTERIOR:               3 5/8" metal studs with 5/8" gypsum board on each side. Taped smooth
                        and ready for finish.

                        DEMISING: 3 5/8" metal studs with 5/8" gypsum board with sound batt
                        insulation. Taped smooth and ready for finish.


PERIMETER WAINSCOT:     5/8" layer of gypsum board.  Taped smooth ready for finish.
                        Extruded bronze finish aluminum sill to match exterior mullions.

PAINT:                  1 of coat primer, 2 coats of interior latex paint in eggshell finish,
                        on each side of partitions.

DOOR ASSEMBLIES

                        DOORS: Doors will be 3'-0" x 8'- 10" x 1-3/4" solid core construction
                        with maple veneer faces and edge.

Interior Doors: 3'-0" x 8'- 10" 1-3/4" solid core door with clear plain sliced maple.


DOOR FRAMES:            Door frames will be clear anodized aluminum.

DOOR HARDWARE:          Tenant entry doors shall receive a lockset, surface mounted closer,
                        butt hinges, and door stop.
                        Tenant interior doors shall receive a latchset, butt hinges and door stop.
                        Door hardware to be Schlage "L" series Mortise locks, finish: 626.
                        Hager 3 knuckle hinges, finish: 626.
                        LCN#1460 Slimline series door closer.
                        Quality #432 door stop.

CEILING SYSTEM

ACOUSTIC CEILINGS AND
SUSPENDED SYSTEMS:      Acoustical suspended ceilings will be Armstrong Dune, Armstrong
                        Silhouette XL 9/16" grid.

LIGHT FIXTURES:         Light fixtures will be Daylite or equal, lay-in mounted 2' x 4'
                        (2)-lamp parabolic with reflector, Motorola rapid start electronic
                        ballast or equal, 277 volt fixture with ready connect soft wire
                        system. SP35 Super Saver II T-8 Fluorescent lamps.

LIGHT SWITCH ASSEMBLY:  Switches will be paired in double gang box to meet Title 24
                        requirements. Bryant #4901, white finish.

ELECTRICAL AND TELEPHONE

RECEPTACLES:            Receptacles will be duplex 20 ampere, 125 volt AC with Bryant wall
                        plate, smooth line, white finish.

TELEPHONE OUTLETS:      Outlets will be a standard telephone plate in manufacturer's
                        standard colors, mounted vertically level with electrical receptacles,
                        white color.

EXIT SIGNAGE:           Exit signs to be Lerrt/Lergt recessed ceiling  edgelit LED exit light.
                        3/16" thick clear acrylic double panels with opaque separator with
                        green engraved lettering.

HEATING AND AIR CONDITIONING SYSTEM

HVAC SYSTEM:            Energy efficient high velocity variable air volume system with
                        conditioned space zoned on the average of 1 zone per every 800
                        square feet. Perimeter zones will have heating, interior zones have
                        cooling only. Interior grills and registers painted to match acoustic
                        ceiling tile.

FIRE PROTECTION

FIRE SPRINKLER HEADS:   Sprinkler head to be Viking Model B1 and B2 concealed automatic and
                        quick response sprinklers.
                        Color:  Off White.

FLOOR COVERING

CARPET:                 38 oz weight cut pile, Designweave, Sabre Classic, installed over pad.
                        All standard colors available.

TILE:                   Armstrong, Standard Excelon vinyl composition tile.  All standard
                        colors available.

BASE:                   Burke, 4" rubber base, topset over VCT and straight cut over carpet.
                        All standard colors available.
</TABLE>


                                       37
<PAGE>   38

WINDOW COVERING

<TABLE>
<S>                     <C>
BLINDS:                 1" aluminum Levelor Mark 1 Dustguard 1" blinds.
                        Color: aluminum. Sized to fit within aluminum mullion module.
</TABLE>









                                              38

<PAGE>   39

                                   SCHEDULE 3
                                  TO EXHIBIT C

                        CONTRACTOR RULES AND REGULATIONS


GENERAL REQUIREMENTS FOR BUILDING CONSTRUCTION WORK

--------------------------------------------------------------------------------

INTENT

The intent of these General Requirements is to communicate Spieker Properties
general performance expectations and requirements of contractors performing work
in our projects. While these requirements may not cover all specific project
requirements, or may not apply to all projects, they are intended to communicate
a basic overall methodology for doing construction work in Spieker Properties
projects.


                                   Preliminary

1.  All work performed shall be performed by union signatory general contractor
    utilizing all union labor and must comply with all applicable rules,
    regulations, and codes of the building, city, state, and federal
    governmental agencies having jurisdiction. The General Contractor will file
    drawings and secure all required permits prior to beginning work, unless
    circumstances require earlier construction commencement, as directed by the
    Owner's architect. All construction within the leased premises shall conform
    to applicable sections of California Title 24 Standards and the American
    with Disabilities Act (ADA).

2.  All work shall be performed during regular business hours (7:00 A.M. - 6:00
    P.M.), Monday through Friday, with the exception of work types listed below.
    All building system operations will be maintained in normal operation, and
    will not be adversely impacted by construction work, unless specifically
    authorized by a Project Management representative. The contractor shall
    communicate requests to the Management Office 24 hours in advance of any
    required interruption of any building services.

        EXCEPTIONS - The following work is required to be performed on an
        overtime or off-hours basis: core drilling, nailing of tackless carpet
        stripping, spray painting of any lacquer or other volatile or odor
        creating substances, and any type of concrete chipping. Any scheduling
        requests for these types of off-hours work must be approved and
        authorized by the Management Office prior to performance any of work.

3.  All contractors must supply Certificate(s) of Insurance naming Spieker
    Properties, L.P. as additionally insured prior to the start of any
    construction. Insurance certificates and copies of permits, as required,
    must be provided to Project Management prior to the commencement of any
    work.

4.  Contractors representative will meet with Project Management representative
    prior to beginning contracted work, to review the scope of construction
    work, construction methods, these general requirements, any additional
    project specific requirements, and any potential impact to the satisfactory
    on-going operation of building services.

5.  The contractor will coordinate proper parking locations for construction
    personnel with Project Management prior to starting construction, to avoid
    impacting our tenants parking availability.

PROJECT AREA ACCESS


1.  Access to project buildings, parking structures, suites, etc. will be
    coordinated in advance with Project Office. No installed access control or
    security system will be over ridden or bypassed for any reason, or at any
    time. All construction personnel will be limited to those areas for which
    they have been given specific access.

2.  Access to all electrical closets, telephone closets, mechanical rooms, and
    suites must be coordinated in advance through the Project Office.
    Electrical, telephone, and other equipment rooms will be kept closed and
    locked when they are not physically occupied.



DURING WORK PERFORMANCE


1.  Upon the start of construction, the contractor will provide walk-off mats at
    all entrances to the construction area(s) from stairwells (if used) and
    entrances to all elevators.

2.  Contractors shall maintain cleanliness throughout; do not clutter or block
    hallways, exits, elevator lobby, electrical or telephone rooms. Building
    fire rated doors will not be propped open, removed, or their door closures
    disconnected. Nor will elevator doors be propped or jammed open to prevent
    the automatic function of it's timed door actuators. CONTRACTORS ARE
    REQUIRED TO UTILIZE THE FREIGHT ELEVATOR ONLY! Where a freight elevator is
    not available, Project Management will designate the appropriate elevator
    for contractor use. Where available, elevator protective pads will be used
    whenever moving materials or equipment in the elevator. Contractors are
    responsible for all damage they cause and clean-up.

3.  Building electrical closets will not, at any time, or for any reason, be
    utilized for the storage of any construction project materials or trash, as
    such storage constitutes a violation of prevailing fire codes.

4.  All material deliveries, and debris removal, must be made as expeditiously
    as possible so as to not have these vehicles blocking accesses to / from the
    building. The contractor, at contractor expense must remove all construction
    debris from the building. Building trash dumpsters are not to be utilized
    for the disposal of construction project debris, as these are provided for
    tenant use. As may be required, Contractor will make arrangements for
    delivery of a debris box for his use. The Project Office will approve an
    appropriate location for the debris box while it is on the project. Delivery
    or removal of large amounts of material is to be done after normal business
    hours with 24-hr. prior approval of the Project Manager.

5.  The contractor is responsible for taking the following precautions / steps
    to protect the satisfactory on-going operation of all building systems and
    tenant operations :


                                       39
<PAGE>   40

        o  Covering HVAC supply and return duct openings to protect from
           construction dirt / dust being spread to other areas of the building
           or into the HVAC equipment / system. This can be accomplished by
           sealing off, covering with filtering media, or other Project
           Management approved method.

        o  Coordinate with Project Manager prior to construction to have fire
           sprinkler systems isolated, smoke detectors disabled, or alarm
           systems de-activated for periods as may be necessary. Contractor will
           protect those smoke detectors or fire sprinkler heads left installed
           in the area, after disabling, by covering them with plastic bags
           during construction.

        o  Where electrical components or circuits are removed, contractor will
           ensure full compliance with OSHA required lockout / tagout procedures
           to prevent personal injuries or system outages.

        o  Develop the best isolation possible of the construction area to
           contain any dirt, dust, noise or other potential tenant impact which
           may be generated by demo, construction work and clean-up.

6.  Any damage to any project area including but not limited to, parking areas,
    doors, freight elevators, and carpets will be reported to the Project Office
    and repaired by the contractor immediately. Spieker Properties reserves the
    right to remedy any damage at the Contractors expense if the damage is not
    repaired in a timely manner.

7.  No powder-actuated guns are to be used without the specific prior
    authorization of the Project Management Office.

8.  No foreign substances are to be poured down any restroom floor drains, or
    into other restroom fixtures.

9.  All firewall and floor penetrations shall be sleeved and sealed in
    accordance with applicable fire code, using only approved, UL listed, fire
    stop materials. All firestop installations must be reviewed and approved by
    the Project Manager prior to closing the associated area of work.

10. All electrical panel and circuit breaker labeling will be performed in
    accordance with acceptable industry methods, or as may be directed by
    Project Management.

11. Contractor will notify the Management Office at least 48 hours in advance of
    construction completion. A walk-through and punch list will be developed for
    each job.

12. Smoking is prohibited in all buildings, and parking garages, at all times.

13. The Contractor is responsible for ensuring, on an on-going basis, that
    common areas, work space, and construction use restrooms are thoroughly
    cleaned upon completion of work, including trash and material disposal,
    removal of all noise and dust shielding materials installed at beginning of
    project, windows cleaned, etc.

14. THE PROJECT OFFICE IS TO BE NOTIFIED IMMEDIATELY SHOULD ANY EMERGENCY
    DEVELOP, ANY BUILDING SYSTEM OR OPERATION BE IMPACTED, OR ANY ASPECT OF THE
    CONSTRUCTION EFFORT IMPACT ANY TENANT.


SAFETY / COMPLIANCE


1.  General Contractor is responsible for ensuring jobsite safety compliance.
    This includes the work force as well as anyone entering the construction
    area. Protective barricades will be placed as required to ensure general
    area safety. Material Safety Data Sheets (MSDS) for all materials to be used
    on the jobsite must be provided to the Project Manager for review prior to
    bringing the materials into the project. The contractor will further ensure
    that a copy of each MSDS is available at the jobsite whenever a specific
    material is in use.

2.  No welding, burning, or cutting with an open flame will be performed without
    prior notification to the Project Office so that appropriate actions may be
    taken with fire alarm systems and fire sprinkler systems. Appropriate fire
    extinguishers will be immediately available at all times.

3.  The contractor is responsible for ensuring that all of their sub-contractors
    are aware, and in compliance, with these general requirements.

                                    MATERIALS


1.  The contractor shall contact the Management Office at the start of
    construction for instructions on building keying, specific hardware and
    other standards, as may be applicable, unless this coordination is
    accomplished through hardware submittals. All permanent keying will be
    provided through the Management Office.

2.  All HVAC, electrical, plumbing, fire alarm system, fire sprinkler, building
    control and lighting components installed will be of Building Standard
    manufacture, unless noted as otherwise on the approved plans and
    specifications. This includes but is not limited to thermostats, controls,
    diffusers, lighting fixtures, switches, lamps, relays, smoke detectors, fire
    sprinkler heads, sprinkler flow switches, manual pull stations, indicator
    horns / strobes, etc.


                               Project Completion

1.  Upon completion of project, contractor will perform a full air balance of
    any installed or modified HVAC systems, providing one copy of each air
    balance report to the Management Office.

2.  Upon completion of project, a completed test report (witnessed by a Fire
    Department representative as required) will be provided to the Project
    Management Office for all fire sprinkler or fire alarm systems having been
    impacted by any aspect of the construction work.

3.  Upon completion of construction, one (1) set of as-built prints, and one (1)
    set of as-built sepias, are to be provided to the Management Office.


                                       40
<PAGE>   41
4.  Contractor will ensure that specific submittals, manufacturers operation and
    maintenance manuals, and applicable manufacturers cut sheets are delivered
    to the Project Office for all equipment or components installed in the
    course of their work. This includes, but is not limited to, mechanical
    equipment, fire alarm system components, fire sprinkler system components,
    HVAC system equipment or components, lighting system components, electrical
    distribution or control components, and any sensing or monitoring
    components.

5.  Upon completion of construction clean inside of all perimeter windows and
    the interior of all lighting fixtures and louvers. Thoroughly clean all work
    areas, common areas where impacted, construction use restrooms, and freight
    elevators. Coordinate construction clean-up schedule with Management Office.


                              Building Contact List

Any questions or concerns should be directed to:

        PROJECT DIRECTOR        -      CHEQUITA MCCULLOUGH
        BUILDING MANAGERS       -      CHEQUITA MCCULLOUGH
        CUSTOMER SERV. REP.     -      ______ N/A_______
        BUILDING ENGINEER       -      DON DEL BONO
        MANAGEMENT OFFICE       -      (408) 467-7150
        MANAGEMENT OFFICE FAX   -      (408) 467-7160










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