LEASE AGREEMENT

                                                      BLDG:         MILPITAS 10
                                                      OWNER:        500
                                                      PROP:         210
                                                      UNIT:         1
                                                      TENANT:       21004


         THIS  LEASE,  made  this  26th  day  of  December,  1996  between  JOHN
ARRILLAGA,  or his Successor Trustee, UTA dated 7/20/77 (ARRILLAGA FAMILY TRUST)
as amended,  and RICHARD T. PEERY,  Trustee or his Successor Trustee,  UTA dated
7/20/77  (RICHARD T. PEERY  SEPARATE  PROPERTY  TRUST) as  amended,  hereinafter
called  Landlord,  and  PARADIGM  TECHNOLOGY,   INC.,  a  Delaware  corporation,
hereinafter called Tenant.

                              W I T N E S S E T H:

         Landlord hereby leases to Tenant and Tenant hereby hires and takes from
Landlord those certain premises (the "Premises") outlined in red on Exhibit "A,"
attached  hereto  and  incorporated   herein  by  this  reference  thereto  more
particularly described as follows:

         A portion of that certain  38,318+/-  square foot,  one-story  building
         located at 694 Tasman Drive, Milpitas,  California 95035, consisting of
         approximately  19,855+/-  square feet of space.  Said  Premises is more
         particularly  shown  within the area  outlined in Red on Exhibit A. The
         entire  parcel,  of which the  Premises is a part,  is shown within the
         area  outlined in Green on Exhibit A attached  hereto.  The Premises is
         leased  on an  "as-is"  basis,  in its  present  condition,  and in the
         configuration as shown in Red on Exhibit B to be attached hereto.

         As used  herein  the  Complex  shall mean and  include  all of the land
outlined in Green and described in Exhibit "A," attached hereto,  and all of the
buildings,  improvements,  fixtures and equipment  now or hereafter  situated on
said land.

         Said letting and hiring is upon and subject to the terms, covenants and
conditions  hereinafter set forth and Tenant covenants as a material part of the
consideration  for this Lease to perform and observe each and all of said terms,
covenants  and  conditions.  This  Lease  is made  upon the  conditions  of such
performance and observance.

         1.  Use.  Tenant  shall  use  the  Premises  only in  conformance  with
applicable governmental laws, regulations,  rules and ordinances for the purpose
of general office, light manufactur- ing, research and development,  and storage
and other uses necessary for Tenant to conduct Tenant's business, provided that

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such  use  shall be in  accordance  with all  applicable  governmental  laws and
ordinances,  and for no other purpose.  Tenant shall not do or permit to be done
in or about  the  Premises  or the  Complex  nor  bring or keep or  permit to be
brought  or kept in or about  the  Premises  or the  Complex  anything  which is
prohibited  by or will in any way increase the  existing  rate of (or  otherwise
affect) fire or any insurance  covering the Complex or any part thereof,  or any
of its contents,  or will cause a  cancellation  of any  insurance  covering the
Complex or any part  thereof,  or any of its  contents.  Tenant  shall not do or
permit to be done  anything  in, on or about the  Premises or the Complex  which
will in any way  obstruct  or  interfere  with the  rights of other  tenants  or
occupants  of the Complex or injure or annoy them,  or use or allow the Premises
to be used for any improper,  immoral,  unlawful or objectionable  purpose,  nor
shall Tenant cause, maintain or permit any nuisance in, on or about the Premises
or the Complex.  No sale by auction shall be permitted on the  Premises.  Tenant
shall not place any loads upon the floors, walls, or ceiling, which endanger the
structure, or place any harmful fluids or other materials in the drainage system
of the building, or overload existing electrical or other mechanical systems. No
waste  materials  or refuse shall be dumped upon or permitted to remain upon any
part of the  Premises  or outside of the  building in which the  Premises  are a
part, except in trash containers placed inside exterior enclosures designated by
Landlord for that purpose or inside of the building  proper where  designated by
Landlord. No materials,  supplies, equipment, finished products or semi-finished
products,  raw  materials  or  articles  of any nature  shall be stored  upon or
permitted to remain outside the Premises or on any portion of common area of the
Complex. No loudspeaker or other device,  system or apparatus which can be heard
outside  the  Premises  shall be used in or at the  Premises  without  the prior
written  consent of Landlord.  Tenant shall not commit or suffer to be committed
any waste in or upon the  Premises.  Tenant  shall  indemnify,  defend  and hold
Landlord  harmless  against  any loss,  expense,  damage,  attorneys'  fees,  or
liability  arising out of failure of Tenant to comply with any  applicable  law.
Tenant shall comply with any  covenant,  condition,  or  restriction  ("CC&R's")
affecting the Premises.  The provisions of this paragraph are for the benefit of
Landlord  only and shall not be construed to be for the benefit of any tenant or
occupant of the Complex.


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         2.  Term.*

         A. The term of this  Lease  shall  be for a  period  of five (5)  years
unless sooner  terminated as hereinafter  provided,  and,  subject to Paragraphs
2(b) and 3, shall commence on the 1st day of February,  1997 and end on the 31st
day of January, 2002.

         B. Subject only to Paragraph 51,  possession  of the Premises  shall be
deemed  tendered and the term of this Lease shall  commence on February 1, 1997,
or

         (d)  As otherwise agreed in writing.

         3. Possession.  If Landlord, for any reason whatsoever,  cannot deliver
possession of said premises to Tenant at the  commencement  of the said term, as
hereinbefore specified,  this Lease shall not be void or voidable; no obligation
of Tenant shall be affected thereby;  nor shall Landlord or Landlord's agents be
liable to Tenant for any loss or damage resulting  therefrom;  but in that event
the  commencement  and  termination  dates of the  Lease,  and all  other  dates
affected thereby shall be revised to conform to the date of Landlord's  delivery
of possession,  as specified in Paragraph  2(b),  above.  The above is, however,
subject to the provision  that the period of delay,  of delivery of the premises
shall not exceed 90 days from the commencement  date herein (except those delays
caused by Acts of God, strikes,  war, utilities,  governmental bodies,  weather,
unavailable materials, and delays beyond Landlord's control shall be excluded in
calculating  such  period) in which  instance  Tenant,  at its  option,  may, by
written notice to Landlord, terminate this Lease.

         4.  Rent.

         A.  Basic  Rent.  Tenant  agrees to pay to  Landlord  at such  place as
Landlord may designate without deduction,  offset,  prior notice, or demand, and
Landlord agrees to accept as Basic Rent for the leased Premises the total sum of
TWO MILLION TWO HUNDRED  FIFTY ONE THOUSAND  FIVE HUNDRED FIFTY SEVEN AND NO/100
($2,251,557.00) Dollars in lawful money of the United States of America, payable
as follows:

                    SEE PARAGRAPH 43 FOR BASIC RENT SCHEDULE.

--------
* It is agreed in the event said Lease  commences on a date other than the first
day of the month the term of the  Lease  will be  extended  to  account  for the
number of days in the partial month. The Basic Rent during the resulting partial
month will be  pro-rated  (for the number of days in the  partial  month) at the
Basic Rent scheduled for the projected  commencement  date as shown in Paragraph
43.

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         B. Time for Payment. In the event that the term of this Lease commences
on a date  other  than  the  first  day of a  calendar  month,  on the  date  of
commencement  of the term  hereof  Tenant  shall pay to Landlord as rent for the
period from such date of  commencement  to the first day of the next  succeeding
calendar month that proportion of the monthly rent hereunder which the number of
days between such date of commencement  and the first day of the next succeeding
calendar  month bears to thirty  (30).  In the event that the term of this Lease
for any reason  ends on a date other than the last day of a calendar  month,  on
the first day of the last calendar  month of the term hereof Tenant shall pay to
Landlord as rent for the period from said first day of said last calendar  month
to and including the last day of the term hereof that  proportion of the monthly
rent  hereunder  which the  number of days  between  said first day of said last
calendar month and the last day of the term hereof bears to thirty (30).

         C. Late Charge.  Notwithstanding  any other provision of this Lease, if
Tenant is in default in the  payment of rental as set forth in the  Paragraph  4
when due, or any part thereof, Tenant agrees to pay Landlord, in addition to the
delinquent rental due, a late charge for each rental payment in default ten (10)
days.  Said late charge shall equal ten (10%) percent of each rental  payment so
in default.

         D. Additional Rent. Beginning with the commencement date of the term of
this  Lease,  Tenant  shall pay to Landlord in addition to the Basic Rent and as
Additional Rent the following:

                  (a) Tenant's  proportionate share of all Taxes relating to the
         Complex as set forth in Paragraph 12, and

                  (b) Tenant's  proportionate  share of  all insurance  premiums
         relating to the Complex, as set forth in Paragraph 15, and

                  (c)   Tenant's   proportionate   share  of  expenses  for  the
         operation,   management,   maintenance   and  repair  of  the  Building
         (including  common  areas  of the  Building)  and  Common  Areas of the
         Complex in which the  Premises are located as set forth in Paragraph 7,
         and

                  (d) All charges, costs and expenses,  which Tenant is required
         to pay hereunder,  together with all interest and penalties,  costs and
         expenses including attorneys' fees and legal expenses,  that may accrue
         thereto in the event of Tenant's  failure to pay such amounts,  and all
         damages,  reasonable  costs and  expenses  which  Landlord may incur by
         reason of default of Tenant or failure on Tenant's  part to comply with
         the  terms of this  Lease.  In the  event of  nonpayment  by  Tenant of
         Additional Rent Landlord shall have all

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         the  rights  and remedies with respect thereto as Landlord has for non-
         payment of rent.

The Additional Rent due hereunder shall be paid to Landlord or Landlord's  agent
(i) within five days for taxes and insurance and within thirty (30) days for all
other  Additional  Rent items after  presentation  of invoice  from  Landlord or
Landlord's agent setting forth such Additional Rent and/or (ii) at the option of
Landlord,  Tenant shall pay to Landlord  monthly,  in advance,  Tenant's prorata
share of an amount  estimated by Landlord to be Landlord's  approximate  average
monthly expenditure for such Additional Rent items, which estimated amount shall
be  reconciled  within  120  days  of the  end of  each  calendar  year  or more
frequently  if  Landlord  so elects  to do so at  Landlord's  sole and  absolute
discretion,  as compared to Landlord's  actual  expenditure  for said Additional
Rent items,  with Tenant paying to Landlord,  upon demand,  any amount of actual
expenses expended by Landlord in excess of said amount, or Landlord refunding to
Tenant  (providing  Tenant is not in  default in the  performance  of any of the
terms,  covenants and conditions of this Lease) any amount of estimated payments
made by Tenant in excess of Landlord's  actual  expenditures for said Additional
Rent items.

         The respective  obligations of Landlord and Tenant under this paragraph
shall survive the expiration or other termination of the term of this Lease, and
if the term hereof shall expire or shall otherwise terminate on a day other than
the last day of a calendar  year,  the actual  Additional  Rent incurred for the
calendar year in which the term hereof expires or otherwise  terminates shall be
determined and settled on the basis of the statement of actual  Additional  Rent
for such calendar year and shall be prorated in the proportion  which the number
of days in such calendar year preceding such expiration or termination  bears to
365.

         E. Fixed Management Fee.  Beginning with the  Commencement  Date of the
Term of this Lease, Tenant shall pay to Landlord,  in addition to the Basic Rent
and Additional Rent, a fixed monthly  management fee ("Management Fee") equal to
3% of the Basic Rent due for each month during the Lease Term.

         F.  Place of  Payment  of Rent and  Additional  Rent.  All  Basic  Rent
hereunder  and all  payments  hereunder  for  Additional  Rent  shall be paid to
Landlord at the office of Landlord at Peery/Arrillaga, File 1504, Box 60000, San
Francisco,  CA 94160 or to such other  person or to such other place as Landlord
may from time to time designate in writing.

         G.  Security  Deposit.  Concurrently  with  Tenant's  execution of this
Lease,  Tenant shall deposit with Landlord the sum of SEVENTY NINE THOUSAND FOUR
HUNDRED  TWENTY  AND  NO/100  ($79,420.00)  Dollars.  Said sum  shall be held by
Landlord as a Security Deposit for the faithful  performance by Tenant of all of
the terms, covenants, and conditions of this Lease to be kept

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and performed by Tenant during the term hereof.  If Tenant defaults with respect
to any  provision of this Lease,  including  but not limited to, the  provisions
relating  to the  payment  of rent and any of the  monetary  sums due  herewith,
Landlord may (but shall not be required to) use, apply or retain all or any part
of this Security  Deposit for the payment of any other amount which Landlord may
spend by reason of Tenant's default or to compensate Landlord for any other loss
or damage  which  Landlord  may  suffer by reason of  Tenant's  default.  If any
portion of said  Deposit is so used or applied,  Tenant  shall,  within ten (10)
days after  written  demand  therefor,  deposit cash with Landlord in the amount
sufficient  to restore the  Security  Deposit to its original  amount.  Tenant's
failure to do so shall be a material breach of this Lease. Landlord shall not be
required to keep this  Security  Deposit  separate from its general  funds,  and
Tenant  shall not be entitled to interest on such  Deposit.  If Tenant fully and
faithfully  performs  every  provision  of this Lease to be performed by it, the
Security  Deposit or any  balance  thereof  shall be  returned  to Tenant (or at
Landlord's  option, to the last assignee of Tenant's interest  hereunder) at the
expiration of the Lease term and after Tenant has vacated the  Premises.  In the
event of  termination  of  Landlord's  interest  in this Lease,  Landlord  shall
transfer  said  Deposit to  Landlord's  successor in interest  whereupon  Tenant
agrees to release  Landlord from liability for the return of such Deposit or the
accounting therefor.

         5.  Rules and  Regulations  and Common  Area.  Subject to the terms and
conditions  of this Lease and such Rules and  Regulations  as Landlord  may from
time to time prescribe,  Tenant and Tenant's  employees,  invitees and customers
shall,  in common with other  occupants of the Complex in which the Premises are
located,  and their  respective  employees,  invitees and customers,  and others
entitled  to the use  thereof,  have the  non-exclusive  right to use the access
roads, parking areas, and facilities provided and designated by Landlord for the
general  use and  convenience  of the  occupants  of the  Complex  in which  the
Premises  are  located,  which areas and  facilities  are  referred to herein as
"Common Area." This right shall  terminate  upon the  termination of this Lease.
Landlord  reserves  the right  from time to time to make  changes  in the shape,
size, location,  amount and extent of Common Area. Landlord further reserves the
right to promulgate such reasonable rules and regulations relating to the use of
the Common Area, and any part or parts thereof, as Landlord may deem appropriate
for  the  best  interests  of  the  occupants  of the  Complex.  The  Rules  and
Regulations  shall be binding  upon  Tenant  upon  delivery of a copy of them to
Tenant,  and Tenant shall abide by them and cooperate in their observance.  Such
Rules and  Regulations  may be amended by  Landlord  from time to time,  with or
without advance notice, and all amendments shall be effective upon delivery of a
copy  to  Tenant.   Landlord   shall  not  be  responsible  to  Tenant  for  the
non-performance  by any other  tenant or  occupant of the Complex of any of said
Rules and Regulations.

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         Landlord shall operate, manage and maintain the Common Area. The manner
in which the  Common  Area shall be  maintained  and the  expenditures  for such
maintenance shall be at the discretion of Landlord.

         6.  Parking.  Tenant shall have the right to use with other  tenants or
occupants of the Complex 100 parking  spaces in the common  parking areas of the
Complex. Tenant agrees, that Tenant, Tenant's employees, agents, representatives
and/or  invitees  shall not use  parking  spaces  in  excess of said 100  spaces
allocated to Tenant hereunder, Landlord shall have the right, at Landlord's sole
discretion,  to specifically  designate the location of Tenant's  parking spaces
within the common  parking  areas of the Complex in the event of a dispute among
the tenants  occupying the building and/or Complex referred to herein,  in which
event Tenant agrees that Tenant,  Tenant's  employees,  agents,  representatives
and/or  invitees shall not use any parking spaces other than those parking space
specifically  designated by Landlord for Tenant's use. Said parking  spaces,  if
specifically  designated by Landlord to Tenant,  may be relocated by Landlord at
any time, and from time to time. Landlord reserves the right, at Landlord's sole
discretion,  to rescind any  specific  designation  of parking  spaces,  thereby
returning  Tenant's  parking spaces to the common  parking area.  Landlord shall
give Tenant  written  notice of any change in Tenant's  parking  spaces.  Tenant
shall not,  at any time,  park,  or permit to be parked,  any trucks or vehicles
adjacent to the loading areas so as to interfere in any way with the use of such
areas,  nor shall  Tenant at any time park,  or permit the  parking of  Tenant's
trucks or other  vehicles or the trucks and  vehicles of Tenant's  suppliers  or
others,  in any portion of the common area not  designated  by Landlord for such
use by Tenant.  Tenant shall not park nor permit to be parked,  any  inoperative
vehicles or equipment on any portion of the common  parking area or other common
areas of the Complex.  Tenant agrees to assume  responsibility for compliance by
its employees  with the parking  provision  contained  herein.  If Tenant or its
employees park in other than such  designated  parking areas,  then Landlord may
charge Tenant, as an additional  charge,  and Tenant agrees to pay, ten ($10.00)
Dollars per day for each day or partial  day each such  vehicle is parked in any
area other than that designated.  Tenant hereby authorizes  Landlord at Tenant's
sole  expense to tow away from the Complex any  vehicle  belonging  to Tenant or
Tenant's  employees  parked  in  violation  of these  provisions,  or to  attach
violation  stickers or notices to such  vehicles.  Tenant  shall use the parking
areas for vehicle parking only, and shall not use the parking areas for storage.

         7. Expenses of Operation,  Management,  and  Maintenance  of the Common
Areas of the  Complex  and  Building  in Which  the  Premises  Are  Located.  As
Additional Rent and in accordance with Paragraph 4 D of this Lease, Tenant shall
pay to Landlord Tenant's  proportionate share (calculated on a square footage or
other equitable basis as calculated by Landlord) of all expenses

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of  operation,  management,  maintenance  and repair of the Common  Areas of the
Complex  including,  but not limited to, license,  permit,  and inspection fees;
security;  utility  charges  associated  with exterior  landscaping and lighting
(including water and sewer charges);  all charges incurred in the maintenance of
landscaped areas, lakes, parking lots, sidewalks, driveways; maintenance, repair
and  replacement  of all  fixtures  and  electrical,  mechanical,  and  plumbing
systems;  structural  elements and exterior surfaces of the buildings;  salaries
and  employee  benefits of  personnel  and  payroll  taxes  applicable  thereto;
supplies, materials, equipment and tools; the cost of capital expenditures which
have the effect of reducing operating expenses,  provided,  however, that in the
event  Landlord  makes such  capital  improvements,  Landlord  may  amortize its
investment in said  improvements  (together with interest at the rate of fifteen
(15%) percent per annum on the unamortized  balance) as an operating  expense in
accordance with standard accounting practices,  provided, that such amortization
is not at a rate greater than the anticipated savings in the operating expenses.

         "Additional  Rent"  as  used  herein  shall  include   Landlord's  debt
repayments;  interest on charges;  expenses  directly or indirectly  incurred by
Landlord  for the  benefit of any other  tenant;  cost for the  installation  of
partitioning  or any other  tenant  improvements;  cost of  attracting  tenants;
depreciation; interest, or executive salaries.

         As Additional  Rent and in accordance with paragraph 4 D of this Lease,
Tenant shall pay its  proportionate  share  (calculated  on a square  footage or
other  equitable  basis as  calculated  by  Landlord)  of the cost of  operation
(including  common  utilities),  management,  maintenance,  and  repair  of  the
building (including common areas such as lobbies, restrooms,  janitor's closets,
hallways,  elevators,  mechanical and telephone  rooms,  stairwells,  entrances,
spaces above the ceilings and  janitorization of said common areas) in which the
Premises are located.  The maintenance items herein referred to include, but are
not limited to, all windows,  all window  frames,  plate glass,  glazing,  truck
doors,  main  plumbing  systems of the building  (such as water and drain lines,
sinks, toilets,  faucets, drains, showers and water fountains),  main electrical
systems  (such as panels and  conduits),  heating and air  conditioning  systems
(such as  compressors,  fans,  air handlers,  ducts,  boilers,  heaters),  store
fronts,  roofs,  downspouts,  building  common  area  interiors  (such  as  wall
coverings,  window  coverings,  floor  coverings  and  partitioning),  ceilings,
building  exterior  doors,  skylights  (if any),  automatic  fire  extinguishing
systems, and elevators; license, permit, and inspection fees; security; salaries
and  employee  benefits of  personnel  and  payroll  taxes  applicable  thereto;
supplies, materials, equipment and tools; the cost of capital expenditures which
have the effect of reducing operating expenses,  provided,  however, that in the
event  Landlord  makes such  capital  improvements,  Landlord  may  amortize its
investment in said improvements (together with interest at the rate of

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fifteen  (15%)  percent per annum on the  unamortized  balance) as an  operating
expense in accordance with standard accounting  practices,  provided,  that such
amortization  is not at a rate  greater  than  the  anticipated  savings  in the
operating  expenses.  Tenant hereby  waives all rights  under,  and benefits of,
subsection 1 of Section 1932 and Sections 1941 and 1942 of the California  Civil
Code and under any similar law, statute or ordinance now or hereafter in effect.

         8.  Acceptance and Surrender of Premises.  By entry  hereunder,  Tenant
accepts the Premises as being in good and sanitary  order,  condition and repair
and accepts the  building  and  improvements  included in the  Premises in their
present  condition and without  representation or warranty by Landlord as to the
condition  of such  building  or as to the use or  occupancy  which  may be made
thereof.  Any exceptions to the foregoing must be by written agreement  executed
by Landlord and Tenant.  Tenant  agrees on the last day of the Lease term, or on
the sooner  termination  of this Lease,  to surrender the Premises  promptly and
peaceably to Landlord in good condition and repair (damage by Acts of God, fire,
normal wear and tear excepted),  with all interior walls painted,  or cleaned so
that they appear freshly  painted,  and repaired and replaced,  if damaged;  all
floors  cleaned  and  waxed;   all  carpets  cleaned  and  shampooed;   the  air
conditioning and heating equipment  serviced by a reputable and licensed service
firm and in good operating condition (provided the maintenance of such equipment
has been Tenant's  responsibility  during the term of this Lease)  together with
all alterations, additions, and improvements which may have been made in, to, or
on the  Premises  (except  movable  trade  fixtures  installed at the expense of
Tenant) except that Tenant shall ascertain from Landlord within thirty (30) days
before the end of the term of this Lease  whether  Landlord  desires to have the
Premises  or  any  part  or  parts  thereof  restored  to  their  condition  and
configuration  as when the  Premises  were  delivered  to Tenant and if Landlord
shall so desire,  then Tenant shall  restore said Premises or such part or parts
thereof before the end of this Lease at Tenant's sole cost and expense.  Tenant,
on or before  the end of the term or sooner  termination  of this  Lease,  shall
remove all of Tenant's  personal  property and trade fixtures from the Premises,
and all  property  not so  removed  on or  before  the end of the term or sooner
termination of this Lease shall be deemed  abandoned by Tenant and title to same
shall thereupon pass to Landlord without  compensation to Tenant.  Landlord may,
upon termination of this Lease,  remove all moveable  furniture and equipment so
abandoned by Tenant, at Tenant's sole cost, and repair any damage caused by such
removal at Tenant's sole cost. If the Premises be not  surrendered at the end of
the term or sooner  termination of the Lease,  Tenant shall  indemnify  Landlord
against loss or liability  resulting from the delay by Tenant in so surrendering
the Premises including,  without  limitation,  any claims made by any succeeding
tenant founded on such delay.  Nothing contained herein shall be construed as an
extension of the term hereof or as a consent of

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Landlord to any holding over by Tenant. The voluntary or other surrender of this
Lease or the Premises by Tenant or a mutual cancellation of this Lease shall not
work as a merger and, at the option of Landlord,  shall either  terminate all or
any existing  subleases or  subtenancies or operate as an assignment to Landlord
of all or any such subleases or subtenancies.

         9.  Alterations  and Additions.  Tenant shall not make, or suffer to be
made, any alteration or addition to the Premises,  or any part thereof,  without
the written  consent of Landlord  first had and  obtained by Tenant,  but at the
cost of Tenant,  and any addition to, or  alteration  of, the  Premises,  except
movable  furniture  and  traded  fixtures,  shall  at once  become a part of the
Premises  and belong to  Landlord.  Landlord  reserves  the right to approve all
contractors  and  mechanics  proposed  by Tenant to make  such  alterations  and
additions.  Tenant  shall  retain  title to all  moveable  furniture  and  trade
fixtures  placed  in  the  Premises.  All  heating,  lighting,  electrical,  air
conditioning,  floor to  ceiling  partitioning,  drapery,  carpeting,  and floor
installations  make by Tenant,  together  with all  property  that has become an
integral part of the Premises, shall not be deemed trade fixtures. Tenant agrees
that it will not proceed to make such  alteration or additions,  without  having
obtained  consent  from  Landlord  to do so,  and  until  five (5) days from the
receipt of such consent,  in order that Landlord may post appropriate notices to
avoid any  liability  to  contractors  or  material  suppliers  for  payment for
Tenant's improvements. Tenant will at all times permit such notices to be posted
and to remain posted until the completion of work.  Tenant shall, if required by
Landlord,  secure  at  Tenant's  own cost and  expense,  a  completion  and lien
indemnity  bond,  satisfactory  to  Landlord,  for  such  work.  Tenant  further
covenants  and agrees that any  mechanic's  lien filed  against the  Premises or
against the Complex for work claimed to have been done for, or materials claimed
to have been  furnished  to Tenant,  will be  discharged  by Tenant,  by bond or
otherwise,  within  ten (10) days  after  the  filing  thereof,  at the cost and
expense of Tenant.  Any  exceptions to the foregoing must be made in writing and
executed by both Landlord and Tenant.

         10. Tenant  Maintenance.  Tenant  shall,  at its sole cost and expense,
keep and maintain the Premises (including  appurtenances) and every part thereof
in a high standard of maintenance  and repair,  and in good sanitary  condition.
Tenant's maintenance and repair responsibilities herein referred to include, but
are not limited to, janitorization, plumbing systems within the non-common areas
of the  Premises  (such as water and drain  lines,  sinks),  electrical  systems
within  the,  non-common  areas  of the  Premises  (such  as  outlets,  lighting
fixtures, lamps, bulbs, tubes, ballasts),  heating and air conditioning controls
within the non-common areas of the Premises (such as mixing boxes,  thermostats,
time clocks,  supply and return grills),  all interior  improvements  within the
premises including but not limited to: wall coverings, window

                                      -10-





<PAGE>



coverings, acoustical ceilings, vinyl tile, carpeting, partitioning, doors (both
interior and exterior,  including closing mechanisms,  latches,  locks), and all
other interior  improvements of any nature whatsoever.  Tenant agrees to provide
carpet shields under all rolling chairs or to otherwise be responsible  for wear
and tear of the  carpet  caused  by such  rolling  chairs  if such wear and tear
exceeds  that  caused by normal  foot  traffic in  surrounding  areas.  Areas of
excessive wear shall be replaced at Tenant' sole expense upon Lease termination.

         11.  Utilities of the  Building in Which the  Premises Are Located.  As
Additional Rent and in accordance with paragraph 4 D of this Lease, Tenant shall
pay its  proportionate  share (calculated on a square footage or other equitable
basis as  calculated  by  Landlord)  of the cost of all utility  charges such as
water, gas, electricity,  telephone,  telex and other electronic  communications
service,  sewer service,  waste-pick-up  and any other  utilities,  materials or
services  furnished  directly to the building in which the Premises are located,
including,  without limitation,  any temporary or permanent utility surcharge or
other exactions whether or not hereinafter imposed.

         Landlord  shall not be liable for and Tenant  shall not be  entitled to
any abatement or reduction of rent by reason of any  interruption  or failure or
utility services to the Premises when such  interruption or failure is caused by
accident,  breakage,  repair, strikes,  lockouts, or other labor disturbances or
labor  disputes of any nature,  or by any other  cause,  similar or  dissimilar,
beyond the reasonable control of Landlord.

         Provided that Tenant is not in default in the performance or observance
of any of the terms,  covenants or  conditions  of this Lease to be performed or
observed by it, Landlord shall furnish to the Premises between the hours of 8:00
a.m. and 6:00 p.m.,  Mondays through Fridays (holidays  excepted) and subject to
the rules and regulations of the Complex  hereinbefore  referred to,  reasonable
quantities of water,  gas and  electricity  suitable for the intended use of the
Premises and heat and air conditioning  required in Landlord's  judgment for the
comfortable use and occupation of the Premises for such purposes.  Tenant agrees
that at all  times  it will  cooperate  fully  with  Landlord  and  abide by all
regulations  and  requirements  that  Landlord  may  prescribe  for  the  proper
functioning  and  protection  of  the  building  heating,  ventilating  and  air
conditioning systems. Whenever heat generating machines, equipment, or any other
devices (including exhaust fans) are used in the Premises by Tenant which affect
the temperature or otherwise maintained by the air conditioning system, Landlord
shall  have 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. Tenant will not,

                                      -11-




<PAGE>



without the written  consent of  Landlord,  use any  apparatus  or device in the
Premises (including,  without limitation),  electronics data processing machines
or machines  using current in excess of 110 Volts which will in any way increase
the amount of electricity,  gas, water or air conditioning  usually furnished or
supplied  to  premises  being  used as general  office  space,  or connect  with
electric current (except through existing  electrical  outlets in the Premises),
or with gas or water  pipes any  apparatus  or device for the  purposes of using
electric current, gas, or water. If Tenant shall require water, gas, or electric
current in excess of that usually  furnished or supplied to premises  being used
as general  office  space,  Tenant  shall first  obtain the  written  consent of
Landlord,  which  consent  shall not be  unreasonably  withheld and Landlord may
cause an electric  current,  gas, or water meter to be installed in the Premises
in order to measure the amount of electric  current,  gas or water  consumed for
any  such  excess  use.  The  cost of any such  meter  and of the  installation,
maintenance  and repair  thereof,  all charges for such  excess  water,  gas and
electric current consumed (as shown by such meters and at the rates then charged
by the  furnishing  public  utility);  and any  additional  expense  incurred by
Landlord in keeping account of electric current, gas, or water so consumed shall
be paid by Tenant,  and Tenant  agrees to pay Landlord  therefor  promptly  upon
demand by Landlord.

         12.  Taxes.

         A. As  Additional  Rent and in  accordance  with  Paragraph 4 D of this
Lease,  Tenant shall pay to Landlord  Tenant's  proportionate  share of all Real
Property Taxes, which prorata share shall be allocated to the leased Premises by
square footage or other  equitable  basis,  as calculated by Landlord.  The term
"Real Property  Taxes," as used herein,  shall mean (i) all taxes,  assessments,
levies and other charges of any kind or nature whatsoever,  general and special,
foreseen and unforeseen  (including all  installments  of principal and interest
required to pay any general or special  assessments for public  improvements and
any increases resulting from reassessments  caused by any change in ownership of
the Complex) now or hereafter imposed by any governmental or  quasi-governmental
authority or special district having the direct or indirect power to tax or levy
assessments, which are levied or assessed against, or with respect to the value,
occupancy or use of, all or any portion of the Complex (as now constructed or as
may at any time  hereafter be  constructed,  altered,  or otherwise  changed) or
Landlord's  interest  therein;  any  improvements  located  within  the  Complex
(regardless  of  ownership);  the  fixtures,  equipment  and other  property  of
Landlord,  real or  personal,  that are an  integral  part of and located in the
Complex; or parking areas, public utilities,  or energy within the Complex; (ii)
all charges,  levies or fees imposed by reason of  environmental  regulation  or
other  governmental  control  of the  Complex;  and  (iii)  all  costs  and fees
(including attorneys'

                                      -12-



<PAGE>



fees)  incurred  by  Landlord  in  contesting  any  Real  Property  Tax  and  in
negotiating with public  authorities as to any Real Property Tax. If at any time
during  the  term of this  Lease  the  taxation  or  assessment  of the  Complex
prevailing as of the commencement date of this Lease shall be altered so that in
lieu of or in addition to any Real Property Tax  described  above there shall be
levied,  assessed  or  imposed  (whether  by reason of a change in the method of
taxation or assessment,  creation of a new tax or charge, or any other cause) an
alternate or additional tax or charge (i) on the value,  use or occupancy of the
Complex  or  Landlord's  interest  therein or (ii) on or  measured  by the gross
receipts,  income or rentals from the Complex, on Landlord's business of leasing
the  Complex,  or computed in any manner with  respect to the  operation  of the
Complex,  then any such tax or charge,  however  designated,  shall be  included
within the meaning of the term "Real Property Taxes" for purposes of this Lease.
If any Real  Property  Tax is based  upon  property  or rents  unrelated  to the
Complex,  then only that part of such real Property Tax that is fairly allocable
to the Complex shall be included  within the meaning of the term "Real  Property
Taxes." Notwithstanding the foregoing,  the term "Real Property Taxes" shall not
include estate, inheritance,  gift or franchise taxes of Landlord or the federal
or state net income tax imposed on Landlord's income from all sources.

         B.  Taxes on Tenant's Property.

         (a)  Tenant  shall  be  liable  for  and  shall  pay  ten  days  before
delinquency, taxes levied against any personal property or trade fixtures placed
by Tenant in or about  the  Premises.  If any such  taxes on  Tenant's  personal
property or trade fixtures are levied against Landlord or Landlord's property or
if the assessed value of the Premises is increased by the inclusion therein of a
value  placed upon such  personal  property  or trade  fixtures of Tenant and if
Landlord, after written notice to Tenant, pays the taxes based on such increased
assessment, which Landlord shall have the right to do regardless of the validity
thereof, but only under proper protest if requested by Tenant, Tenant shall upon
demand,  as the case may be,  repay to  Landlord  the  taxes so  levied  against
Landlord,  or the  proportion of such taxes  resulting from such increase in the
assessment;  provided that in any such event Tenant shall have the right, in the
name of Landlord  and with  Landlord's  full  cooperation,  to bring suit in any
court of competent  jurisdiction to recover the amount of any such taxes so paid
under protest, and any amount so recovered shall belong to Tenant.

         (b) If the Tenant  improvements  in the  Premises,  whether  installed,
and/or  paid for by  Landlord  or Tenant and  whether or not affixed to the real
property so as to become a part  thereof,  are  assessed  for real  property tax
purposes  at a valuation  higher than the  valuation  at which  standard  office
improvements in other space in the Complex are assessed,  then the real property
taxes and assessments levied against Landlord or the

                                      -13-






<PAGE>



Complex by reason of such excess assessed  valuation shall be deemed to be taxes
levied  against  personal  property  of  Tenant  and  shall be  governed  by the
provisions of 12Ba,  above.  If the records of the County Assessor are available
and  sufficiently  detailed  to serve as a basis for  determining  whether  said
Tenant  improvements  are assessed at a higher  valuation  than standard  office
improvements  in other space in the Complex,  such  records  shall be binding on
both the Landlord and the Tenant.  If the records of the County Assessor are not
available  or  sufficiently  detailed  to  serve  as a  basis  for  making  said
determination, the actual cost of construction shall be used.

         13. Liability Insurance.  Tenant at Tenant's expense, agrees to keep in
force  during the term of this Lease a policy of  commercial  general  insurance
with  combined  single  limit  coverage  of not less  than Two  Million  Dollars
($2,000,000)  for injuries to or death of persons  occurring in, on or about the
Premises or the Complex,  and property damage.  The policy or policies affecting
such  insurance,  certificates  of  insurance  of which  shall be  furnished  to
Landlord,  shall name  Landlord as  additional  insureds,  and shall  insure any
liability of Landlord, contingent or otherwise, as respects acts or omissions of
Tenant,  its  agents,  employees  or  invitees  or  otherwise  by any conduct or
transactions  of any of said  persons in or about or  concerning  the  Premises,
including  any  failure of Tenant to observe or perform  any of its  obligations
hereunder; shall be issued by an insurance company admitted to transact business
in the  State of  California;  and shall  provide  that the  insurance  effected
thereby  shall not be  canceled,  except upon  thirty  (30) days' prior  writing
notice to Landlord. If, during the term of this Lease, in the considered opinion
of Landlord's  Lender,  insurance advisor,  or counsel,  the amount of insurance
described in this  Paragraph 13 is not adequate,  Tenant agrees to increase said
coverage to such reasonable amount as Landlord's Lender,  insurance advisor,  or
counsel shall deem adequate.

         14. Tenant's  Personal  Property  Insurance and Workman's  Compensation
Insurance.  Tenant  shall  maintain a policy or  policies  of fire and  property
damage  insurance  in "all  risk"  form  with a  sprinkler  leakage  endorsement
insuring  the  personal  property,  inventory,  trade  fixtures,  and  leasehold
improvements  within the leased Premises for the full replacement value thereof.
The  proceeds  from  any of such  policies  shall  be used  for  the  repair  or
replacement of such items so insured.

         Tenant   shall  also   maintain  a  policy  or  policies  of  workman's
compensation  insurance and any other employee benefit  insurance  sufficient to
comply with all laws.

         15. Property  Insurance.  Landlord shall purchase and keep in force and
as Additional  Rent and in accordance  with  Paragraph 4D of this Lease,  Tenant
shall pay to Landlord (or Landlord's agent if so directed by Landlord)  Tenant's
proportionate share (calculated on a square footage or other

                                      -14-



<PAGE>



equitable  basis as  calculated  by  Landlord) of the  deductibles  on insurance
claims and the cost of policy or policies of insurance  covering  loss or damage
to the Premises and Complex in the amount of the full replacement value thereof,
providing  protection against those perils included within the classification of
"all risks" insurance and flood and/or earthquake insurance, if available,  plus
a policy of rental income  insurance in the amount of one hundred (100%) percent
of twelve (12) months Basic Rent,  plus sums paid as  Additional  Rent.  If such
insurance  cost is increased due to Tenant's use of the Premises or the Complex,
Tenant  agrees to pay to Landlord the full cost of such  increase.  Tenant shall
have no interest in nor any right to the proceeds of any  insurance  procured by
Landlord for the Complex.

         Landlord and Tenant do each hereby  respectively  release the other, to
the extent of insurance  coverage of the releasing party, from any liability for
loss  or  damage  caused  by  fire or any of the  extended  coverage  casualties
included in the releasing party's insurance policies,  irrespective of the cause
of such fire or casualty;  provided,  however,  that if the insurance  policy of
either  releasing party  prohibits such waiver,  then this waiver shall not take
effect  until  consent  to  such  waiver  is  obtained.  If  such  waiver  is so
prohibited,  the insured party affected  shall  promptly  notify the other party
thereof.

         16. Indemnification.  Landlord shall not be liable to Tenant and Tenant
hereby  waives all  claims  against  Landlord  for any injury to or death of any
person or damage to or  destruction  of property in or about the Premises or the
Complex by or from any cause whatsoever,  including,  without  limitation,  gas,
fire,  oil,  electricity  or  leakage  of any  character  from the roof,  walls,
basement or other portion of the Premises of the Complex but excluding, however,
the  willful  misconduct  or  negligence  of  Landlord,  its  agents,  servants,
employees,  invitees,  or contractors of which negligence Landlord has knowledge
and  reasonable  time to  correct.  Except as to injury to  persons or damage to
property to the extent arising from the willful  misconduct or the negligence of
Landlord, its agents, servants, employees, invitees or contractors, Tenant shall
hold Landlord  harmless from and defend  Landlord  against any and all expenses,
including reasonable  attorneys' fees, in connection  therewith,  arising out of
any injury to or death of any  person or damage to or  destruction  of  property
occurring  in, on or about the  Premises,  or any part  thereof,  from any cause
whatsoever.

         17.  Compliance.  Tenant, at its sole cost and expense,  shall promptly
comply with all laws, statutes,  ordinances and governmental rules,  regulations
or requirements  now or hereafter in effect;  with the requirements of any board
of fire  underwriters  or other similar body now or hereafter  constituted;  and
with any direction or occupancy certificate issued pursuant to law by any public
officer; provided, however, that no such

                                      -15-



<PAGE>



failure shall be deemed a breach of the provisions if Tenant,  immediately  upon
notification,  commences to remedy or rectify said failure.  The judgment of any
court of competent jurisdiction or the admission of Tenant in any action against
Tenant, whether Landlord be a party thereto or not, that Tenant has violated any
such law,  statute,  ordinance or governmental  rule,  regulation,  requirement,
direction or provision, shall be conclusive of that fact as between Landlord and
Tenant.  This paragraph  shall not be  interpreted  as requiring  Tenant to make
structural  changes  or  improvements,  except to the  extent  such  changes  or
improvements  are  required as a result  Tenant's  use of the  Premises.  Tenant
shall,  at its  sole  cost and  expense,  comply  with any and all  requirements
pertaining to said Premises, of any insurance organization or company, necessary
for the maintenance of reasonable fire and public liability  insurance  covering
the Premises.

         18. Liens. Tenant shall keep the Premises and the Complex free from any
liens  arising out of any work  performed,  materials  furnished  or  obligation
incurred  by Tenant.  In the event that Tenant  shall not,  within ten (10) days
following the imposition of such lien,  cause the same to be released of record,
Landlord  shall have, in addition to all other remedies  provided  herein and by
law,  the right,  but no  obligation,  to cause the same to be  released by such
means as it shall deem  proper,  including  payment of the claim  giving rise to
such lien. All sums paid by Landlord for such purpose, and all expenses incurred
by it in connection therewith,  shall be payable to Landlord by Tenant on demand
with interest at the prime rate of interest as quoted by the Bank of America.

         19. Assignment and Subletting.  Tenant shall not assign,  transfer,  or
hypothecate the leasehold estate under this Lease, or any interest therein,  and
shall not sublet the Premises,  or any part  thereof,  or any right or privilege
appurtenant  thereto,  or suffer any other person or entity to occupy or use the
Premises,  or any portion  thereof,  without,  in each case,  the prior  written
consent of  Landlord  which  consent  will not be  unreasonably  withheld.  As a
condition for granting this consent to any assignment,  transfer, or subletting,
Landlord may require that Tenant agrees to pay to Landlord,  as additional rent,
fifty percent (50%) of all rents or additional  consideration received by Tenant
from its assignees,  transferees, or subtenants in excess of the rent payable by
Tenant to Landlord hereunder.  Tenant shall, by thirty (30) days written notice,
advise  Landlord  of its intent to assign or transfer  Tenant's  interest in the
Lease or sublet the  Premises  or any  portion  thereof for any part of the term
hereof.  Within thirty (30) days after receipt of said written notice,  Landlord
may, in its sole discretion,  elect to terminate this Lease as to the portion of
the  Premises  described  in Tenant's  notice on the date  specified in Tenant's
notice by giving written notice of such election to terminate. If no such notice
to terminate is given to Tenant  within said thirty (30) day period,  Tenant may
proceed to locate

                                      -16-




<PAGE>



an  acceptable  sublease,  assignee,  or other  transferee  for  presentment  to
Landlord for Landlord's approval,  all in accordance with the terms,  covenants,
and  conditions  of this  paragraph  19. If Tenant  intends to sublet the entire
Premises  and  Landlord  elects to  terminate  this  Lease,  this Lease shall be
terminated on the date specified in Tenant's  notice.  If,  however,  this Lease
shall  terminate  pursuant to the  foregoing  with  respect to less than all the
Premises,  the rent, as defined and reserved  hereinabove shall be adjusted on a
pro rata basis to the number of square feet  retained by Tenant,  and this Lease
as so amended  shall  continue in full force and effect.  In the event Tenant is
allowed to  assign,  transfer  or sublet the whole or any part of the  Premises,
with the prior written consent of Landlord, no assignee, transferee or subtenant
shall assign or transfer  this Lease,  either in whole or in part, or sublet the
whole or any part of the  Premises,  without  also  having  obtained  the  prior
written consent of Landlord. A consent of Landlord to one assignment,  transfer,
hypothecation,  subletting,  occupation  or use by any  other  person  shall not
release Tenant from any of Tenant's  obligations  hereunder or be deemed to be a
consent  to  any  subsequent   similar  or  dissimilar   assignment,   transfer,
hypothecation,  subletting,  occupation  or use by any  other  person.  Any such
assignment, transfer, hypothecation,  subletting, occupation or use without such
consent shall be void and shall  constitute a breach of this Lease by Tenant and
shall,  at the  option of  Landlord  exercised  by  written  notice  to  Tenant,
terminate this Lease. The leasehold estate under this Lease shall not, nor shall
any interest therein,  be assignable for any purpose by operation of law without
the written  consent of Landlord.  As a condition  to its consent,  Landlord may
require  Tenant to pay all  expenses  in  connection  with the  assignment,  and
Landlord may require  Tenant's  assignee or  transferee  (or other  assignees or
transferees)  to assume in writing all of the  obligations  under this Lease and
for Tenant to remain liable to Landlord under the Lease. See Paragraph 49.

         20.  Subordination  and  Mortgages.  In the event  Landlord's  title or
leasehold  interest is now or hereafter  encumbered by a deed of trust, upon the
interest of Landlord in the land and buildings in which the demised Premises are
located, to secure a loan from a lender (hereinafter referred to as "Lender") to
Landlord, Tenant shall, at the request of Landlord or Lender, execute in writing
an agreement  subordinating its rights under this Lease to the lien of such deed
of trust, or, if so requested,  agreeing that the lien of Lender's deed of trust
shall be or remain  subject and  subordinate  to the rights of Tenant under this
Lease.  Notwithstanding any such  subordination,  Tenant's possession under this
Lease shall not be  disturbed  if Tenant is not in default and so long as Tenant
shall pay all rent and observe and  perform all of the  provisions  set forth in
this Lease.

         21. Entry by Landlord.  Landlord reserves,  and shall at all reasonable
times after at least 24 hours notice (except in

                                      -17-





<PAGE>



emergencies)  have,  the right to enter the Premises to inspect them; to perform
any  services to be provided by Landlord  hereunder;  to submit the  Premises to
prospective   purchasers,   mortgagers   or   tenants;   to  post   notices   of
nonresponsibility;  and to alter, improve or repair the Premises and any portion
of the Complex,  all without  abatement of rent; and may erect  scaffolding  and
other necessary  structures in or through the Premises where reasonably required
by the  character  of the  work to be  performed;  provided,  however  that  the
business  of  Tenant  shall  be  interfered  with to the  least  extent  that is
reasonably  practical.  For each of the  foregoing  purposes,  any  entry to the
Premises  obtained by Landlord by any of said  means,  or  otherwise,  shall not
under any  circumstances  be  construed  or deemed 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 portion thereof. Landlord shall also have the
right  at any time to  change  the  arrangement  or  location  of  entrances  or
passageways,  doors and doorways, and corridors,  elevators,  stairs, toilets or
other public parts of the Complex and to change the name,  number or designation
by which the  Complex is  commonly  known,  and none of the  foregoing  shall be
deemed an actual or constructive  eviction of Tenant, or shall entitle Tenant to
any reduction of rent hereunder.

         22. Bankruptcy and Default.  The commencement of a bankruptcy action or
liquidation  action  or  reorganization   action  or  insolvency  action  or  an
assignment of or by Tenant for the benefit of creditors,  or any similar  action
undertaken by Tenant, or the insolvency of Tenant,  shall, at Landlord's option,
constitute  a breach  of this  Lease  by  Tenant.  If the  trustee  or  receiver
appointed to serve during a bankruptcy, liquidation, reorganization,  insolvency
or similar  action elects to reject  Tenant's  unexpired  Lease,  the trustee or
receiver  shall notify  Landlord in writing of its election  within  thirty (30)
days after an order for relief in a  liquidation  action or within  thirty  (30)
days after the commencement of any action.

         Within thirty (30) days after court  approval of the assumption of this
Lease, the trustee or receiver shall cure (or provide adequate  assurance to the
reasonable satisfaction of Landlord that the trustee or receiver shall cure) any
and all  previous  defaults  under the  unexpired  Lease  and  shall  compensate
Landlord for all actual pecuniary loss and shall provide  adequate  assurance of
future performance under said Lease to the reasonable  satisfaction of Landlord.
Adequate assurance of future performance,  as used herein,  includes,  but shall
not be  limited  to: (i)  assurance  of source  and  payment of rent,  and other
consideration  due under this  Lease;  (ii)  assurance  that the  assumption  or
assignment of this Lease will not breach  substantially  any provision,  such as
radius,  location,  use, or exclusivity provision,  in any agreement relating to
the above described Premises.


                                      -18-





<PAGE>



         Nothing  contained in this section  shall affect the existing  right of
Landlord to refuse to accept an assignment upon commencement of or in connection
with a  bankruptcy,  liquidation,  reorganization  or  insolvency  action  or an
assignment of Tenant for the benefit of creditors or other similar act.  Nothing
contained  in this Lease shall be construed as giving or granting or creating an
equity in the demised Premises to Tenant. In no event shall the leasehold estate
under  this  Lease,  or any  interest  therein,  be  assigned  by  voluntary  or
involuntary bankruptcy proceeding without the prior written consent of Landlord.
In no event shall this Lease or any rights or  privileges  hereunder be an asset
of Tenant under any bankruptcy, insolvency or reorganization proceedings.

         The   failure  to  perform  or  honor  any   covenant,   condition   or
representation  made under this Lease shall  constitute  a default  hereunder by
Tenant upon expiration of the  appropriate  grace period  hereinafter  provided.
Tenant shall have a period of five (5) days from the date of written notice from
Landlord within which to cure any default in the payment of rental or adjustment
thereto. Tenant shall have a period of thirty (30) days from the date of written
notice from  Landlord  within which to cure any other  default under this Lease;
provided, however, that if the nature of Tenant's failure is such that more than
thirty (30) days is reasonably required to cure the same, Tenant shall not be in
default so long as Tenant  commences  performance  within  such  thirty (30) day
period and thereafter prosecutes the same to completion. Upon an uncured default
of this Lease by Tenant,  Landlord shall have the following  rights and remedies
in addition to any other  rights or remedies  available to Landlord at law or in
equity:

         (a) The rights  and  remedies  provided  for by  California  Civil Code
Section 1951.2,  including but not limited to, recovery of the worth at the time
of award of the  amount by which the  unpaid  rent for the  balance  of the term
after the time of award  exceeds  the amount of rental  loss for the same period
that  Tenant  proves  could be  reasonably  avoided,  as  computed  pursuant  to
subsection (b) of said Section 1951.2.  Any proof by Tenant under  subparagraphs
(2) and (3) of  Section  1951.2 of the  California  Civil  Code of the amount of
rental  loss that could be  reasonably  avoided  shall be made in the  following
manner:  Landlord and Tenant shall each select a licensed  real estate broker in
the business of renting property of the same type and use as the Premises and in
the same geographic vicinity.  Such two real estate brokers shall select a third
licensed  real estate  broker,  and the three  licensed  real estate  brokers so
selected shall  determine the amount of the rental loss that could be reasonably
avoided from the balance of the term of this Lease after the time of award.  The
decision of the majority of said licensed real estate brokers shall be final and
binding upon the parties hereto.


                                      -19-



<PAGE>



         (b) The rights and remedies  provided by California  Civil Code Section
which allows  Landlord to continue the Lease in effect and to enforce all of its
rights and remedies under this Lease,  including the right to recover rent as it
becomes  due,  for so long as  Landlord  does not  terminate  Tenant's  right to
possession; acts of maintenance or preservation,  efforts to relet the Premises,
or the  appointment  of a receiver  upon  Landlord's  initiative  to protect its
interest  under this Lease shall not  constitute a termination of Tenant's right
to possession.

         (c) The right to  terminate  this  Lease by giving  notice to Tenant in
accordance with applicable law,

         (d) To the extent  permitted by law, the right and power,  to enter the
Premises and remove  therefrom all persons and property,  to store such property
in a public warehouse or elsewhere at the cost of and for the account to Tenant,
and to sell  such  property  and  apply  such  proceeds  therefrom  pursuant  to
applicable California law. Landlord may from time to time sublet the Premises or
any part  thereof  for such term or terms  (which may extend  beyond the term of
this  Lease)  and at such  rent and such  other  terms as  Landlord  in its sole
discretion may deem advisable, with the right to make alterations and repairs to
the Premises.  Upon each subletting,  (i) Tenant shall be immediately  liable to
pay Landlord,  in addition to  indebtedness  other than rent due hereunder,  the
cost of such subletting,  including,  but not limited to, reasonable  attorneys'
fees,  and any  real  estate  commissions  actually  paid,  and the cost of such
alterations  and repairs  incurred by Landlord and the amount,  if any, by which
the rent hereunder for the period of such  subletting (to the extent such period
does not exceed the term  hereof)  exceeds the amount to be paid as rent for the
Premises for such period or (ii) at the option of Landlord,  rents received from
such  subletting  shall be applied first to payment of  indebtedness  other than
rent due hereunder from Tenant to Landlord;  second, to the payment of any costs
of such subletting and of such alterations and repairs; third to payment of rent
due and unpaid hereunder; and the residue, if any, shall be held by Landlord and
applied in payment of future rent as the same becomes due  hereunder.  If Tenant
has been credited with any rent to be received by such  subletting  under option
(i) and such rent shall not be promptly paid to Landlord by the subtenant(s), or
if such rentals received from such subletting under option (ii) during any month
be less than that to be paid during that month by Tenant hereunder, Tenant shall
pay any such  deficiency to Landlord.  Such  deficiency  shall be calculated and
paid  monthly.  For all  purposes  set forth in this  subparagraph  d, no taking
possession of the Premises by Landlord, shall be construed as an election on its
part to terminate  this Lease unless a written notice of such intention be given
to Tenant. Notwithstanding any such subletting without termination, Landlord may
at any time hereafter elect to terminate this Lease for such previous breach.

                                      -20-




<PAGE>




         (e) The right to have a receiver  appointed for Tenant upon application
by  Landlord,  to take  possession  of the  Premises  and to  apply  any  rental
collected  from the  Premises  and to  exercise  all other  rights and  remedies
granted to Landlord pursuant to subparagraph d. above.

         23. Abandonment. Tenant shall not vacate or abandon the Premises at any
time during the term of this Lease  (except that Tenant may vacate so long as it
pays rent,  provides an on-site security guard during normal business hours from
Monday through Friday, and otherwise performs its obligations hereunder), and if
Tenant shall abandon,  vacate or surrender said Premises,  or be dispossessed by
the process of law, or otherwise,  any personal property belonging to Tenant and
left on the Premises shall be deemed to be abandoned, at the option of Landlord,
except such property as may be mortgaged to Landlord.

         24. Destruction. In the event the Premises are destroyed in whole or in
part from any cause,  except for routine  maintenance and repairs and incidental
damage and  destruction  caused from vandalism and accidents for which Tenant is
responsible for under Paragraph 10, Landlord may, at its option:

         (a) Rebuild or restore the  Premises  to their  condition  prior to the
damage or destruction; or

         (b) Terminate this Lease (providing that the Premises is damaged to the
extent of 33 1/3% of the replacement cost).

         If Landlord does not give Tenant  notice in writing  within thirty (30)
days from the  destruction of the Premises of its election to either rebuild and
restore  them,  or to  terminate  this Lease,  Landlord  shall be deemed to have
elected to rebuild or restore  them,  in which  event  Landlord  agrees,  at its
expense, promptly to rebuild or restore the Premises to their condition prior to
the damage or destruction. Tenant shall be entitled to a reduction in rent while
such  repair  is being  made in the  proportion  that  the area of the  Premises
rendered untenantable by such damage bears to the total area of the Premises. If
Landlord initially  estimates that the rebuilding or restoration will exceed 180
days or if Landlord does not complete the rebuilding or  restoration  within one
hundred eighty (180) days following the date of destruction (such period of time
to be extended for delays caused by the fault or neglect of Tenant or because of
Acts of God, acts of public agencies,  labor disputes,  strikes,  fires, freight
embargoes, rainy or stormy weather,  inability to obtain materials,  supplies or
fuels,  acts of contractors or  subcontractors,  or delay of the  contractors or
subcontractors due to such causes or other  contingencies  beyond the control of
Landlord),  then Tenant shall have the right to terminate  this Leases by giving
fifteen (15) days prior  written  notice to Landlord.  Notwithstanding  anything
herein to the  contrary,  Landlord's  obligation  to rebuild or restore shall be
limited to the building and interior improvements constructed by

                                      -21-





<PAGE>



Landlord as they existed as of the commencement  date of the Lease and shall not
include restoration of Tenant's trade fixtures,  equipment,  merchandise, or any
improvements,  alterations  or additions  made by Tenant to the Premises,  which
Tenant shall forthwith replace or fully repair at Tenant's sole cost and expense
provided this Lease is not cancelled according to the provisions above.

         Unless this Lease is terminated  pursuant to the foregoing  provisions,
this Lease shall remain in full force and effect. Tenant hereby expressly waives
the provisions of Section 1932, Subdivision 2, in Section 1933, Subdivision 4 of
the California Civil Code.

         In the event that the  building in which the  Premises  are situated is
damaged or destroyed  to the extent of not less than 33 1/3% of the  replacement
cost thereof,  Landlord may elect to terminate this Lease,  whether the Premises
be injured or not.

         25. Eminent  Domain.  If all or any part of the Premises shall be taken
by any public or  quasi-public  authority  under the power of eminent  domain or
conveyance in lieu thereof,  this Lease shall terminate as to any portion of the
Premises so taken or conveyed on the date when title vests in the condemnor, and
Landlord shall be entitled to 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 the value of any unexpired term of this Lease. Notwithstanding the
foregoing  paragraph,  any compensation  specifically awarded Tenant for loss of
business,  Tenant's personal property, moving cost or loss of goodwill, shall be
and remain the property of Tenant.

         If (i) any action or  proceeding  is  commenced  for such taking of the
Premises or any part thereof, or if Landlord is advised in writing by any entity
or body having the right or power of  condemnation  of its  intention to condemn
the premises or any portion  thereof,  or (ii) any of the foregoing events occur
with respect to the taking of any space in the Complex not leased hereby,  or if
any such spaces so taken or conveyed in lieu of such taking and  Landlord  shall
decide  to  discontinue  the use and  operation  of the  Complex,  or  decide to
demolish,  alter or rebuild the Complex,  then,  in any of such events  Landlord
shall have the right to terminate  this Lease by giving  Tenant  written  notice
thereof within sixty (60) days of the date of receipt of said written advice, or
commencement  of  said  action  or  proceeding,  or  taking  conveyance,   which
termination  shall  take  place as of the  first to occur of the last day of the
calendar  month next  following  the month in which such  notice is given or the
date on which title to the Premises shall vest in the condemnor.


                                      -22-




<PAGE>



         In the event of such a partial taking or conveyance of the Premises, if
the portion of the Premises taken or conveyed is so substantial  that the Tenant
can no longer reasonably  conduct its business,  Tenant shall have the privilege
of terminating this Lease within sixty (60) days from the date of such taking or
conveyance,  upon written notice to Landlord of its intention so to do, and upon
giving of such notice this Lease shall terminate on the last day of the calendar
month next  following  the month in which such notice is given,  upon payment by
Tenant of the rent from the date of such  taking  or  conveyance  to the date of
termination.

         If a portion of the Premises be taken by  condemnation or conveyance in
lieu  thereof and neither  Landlord  nor Tenant  shall  terminate  this Lease as
provided  herein,  this Lease shall  continue in full force and effect as to the
part of the  Premises  not so taken or  conveyed,  and the rent herein  shall be
apportioned  as of the date of such taking or conveyance so that  thereafter the
rent to be paid by Tenant  shall be in the ratio that the area of the portion of
the  Premises  not so taken or conveyed  bears to the total area of the Premises
prior to such taking.

         26.  Sale  or  Conveyance  by  Landlord.  In the  event  of a  sale  or
conveyance of the Complex or any interest therein, by any owner of the reversion
then  constituting  Landlord,  the transferor shall thereby be released from any
further  liability  upon any of the terms,  covenants or conditions  (express or
implied) herein contained in favor of Tenant, and in such event, insofar as such
transfer is concerned, Tenant agrees to look solely to the responsibility of the
successor in interest of such  transferor  in and to the Complex and this Lease.
This Lease  shall not be  affected  by any such sale or  conveyance,  and Tenant
agrees to attorn to the successor in interest of such transferor.

         27.  Attornment to Lender or Third Party.  In the event the interest of
Landlord  in the land and  buildings  in which the leased  Premises  are located
(whether  such  interest  of  Landlord  is a fee title  interest  or a leasehold
interest) is encumbered  by deed of trust,  and such interest is acquired by the
lender or any third party through judicial foreclosure or by exercise of a power
of sale at private trustee's foreclosure sale. Tenant hereby agrees to attorn to
the purchaser at any such  foreclosure  sale and to recognize  such purchaser as
the  Landlord  under  this  Lease.  In the  event  the lien of the deed of trust
securing the loan from a Lender to Landlord is prior and paramount to the Lease,
this Lease shall nonetheless continue in full force and effect for the remainder
of the unexpired  term hereof,  at the same rental herein  reserved and upon all
the other terms, conditions and covenants herein contained.

         28. Holding Over. Any holding over by Tenant after  expiration or other
termination of the term of this Lease with

                                      -23-




<PAGE>



the written  consent of Landlord  delivered  to Tenant  shall not  constitute  a
renewal or  extension of the Lease or give Tenant any rights in or to the leased
Premises except as expressly  provided in this Lease. Any holding over after the
expiration or other  termination of the term of this Lease,  with the consent of
Landlord,  shall be construed  to be a tenancy from month to month,  on the same
terms and  conditions  herein  specified  insofar as applicable  except that the
monthly  Basic Rent shall be increased  to an amount equal to one hundred  fifty
(150%)  percent of the monthly Basic Rent required  during the last month of the
Lease term.

         29.  Certification of Estoppel.  Tenant shall at any time upon not less
than ten (10) days' prior written notice from Landlord execute,  acknowledge and
deliver to Landlord a statement  in writing  (i)  certifying  that this Lease is
unmodified and in full force and effect (or, if modified,  stating the nature of
such  modification  and certifying that this Lease,  as so modified,  is in full
force and effect)  and the date to which the rent and other  charges are paid in
advance,  if any,  and  (ii)  acknowledging  that  there  are not,  to  Tenant's
knowledge, any uncured defaults on the part of Landlord hereunder, or specifying
such  defaults,  if any, are claimed.  Any such  statement  may be  conclusively
relied  upon by any  prospective  purchaser  or  encumbrancer  of the  Premises.
Tenant's  failure to deliver such statement within such time shall be conclusive
upon Tenant that this Lease is in full force and  effect,  without  modification
except as may be represented by Landlord;  that there are no uncured defaults in
Landlord's performance, and that not more than one month's rent has been paid in
advance.

         30. Construction  Changes. It is understood that the description of the
Premises and the location of ductwork, plumbing and other facilities therein are
subject to such minor changes as Landlord or Landlord's  architect determines to
be desirable in the course of construction of the Premises, and no such changes,
or any changes in plans for any other  portions of the Complex shall affect this
Lease or entitle  Tenant to any  reduction  of rent  hereunder  or result in any
liability of Landlord to Tenant. Landlord does not guarantee the accuracy of any
drawings  supplied to Tenant and  verification  of the accuracy of such drawings
rests with Tenant.

         31. Right of Landlord to Perform.  All terms,  covenants and conditions
of this Lease to be  performed  or  observed  by Tenant  shall be  performed  or
observed by Tenant at Tenant's  sole cost and expense and without any  reduction
of rent. If Tenant shall fail to pay an sum of money, or other rent, required to
be paid by it  hereunder  or shall  fail to perform  any other term or  covenant
hereunder on its part to be performed,  and such failure shall continue for five
(5) days after written notice thereof by Landlord,  Landlord, without waiving or
releasing Tenant from any obligation of Tenant hereunder,  may, but shall not be
obligated

                                      -24-




<PAGE>



to, make any such payment or perform any such other term or covenant on Tenant's
part to be performed.  All sums so paid by Landlord and all  necessary  costs of
such  performance by Landlord  together with interest thereon at the rate of the
prime rate of interest  per annum as quoted by the Bank of America from the date
of such payment or performance by Landlord,  shall be paid (and Tenant covenants
to make such payment) to Landlord on demand by Landlord, and Landlord shall have
(in  addition  to any other  right or remedy of  Landlord)  the same  rights and
remedies  in the event of  nonpayment  by Tenant  as in the case of  failure  by
Tenant in the payment of rent hereunder.

         32.  Attorneys' Fees.

         (a) In the event that either  Landlord or Tenant  should bring suit for
the  possession  of the  Premises,  for the  recovery  of any sum due under this
Lease, or because of the breach of any provision of this Lease, or for any other
relief against the other party hereunder, then all costs and expenses, including
reasonable  attorneys'  fees,  incurred by the prevailing party therein shall be
paid by the other party,  which  obligation on the part of the other party shall
be deemed to have  accrued on the date of the  commencement  of such  action and
shall be enforceable whether or not the action is prosecuted to judgment.

         (b) Should Landlord be named as a defendant in any suit brought against
Tenant in connection with or arising out of Tenant's occupancy hereunder, Tenant
shall pay to Landlord its costs and expenses incurred in such suit,  including a
reasonable attorney's fee.

         33. Waiver.  The waiver by either party of the other party's failure to
perform or observe  any term,  covenant  or  condition  herein  contained  to be
performed or observed by such  waiving  party shall not be deemed to be a waiver
of such term,  covenant or condition or of any  subsequent  failure of the party
failing  to perform or  observe  the same or any other  such term,  covenant  or
condition therein contained, and no custom or practice which may develop between
the parties hereto during the term hereof shall be deemed a waiver of, or in any
way affect,  the right of either party to insist upon performance and observance
by the other party in strict accordance with the terms hereof.

         34. Notices. All notices,  demands,  requests,  advices or designations
which may be or are required to be given by either party to the other  hereunder
shall be in writing. All notices, demands,  requests, advices or designations by
Landlord to Tenant shall be sufficiently  given, made or delivered if personally
served on Tenant by leaving the same at the Premises or if sent by United States
certified  or  registered  mail,  postage  prepaid,  addressed  to Tenant at the
Premises.  All notices demands,  requests,  advices or designations by Tenant to
Landlord shall be sent by United States certified or registered mail, postage

                                      -25-





<PAGE>



prepaid,  addressed to Landlord at its offices at Peery/Arrillaga,  2560 Mission
College Blvd., Suite 101, Santa Clara, CA 95054. Each notice,  request,  demand,
advice or designation  referred to in this paragraph shall be deemed received on
the  date of the  personal  service/or  mailing  thereof  in the  manner  herein
provided, as the case may be.

         35. Examination of Lease. Submission of this instrument for examination
or signature  by Tenant does not  constitute  a  reservation  of or option for a
lease,  and this  instrument is not effective as a lease or otherwise  until its
execution and delivery by both Landlord and Tenant.

         36.  Default  by  Landlord.  Landlord  shall not be in  default  unless
Landlord fails to perform  obligations  required of Landlord within a reasonable
time,  but in no event  earlier  than thirty (30) days after  written  notice by
Tenant to  Landlord  and to the  holder of any first  mortgage  or deed of trust
covering  the  Premises  whose  name and  address  shall  have  heretofore  been
furnished  to Tenant in  writing,  specifying  wherein  Landlord  has  failed to
perform such obligations;  provided,  however,  that if the nature of Landlord's
obligations   is  such  that  more  than  thirty  (30)  days  are  required  for
performance,  then  Landlord  shall  not be in  default  if  Landlord  commences
performance  within  such  thirty  (30) day  period  and  thereafter  diligently
prosecutes the same to completion.

         37. Corporate Authority. If Tenant is a corporation, (or a partnership)
each  individual  executing  this  Lease  on  behalf  of  said  corporation  (or
partnership)  represents and warrants that he is duly  authorized to execute and
deliver this Lease on behalf of said  corporation (or partnership) in accordance
with the bylaws of said  corporation  (or  partnership  in  accordance  with the
partnership  agreement) and that this Lease is binding upon said corporation (or
partnership) in accordance  with its terms.  If Tenant is a corporation,  Tenant
shall,  within  thirty  (30) days  after  execution  of this  Lease,  deliver to
Landlord a certified  copy of the  resolution  of the Board of Directors of said
corporation authorizing or ratifying the execution of this Lease.

         38.  Limitation  Liability.  In consideration of the benefits  accruing
hereunder, Tenant and all successors and assigns covenant and agree that, in the
event of any actual or alleged failure, breach or default hereunder by Landlord,

         (i) the sole and exclusive remedy shall be against Landlord's  interest
in the Premises leased herein;

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


                                      -26-




<PAGE>



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

         (iv) no partner of Landlord  shall be  required to answer or  otherwise
plead to any service of process;

         (v) no judgment will be taken against any partner of Landlord;

         (vi) any judgment  taken against any partner of Landlord may be vacated
and set aside at any time without hearing;

         (vii) no writ of  execution  will ever be levied  against the assets of
any partner of Landlord;

         (viii) these covenants and agreements are enforceable  both by Landlord
and also by an partner of Landlord.

         Tenant agrees that each of the foregoing covenants and agreements shall
be applicable to any covenant or agreement  either  expressly  contained in this
Lease or imposed by statute or at common law.

         39.  Miscellaneous and General Provisions.

         (a) Tenant shall not, without the written consent of Landlord,  use the
name of the building  for any purpose  other than as the address of the business
conducted by Tenant in the Premises.

         (b) This Lease shall in all  respects be governed by and  construed  in
accordance  with the laws of the State of  California.  If any provision of this
Lease shall be invalid,  unenforceable or ineffective for any reason whatsoever,
all other provisions hereof shall be and remain in full force and effect.

         (c) The term  "Premises"  includes  the  space  leased  hereby  and any
improvements now or hereafter  installed therein or attached  thereto.  The term
"Landlord" or any pronoun used in place  thereof  includes the plural as well as
the singular and the  successors  and assigns of Landlord.  The term "Tenant" or
any pronoun  used in place  thereof  includes the plural as well as the singular
and individuals,  firms, associations,  partnerships and corporations, and their
and each of their respective heirs,  executors,  administrators,  successors and
permitted  assigns,  according to the context hereof,  and the provisions of the
this  Lease  shall  inure to the  benefit  of and bind  such  heirs,  executors,
administrators, successors and permitted assigns.

         The term  "person"  includes  the  plural as well as the  singular  and
individuals, firms, associations,  partnerships and corporations.  Words used in
any gender include other genders.

                                      -27-





<PAGE>



If there be more than one Tenant the  obligations of Tenant  hereunder are joint
and  several.  The  paragraph  headings  of this  Lease are for  convenience  of
reference only and shall have no effect upon the construction or  interpretation
of any provision hereof.

         (d) Time is of the  essence  of this  Lease  and of each and all of its
provisions.

         (e) At the  expiration  or earlier  termination  of this Lease,  Tenant
shall execute,  acknowledge and deliver to Landlord,  within ten (10) days after
written  demand from Landlord to Tenant,  any quitclaim  deed or other  document
required by any  reputable  title  company,  licensed to operate in the State of
California,  to remove the cloud or  encumbrance  created by this Lease from the
real property of which Tenant's Premises are a part.

         (f) This  instrument  along with any  exhibits and  attachments  hereto
constitutes  the entire  agreement  between  Landlord and Tenant relative to the
Premises and this  agreement  and the exhibits and  attachments  may be altered,
amended or revoked only by an instrument in writing  signed by both Landlord and
Tenant.  Landlord and Tenant agree hereby that all prior or contemporaneous oral
agreements  between and among  themselves  and their  agents or  representatives
relative  to the  leasing  of the  Premises  are  merged in or  revoked  by this
agreement.

         (g) Neither Landlord nor Tenant shall record this Lease or a short form
memorandum hereof without the consent of the other.

         (h) Tenant  further  agrees to execute  any  amendments  required  by a
lender to  enable  Landlord  to obtain  financing,  so long as  Tenant's  rights
hereunder are not substantially affected.

         (i) Paragraphs 43 through 51 added hereto and are included as a part of
this lease.

         (j) Clauses,  plats and riders,  if any,  signed by Landlord and Tenant
and endorsed on or affixed to this Lease are a part hereof.

         (k) Tenant  covenants  and agrees that no diminution or shutting off of
light,  air or view by any structure which may be hereafter  erected (whether or
not by  Landlord)  shall in any way  affect  his  Lease,  entitle  Tenant to any
reduction or rent hereunder or result in any liability of Landlord to Tenant.

         40.  Brokers.  Tenant  warrants  that it had  dealings  with  only  the
following  real estate brokers or agents in connection  with the  negotiation of
this Lease:  none and that it knows of no other real estate  broker or agent who
is entitled to a commission in connection with this Lease.

                                      -28-

<PAGE>




         41. Signs. No sign,  placard,  picture,  advertisement,  name or notice
shall be  inscribed,  displayed  or  printed or affixed on or to any part of the
outside of the  Premises or any  exterior  windows of the  Premises  without the
written  consent of Landlord  first had and obtained and Landlord shall have the
right to remove any such sign, placard, picture,  advertisement,  name or notice
without notice to and at the expense of Tenant. If Tenant is allowed to print or
affix or in any way place a sign in, on, or about the Premises,  upon expiration
or other  sooner  termination  of this Lease,  Tenant at Tenant's  sole cost and
expense shall both remove such sign and repair all damage in such a manner as to
restore all aspects of the appearance of the Premises to the condition  prior to
the placement of said sign.

         All  approved  signs or  lettering  on outside  doors shall be printed,
painted,  affixed or inscribed at the expense of Tenant by a person  approved of
by Landlord.

         Tenant shall not place anything or allow anything to be placed near the
glass of any window,  door  partition  or wall which may appear  unsightly  from
outside the Premises.

         IN WITNESS  WHEREOF,  Landlord and Tenant have  executed and  delivered
this Lease as of the day and year last written below.

LANDLORD                                          TENANT

ARRILLAGA FAMILY TRUST                            PARADIGM TECHNOLOGY, INC., a
                                                  Delaware corporation


By__________________________                      By____________________________
   John Arrillaga, Trustee

Date________________________                      Title_________________________

                                                  Type or Print Name____________
RICHARD T. PEERY SEPARATE
PROPERTY TRUST                                    Date__________________________


By___________________________
   Richard T. Peery, Trustee

Date_________________________


                                      -29-



<PAGE>



Paragraphs  43 through 51 to Lease  Agreement  Dated  December 26, 1996,  By and
Between the Arrillaga  Family Trust and the Richard T. Peery  Separate  Property
Trust, as Landlord,  and Paradigm Technology,  Inc., a Delaware corporation,  as
Tenant for 19,855+/- Square Feet of Space Located at 694 Tasman Drive, Milpitas,
California.

         43. Basic Rent.  In  accordance  with  Paragraph  4A herein,  the total
aggregate  sum of TWO MILLION TWO HUNDRED  FIFTY ONE THOUSAND FIVE HUNDRED FIFTY
SEVEN AND NO/100 DOLLARS ($2,251,557.00), shall be payable as follows:

         On February  1, 1997,  the sum of THIRTY FOUR  THOUSAND  SEVEN  HUNDRED
FORTY SIX AND 25/100  DOLLARS  ($34,746.25)  shall be due, and a like sum due on
the first day of each month thereafter, through and including January 1, 1998.

         On  February  1, 1998,  the sum of THIRTY SIX  THOUSAND  SEVEN  HUNDRED
THIRTY ONE AND 75/100 DOLLARS  ($36,731.75)  shall be due, and a like sum due on
the first day of each month thereafter, through and including January 1, 1999.

         On February 1, 1999,  the sum of THIRTY SEVEN  THOUSAND  SEVEN  HUNDRED
TWENTY FOUR AND 50/100 DOLLARS  ($37,724.50) shall be due, and a like sum due on
the first day of each month thereafter, through and including January 1, 2000.

         On February 1, 2000,  the sum of THIRTY EIGHT  THOUSAND  SEVEN  HUNDRED
SEVENTEEN AND 25/100  DOLLARS  ($38,717.25)  shall be due, and a like sum due on
the first day of each month thereafter, through and including January 1, 2001.

         On February 1, 2001,  the sum of THIRTY NINE THOUSAND SEVEN HUNDRED TEN
AND NO/100  DOLLARS  ($39,710.00)  shall be due, and a like sum due on the first
day of each month  thereafter,  through and including  January 1, 2002; or until
the entire  aggregate  sum of TWO MILLION TWO HUNDRED  FIFTY ONE  THOUSAND  FIVE
HUNDRED FIFTY SEVEN AND NO/100 DOLLARS ($2,251,557.00) has been paid.

         44.  "As-Is"  Basis.  It is  hereby  agreed  that the  Premises  leased
hereunder is leased  strictly on an "as-is" basis and in its present  condition,
and in the configuration as shown on Exhibit B attached hereto, and by reference
made a part hereof. It is specifically  agreed between the parties that Landlord
shall not be required to make,  nor be  responsible  for any cost, in connection
with any repair,  restoration,  and/or  improvement to the Premises in order for
this  Lease to  commence,  or  thereafter,  throughout  the Term of this  Lease.
Notwithstanding  anything to the contrary  within this Lease,  Landlord makes no
warranty or  representation of any kind or nature whatsoever as to the condition
or  repair of the  Premises,  nor as to the use or  occupancy  which may be made
thereof.


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<PAGE>



         45. Consent. Whenever the consent of one party to the other is required
hereunder, such consent shall not be unreasonably withheld.

         46.  Choice of Law;  Severability.  This Lease shall in all respects be
governed  by  and  construed  in  accordance  with  the  laws  of the  State  of
California. If any provisions of this Lease shall be invalid,  unenforceable, or
ineffective for any reason whatsoever,  all other provisions hereof shall be and
remain in full force and effect.

         47.  Authority to Execute.  The parties  executing this Lease Agreement
hereby warrant and represent  that they are properly  authorized to execute this
Lease  Agreement  and bind the parties on behalf of whom they execute this Lease
Agreement  and to all of the  terms,  covenants  and  conditions  of this  Lease
Agreement as they relate to the respective parties hereto.

         48.  Assessment  Credits.  The demised  property herein is subject to a
special assessment levied by the City of Milpitas in Improvement District No. 9.
As a part of said special assessment proceedings, additional bonds were sold and
assessments levied to provide for construction  contingencies and reserve funds.
Interest will be earned on such funds created for  contingencies  and on reserve
funds which will be credited for the benefit of said assessment district. To the
extent surpluses are created in said district through unused  contingency funds,
interest  earnings on reserve funds, such surpluses shall be deemed the property
of Landlord.  Notwithstanding that such surpluses may be credited on assessments
otherwise  due against the demised  premises,  Tenant shall pay to Landlord,  as
additional  rent if, and at the time of any such credit of surpluses,  an amount
equal to all such surpluses so credited.

         49.  Assignment  and  Subletting  (Continued).  Any  and  all  sublease
agreement(s)  between Tenant and any and all subtenant(s) (which agreements must
be consented to by Landlord,  pursuant to the  requirements of this Lease) shall
contain the following language:

         "If Landlord and Tenant jointly and voluntarily  elect,  for any reason
         whatsoever, to terminate the Master Lease prior to the scheduled Master
         Lease  termination  date,  then this Sublease (if then still in effect)
         shall terminate  concurrently with the termination of the Master Lease.
         Subtenant  expressly  acknowledges  and agrees  that (1) the  voluntary
         termination  of the  Master  Lease  by  Landlord  and  Tenant  and  the
         resulting  termination  of this Sublease  shall not give  Subtenant any
         right or power to make any legal or equitable  claim against  Landlord,
         including  without  limitation any claim for interference with contract
         or interference with prospective economic advantage, and

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<PAGE>



         (2) Subtenant hereby waives any and all rights it may have under law or
         at equity against  Landlord to challenge  such an early  termination of
         the Sublease,  and unconditionally  releases and relieves Landlord, and
         its officers, directors, employees and agents, from any and all claims,
         demands, and/or causes of action whatsoever  (collectively,  "Claims"),
         whether  such  matters  are  known  or  unknown,  latent  or  apparent,
         suspected or unsuspected, foreseeable or unforeseeable, which Subtenant
         may  have  arising  out  of  or  in  connection  with  any  such  early
         termination of this  Sublease.  Subtenant  knowingly and  intentionally
         waives any and all protection  which is or may be given by Section 1542
         of the  California  Civil Code which  provides as  follows:  "A general
         release does not extend to claims  which the creditor  does not know or
         suspect  to exist in his favor at the time of  executing  the  release,
         which if known by him must have materially affected his settlement with
         debtor.

         The term of this  Sublease is therefore  subject to early  termination.
Subtenant's  initials here below evidence (a) Subtenant's  consideration  of and
agreement to this early termination  provision,  (b) Subtenant's  acknowledgment
that, in determining the net benefits to be derived by Subtenant under the terms
of this Sublease, Subtenant has anticipated the potential for early termination,
and (c) Subtenant's agreement to the general waiver and release of Claims above.

         Initials: __________                           Initials: __________
                   Subtenant                                      Tenant

         50.  Hazardous  Materials.  Landlord  and Tenant  agree as follows with
respect to the existence or use of "Hazardous Materials" (as defined herein) on,
in, under or about the Premises and real property  located beneath said Premises
and the common areas of the Complex (hereinafter collectively referred to as the
"Property"):

         A. As used  herein,  the  term  "Hazardous  Materials"  shall  mean any
material,  waste,  chemical,  mixture  or  byproduct  which is or  hereafter  is
defined,  listed or designated  under  Environmental  Laws (defined  below) as a
pollutant, or as a contaminant,  or as a toxic or hazardous substance,  waste or
material,  or  any  other  unwholesome,   hazardous,  toxic,  biohazardous,   or
radioactive material, waste, chemical, mixture or byproduct, or which is listed,
regulated or restricted by any Environmental Law (including, without limitation,
petroleum  hydrocarbons or any  distillates or derivative or fractions  thereof,
polychlorinated byphenyls, or asbestos). As used herein, the term "Environmental
Laws"  shall  mean  any  applicable  Federal,   State  of  California  or  local
governmental law (including common law), statute,  regulation,  rule, ordinance,
permit, license, order, requirement, agreement, or approval, or

                                      -32-



<PAGE>



any determination,  judgment,  directive,  or order of any executive or judicial
authority  at any level of  Federal,  State of  California  or local  government
(whether  now  existing  or  subsequently  adopted or  promulgated)  relating to
pollution or the protection of the environment,  ecology,  natural resources, or
public health and safety.

         B.  Tenant  shall  obtain  Landlord's  written  consent,  which  may be
withheld in  Landlord's  discretion,  prior to the  occurrence  of any  Tenant's
Hazardous  Material  Activities  (defined  below);   provided,   however,   that
Landlord's  consent  shall not be  required  for normal use in  compliance  with
applicable Environmental Laws of customary household and office supplies (Tenant
shall first provide  Landlord with a list of said materials  use),  such as mild
cleaners,  lubricants  and copier  toner.  As used  herein,  the term  "Tenant's
Hazardous   Materials   Activities"  shall  mean  any  and  all  use,  handling,
generation, storage, disposal, treatment, transportation, discharge, or emission
of any Hazardous Materials on, in, beneath,  to, from, at or about the Property,
in  connection  with  Tenant's  use of the  Property,  or by Tenant or by any of
Tenant's agents,  employees,  contractors,  vendors,  invitees,  visitors or its
future  subtenants  or  assignees.  Tenant  agrees  that  any and  all  Tenant's
Hazardous  Materials  Activities  shall be conducted in strict,  full compliance
with applicable  Environmental Laws at Tenant's expense, and shall not result in
any  contamination of the Property or the environment.  Tenant agrees to provide
Landlord  with  prompt  written  notice of any  spill or  release  of  Hazardous
Materials at the Property  during the term of the Lease of which Tenant  becomes
aware,  and further agrees to provide Landlord with prompt written notice of any
violation of Environmental Laws in connection with Tenant's Hazardous  Materials
Activities  of which  Tenant  becomes  aware.  If Tenant's  Hazardous  Materials
Activities  involve  Hazardous  Materials  other than  normal  use of  customary
household and office supplies,  Tenant also agrees at Tenant's  expense:  (i) to
install such Hazardous Materials monitoring,  storage and containment devices as
Landlord  reasonably  deems  necessary  (Landlord  shall have no  obligation  to
evaluate   the  need  for  any  such   installation   or  to  require  any  such
installation);  (ii) provide Landlord with a written inventory of such Hazardous
Materials,  including an update of same each year upon the  anniversary  date of
the  Commencement  Date of the  Lease  ("Anniversary  Date");  and (iii) on each
Anniversary Date, to retain a qualified environmental consultant,  acceptable to
Landlord,  to  evaluate  whether  Tenant is in  compliance  with all  applicable
Environmental  Laws with  respect to Tenant's  Hazardous  Materials  Activities.
Tenant,   at  its  expense,   shall  submit  to  Landlord  a  report  from  such
environmental consultant which discusses the environmental consultant's findings
within two (2) months of each Anniversary Date.  Tenant,  at its expense,  shall
promptly  undertake  and  complete  any and  all  steps  necessary,  and in full
compliance  with  applicable  Environmental  Laws,  to fully correct any and all
problems or deficiencies identified by the

                                      -33-






<PAGE>



environmental consultant, and promptly provide Landlord  with  documentation  of
all such corrections.

         C. Prior to  termination  or  expiration of the Lease,  Tenant,  at its
expense,  shall (iv) properly  remove from the Property all Hazardous  Materials
which come to be located at the Property in connection  with Tenant's  Hazardous
Materials  Activities,  and (v) fully  comply  with and  complete  all  facility
closure  requirements  of  applicable   Environmental  Laws  regarding  Tenant's
Hazardous  Materials  Activities,  including  but not  limited  to (x)  properly
restoring  and  repairing  the  Property to the extent  damaged by such  closure
activities,   and  (y)  obtaining  from  the  local  Fire  Department  or  other
appropriate  governmental authority with jurisdiction a written concurrence that
closure has been completed in compliance  with  applicable  Environmental  Laws.
Tenant shall promptly provide Landlord with copies of any claims,  notices, work
plans, data and reports  prepared,  received or submitted in connection with any
such closure activities.

         D. If Landlord, in its sole discretion,  believes that the Property has
become  contaminated  as a result of Tenant's  Hazardous  Materials  Activities,
Landlord in  addition to any other  rights it may have under this Lease or under
Environmental  Laws or other  laws,  may enter  upon the  Property  and  conduct
inspection,  sampling and  analysis,  including but not limited to obtaining and
analyzing  samples of soil and  groundwater,  for the purpose of determining the
nature  and  extent  of such  contamination.  Tenant  shall  promptly  reimburse
Landlord for the costs of such an  investigation,  including  but not limited to
reasonable  attorneys' fees Landlord incurs with respect to such  investigation,
that  discloses  Hazardous  Materials  contamination  for which Tenant is liable
under  this  Lease.   Except  as  may  be  required  of  Tenant  by   applicable
Environmental Laws, Tenant shall not perform any sampling,  testing, or drilling
to identify the presence of any  Hazardous  Materials at the  Property,  without
landlord's prior written consent which may be withheld in Landlord's discretion.
Tenant shall promptly provide Landlord with copies of any claims,  notices, work
plans, data and reports  prepared,  received or submitted in connection with any
sampling, testing, or drilling performed pursuant to the preceding sentence.

         E. Tenant shall  indemnify,  defend (with legal  counsel  acceptable to
Landlord,  whose consent shall not  unreasonably  be withheld) and hold harmless
Landlord, its employees, assigns, successors, successors-in-interest, agents and
representatives  from and against any and all claims  (including but not limited
to  third  party  claims  from  a  private  party  or a  government  authority),
liabilities,  obligations,  losses,  causes  of  action,  demands,  governmental
proceedings or directives, fines, penalties,  expenses, costs (including but not
limited to  reasonable  attorneys',  consultants'  and other  experts'  fees and
costs),  and  damages,  which arise from or relate to: (vi)  Tenant's  Hazardous
Materials Activities; (vii) releases or

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<PAGE>


discharges of Hazardous  Materials at the Property,  which occur during the Term
of this Lease,  (viii) any Hazardous  Materials  contamination  caused by Tenant
prior  to the  Commencement  Date  of the  Lease;  or  (ix)  the  breach  of any
obligation  of  Tenant  under  this   Paragraph  50   (collectively,   "Tenant's
Environmental  Indemnification").  Tenant's Environmental  Indemnification shall
include but is not limited to the  obligation  to promptly  and fully  reimburse
Landlord for losses in or reductions to rental  income,  and  diminution in fair
market  value of the  Property.  Tenant's  Environmental  Indemnification  shall
further  include but is not limited to the obligation to diligently and properly
implement  to  completion,  at  Tenant's  expense,  any  and  all  environmental
investigation,  removal, remediation,  monitoring, reporting, closure activities
or other  environmental  response  action  (collectively,  "Response  Actions").
Tenant shall promptly provide Landlord with copies of any claims,  notice,  work
plans, data and reports  prepared,  received or submitted in connection with any
Response Actions.

         It is agreed that the  Tenant's  responsibilities  related to Hazardous
Materials  will survive the  expiration  or  termination  of this Lease and that
Landlord may obtain specific performance of Tenant's responsibilities under this
Paragraph 50.

         51. Lease Contingent Upon Landlord Obtaining Termination Agreement with
Current Tenant. This Lease is subject to and conditional upon Landlord obtaining
from Crosspoint Solutions,  Inc., a California corporation  ("Crosspoint"),  the
current tenant occupying the Premises leased hereunder,  a Termination Agreement
satisfactory to Landlord on or before February 1, 1997. In the event Landlord is
unable to obtain said satisfactory  Termination  Agreement on or before February
1, 1997, this Lease Agreement shall, at Landlord's option (a) terminate,  or (b)
the  Commencement  Date hereof shall be modified to reflect the date Landlord so
obtains said satisfactory  Termination  Agreement and receives possession of the
Premises hereunder free and clear of Crosspoint's occupancy and Landlord is able
to deliver the Premises to Tenant; provided,  however, that said period of delay
caused by  Crosspoint  shall not extend  beyond April 1, 1997. In the event this
Lease does not commence by April 1, 1997 (subject only to the delays  covered in
Paragraph 3) this Lease shall be automatically rescinded.


                                      -35-