<PAGE>   1
                                                                  EXHIBIT 10.16

                                LEASE AGREEMENT

                                                        BLDG: PSII-2
                                                        OWNER: 500
                                                        PROP: 322
                                                        UNIT: 101
                                                        TENANT: 32208

        THIS LEASE, made this 4th day of September, 1996 between JOHN
ARRILLAGA, Trustee, 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 THE VANTIVE CORPORATION, a California
corporation, hereinafter called Tenant.


                                  WITNESSETH:

        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:


                All of that certain 24,000(plus or minus) square foot, one-story
                building located at 3333 Octavius Drive, Santa Clara, California
                95054. 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 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 manufacturing, research and development, and storage and other
uses necessary for Tenant to conduct Tenant's business, provided that such uses
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 (unless Tenant agrees to pay
any increased portion of any premium for such insurance), 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 unlawful 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 governing Tenant's use of the
Premises. Tenant shall comply with any covenant, condition, or restriction
("CC&R's") affecting the Premises of which Tenant has notice. 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.

2. TERM *

        A. The term of this Lease shall be for a period of SEVEN (7) years
(unless sooner terminated as hereinafter provided) and, subject to Paragraphs
2(B) and 3, shall commence on the 1st day of January, 1997 and end on the 31st
day December of 2003.

        B. Possession of the Premises shall be deemed tendered and the term of
this Lease shall commence on January 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 XXXXXX specified, this Lease shall
not be void or voidable; no obligation of Tenant shall be XXXXXX 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 30 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.

* 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.


                                                        [INITIAL STAMP]

                                                        /s/ XXXX

                                  page 1 of 8

<PAGE>   2
4. RENT
   A. Basic Rent. Tenant agrees to pay to Landlord at such place as Landlord
may designate without deduction, affect, prior notice, or demand, and Landlord
agrees to accept as Basic Rent for the leased Premises the total sum of FOUR
MILLION THIRTY TWO THOUSAND AND NO/100----------($4,032,000.00) Dollars in
lawful money of the United States of America payable as follows:

        See Paragraph 43 for Basic Rent Schedule

   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 rent as set forth in this 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 the rights and remedies with respect thereto as
       Landlord has for nonpayment 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 rent items
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 estimated 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 XXXXXX
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. See Paragraph 54

   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 equal to 2% of the Basic Rent
due for each month during the Lease Term ("Management Fee").

   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 ONE HUNDRED THREE THOUSAND TWO
HUNDRED AND NO/100 ($103,200.00) 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 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) within thirty (30)
days following 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   XXXX   XXXX   XXXX   XXXX
XXXX   XXXX 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.

   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.

                                                             [INITIAL STAMP]
                                                      /s/ XXXX
                                                     --------------------------

                                  page 2 of 8


<PAGE>   3

6.  PARKING   Tenant shall have the right to use with other tenants or
occupants of the Complex 96 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
96 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 spaces 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, at 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  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 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 amortized
cost of capital expenditures which have the effect of reducing operating
expenses, provided, however, that in the event Landlord makes such capital
improvements, Landlord shall amortize its investment in said improvements over
the useful life thereof (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 reasonably anticipated savings in the
operating expenses.

        "Additional Rent" as used herein shall not 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.

8.  ACCEPTANCE AND SURRENDER OF PREMISES  Subject to Paragraphs 44, 51 and 53,
and 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 XXXXXX 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 airconditioning 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 to pay for 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 this
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 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 (not to be unreasonably withheld) first had and obtained by
Tenant, but at the cost of Tenant, and any addition to, or alteration of, the
Premises, except moveable furniture and trade fixtures, shall at once become a
part of the Premises and belong to Landlord. Landlord reserves the right to
reasonably 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,
airconditioning, floor to ceiling partitioning, drapery, carpeting, and floor
installations made 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 comment, 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 and sanitary condition. Tenant's
maintenance and repair responsibilities herein referred to include, but are not
limited to, all windows, window frames, plate glass, glazing, truck doors,
plumbing systems (such as water and drain lines, sinks, toilets, faucets,
drains, showers and water fountains), electrical systems (such as panels,
conduits, outlets, lighting fixtures, lamps, bulbs, tubes, ballasts), heating
and air-conditioning systems (such as compressors, fans, air handlers, ducts,
mixing boxes, thermostats, time clocks, boilers, heaters, supply and return
grills), store fronts, roofs, downspouts, all interior improvements within the
premises including but not limited to wall coverings, window coverings, carpet,
floor coverings, partitioning, ceilings, doors (both interior and exterior,
including closing mechanisms, latches, locks, skylights (if any), automatic fire
extinguishing systems, and elevators 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's sole expense upon Lease termination. Tenant hereby waives all rights
under, and benefits of, subsection 1 of Section 1932 and Section 1941 and 1942
of the California XXXXXX or ordinance now or hereafter in effect.

11.  UTILITIES  Tenant shall pay promptly, as the same becomes due, all charges
for 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 or used by Tenant on or about the
Premises during the term of this Lease, 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 of
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.

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


                                                                 [INITIAL STAMP]
                                                                 /s/ XXXX

                                  page 3 of 8

<PAGE>   4
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 reasonable attorneys' 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 of 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, or interest charges or other penalties or fines for Landlord's late
payment or Property Taxes, provided Tenant has paid its Taxes by the due dated
as stated herein.

  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 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 liability
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 insurance with limits of
$500,000.  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 written notice to Landlord.  If, during the term
of this Lease, in the considered opinion of Landlord's Lender or insurance
advisor, 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.  Landlord
agrees that such adjustments shall not take place more than one time in any
twelve (12) month period.

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 equitable basis as
calculated by Landlord) 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 and any
deductibles related thereto.  If such insurance cost is increased solely due to
Tenant's use of the Premises or the Complex, Tenant agrees to pay to Landlord
the full cost of such increase or its pro rata share if the increase results
from two or more tenants' use.  Tenant shall have no interest in nor any right
to the proceeds of any insurance procured by Landlord for the Complex.
  Any other provision of this Lease to the contrary notwithstanding, 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 or 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 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 of Tenant's particular 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 maintenance of reasonable fire and
public liability insurance covering the Premises.  See Paragraph 53.

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.


                                                [INITIAL STAMP]
                                                /s/ XXXX
                                                ---------------------
<PAGE>   5
19. ASSIGNMENT AND SUBLETTING  See Paragraph 49

20. SUBORDINATION AND MORTGAGES  In the event Landlord's XXXXXX or
leasehold XXXXXX 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 cost and observe and perform all of the
provisions set forth in this Lease.  See Paragraph 56

21. ENTRY BY LANDLORD  Landlord reserves, and shall at all reasonable times
after at least 24 hours notice (except in 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
(during the last eighteen (18) months of the Term of this Lease) XXXXXX; 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, Landlord shall
at all times have and retain a key with which to unlock all of the doors in an
emergency in order to obtain entry to the Premises, and 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. See Paragraph 57

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) XXXXXX 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.

        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 XXXXXX  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 incurred 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 XXXXXX 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 XXXXXX the amount of rental loss for the same
period that Tenant XXXXXX 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.

        (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 as 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 of Tenant,
and to sell such property and supply such proceeds therefrom pursuant to
applicable California law, Landlord, may from time to time sublet the Premises
or XXXXXX terms (which may extend beyond the term of this Lease) and as
such rent and such other XXXXXX 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. 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

                                                                [INITIAL STAMP]
                                                            /s/ XXXX

                                  page 5 of 8
<PAGE>   6
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.

        (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 and the estimated time required to rebuild or restore 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 building 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 Lease 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 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.

        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. See
Paragraph 58.

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 in 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 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 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. CERTIFICATE OF ESTOPPEL Either party shall at any time upon not less than
ten (10) days' prior written notice from the other party exercise, acknowledge
and deliver to the requesting party 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 the
best of such party's knowledge, any uncured defaults on the part of the other
party 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. The party receiving such request's failure to
deliver such statement within such time shall be conclusive upon the other party
that this Lease is in full force and effect, without modification except as may
be requested by Landlord; that there are no uncured defaults in the requesting
party's performance, and that no more than one month's XXXXXX

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 any 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 to, make any such payment or perform

                                                                 [INITIAL STAMP]
                                                                 /s/ XXXX

                                  page 6 of 8

<PAGE>   7
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 judgement.

        (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
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 the date of actual receipt or refusal of
delivery, 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
by-laws 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.

39. LIMITATION OF 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)
  (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 leveled against the assets of any
         partner of Landlord;
  (viii) these covenants and agreements are enforceable both by Landlord and
         also by any 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.

  40. 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 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. 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.

                                                         [INITIAL STAMP]
                                                         /s/ XXXXXX

                                  page 7 of 8
<PAGE>   8
        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 60 are 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 of rent hereunder or result in any liability of
        Landlord to Tenant.

41.  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.

42.  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 (such consent not be unreasonably
withheld) 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. During the Term of this Lease in which Tenant is the sole
occupant of said Premises, Tenant shall be entitled to use the entire monument
sign designated for said Building.

     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                  THE VANTIVE CORPORATION
                                        a California corporation

By /s/ John Arrillaga                   By /s/ Michael Loo
   -----------------------------------     -----------------------------------
   John  Arrillaga, Trustee                Michael Loo, Director of Finance

Date: 12/2/96                           Date: 28-OCT-96
      --------------------------------        --------------------------------

RICHARD T. PEERY SEPARATE PROPERTY TRUST

By /s/ Richard T. Peery
   -----------------------------------
   Richard T. Peery, Trustee

Date:
      --------------------------------

                                  page 8 of 8
<PAGE>   9
Paragraphs 43 through 60 to Lease Agreement Dated September 4, 1996, By and
Between the Arrillaga Family Trust and the Richard T. Peery Separate Property
Trust, as Landlord, and THE VANTIVE CORPORATION, a California corporation, as
Tenant for 24,000 plus/minus Square Feet of Space Located at 3333 Octavius
Drive, Santa Clara, California.


43.     BASIC RENT: In accordance with Paragraph 4A herein, the total aggregate
sum of FOUR MILLION THIRTY TWO THOUSAND AND NO/100 DOLLARS ($4,032,000.00),
shall be payable as follows:

        On January 1, 1997, the sum of FORTY FOUR THOUSAND FOUR HUNDRED AND
NO/100 DOLLARS ($44,400.00) shall be due, and a like sum due on the first day of
each month thereafter, through and including December 1, 1997.

        On January 1, 1998, the sum of FORTY FIVE THOUSAND SIX HUNDRED AND
NO/100 DOLLARS ($45,600.00) shall be due, and a like sum due on the first day
of each month thereafter, through and including December 1, 1998.

        On January 1, 1999, the sum of FORTY SIX THOUSAND EIGHT HUNDRED AND
NO/100 DOLLARS ($46,800.00) shall be due, and a like sum due on the first day
of each month thereafter, through and including December 1, 1999.

        On January 1, 2000, the sum of FORTY EIGHT THOUSAND AND NO/100 DOLLARS
($48,000.00) shall be due, and a like sum due on the first day of each month
thereafter, through and including December 1, 2000.

        On January 1, 2001, the sum of FORTY NINE THOUSAND TWO HUNDRED AND
NO/100 DOLLARS ($49,200.00) shall be due, and a like sum due on the first day of
each month thereafter, through and including December 1, 2001.

        On January 1, 2002, the sum of FIFTY THOUSAND FOUR HUNDRED AND NO/100
DOLLARS ($50,400.00) shall be due, and a like sum due on the first day of each
month thereafter, through and including December 1, 2002.

        On January 1, 2003 the sum of FIFTY ONE THOUSAND SIX HUNDRED AND NO/100
DOLLARS ($51,600.00) shall be due, and a like sum due on the first day of each
month thereafter, through and including December 1, 2003; or until the entire
aggregate sum of FOUR MILLION THIRTY TWO THOUSAND AND NO/100 DOLLARS
($4,032,000.0) has been paid.

44.     "AS-IS" BASIS: Subject only to Paragraphs 51, 52, 53 and 55, 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. Except as
specifically noted herein, 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. 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.

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 XXXXXX.
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.

                                                            [INITIAL STAMP]
                                                            /s/ XXXXXX

                                     Page 9

<PAGE>   10
48.   ASSESSMENT CREDITS:  The demised property herein may be subject to a
special assessment levied by the City of Santa Clara as part of an Improvement
District.  As a part of said special assessment proceedings (if any),
additional bonds were or may be sold and assessments were or may be levied to
provide for construction contingencies and reserve funds.  Interest shall 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 or reserve funds, such surpluses shall be deemed the property
of Landlord.  Notwithstanding that such surpluses may be credited on assessments
otherwise due against the Leased 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.  For example: if (i) the property is
subject to an annual assessment of $1,000.00, and (ii) a surplus of $200.00 is
credited towards the current year's assessment which reduces the assessment
amount shown on the property tax bill from $1,000.00 to $800.00, Tenant shall,
upon receipt of notice from Landlord, pay to Landlord said $200.00 credit as
Additional Rent.


49.   ASSIGNMENT AND SUBLETTING:

A.    Subject to Paragraph 49B below, 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 shall not be unreasonably withheld.  As a
condition for granting this consent to any assignment, transfer, subletting or
sub-subletting, Landlord may require that Tenant agrees to pay to Landlord, as
Additional Rent, fifty percent (50%) of all rents or additional consideration
(net of reasonable third party broker fees) received by Tenant from its
assignees, transferees, subtenants, and/or sub-subtenants (if any, which in any
and all cases require the written approval of Landlord) 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 two (2) weeks after receipt of said written notice,
Landlord may, at 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; however,
Tenant may, within three (3) business days after receipt of such election by
Landlord, rescind its request to assign or transfer Tenant's interest in the
Lease by providing Landlord written notice thereof, in which event Landlord's
election to terminate shall be null and void.  If no such notice to terminate is
given to Tenant within said two (2) week period, Tenant may proceed to locate an
acceptable sublessee, assignee, or other transferee for presentment to Landlord
for Landlord's approval, all in accordance with the terms, covenants and
conditions of this Paragraph.  If Tenant intents 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, which consent shall not be unreasonably withheld, no
assignee, transferee, subtenant or sub-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,
which consent shall not be unreasonably withheld. A consent of Landlord to one
assignment, transfer, hypothecation, subletting, sub-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, sub-subletting,
occupation or use by any other person.  Any such assignment, transfer,
hypothecation, subletting, sub-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, which consent shall not be unreasonably
withheld.  As a condition XXXX 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.

     B.   In addition to and notwithstanding anything to the contrary in
Paragraph 49A above, Tenant shall be entitled to assign or sublet without
Landlord's consent (but shall still give Landlord notice thereof) to: (i) any
parent or subsidiary corporation, or corporation with which Tenant merges or
consolidates, or (ii) any third party or entity to whom Tenant sells all or
substantially all of its assets; provided, that the net worth of the resulting
or acquiring corporation has a net worth after the merger.


                                                          [INITIAL STAMP]
                                                          /s/ XXXXXX
                                                          ---------------

                                    Page 10
<PAGE>   11
consolidation or acquisition equal to or greater than the net worth of Tenant at
the time of such merger, consolidation or acquisition. No such assignment or
subletting will release the Tenant from its liability and responsibility under
this Lease to the extent Tenant continues in existence following such
transaction.

        C.  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 (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
(hereinafter collectively referred to as the "Property") and the Complex:

        A.  As used herein, the term "Hazardous Materials" shall mean any
hazardous or toxic substance, material or waste which is or becomes subject to
or regulated by any local governmental authority, the State of California, or
the United States Government. The term "Hazardous Materials" includes, without
limitation any material or hazardous substance which is (i) listed under
Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to
Article 11 of Title 22 of the California Administrative Code, Division 4,
Chapter 30, (ii) listed or defined as a "hazardous waste" pursuant to the
Federal Reserve Resource Conservation and Recovery Act, Section 42 U.S.C.
Section 6901 et. seq., (iii) listed or defined as a "hazardous substance"
pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Section 9601 et. seq. (42 U.S.C. Section 9601),
(iv) petroleum or any derivative of petroleum, or (v) asbestos.

        B.  Subject to the terms of this Paragraph 50, Tenant shall have no
obligation to "clean up", reimburse, release indemnify [xxxx] respect to any
Hazardous Materials or wastes which Tenant (prior to and during the term of the
Lease) or other parties on the Property (during the term of this Lease) did not
store, dispose, or transport in, use, or cause to be on the Property in
violation of applicable law.

        C.  Tenant will be 100 percent liable and responsible for: (i) any and
all "cleanup" of said Hazardous Materials contamination which Tenant, its
agents, employees, contractors, invitees or its future subtenants and/or
assignees (if any), or other parties (other than Landlord or Landlord's
employees, agents, contractors or invitees) on the Property, does store,
dispose, or transport in, use or cause to be on the Property and which Tenant,
its agents, employees, contractors, invitees or its future

                                                                 [INITIAL STAMP]
                                    Page 11                      /s/ XXXXX
                                                                       --------
<PAGE>   12
subtenants and/or assignees (if any), or other parties on the Property, does
store, dispose, or transport in, use or cause to be on the Property, and (ii)
any claims, including third party claims, resulting from such Hazardous
Materials contamination described in clause (i) above. Tenant shall indemnify
Landlord and hold Landlord harmless from any liabilities, demands, costs,
expenses and damages, including, without limitation, attorney fees incurred as
a result of any claims resulting from such Hazardous Materials contamination
described in clause (i) above.

        D.  Tenant also agrees not to use or dispose of any Hazardous Materials
on the Property or the Complex without first obtaining Landlord's written
consent, except for the normal use in day-to-day operations of substances which
are substances which in certain strengths or quantities would be deemed
hazardous Materials, but which are typical for office use (e.g., so-called
"liquid paper", copier toner, etc.). In the event consent is granted by
Landlord, Tenant agrees to complete compliance with governmental regulations,
and prior to the termination of said Lease Tenant agrees to follow the proper
closure procedures and will obtain a clearance from the local fire department
and/or the appropriate city agency. If Tenant uses Hazardous Materials, Tenant
also agrees: (i) to install, at Tenant's expense, such Hazardous Materials
monitoring devices as Landlord reasonably deems necessary and (ii) at Tenant's
sole cost and expense, each year upon the anniversary of the Commencement Date
of the Lease Term ("Anniversary Date"), to hire a qualified environmental
consultant, acceptable to Landlord, to evaluate whether Tenant is in compliance
with all applicable Governmental Regulations pertaining to Hazardous Materials.
Tenant 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 shall promptly take all steps necessary to
correct any and all problems identified by the environmental consultant and
provide Landlord with documentation of all such corrections. It is agreed that
the Parties' responsibilities related to Hazardous Materials will survive the
Termination Date of the Lease and that Landlord may obtain specific performance
of Tenant's responsibilities under this Paragraph 50.

51.     MAINTENANCE OF THE PREMISES:

        A.  Roof: In addition to, and notwithstanding anything to the contrary
in Paragraphs 10, 44, and 55 Landlord shall, during the first six (6) months of
the Term of this Lease, be responsible for any costs for repair or damage (but
not maintenance) to the roof membrane covering the Leased Premises; provided
that if Tenant has caused such damage, Tenant shall be responsible for one
hundred (100%) percent of any such costs for repair or damage to the roof
membrane so caused by Tenant. Following the expiration of such six (6) month
period Tenant shall be responsible for paying one hundred percent (100%) of the
cost of repairs, maintenance and the replacement of the roof membrane
throughout the Term of the Lease as described in Paragraphs 4(D) and 7 above.

        B.  Building Systems: In addition to, and notwithstanding anything to
the contrary contained in Paragraphs 10 and 45, Landlord shall repair or cause
to be repaired, at Landlord's expense, any necessary repairs, as reasonably
determined by Landlord, (excluding maintenance) to the HVAC system, plumbing
and standard electrical wiring during the first six (6) month period in the
initial Lease Term, provided however, any repair resulting from Tenant's use
will be paid for one hundred (100%) percent by Tenant. Tenant shall notify
Landlord of any such necessary repairs and Landlord will approve such repairs
and the related cost before such repairs are made.

52.     AMORTIZATION OF CAPITAL IMPROVEMENTS: Notwithstanding anything to the
contrary in Paragraphs 7 and 10, Landlord shall amortize the cost of capital
improvements (if any) as an operating expense in accordance with standard
accounting practices and Tenant shall pay its pro rata share of said capital
improvement cost based on the remaining Term (and/or extended Term, if any) of
the Lease. For example: (i) Landlord incurs capital improvement costs of
$10,000 one year prior to Lease Termination Date, and (ii) said capital
improvement's life is ten (10) years; Tenant shall pay upon receipt of invoice
from Landlord its pro rata share of $1,000.00).

In the event the Term of the Lease is extended XXXXXX pro rata share of the
capital improvement cost shall be increased to include the additional amount
payable to Landlord due to the Extended Term of the Lease. For Example: In the
event: (i) Landlord incurred capital improvement costs illustrated above; and
(ii) this Lease is extended for an additional three year period, Tenant would be
liable for an additional payment to Landlord of $3,000.00 as Additional Rent.
Said payment would be due in full immediately upon Tenant's execution of Lease
documentation related to said Lease extension.


                                    Page 12
<PAGE>   13
53.     COMPLIANCE (CONTINUED): Any non-conformance of the Tenant Improvements
installed and paid for by Landlord as set forth on Exhibit B, required to be
corrected by a governing agency, shall be corrected at the cost and expense of
Landlord if such non-conformance exists as of the Commencement Date of the
Lease and further provided that such governing agency's requirement to correct
the non-conformance is not initiated as a result of: (i) any future
improvements made by Tenant; or (ii) any permit request made to a governing
agency by Tenant. Any non-conformance of the Premises occurring after the
Commencement Date of this Lease Agreement shall be the responsibility of Tenant
to correct at Tenant's cost and expense.

54.     ADDITIONAL RENT (CONTINUED): Notwithstanding anything to the contrary
in Paragraph 4D, Landlord shall provide a written reconciliation in reasonable
detail of the foregoing expenses within one hundred twenty (120) days after the
end of each calendar year, or more frequently if Landlord elects to do so, at
Landlord's sole and absolute discretion. Within thirty (30) days after receipt
of Landlord's reconciliation, Tenant shall have the right, at Tenant's sole
expense, to audit, at a mutually convenient time at Landlord's office,
Landlord's records relating to the foregoing expenses. Such audit must be
conducted by Tenant or an independent nationally recognized accounting firm
that is not being compensated by Tenant or other third party on a contingency
fee basis. If such audit reveals that Landlord has overcharged Tenant, the
amount overcharged shall be credited to Tenant's account within thirty (30)
days after the audit is concluded. If the audit reveals Tenant has been
undercharged, Tenant shall pay the amount of the undercharge within thirty (30)
days of receipt of a statement from Landlord.

The following items shall be excluded from "Additional Rent":

        A.      Any expense reasonably allocable to a particular building in the
                Complex, rather than to the Complex as a whole; provided
                however, that any expense incurred by Landlord for Tenant's
                Leased Premises shall be included as Additional Rent.

        B.      Leasing commissions, attorney's fees, costs, disbursements, and
                other expenses incurred in connection with negotiations with
                other tenants, or disputes between Landlord and other tenants,
                or in connection with marketing, leasing, renovating, or
                improving space for other current or prospective tenants or
                other current or prospective occupants of the Complex.

        C.      The cost of any service sold to any other tenant or other
                occupant for which Landlord is entitled to be reimbursed as an
                additional charge or rental over and above the basic rent and
                additional rent payable under the lease agreement with said
                other tenant or other occupant (including, without limitation,
                after-hours HVAC costs or over-standard electrical consumption
                costs incurred by other tenants or occupants).

        D.      Any costs for which Landlord is reimbursed by others.

        E.      Any costs, fines, or penalties incurred due to violations by
                Landlord of any governmental rule or authority.

        F.      Management costs to the extent they exceed two percent (2%) of
                the monthly Basic Rent due under the Lease.

        G.      Wages, salaries, or other compensation paid to executive
                employees above the grade of Property Manager.

        H.      The cost of correcting any building code or other violations
                which are violations prior to the Lease Commencement Date and
                which violations were not caused by or contributed to by Tenant.

        I.      Repairs or other works XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
                XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX casualty or hazard, to the
                extent that Landlord shall receive proceeds of such insurance or
                would have received such proceeds had Landlord maintained the
                insurance coverage required under this Lease.

        J.      Repairs or building necessitated by condemnation.

        K.      Depreciation and amortization, other than as permitted pursuant
                to this Lease.

        L.      Except as otherwise noted in this Lease, debt service payments
                on any indebtedness

<PAGE>   14
                applicable to the Complex or any portion thereof, including any
                mortgage debt, or ground rents or any other amounts payable
                under any ground lease for the Property.

        M.      Space planning fees and commissions.

        N.      Any amounts paid to any person, firm, or corporation related or
                otherwise affiliated with Landlord or any general partner,
                officer, or director of Landlord or any general partners,
                to the extent same exceeds arms-length competitive prices paid
                in the Santa Clara, California metropolitan area for the
                services or goods provided.

55.     COMMON AREA MAINTENANCE: Subject to Paragraph 5, ("Rules and
Regulations and Common Area") and Paragraph 7, ("Expenses of Operation,
Management, and Maintenance of the Common Areas of the Complex and Building in
Which the Premises are Located"), Landlord shall maintain or cause to be
maintained and repaired the Common Areas of the Complex (such as Common Area
elevators, stairs, corridors, restrooms and sidewalks), all landscaping,
parking areas and all portions of the Complex, the maintenance of which is not
the express obligation of Tenant or other occupants of the Complex, and Tenant
shall pay its pro rata share of said costs and expenses for said maintenance
and repairs.

56.     SUBORDINATION AND MORTGAGES (CONTINUED): Notwithstanding anything to
the contrary contained in Paragraph 20 of this Lease, Tenant's agreement to
subordinate to any existing or future lender shall be conditional upon the
receipt by Tenant of a non-disturbance agreement on such lender's commercially
reasonable form, executed by Landlord and such lender.

57.     ENTRY BY LANDLORD (CONTINUED): Notwithstanding anything to the contrary
contained in Paragraph 21 of this Lease. Tenant shall have the right to require
that Landlord be accompanied by a representative of Tenant during any entry of
the Premises pursuant to the provisions of Paragraph 21 of the Lease (except in
the case of emergency).

58.     SALE OR CONVEYANCE BY LANDLORD (CONTINUED): Notwithstanding anything to
the contrary in the Lease, if Landlord sells or otherwise conveys its interest
in the Premises, Landlord shall not be relieved of its obligation under the
Lease, unless and until Landlord transfers the balance of Tenant's Security
Deposit (if any) to its successor and the successor assumes in writing
Landlord's obligations under the Lease.

59.     OPTION TO EXTEND LEASE FOR FIVE (5) YEARS: Provided Tenant is not in
default (pursuant to Paragraph 22 of the Lease, i.e., Tenant has received
notice and any applicable cure period has expired without cure) of any of
the terms, covenants, and conditions of this Lease Agreement, Landlord hereby
grants to Tenant an Option to Extend this Lease Agreement for an additional
five (5) year period (the "Extended Term") upon the following terms and
conditions:

A.      Tenant shall give Landlord written notice of Tenant's exercise of this
Option to Extend not later than twelve (12) months prior to the scheduled Lease
Termination Date, which date is currently projected to be December 31, 2003, in
which event the Lease shall be considered extended for an additional five (5)
years subject to the Basic Rental set forth below and with: (i) the terms and
conditions subject to amendment by Landlord (Landlord, in its sole and absolute
discretion, may, but is not required to, incorporate its current Lease
provisions that are standard in Landlord's leases as of the date of Tenant's
exercise of its Option to Extend) and (ii) this Paragraph 59 deleted. In the
event that Tenant fails to timely exercise Tenant's option as set forth herein
in writing. Tenant shall have no further Option to extend this lease OEL, and
this lease shall continue in full force and effect for the full remaining term
hereof, absent this Paragraph 59.

B.      The following summarizes the Basic Monthly Rental and the related per
square foot charge by period under the Lease Agreement that would be applied to
the Extended Term:

                                    Page 14


                                                                 [INITIAL STAMP]
                                                                 /s/ XXXXX
                                                                ---------
<PAGE>   15
<TABLE>
<CAPTION>
                                                Monthly
     Period             PSF Rate                Basic Rental

<S>                     <C>                     <C>
01/01/04 - 12/31/04     $2.20                   $52,800.00
01/01/05 - 12/31/05     $2.25                   $54,000.00
01/01/06 - 12/31/06     $2.30                   $55,200.00
01/01/07 - 12/31/07     $2.35                   $56,400.00
01/01/08 - 12/31/08     $2.40                   $57,600.00
</TABLE>

C. The option rights of Tenant under this Paragraph 59, and the Extended Term
thereunder, are granted for Tenant's personal benefit and may not be assigned or
transferred by Tenant, (except to a parent or subsidiary corporation, or
corporation with which Tenant merges or consolidates or to whom Tenant sells
all or substantially all of its assets as provided for in Paragraph 49), either
voluntarily or by operation of law, in any manner whatsoever. In the event that
Landlord consents to a sublease or assignment under Paragraph 49, the option
granted herein and any Extended Term thereunder shall be void and of no force
and effect, whether or not Tenant shall have purported to exercise such option
prior to such assignment or sublease.

D. INCREASED SECURITY DEPOSIT: In the event the term of Tenant's Lease is
extended pursuant to this Paragraph 59, Tenant's Security Deposit shall be
increased to equal twice the Basic Rental due for the last month of the
extended term (i.e., $57,600.00 per month X 2 = $115,200.00).

60. MAINTENANCE OF THE PREMISES: Notwithstanding anything to the contrary in
Paragraph 10, Landlord shall repair damage to the structural shell, foundation,
and roof structure (but not the interior improvements, roof membrane, or
glazing) of the building leased hereunder at Landlord's cost and expense
provided Tenant has not caused such damage, in which event Tenant shall be
responsible for 100 percent of any such costs for repair or damage so caused by
the Tenant. Notwithstanding the foregoing, a crack in the foundation, or
exterior walls that does not endanger the structural integrity of the building,
or which is not life-threatening, shall not be considered material, and shall
not require either Landlord or Tenant to repair the same (unless Tenant has
caused the damage, in which case Tenant shall be responsible for the cost of
said repair(s) regardless of how minor said repair(s) may be).

                                                                     [INITIALS]
<PAGE>   16
PARK SQUARE - PHASE 2
BUILDINGS 1-6
SANTA CLARA, CALIFORNIA 95051
PEERY/LANDLORD


EXHIBIT A TO LEASE AGREEMENT DATED SEPTEMBER 4, 1996 BY AND BETWEEN THE
ARRILLAGA FAMILY TRUST AND THE RICHARD T. PEERY SEPARATE PROPERTY TRUST, AS
LANDLORD AND VANTIVE CORPORATION, AS TENANT.


                             [SITE PLAN DIAGRAM]                 [INITIAL STAMP]
                                                                 /s/ XXXXX


<PAGE>   17
                 [FLOOR PLAN 3333 OCTAVIUS ST. SANTA CLARA, CA]


EXHIBIT B TO LEASE AGREEMENT DATED SEPTEMBER 4, 1996 BY AND BETWEEN THE
ARRILLAGA FAMILY TRUST AND THE RICHARD T. PEERY SEPARATE PROPERTY TRUST, AS
LANDLORD AND THE VANTIVE CORPORATION, AS TENANT.

                                                                 [INITIAL STAMP]
                                                                 /s/ XXXXX