THIRD AMENDMENT TO LEASE


     THIS THIRD AMENDMENT TO LEASE (the "Amendment") is made and entered into as
this 1st day of October, 1992, by and between C. J. SEGERSTROM & SONS, a general
partnership,   hereinafter  called  "Landlord,"  and  FILENET   CORPORATION,   a
California  corporation,  hereinafter  called  "Tenant,"  with  respect  to  the
following:

                                    RECITALS

     A.  Landlord  is the  landlord  and Tenant is the tenant  pursuant  to that
certain High  Technology/Research  and Development Lease dated July 23, 1986, as
amended by a certain  letter  agreement  dated July 2, 1987  (collectively;  the
"Original  Lease").  The Original Lease covers certain premises  consisting of a
total of  approximately  120,000  square  feet of Rentable  Area  located in two
buildings,  of  approximately  60,000  square  feet each  ("Buildings  1 and 2")
located at the  Northwest  corner of Harbor  Boulevard and Scenic Avenue in that
certain business park known as Harbor Gateway Business Center (the "Center"), in
the City of Costa Mesa, State of California and more  particularly  described in
the Original Lease.

     B.  Landlord  and  Tenant  have  also  entered  into that  certain  Option:
Agreement  dated and  executed  July 23,  1986,  as amended  by  certain  letter
agreements dated, respectively,  June 23, 1987, March 15, 1988, and May 23, 1988
(collectively;  the  "Option  Agreement").  By  means of the  Option  Agreement,
Landlord and Tenant  amended the Original  Lease to add to the Premises  certain
additional premises consisting of approximately  50,000 square feet located in a
single  building  denominated  as High-Tech 3 ("Building  3") and located in the
Center.  Buildings  1, 2 and 3 are  herein  referred  to,  collectively,  as the
"Premises,"  and the  Original  Lease and the  Option  Agreement  are  sometimes
referred to herein, collectively, as the "Lease."

     C.  Tenant  desires  to amend  the  Original  Lease to add to the  Premises
another  additional  building located within the Center,  commonly known as 1535
Scenic  Avenue and  consisting of  approximately  60,000 square feet of Rentable
Area ("Building 14"), as more particularly shown on Exhibit "A" attached hereto.
Landlord is willing to so amend the Original Lease,  but only upon the terms and
conditions set forth in this Amendment.

                                    AGREEMENT

     IN CONSIDERATION  OF the foregoing  recitals and the promises and covenants
contained in this Amendment, Landlord and Tenant agree as follows:

     1. Leasing of Building 14.  Landlord  hereby  leases to Tenant,  and Tenant
hereby  hires from  Landlord,  Building 14 upon all of the terms of the Original
Lease, as modified by this Amendment.

     2. Terms of Leasing.  Tenant  shall hold and occupy  Building 14 as part of
the Premises upon all of the terms and conditions of the Original Lease,  except
that:

     (a) The term of the Lease with  respect to  Building  14 shall  commence on
July 1, 1993 (the "Building 14  Commencement  Date"),  and  thereafter  shall be
coterminous  with the term of the Lease with respect to Building 3. Tenant shall
also have the option to extend the term of the Lease  with  respect to  Building
14. Such option shall be upon the terms set forth in  paragraph  4(b)(xi) of the
Option Agreement and Section 48.1 of the Original Lease, and the additional term
for Building 14 shall be


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coterminous with the additional term for Building 3. From and after the Building
14 Commencement  Date, Tenant and Landlord shall each observe and perform all of
their  respective  obligations  pursuant to the Lease, as hereby  amended,  with
respect to Building  14,  including,  without  limitation,  the payment of Basic
Annual Rent and Additional Rent.

     Landlord and Tenant  contemplate  that Landlord will deliver  possession of
Building 14 to Tenant and Tenant will commence  occupancy of Building 14 on July
1, 1993, the Building 14 Commencement Date. In no event shall Tenant be required
to pay Basic Annual Rent or Additional  Rent with respect to Building 14 for any
period  prior to July 1, 1993,  notwithstanding  any delivery of  possession  of
Building 14 to Tenant prior to the Building 14 Commencement Date.

     Notwithstanding  the foregoing  Tenant shall have a license (the "License")
to enter Building 14 prior to the Building 14  Commencement  Date.  Such License
shall be upon the following terms:

     (i) The License shall extend for the period from April 1, 1993 through June
30 1993.

     (ii) Entry  pursuant to the  License may be made at any time during  normal
business  hours (8 a.m.. to 5:30 p.m.,  Monday  through  Friday,  legal holidays
excepted).  For this  purpose,  Tenant  shall not retain a key to  Building  14.
Rather,  access shall be afforded by Landlord's management or security personnel
upon request to Landlord's  management office at the Center. Such request may be
made in person or by telephone.

     (iii) Entry  pursuant to the  License  shall be for any purpose  reasonably
related  to  Tenant's  occupancy  of  Building  14  following  the  Building  14
Commencement  Date,  including  but not  limited to  measurement  of areas to be
occupied,  inspection  of  Building  14 and the  equipment  located  therein  or
thereon, installation of furniture, furnishings, equipment and operating systems
(such as telephone,  security and fire),  replacement  of existing  signage with
respect to Building 14 and installation of tenant improvements.

     (iv) Entry pursuant to the License is limited to Tenant,  its employees and
to third parties  retained by Tenant for the purposes  specified in clause (iii)
above and designated in writing by Tenant to Landlord.  As between  Landlord and
Tenant,  all persons  entering  Building  14 at the  request of Tenant  shall be
deemed agents of Tenant,  and Tenant shall be solely  responsible for the safety
of  and  actions  of  such  persons.   In  no  event  shall  Landlord  have  any
responsibility  for such  persons or any  liability  to them,  and Tenant  shall
indemnify.  defend and hold Landlord harmless from and against all claims by any
such persons for damages (including punitive damages,  costs and attorneys fees)
resulting from injury, death or property damage arising out of such entry.

     (v) Any work in or on Building 14  performed  by or for Tenant  pursuant to
the License shall be the sole  responsibility  of Tenant as to  performance  and
payment of costs and shall comply with Articles 9 and 12 of the Original  Lease,
all applicable provisions of Exhibit "D" thereto and all applicable requirements
of all  governmental  authorities  having  jurisdiction  of  Building  14.  Such
requirements  shall include the prior written approval of Landlord when required
by the Original Lease.

     (vi) The insurance required by Sections 15.1, 15.2 and 15,3 of the Original
Lease shall extend to any entry pursuant to the License and all activities by or
on behalf of Tenant in or about  Building 14. In addition,  the  indemnification
and  exculpation  provisions  contained in Sections  15.4,  15.5 and 15,6 of the
Original Lease shall extend to any such entry and any such activities.

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     (vii) As used in this License,  all references to Building 14 shall include
the Permanent Building 14 Parking Area, as defined in subparagraph (g) below.

     (viii) In the event that  Tenant  fails to perform  any of its  obligations
pursuant to clauses  (v) and (vi) above with  respect to the  License,  and such
failure  continues  for ten (10) days  after  delivery  of written  notice  from
Landlord to Tenant,  Landlord may immediately terminate the License upon written
notice to Tenant,  with such  termination to be effective upon receipt by Tenant
of Landlord's notice of termination. In addition, if Tenant fails to perform any
of its  obligations  pursuant to the License,  Landlord  shall have the right to
perform  such  obligations  for Tenant's  account  pursuant to Article 33 of the
Original  Lease,  but without  requirement  of further notice and a grace period
pursuant to Article 19 of the Original Lease.

     (b)  Notwithstanding  anything to the contrary in this Amendment and except
as provided in this subparagraph (b), Tenant accepts Building 14 "AS IS". Tenant
acknowledges  that,  except as  provided  to the  contrary in clause (ii) below,
Landlord  shall have no  responsibility,  either as to performance or payment of
costs, to remodel or renovate  Building 14 or the Permanent  Building 14 Parking
Area for Tenant use. Any remodel,  renovation or  improvement  to Building 14 or
the Permanent  Building 14 Parking Area  undertaken by Tenant shall be completed
in accordance  with the terms and conditions of paragraphs 5, 6 and 8 of Exhibit
"D" to the Original Lease and notwithstanding  anything to the contrary therein,
all such work shall be completed at Tenant's sole cost and expense.

     Without limiting the generality of the foregoing:

     (i) Landlord  represents  and warrants to Tenant that,  to the knowledge of
Landlord,  no hazardous,  toxic  carcinogenic,  reproductive  toxic,  corrosive,
reactive  or  ignitable  substances,  wastes or  materials,  as  defined  in any
applicable  federal,  state or local law or regulation  promulgated  thereunder,
including,  without limitation,  petroleum  (including crude oil or any fraction
thereof),   asbestos  or   asbestos-containing   materials  and  polychlorinated
byphenyls (PCB's), collectively, "Substances," are incorporated into Building 14
or-any other  improvements  or facilities  located on the Permanent  Building 14
Parking Area.  Tenant  acknowledges  and accepts that Landlord has not conducted
any   investigation  or  testing  for  the  purposes  of  making  the  foregoing
representation  and warranty.  Rather,  Landlord makes such  representation  and
warranty  solely on the basis of Landlord's  construction of Building 14 and the
Permanent  Building 14 Parking Area and its continuous  ownership  thereof since
such construction. The foregoing representation and warranty shall not extend to
any Substances incorporated into, brought into or maintained in or upon Building
14 or the Permanent Building 14 Parking Area by Emulex  Corporation  ("Emulex"),
the existing tenant of Building 14 and the Permanent Building 14 Parking Area.

     (ii) Prior to execution and delivery of this  Amendment,  Landlord,  Tenant
and  Emulex  have  mutually  inspected  Building  14 and on the  basis  of  such
inspection,  Landlord and Emulex have compiled a list of maintenance  and repair
work with  respect to Building 14 to be performed by Emulex prior to delivery of
possession  of Building 14 to  Landlord.  A copy of such list u attached to this
Amendment as Exhibit "B." Landlord shall use its best efforts to cause Emulex to
perform all work specified on such list (the "Repair List").  Except for (A) the
performance  of the work  specified on the Repair List, (B) normal wear and tear
and (C) removal by Emulex of all signage and all personal  property and fixtures
not  permanently  attached  to  Building  14 other than the FF&E,  as defined in
paragraph  4 below,  upon  delivery  of  possession  of  Building  14 to Tenant,
Building  14  shall be in the same  condition  as on the date of the  inspection
described herein.

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<PAGE>
     (iii) As  described in paragraph 4 below,  Tenant shall  purchase  directly
from Emulex  certain FF&E located in Building 14. Tenant may,  during the period
from  surrender  of  possession  of Building  14 by Emulex to  Landlord  and the
Building 14 Commencement Date, desire to leave the FF&E in place in Building 14.
Landlord consents to such storage  arrangement by Tenant.  Such storage shall be
without  requirement of payment of rent or any other amount to Landlord However,
Tenant shall be solely responsible for all such FF&E,  including security of the
same and maintenance of insurance upon the FF&E. Except for intentional acts and
negligence of Landlord,  Landlord shall have no  responsibility  with respect to
the FF&E.  Without limiting the generality of the foregoing  Landlord shall have
no responsibility  to provide special security for,  maintenance of or insurance
with respect to the FF&E. By its signature  hereto,  Tenant releases and forever
discharges Landlord from any and all such responsibilities  and/or liability and
irrevocably waives any and all claims against Landlord its partners,  agents and
employees  arising  out  of  or  resulting  from  any  loss,  theft,  damage  or
destruction to or of the FF&E, or any of it while stored in Building 14 pursuant
to this clause (iii), except for intentional acts and negligence of Landlord.

     (c) The provisions of the Option Agreement,  other than paragraph  4(b)(xi)
thereof shall have no application with respect to Building 14.

     (d) The  provisions of Sections 2.2, 2.4. 3.5,  48.1(c) and Articles 38 and
41 of the Original Lease shall have no application  with respect to Building 14.
The provisions of Exhibit "D" to the Original Lease,  other than paragraphs 5, 6
and 8 thereof, shall have no application to Building 14.

     (e) All  references to the term  "Building" or  "Buildings" in the Original
Lease,  when referring to Buildings 1 and/or 2 generically shall be construed to
refer to Building 3 and Building 14 to the extent,  in each such case, that such
a reference is capable of reasonable application to Building 3 and Building 14.

     (f) Any  provisions  of the Lease  superseded by or  inconsistent  with the
provisions of this Amendment shall have no application  with respect to Building
14.

     (g) Tenant's  Allocated Parking Spaces with respect to Building 14 shall be
240 spaces.  Tenant shall be entitled to use such Allocated  Parking Spaces,  in
common with others, in the Parking Area for the Center, as defined in Article 44
of the Original  Lease.  Tenant's use of its Allocated  Parking  Spaces shall be
subject to the terms and provisions of Article 44 of the Original Lease. Without
limiting  the  generality  of the  foregoing,  Landlord  and  Tenant  agree  and
acknowledge that:

     (i) The primary  parking  area  currently  designated  for Building 14 (the
"Current Building 14 Parking Area") is the area depicted on Exhibit "C" attached
hereto with single  hatching.  As described  in clause (iv) below and  paragraph
5(e) below,  Landlord  will cause Emulex to exchange with Tenant that portion of
the Building B parking area located to the east of Building 14  ("Exchange  Area
No. 1") for that  portion of the Current Building 14 Parking Area located to the
west of Building B  ("Exchange  Area No. 2").  Exchange  Area No. 1 and Exchange
Area No. 2 are  depicted and  designated  on Exhibit "C'  attached  hereto.  The
Building 14 parking area resulting  from such exchange is herein  referred to as
the "Permanent  Building 14 Parking Area" Tenant's primary or principal  parking
area for Building 14 shall be the Permanent  Building 14 Parking Area.  Tenant's
Allocated  Spaces shall not,  however,  be limited to the Permanent  Building 14
Parking  Area,  and Tenant may,  subject to the  provisions of Article 44 of the
Original  Lease and clause (ii) below,  utilize  for  purposes of its  Allocated
Parking Spaces the Parking Area for the Center.

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<PAGE>

     (ii) Those spaces identified with cross-hatching on Exhibit "C," other than
Exchange  Area No. 1, and  Exchange  Area No. 2 are or shall be exclusive to the
tenants of Buildings A, B and High-Tech  15. Tenant and its employees  shall not
be entitled to park in such areas.

     (iii) The Permanent  Building 14 Parking Area is subject to the  provisions
of that certain  Reciprocal  Parking  Agreement,  Amendment  No. 8 to Lease with
Emulex  Corporation  and Notice of Deletion of Territory as to Declaration as to
Easements,  Restrictions add Common Facilities for Harbor Gateway Center,  dated
May 25, 1984,  by and among  Citibank  N.A.,  Ticor Title  Insurance  Company of
California,  Landlord  and Emulex  (the  "Parking  Agreement").  As  provided in
paragraph 5(e) below, Tenant shall cooperate with Landlord (and Emulex) to amend
and restate the Parking  Agreement  to, among other  things,  modify the Parking
Agreement to reflect the exchange of Exchange Area No. 1 and Exchange Area No. 2
as provided in clause (i) above.

     (iv) There is currently  located,  approximately  at the location  depicted
with an "x" on Exhibit "B," a vehicle  entry  barrier  maintained  by Emulex and
which prevents entry to a portion of the Current Building 14 Parking Area except
through a guarded gate located at the  southerly end of Building A. Emulex shall
not  relocate  such entry  barrier  and Tenant  shall not use the portion of the
Current  Building 14 Parking Area now protected by such vehicle  entry  barrier.
Rather,  Landlord  shall cause  Emulex to effect the  exchange of parking  areas
provided for in clause (i) above. In addition, Landlord, Tenant and Emulex shall
as a part of the refinancing  provided for in Paragraph 6 below,  use reasonable
efforts to cause the  Parking  Agreement  to be amended to create the  Permanent
Building 14 Parking Area by recognition of the exchange to be effected  pursuant
to clause (i) above.


     (h) Tenant shall not be required to make any  additional  security  deposit
with  respect  to  Building  14, but the  existing  security  deposit  under the
Original  Lease  shall  apply to the  leasing of  Building 14 in addition to the
leasing of Buildings 1, 2 and 3.

     (i) Upon the Effective  Date of this  Amendment,  as defined in paragraph 6
below,  Tenant  shall  deposit  with  Landlord  the sum of  $49,200 as the first
month's Basic Annual Rent due  hereunder  with respect to Building 14, which sum
shall be applied by Landlord, without interest, to the first monthly installment
of Basic Annual Rent due hereunder with respect to Building 14.

     (j) Tenant  shall use and occupy  Building  14 only for the  purposes  of a
corporate headquarters, corporate offices, general offices uses and research and
development activities.

     (k) From and after the  Building 14  Commencement  Date,  Tenant's  monthly
Proportionate Share of Common Facilities Expenses,  as defined and determined in
accordance  with  Exhibit "B" to the  Original  Lease,  shall be  determined  by
including the Allocated Parking Spaces for Building 14. In other words, from and
after the Building 14 Commencement Date, Tenant's  Proportionate Share of Common
Facilities  Expenses shall be determined using the Allocated  Parking Spaces for
all  of  Buildings  1,  2,  3  and  14.  Expressed  as  a  percentage,  Tenant's
Proportionate Share of Common Facilities Expenses for the Center shall be 42.2%,
determined by dividing  Tenant's  aggregate of 824 allocated  Parking  Spaces by
1,952 total Allocated  Parking Spaces in the Center of tenants who contribute to
Common Facilities  Expenses.  As of the Building 14 Commencement Date,  Tenant's
Allocated Parking Spaces, by Building, shall be as follows:

                                        5

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                 Building            Allocated Spaces
                 --------            ----------------

                    1                       212
                    2                       172
                    3                       200
                   14                       240

     It is understood and  acknowledged  that the 1,952 Allocated  Spaces in the
Center of tenants who contribute to Common Facilities Expenses are less than all
Allocated Spaces in the Center.  Landlord represents and warrants to Tenant that
all tenants with allocated  Spaces in the Center who do not contribute to Common
Facilities  Expenses either (i) maintain and operate their own Allocated Spaces,
including   direct  payment  of  real  property  taxes  and  other  expenses  of
maintaining and operating such allocated  Spaces or (ii) pay rent to Landlord on
a so-called "gross" basis which includes an allocated portion of the expenses of
operating  and  maintaining  the allocated  Spaces of such  tenants,  which such
allocated   portion  is  applied  by  Landlord  to  expenses  of  operating  and
maintaining  Allocated  Spaces in the Canter.  During the term of the Lease, all
leases of space in the Center shall provide either that (A) the tenants pursuant
to such leases shall pay a Proportionate Share of Common Facilities Expenses for
the Center  determined  in the same  manner as  provided  in Exhibit  "B" to the
Original  Lease or (B) such  tenants  shall pay,  directly  or  indirectly,  the
expenses of  maintaining  and  operating  their  allocated  Spaces in one of the
manners provided in clauses (i) and (ii) of this subparagraph.

         3.       Rent.

     (a) From and after the Building 14 Commencement  Date, Tenant shall pay, as
Basic  Annual Rent with respect to Building 14, the sum of $9.84 per square foot
of Rentable  Area  ($590,400)  triple net,  per year,  payable in equal  monthly
installments  of $49,200  ($0.82 per square foot of  Rentable  Area)concurrently
with Tenant's  monthly  installments of Basic Annual Rent for the balance of the
Premises,  without  deduction or offset.  Basic Annual Rent shall be paid at the
times and in the manner provided in Section 3.1 of the Original Lease

     (b) The Basic  Annual  Rent  payable  with  respect to Building 14 shall be
adjusted in the manner  provided in Section 3.4 of the  Original  Lease,  except
that, (i) the term "Adjustment Date" as applied to the Basic Annual Rent payable
with  respect to  Building  14 shall  mean July 1, 1995,  and again on April 30,
1997,  (ii) as to  Building  14, in no event  shall the Basic  Annual Rent as to
Building 14 be increased on any such  Adjustment Date to more than eight percent
(8%) per year of the Basic  Annual  Rent with  respect to  Building 14 in effect
immediately  prior  to  such  adjustment  and  (iii)  for  the  purpose  of  the
adjustments  to the Basic  Annual Rent with  respect to Building  14, the phrase
"twenty-five  (25) multiplied by "appearing in the third sentence of Section 3.4
of the Original Lease shall not be  applicable.  For the purposes of clause (ii)
of this subparagraph, if the number of months in the period from the Building 14
Commencement  Date to the first  Adjustment  Date or the  period  from the first
Adjustment Date to the second Adjustment Date, as the case may be, is not evenly
divisible by twelve (12), then the percentage increase at the end of such period
shall be equal to eight  percent (8%) for each full year in such period plus for
the  partial  year in such  period,  a  percentage  equal to eight  (8)  times a
fraction  whose  numerator is the number of months in the partial year and whose
denominator is twelve (12).

     4. Furniture.  Fixtures and Equipment.  Landlord and Tenant acknowledge and
agree that Building 14 has been previously  built-out by Landlord,  and that all
permanently  attached  improvements in Building 14 are the property of Landlord.
Concurrently with Tenant's execution of this Amendment,  Tenant shall enter into
an

                                        6

<PAGE>
agreement  with  Emulex  to  acquire  directly  from  Emulex  certain  fixtures,
furniture and equipment (the "FF&E') of Emulex currently located in Building 14.
A list of the FF&E to be so  acquired is attached  hereto as Exhibit  "D".  Such
list has been compiled by Tenant and Emulex,  and Landlord has no responsibility
for the compilation of such list and makes no  representation  or warranty as to
the accuracy or  completeness  of such list.  Such  agreement  shall be the sole
responsibility of Tenant, and Landlord shall have no  responsibility,  either as
to  performance  or  payment,  with  respect to the FF&E,  payment  therefor  or
delivery  thereof.  Landlord  shall  have no claim  to the FF&E or any  proceeds
thereof,  and title to the FF&E  shall be  conveyed  to Tenant by Emulex in such
manner and using such instruments as shall be agreed upon by Tenant and Emulex

         5.       Representations and Covenants.

     (a) Zoning.  Landlord represents and warrants to Tenant that Building 14 is
zoned,  as of the date hereof,  in a manner which permits the use of Building 14
as  specifically  permitted  by  paragraph  2(j) above and that no  variance  or
special  use  permit is  required  for the use of  Building  14 as  specifically
permitted  by  paragraph  2(j)  above or, if any  special  use  permit  has been
granted,  such  special use permit is still in effect and will apply to Tenant's
use of Building 14 as specifically permitted by paragraph 2(j) above.

     (b)  Use.  Landlord  represents  and  warrants  to  Tenant  that the use of
Building 14 as specifically permitted by paragraph 2 (j) above complies with the
Declaration as to Easements,  Restrictions  and Common  Facility  Provisions for
Harbor Gateway Center dated July 31, 1981,  executed by Landlord and recorded in
the Office of the Orange County Recorder.

     (c) Brokers.  Landlord and tenant each  represents  w~ and covenants to the
other that such warranting  party shall defend,  indemnify and hold harmless the
other  party from and  against  any and all  claims,  costs,  losses,  expenses,
damages,  actions and Muses of action incurred in any claim or action instituted
by any broker,  agent or finder,  including,  but not limited to, CB  Commercial
Real Estate Group,  Inc.,  claiming under the  warranting  party with respect to
Building 14.  Landlord  and Tenant  agree that payment  shall not be a condition
precedent to recovery upon the foregoing indemnification provisions.

     (d) Schematics and As-Built Drawings. Prior to the Building 14 Commencement
Date,  Landlord  shall  provide  to Tenant  one copy of all  existing  schematic
drawings and as-built drawings in Landlord's possession with respect to Building
14. However,  Landlord makes no representations or warranties as to the accuracy
or  completeness  of any items supplied to Tenant  pursuant to the provisions of
this subparagraph.

     (e)  Cooperation,  Tenant  recognizes  that  Landlord  is in the process of
refinancing  certain  property  within the Center with  Teachers  Insurance  and
Annuity Association of America ('Teachers"), including Building 14, and that the
Permanent  Parking Area for Building 14 is subject to existing  restrictions  as
contained  within  the  Parking  Agreement.  Tenant  will take all action as may
reasonably  be  necessary  for  Landlord  to obtain  refinancing  approval  from
Teachers  with  respect to  Building  14, and to amend and  restate  the Parking
Agreement to, among other  things,  (i)  substitute  Tenant for Emulex as to the
Permanent  Building 14 Parking Area,  (ii)  terminate all rights of Emulex as to
the  Permanent  Building  14 Parking  Area,  (iii) amend and restate the Parking
Agreement to eliminate  therefrom  those  portions  superseded by the passage of
time or various  construction  or development  of the property  described in the
Parking Agreement and (iv) eliminate the Current Building 14

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<PAGE>
     Parking  Area and create the  Permanent  Building 14 Parking Area by giving
effect to and  recognizing the exchange of Exchange Area No. 1 for Exchange Area
No. 2 provided for in paragraph 2(g) above. Such amendment to and restatement of
the Parking  Agreement  shall be consistent  with the parking  rights granted to
Tenant with respect to Building 14 pursuant to this Amendment. Such amendment to
and  restatement  of the Parking  Agreement  shall be at no cost or liability to
Tenant other than Tenant's own attorneys' fees and costs,  and no such amendment
and restatement  shall effect any changes to the business terms embodied in this
Amendment with respect to Tenant's use of Building 14 and the Permanent Building
14 Parking Area.  In addition,  in connection  with such  refinancing,  Landlord
shall use reasonable efforts to obtain from Teachers s subordination  agreement,
in  recordable  form  and in the form  attached  hereto  as  Exhibit  "E,"  with
appropriate  references to the  refinancing  documents  executed by Landlord and
Teachers.  Nothing  contained herein shall,  however,  be deemed to constitute a
representation, warranty or covenant by Landlord to the effect that (i) Landlord
shall.  be able to obtain such  subordination  agreement  from  Teachers or (ii)
Landlord shall be able to obtain such subordination  agreement by any particular
date or within any particular time.

     6.  Contingencies.   The  effectiveness  of  this  Amendment  is  expressly
contingent upon each of the following:

     (a) Landlord's  review and approval of Tenant's  current audited  financial
statements (including  consolidated balance sheets,  consolidated  statements of
operations and  consolidated  statements of cash flows) for Tenant's fiscal year
ended  December  31,  1991,  and for the  interim  period  ended  June 30  1992.
Accordingly, Tenant shall deliver to Landlord the foregoing financial statements
on or before  October 16, 1992,  and Landlord  shall approve or disapprove  such
financial  statements  by written  notice to Tenant  given  within ten (10) days
after Landlord's  receipt of such statements.  Landlord's  failure to approve or
disapprove  such  statements in such manner and within such time shall be deemed
approval thereof;

     (b)  Approval by  Teachers,  on or before  November  15, 1992 (the  'Target
Date"),  of  the  terms  of  this  Amendment  and  the  agreement  described  in
subparagraph (d) below.

     (c)  Delivery  by  Teachers  to Landlord on or before the Target Date of an
executed letter providing, in substance,  that Teachers' commitment to refinance
the  existing  Teachers  financing  upon  Building 14 and other  portions of the
Center on the terms and  conditions  set forth in  Teachers'  commitment  letter
dated August 20, 1992  remains in effect  without  modification  notwithstanding
this Amendment and the agreement provided for in subparagraph (d) below;

     (d) The  execution  and delivery by Emulex and  Landlord,  on or before the
Target Date, of an agreement,  on terms and conditions mutually  satisfactory to
Landlord and Emulex,  providing,  among other  things,  for the  termination  of
Emulex' existing lease (as to Building 14 and the Building 14 Parking Area only)
on or before March 31, 1993 and delivery by Emulex to Landlord of  possession of
Building 14 and the Building 14 Parking Area on or before March 31, 1993;

     (e)  Delivery,  on or before the Target  Date,  of a letter  executed by an
appropriate official of the City of Costa Mesa providing in substance,  that (i)
the existing zoning for Building 14 permits Tenant's use thereof as specified in
paragraph  2(j) above and (ii) no additional  permits are required to permit the
use of Building 14 as specified in paragraph 2 (j) above;


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     (f)  Execution  and delivery by Tenant and Emulex,  on or before the Target
Date, of an agreement covering the transfer of the FF&E as provided in paragraph
4 above and in form and substance satisfactory to Tenant and Emulex.

     (g) Review and approval by Tenant of the Parking  Agreement.  Such approval
shall be deemed  given  unless,  on or before  October 14 1992  Tenant  notifies
Landlord in writing of the  portion(s)  of the Parking  Agreement  which  Tenant
disapproves.

     In the event  that (i) the  contingencies  set forth in  subparagraphs  (b)
through (d) above shall fail to occur within the time periods  specified therein
or (ii) Landlord  disapproves of Tenant's  financial  statements within the time
and in the manner set forth in subparagraph (a) above,  then Landlord shall have
the option to terminate  this Amendment by written notice to Tenant given (A) as
to  subparagraph  (a)  above,  by  delivery  to Tenant of  Landlord's  notice of
disapproval  (B) as to  subparagraphs  (b),  (c) and  (d)  above,  on or  before
November 15, 1992. Similarly,  if (x) either or both of the conditions set forth
in  subparagraphs  (e) and (f) above shall fail to occur on or before the Target
Date or (y) Tenant disapproves the Parking Agreement, then Tenant shall have the
right to terminate  this Amendment by written notice to Landlord given (C) as to
subparagraphs  (e) and (f) above,  on or before  the  Target  Date and (D) as to
subparagraph  (g) above by delivery to  Landlord of Tenant's  written  notice of
disapproval.

     If either  party  has the right to  terminate  this  Amendment  and does so
within the times and in the manner set forth herein:

     (1) this Amendment shall  terminate on the date of the addressee's  receipt
of the notice of termination given by the other party;

     (2)  each  party  shall  bear  its  own  costs  and  fees  incurred  in the
negotiation  and  preparation of this Amendment and in performing its respective
obligations hereunder through the date of such termination; and

     (3)  all  amounts  deposited  by  Tenant  with  Landlord  pursuant  to this
Amendment  shall be returned to Tenant and neither  party shall have any further
obligation to the other with respect to Building 14 or the Permanent Building 14
Parking Area. Any termination  hereunder shall not have any effect on Landlord's
and  Tenant's  obligations  to one another  pursuant  to the Lease.  Pending any
termination of this Amendment as provided herein, Landlord and Tenant each agree
to diligently pursue their respective obligations hereunder.

     As soon as any of the  conditions  contained  herein  are  met,  the  party
entitled to terminate on the basis of failure of such  condition  shall promptly
notify the other party of the satisfaction of such condition.  The date on which
such notice is received as to the last  condition to be  satisfied  shall be the
effective date (the "Effective Date") of this Amendment.

     7. Other Matters. Landlord and Tenant further agree that:

     (a)  Notwithstanding  anything to the  contrary  contained  in the Original
Lease, upon the expiration or any earlier  termination of the Lease with respect
to Building 14, reasonable wear and tear shall be excepted from the condition in
which Tenant is required to deliver possession of Building 14 to Landlord.

     (b) By their signatures  hereto,  Landlord and Tenant confirm the following
information with respect to Buildings 1, 2, 3 and 14:

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<PAGE>
     (i) Building 1 - Commencement  Date is November 1, 1987 and expiration date
is April 30 1998;  one five (5) year option (May 1, 1998 through  April 30 2003)
exercisable  upon not more  than 15 and not less than 12  months  prior  written
notice to Landlord.

     (ii) Building 2 - Commencement  Date is August 1, 1987 and expiration  date
is January 31, 1998; one five (5) year option  (February 1, 1998 through January
31,  2003)  exercisable  upon not more than 15 and not less than 12 months prior
written notice to Landlord.

     (iii) Building 3 - Commencement Date is June 1, 1990 and expiration date is
May 31,  2000;  one  five  (5)  year  option  (June  1,  2000  to May 31,  2005)
exercisable  upon not more  than 15 and not less than 12  months  prior  written
notice to Landlord.

     (iv) Building 14 - Commencement Date is July 1, 1993 and expiration date is
May 31,  2000;  one  five  (5)  year  option  (June  1,  2000  to May 31,  2005)
exercisable  upon not more  than 15 and not less than 12  months  prior  written
notice to Landlord.

     (c) There currently  exists a free standing  concrete sign monument located
at the entrance to the Permanent Building 14 Parking Area from Scenic Drive (the
"monument").  Such  Monument is currently  occupied by a sign erected by Emulex.
Tenant  agrees that,  from and after the Target Date,  Tenant shall acquire from
Emulex all rights in and to the use of the  Monument  and that the sign  thereon
shall be redesigned to reflect  thereon the name of Tenant only.  The removal of
the existing  Emulex sign, the design and  fabrication of Tenant's sign, and all
costs and  expenses  with  respect to such  removal,  design,  construction  and
installation,  shall be the sole responsibility of Tenant and Emulex, and Tenant
indemnifies and holds Landlord  harmless with respect to any claims or liability
with respect thereto.  Tenant shall obtain or cause to be obtained all necessary
permits and  approvals  for the modified  signage from the  governmental  agency
having  jurisdiction.  Landlord shall have the right to approve such replacement
signage in accordance with its rights under the Lease.

     (d)  Landlord and Tenant  acknowledge  that Tenant may, at some date in the
future,  desire to  consolidate  some or all operations  currently  conducted in
Buildings  1, 2, 3 and 14  into a  single,  larger  building  and  may  approach
Landlord  with a proposal to construct for and lease to Tenant a building in the
Center,  or in or on any other  property  owned or  controlled by Landlord or an
affiliate of Landlord, with a Rentable Area of 150,000 to 200,000 or more square
feet.  Landlord  agrees,  upon any such  proposal by Tenant,  to  consider  such
proposal. For the purposes of this subparagraph, Landlord and Tenant acknowledge
and agree that:

     (i) Nothing contained in this subparagraph  shall be deemed or construed to
require Tenant to present any such proposal to Landlord, or to require Tenant to
remain in the Center beyond the several  expiration  dates in the Lease (and any
option terms as to which Tenant timely and properly exercises its options).

     (ii) Nothing contained in this subparagraph shall be deemed or construed to
require  Landlord  to  accept  any  proposal  made  by  Tenant,   to  make  any,
counterproposal to Tenant or to permit Tenant to remain in the Canter beyond the
several  expiration  dates in the Lease (and any option terms as to which Tenant
timely and properly exercises its options).

     (iii)  In  determining  whether  to make or  accept  any such  proposal  or
counter-proposal, each party shall be free to take into account any fact or

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<PAGE>
factor  which such party  deems  relevant  to its  decision,  including  but not
limited  to the  availability  of land in the Center or  elsewhere,  alternative
space available to Tenant,  the cost of  construction of any such building.  the
rent payable with respect to any such  building and with respect to  alternative
available  space,  any other  leasing goals or plans of Landlord with respect to
the Center or other  property  of  Landlord  or its  affiliates,  the ability of
Landlord (or its affiliates) to obtain  construction  and/or permanent financing
with respect to any new building to be constructed  for Tenant and the impact of
any total or partial  lease  termination  pursuant to clause (iv) below upon any
financing then existing and encumbering Buildings 1, 2, 3 and/or 14.

     (iv) In  connection  with  any  proposal  or  counter-proposal  of the type
described in this subparagraph,  one element thereof shall be the termination of
the Lease, if then existing,  as to each building covered thereby surrendered by
Tenant to Landlord in connection  with  Tenant's  relocation to the new building
constructed by Landlord or its affiliate for Tenant.

     (v) Nothing contained in this subparagraph  shall be deemed or construed to
create or grant to either party any option, put, call, right of first refusal or
right of first offer.  There shall be no right to recover  damages on account of
any alleged  "breach" of the  provisions  of this  subparagraph  and no right to
specific  performance  or  injunctive  relief  on  account  of any such  alleged
"breach" or threatened "breach."

     8. Defined Terms.  All terms used in this  Amendment  with initial  capital
letters and not defined  herein shall have the  meanings  given to such terms in
the Original Lease.

     9. Lease in Effect.  Landlord  and  Tenant  acknowledge  and agree that the
Lease,  as hereby  amended  and  modified,  remains  in full force and effect in
accordance with its terms.

     IN WITNESS WHEREOF,  Landlord and Tenant have executed this Third Amendment
to Lease as of the day and year first above written.

FILENET CORPORATION,                        C. J. SEGERSTROM & SONS,
a California corporation                    a general partnership

By _____________________,                   By_________________
                                            Managing Partner
Title Sr. VP Operations
                                            By_________________
By ____________________                     Managing Partner

Title __________________                    "Landlord"

'Tenant"
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