<PAGE>
                                                                 EXHIBIT 10.20.1

                       FIRST AMENDMENT TO BUILDING 3 LEASE

         THIS FIRST AMENDMENT TO BUILDING 3 LEASE (the "First Amendment") is
made and entered into as of January 31, 2003 (the "Effective Date") by and
between GREENVILLE INVESTORS, L.P. a California limited partnership (hereafter,
"LANDLORD"), and FORMFACTOR, INC., a Delaware corporation (hereafter "TENANT").

                                    RECITALS

                  A. Landlord and Tenant entered into a Lease Agreement dated
May 3, 2001 (the "Lease") relating to certain premises referred to as Building 3
in the Pacific Corporate Center as described in said Lease, and

                  B. On May 3, 2001 Landlord and Tenant also entered into two
leases relating to other premises in the Pacific Corporate Center: a lease for
the premises referred to as Building 1 (the "Building 1 Lease") and a lease for
the premises referred to as Building 2 (the "Building 2 Lease").

                  C. Landlord and Tenant desire to amend the Lease on the terms
and conditions set forth herein. Concurrently with the amendment of the Lease,
Landlord and Tenant will also be amending the Building 1 Lease and the Building
2 Lease.

         NOW, THEREFORE, in consideration of the mutual covenants made herein,
Landlord and Tenant agree as follows:

                                   AGREEMENTS

         1. RENT COMMENCEMENT DATE. Landlord and Tenant acknowledge and agree
that: a. The Rent Commencement Date occurred on June 30, 2002 and that Tenant's
obligation to pay the Base Rent and all other charges payable by Tenant under
the Lease commenced on that date; and b. As of the effective date of this First
Amendment, Tenant is current on all such payment obligations.

         2. ACKNOWLEDGMENT. On the Effective Date of this First Amendment,
Landlord and Tenant shall execute a written acknowledgment of the Rent
Commencement Date in the form attached hereto as Exhibit A-1.

         3. WORK LETTER. The Work Letter which is attached hereto as Exhibit C-1
replaces Exhibit C to the Lease in its entirety.

         4. APPROVED TENANT IMPROVEMENT PLANS. The Tenant Improvements for the
Premises are set forth in the plans described on Exhibit B-1 attached hereto
which have been approved by Landlord and Tenant. The plans shall be deemed to be
the "Approved Tenant Improvement Plans" referred to in Section 2.4 of the Work
Letter attached hereto as Exhibit C-1.

         5. LANDLORD'S WORK. Tenant acknowledges that subject to Paragraph 10
below, Landlord has fully completed all Landlord's Work (as defined in Section
1.4 of Exhibit C-1) and Tenant has accepted such work and possession of the
Premises. Landlord represents it has made all payments and met all obligations
to any contractors, agents or other third parties for all work completed by
Landlord under the Lease.

<PAGE>
         6. TENANT'S WORK. Tenant commenced construction of Tenant's Work but
has elected to stop such construction prior to its completion. Section 8.2 of
the Lease requires Tenant to diligently proceed to complete Tenant's Work.
Landlord consents to Tenant's temporary work stoppage.

         7. TENANT IMPROVEMENT ALLOWANCE. The Lease provides for a Tenant
Improvement Allowance of $952,175 ($25/sq.ft.), subject to the provisions of the
Lease, to be disbursed at the time and in the manner provided in Exhibit C-1
attached hereto.

         8. TERM; RENT ADJUSTMENT. The parties agree to extend the term of the
Lease for one year and acknowledge that the termination date of the initial term
shall be November 30, 2012. The parties further agree to delete Section 3.2 of
the Lease and substitute the following therefor:

                  " 3.2 As of the date of commencement of the third Lease Year
         and as of the commencement of each Lease Year during the initial Lease
         Term thereafter, the monthly Base Rent shall increase by four percent
         (4%) over the monthly Base Rent in effect immediately preceding the
         applicable adjustment date."

         9. NO OUTSTANDING DEFAULTS. Subject to Paragraph 10 below, the parties
acknowledge that as of the Effective Date, neither party is in default of any of
its obligations under the Lease. As of the Effective Date Landlord expressly
releases Tenant from all liability arising out of any alleged breach or default
by Tenant prior to the Effective Date. All such outstanding alleged (or actual,
if any) defaults by Tenant of the Lease shall be deemed to be settled by the
terms of this First Amendment.

         10. NO WAIVER. The parties agree that neither Tenant's acceptance in
Paragraph 5 above of Landlord's Work and possession of the Premises nor Tenant's
acknowledgment in Paragraph 9 above regarding Landlord defaults shall be deemed
a waiver by Tenant of any warranties provided in the Lease with respect to
Landlord's Work, or of any rights or remedies provided in the Lease for the
correction of defects or cure of lack of compliance in Landlords's work.

         11. EFFECTIVENESS OF LEASE. Except as otherwise expressly provided
herein, from and after the Effective Date of this First Amendment, all
provisions of the Lease shall remain in full force and effect and references to
the "Lease" shall mean the Lease as amended hereby.

         IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment to Building 3 Lease as of the day and year first written above.

LANDLORD:                                          TENANT:
GREENVILLE INVESTORS, L.P.                         FORMFACTOR, INC.,
By:  Greenville Ventures, Inc.                     a Delaware corporation
Title:  General Partner

By:  /s/ William A. Drummond                       By:      /s/ Jens Meyerhoff
     William A. Drummond
Its: Vice President                                Its:     CFO

ADDRESS: 675 Hartz Avenue, Suite 300               ADDRESS: 2140 Research Drive
         Danville, CA  94526                                Livermore, CA  94550

Dated:   1/31/03                                   Dated:   January 15, 2003


                                        2
<PAGE>
                                   EXHIBIT A-1

                    ACKNOWLEDGMENT OF RENT COMMENCEMENT DATE

         THIS ACKNOWLEDGMENT OF RENT COMMENCEMENT DATE is made as of January 31,
2002, by and between the undersigned parties with reference to that certain
Lease (the "LEASE") dated as of May 3, 2001, by and between Greenville
Investors, L.P., as "LANDLORD" therein, and FormFactor, Inc. as "TENANT," for
the premises commonly known as "BUILDING 3", located in the Pacific Corporate
Center, in the City of Livermore, California, as more particularly described in
the Lease. All capitalized terms referred to herein shall have the same meaning
defined in the Lease, except where expressly provided to the contrary.

         1. Landlord and Tenant hereby confirm that in accordance with the
provisions of the Lease, the Rent Commencement Date has occurred and is June 30,
2002, and that, unless sooner terminated, the initial term of the Lease expires
on November 30, 2012. If Tenant elects to exercise its first extension option
pursuant to the terms of the Lease, Tenant must deliver written notice to
Landlord by no later than November 30, 2011.

         2. This Acknowledgment of Rent Commencement Date shall inure to the
benefit of, and bind, the parties hereto, and their respective heirs, successors
and assigns, subject to the restrictions upon assignment and subletting
contained in the Lease.

         IN WITNESS WHEREOF, the parties have executed this Acknowledgment of
Rent Commencement Date as of the date first above written.

LANDLORD:                                               TENANT:

GREENVILLE INVESTORS, L.P.                              FORMFACTOR, INC,
a California limited partnership

                                                        By:  /s/ Jens Meyerhoff

By:    Greenville Ventures, Inc.
Title: General Partner                                  Its: CFO

By:    /s/ William A. Drummond

Its:   Vice President


<PAGE>
                                   EXHIBIT B-1

Description of Approved Plans


<PAGE>
                                   EXHIBIT B-1

                          DESCRIPTION OF APPROVED PLANS
                                  (BUILDING 3)

SHEET                                                        DATE
-----                                                        ----
T0.1                                                         4/17/02
T0.2                                                         4/17/02
T0.3                                                         4/17/02
A0.1                                                         4/17/02
A1.1                                                         4/17/02
A2.1                                                         4/17/02
A2.2                                                         4/17/02
A2.3                                                         4/17/02
A2.4                                                         4/17/02
A2.5                                                         4/17/02
A2.6                                                         5/24/02
A2.7                                                         5/24/02
A2.8                                                         4/17/02
A2.9                                                         4/17/02
A3.1                                                         4/17/02
A3.2                                                         4/17/02
A3.3                                                         4/17/02
A4.1                                                         4/17/02
A5.1                                                         4/17/02
A5.2                                                         4/17/02
A6.1                                                         4/17/02
A6.2                                                         4/17/02
A9.1                                                         4/17/02
A9.2                                                         4/17/02
A9.3                                                         4/17/02
A9.4                                                         4/17/02
A9.5                                                         4/17/02
A9.6                                                         4/17/02
EQ2.1                                                        4/17/02
EQ2.2                                                        4/17/02
AF2.1                                                        5/24/02
AF2.2                                                        5/24/02
AF2.3                                                        5/24/02
AF2.4                                                        4/17/02
A1.4R                                                        4/17/02
A1.5R                                                        4/17/02
AC0.1                                                        4/17/02
AC0.2                                                        4/17/02


<PAGE>
AC0.3                                                        4/17/02
AC0.4                                                        4/17/02
AC1.1A                                                       4/17/02
AC1.1B                                                       4/17/02
AC1.1C                                                       4/17/02
AC1.1D                                                       4/17/02
AC1.1E                                                       4/17/02
AC1.1F                                                       4/17/02
AC1.1G                                                       4/17/02
AC1.1H                                                       4/17/02
AC1.1I                                                       4/17/02
AC1.1J                                                       4/17/02
AC1.1K                                                       4/17/02
AC1.2A                                                       4/17/02
AC1.2B                                                       4/17/02
AC1.2C                                                       4/17/02
AC1.2D                                                       4/17/02
AC4.1                                                        4/17/02
AC5.1                                                        4/17/02
AC5.2                                                        4/17/02
AC5.3                                                        4/17/02
AC5.4                                                        4/17/02
AC5.5                                                        4/17/02
AC5.6                                                        4/17/02
AC5.7                                                        4/17/02
AC6.1                                                        4/17/02
AC6.2                                                        4/17/02
AC6.3                                                        4/17/02
AC7.1                                                        4/17/02
AC7.2                                                        4/17/02
S2.1                                                         5/28/02
S2.2                                                         3/6/02
S2.3                                                         3/6/02
S2.4                                                         3/6/02
S2.5                                                         3/6/02
S2.6                                                         3/6/02
S3.1                                                         3/6/02
S4.1                                                         3/6/02
S5.1                                                         5/28/02
S5.2                                                         5/28/02
S6.1                                                         3/6/02
S7.1                                                         3/6/02
S7.2                                                         3/6/02
S7.3                                                         3/6/02
S7.4                                                         3/6/02
S8.1                                                         3/6/02

<PAGE>
S8.2                                                         3/6/02

PP0.0                                                        4/17/02
PP0.1                                                        4/17/02
PP1.1                                                        4/17/02
PP1.1A                                                       4/17/02
PP1.1B                                                       4/17/02
PP1.1C                                                       4/17/02
PP1.1D                                                       4/17/02
PP1.1E                                                       4/17/02
PP1.2                                                        4/17/02
PP5.1                                                        4/17/02
PP5.2                                                        4/17/02
PP5.3                                                        4/17/02
PP5.4                                                        4/17/02
PP5.5                                                        4/17/02
P0.0                                                         4/17/02
P1.0A                                                        4/17/02
P1.0B                                                        4/17/02
P2.0A                                                        4/17/02
P2.0B                                                        4/17/02
P2.1                                                         4/17/02
P3.0A                                                        4/17/02
P3.0B                                                        4/17/02
P3.1                                                         4/17/02
P3.2                                                         4/17/02
P4.1A                                                        4/17/02
P4.1B                                                        4/17/02
P4.2A                                                        4/17/02
P4.2B                                                        4/17/02
P5.1                                                         4/17/02
E0.0                                                         4/17/02
E0.1                                                         4/17/02
E0.2                                                         4/17/02
E1.0                                                         4/17/02
E1.1                                                         4/17/02
E1.2                                                         4/17/02
E2.1                                                         4/17/02
E2.2                                                         4/17/02
E2.3                                                         4/17/02
E2.4                                                         4/17/02
E3.1                                                         4/17/02
E3.2                                                         4/17/02
E3.1.1                                                       4/17/02
E3.1.2                                                       4/17/02
E3.1.3                                                       4/17/02


<PAGE>
E3.1.4                                                       4/17/02
E3.3                                                         4/17/02
E3.4                                                         4/17/02
E4.1                                                         4/17/02
E4.2                                                         4/17/02
E5.1                                                         4/17/02
E5.2                                                         4/17/02
E5.3                                                         4/17/02
E6.1                                                         4/17/02
E6.2                                                         4/17/02
E7.0                                                         4/17/02
E7.1                                                         4/17/02
E7.2                                                         4/17/02
E7.3                                                         4/17/02
E7.4                                                         4/17/02



<PAGE>
                                   EXHIBIT C-1

                                   WORK LETTER

   This Work Letter sets forth the terms and conditions relating to the
construction of the Premises.

                                    SECTION 1

              INITIAL CONSTRUCTION OF THE BUILDING AND THE PREMISES

         1.1 Base Building. Landlord shall construct the "BASE BUILDING" at
Landlord's sole cost and expense; provided that any modifications to the Base
Building required by the Tenant Improvement Work described below shall be deemed
to be Tenant Improvements. The Base Building shall be constructed in accordance
with the plans for such improvements listed on the plan list attached as
Schedule 1 to this Exhibit C (the "PLAN LIST"). The Base Building shall include
without limitation:

         a) Fully enclosed tilt-up concrete building(s) with 5" thick concrete
slab and grade doors as shown on the construction drawings listed in the Plan
List;

         b) Water and gas service stubbed into Building;

         c) A sanitary sewer gut line as shown on the construction drawings;

         d) 2000 amp, 480/277 volt, 3 phase electrical service with main switch
in the electrical room;

         e) Four (4) 4" telephone conduits and 8' x 8' plywood terminal board in
the electrical room;

         f) Fire sprinklers at roof to meet Legal Requirements for the Building
shell.

1.2 Special Tenant Improvements. In addition to the Base Building, Landlord
shall also obtain all necessary permits and approvals for and shall construct
those improvements specifically described in Architect's Bulletin No. 4 dated
February 2, 2001 (the "BULLETIN") and prepared by Ware Malcomb Architects, which
Bulletin has been approved by Landlord and is attached hereto (the "SPECIAL
TENANT IMPROVEMENTS"). Prior to the date hereof Tenant has paid to Landlord
$135,000 representing the estimated cost of the Special Tenant Improvements. In
the event the actual cost of completing the Special Tenant Improvements exceeds
$135,000 the remainder shall be charged against the Tenant Improvement
Allowance. If the actual cost is less than $135,000, the remainder shall be
promptly refunded to Tenant.

1.3 Parcel 3 Improvements. Landlord shall construct the site improvements on
Parcel 3 at Landlord's sole cost and expense in accordance with the plans for
such improvements listed on the Plan List. The site improvements shall include,
without limitation, site concrete, asphalt paving, striping, exterior lighting,
site utilities and landscaping.

1.4 Landlord's Work. "LANDLORD'S WORK" shall mean all work to be constructed by
Landlord described in Sections 1.1, 1.2 and 1.3 above.

1.5 Tenant's Work. "TENANT'S WORK" will include designing, providing and
installing all Tenant Improvements (defined hereafter) and providing the
required furnishings, fixtures and equipment for Tenant's use of the Premises.
As used in this Lease, the term "TENANT IMPROVEMENTS" shall mean all
improvements set forth in the Approved Tenant Improvement Plans. Tenant shall
obtain all necessary permits and approvals for and shall construct the "TENANT
IMPROVEMENTS" in accordance with the Approved Tenant Improvement Plans (as
defined in Section 2.4 below). Landlord will disburse the Tenant Improvement
Allowance described in Section 4 below to pay for Tenant Improvement Costs
(defined hereafter). All such costs of completing Tenant's Work which are in
excess of the Tenant Improvement Allowance shall be paid by Tenant pursuant to
the terms of the Lease and this Work Letter.

<PAGE>
                                    SECTION 2

                            TENANT IMPROVEMENT PLANS

         2.1 Architect/Construction Plans. Tenant has retained CAS Architects,
Inc. (the "Architect") to prepare the construction plans for all Tenant
Improvements and Special Tenant Improvements. Tenant shall retain engineering
consultants (the "Engineers") approved by Landlord (which approval shall not be
unreasonably withheld or delayed) to prepare all plans and engineering working
drawings relating to the Tenant Improvements, including without limitation, all
structural, HVAC, electrical, plumbing, life safety, and sprinkler work in the
Premises which is not part of the Base Building. The final working plans and
drawings to be prepared by Architect and the Engineers hereunder shall be known
collectively as the "Tenant Improvement Plans". The scope, form and content of
all plans and drawings shall be discussed in reasonable detail at each of the
weekly meetings held pursuant to the terms of Section 3.2.6 below. All Tenant
Improvement Plans shall be in a form suitable for bidding and construction by
qualified contractors, shall meet the requirements of the City of Livermore, and
shall be subject to Landlord's approval, which shall not be unreasonably
withheld or delayed. Tenant and Architect shall verify, in the field, the
dimensions and conditions as shown on the relevant portions of the Base Building
plans, and Tenant and Architect shall be solely responsible for the same, and
Landlord shall have no responsibility in connection therewith. Landlord's review
of the Tenant Improvement Plans as set forth in this Section 2, shall be for its
sole purpose and shall not obligate Landlord to review the same, for quality,
design, code compliance or other like matters. Accordingly, notwithstanding that
any Tenant Improvement Plans are reviewed by Landlord or its architect,
engineers and consultants, and notwithstanding any advice or assistance which
may be rendered to Tenant by Landlord or Landlord's space planner, architect,
engineers, and consultants, Landlord shall have no liability whatsoever in
connection therewith and shall not be responsible for any omissions or errors
contained in the Tenant Improvement Plans, and Tenant's waiver and indemnity set
forth in Section 16 of this Lease shall specifically apply to the Tenant
Improvement Plans.

         2.2 Final Design Drawings. Tenant and the Architect shall prepare the
final design drawings and specifications for Tenant Improvements in the Premises
(collectively, the "Final Design Drawings") and shall deliver the same to
Landlord for Landlord's approval. The Final Design Drawings shall include a
layout and designation of all offices, rooms and other partitioning. Landlord
may request clarification or more specific drawings for special use items not
included in the Final Design Drawings. Landlord shall advise Tenant within five
(5) business days after Landlord's receipt of the Final Design Drawings for the
Premises if the same are unsatisfactory or incomplete in any commercially
reasonable respect. If Tenant is so advised, Tenant shall promptly cause the
Final Design Drawings to be revised to correct any deficiencies or other matters
Landlord may reasonably require.

         2.3 Final Working Drawings. After the Final Design Drawings have been
approved by Landlord, Tenant shall promptly cause the Architect and the
Engineers to complete the architectural and engineering drawings for the
Premises, and Architect shall compile a fully coordinated set of architectural,
structural, mechanical, electrical and plumbing working drawings in a
commercially reasonable and customary form which is sufficiently complete to
allow subcontractors with a reasonable level of competence and experience in the
industry to bid on the work and to obtain all permits required for the
construction of the Tenant Improvements (the "PERMITS") and shall submit the
same (collectively, the "FINAL WORKING DRAWINGS") to Landlord for Landlord's
approval, which approval shall not be unreasonably withheld or delayed. Tenant
shall supply Landlord with three (3) copies signed by Tenant of such Final
Working Drawings. Landlord shall advise Tenant in writing within five (5)
business days after Landlord's receipt of the Final Working Drawings for the
Premises if the same are unsatisfactory or incomplete in any commercially
reasonable respect, and provide Tenant with sufficient detail to address the
issues presented by Landlord. If Tenant is so advised, Tenant shall promptly
cause the Final Working Drawings to be revised in accordance with such review
and any disapproval of Landlord in connection therewith.

         2.4 Approved Tenant Improvement Plans. The Final Working Drawings shall
be approved by Landlord (the "Approved Tenant Improvement Plans") prior to the
commencement of construction of the Tenant Improvements by Tenant. In order to
expedite the permitting process,
<PAGE>
however, prior to Landlord's approval pursuant to Section 2.3 above, Tenant may
submit the Final Working Drawings to the appropriate municipal authorities for
all Permits necessary to allow Tenant's contractor to commence and fully
complete the construction of the Tenant Improvements. Notwithstanding the
foregoing, Tenant acknowledges that Landlord does not waive the right to approve
the Final Working Drawings and by electing to submit the Final Working Drawings
for permit prior to Landlord's approval, Tenant is assuming the risk that
Landlord may require changes in such drawings after the same have been submitted
for permits. Tenant hereby agrees that neither Landlord nor Landlord's
consultants shall be responsible for obtaining any of the Permits or a
certificate of occupancy for the Premises and that obtaining the same shall be
Tenant's responsibility; provided, however, that Landlord shall in all events
cooperate with Tenant in executing permit applications and performing other
ministerial acts reasonably necessary to enable Tenant to obtain any such permit
or certificate of occupancy. No changes, modifications or alterations in the
Approved Tenant Improvement Plans may be made without the prior written consent
of Landlord, which consent shall not be unreasonably withheld or delayed.

                                    SECTION 3

                       CONSTRUCTION OF TENANT IMPROVEMENTS

         3.1      Tenant's Selection of Contractors.

                 3.1.1 Tenant's Contractor. A general contractor shall be
retained by Tenant to construct the Tenant Improvements. Such general contractor
("TENANT'S CONTRACTOR") shall be subject to Landlord's prior approval, which
approval shall not be unreasonably withheld or delayed.

                 3.1.2 Tenant's Agents. All subcontractors, laborers,
materialmen, and suppliers used by Tenant (such subcontractors, laborers,
materialmen, and suppliers, and Tenant's Contractor to be known collectively as
"TENANT'S AGENTS") must be approved in writing by Landlord, which approval shall
not be unreasonably withheld or delayed. If Landlord does not approve any of
Tenant's proposed subcontractors, laborers, materialmen or suppliers, Tenant
shall submit other proposed subcontractors, laborers, materialmen or suppliers
for Landlord's written approval. Notwithstanding the foregoing, Tenant shall
retain subcontractors designated or reasonably approved by Landlord in
connection with any structural, mechanical, electrical, plumbing or heating,
air-conditioning or ventilation work to be performed in the Premises. Further
Landlord's approval shall not be required for any of Tenant's Agents performing
work or providing materials costing less than $10,000.

         3.2      Construction of Tenant Improvements by Tenant's Agents.

              3.2.1 Tenant's Construction Contract; Cost Budget. Prior to
Tenant's execution of the construction contract and general conditions with
Tenant's Contractor ("TENANT'S CONSTRUCTION CONTRACT"), Tenant shall submit
Tenant's Construction Contract to Landlord for its approval, which approval
shall not be unreasonably withheld or delayed. Prior to the commencement of the
construction of the Tenant Improvements, and after Tenant has accepted all bids
for the Tenant Improvements, Tenant shall provide Landlord with a detailed
breakdown, by trade, of the final costs to be incurred or which have been
incurred in connection with the design and construction of the Tenant
Improvements to be performed by or at the direction of Tenant or Tenant's
Contractor, which costs form a basis for the amount of Tenant's Construction
Contract (the "Final Costs"). If the costs of the Tenant Improvements exceed the
Tenant Improvement Allowance, Tenant shall also provide Landlord with its
computation of percentage that the Tenant Improvement Allowance bears to the
total costs of the Tenant Improvements (the "ALLOWANCE PERCENTAGE")

             3.2.2                  Tenant's Agents.

                 A. Landlord's General Terms for Tenant's Agents and Tenant
Improvement Work. Tenant's and Tenant's Agent's construction of the Tenant
Improvements shall comply with the following: (i) the Tenant Improvements shall
be constructed in accordance with the Approved Tenant Improvement Plans; and
(ii) Tenant shall abide by all rules reasonably made by Landlord with respect to
storage of materials, coordination of work with the contractors of other tenants
and Landlord, and any other matter in connection with this Work Letter,
including, without limitation,
<PAGE>
the construction of the Tenant Improvements.

                 B. Indemnity. Tenant's indemnity of Landlord as set forth in
Section 16.1 of this Lease shall also apply with respect to any and all costs,
losses, damages, injuries and liabilities related in any way to any act or
omission of Tenant or Tenant's Agents, or anyone directly or indirectly employed
by any of them, or in connection with Tenant's non-payment of any amount arising
out of the Tenant Improvements and/or Tenant's disapproval of all or any portion
of any request for payment. Such indemnity by Tenant, as set forth in Section
16.1 of this Lease, shall also apply with respect to any and all costs, losses,
damages, injuries and liabilities related in any way to Landlord's performance
of any ministerial acts reasonably necessary (i) to permit Tenant to complete
the Tenant Improvements, and (ii) to enable Tenant to obtain any building permit
or certificate of occupancy for the Premises.

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

                 D.         Insurance Requirements.

                            1. General Coverages. All of Tenant's Agents shall
carry worker's compensation insurance covering all of their respective
employees, and shall also carry public liability insurance, including property
damage, all with limits, in form and with companies as are required to be
carried by Tenant as set forth in Article 14 of this Lease.

                            2. Special Coverages. Tenant shall carry "Builder's
All Risk" insurance in an amount approved by Landlord covering the construction
of the Tenant Improvements, and such other commercially reasonable insurance as
Landlord may require, it being understood and agreed that the Tenant
Improvements shall be insured by Landlord pursuant to Article 14 of this Lease
upon completion thereof. Tenant's policy of Builder's All Risk insurance shall
be in amounts and shall include such extended coverage endorsements as may be
reasonably required by Landlord including, but not limited to, the requirement
that all of Tenant's Agents shall carry Excess Liability and Products and
Completed Operation Coverage insurance, each in amounts not less than $1,000,000
per incident, $2,000,000 in aggregate, and in form and with companies as are
required to be carried by Tenant as set forth in Article 14 of this Lease.

                            3. General Terms. Certificates for all insurance
carried pursuant to this Section 3.2.2(D) shall be delivered to Landlord before
the commencement of construction of the Tenant Improvements and before the
equipment of Tenant's Contractor is moved onto the site. All such policies of
insurance must contain a provision that the company writing said policy will
give Landlord thirty (30) days' prior written notice of any cancellation or
lapse of the effective date or any reduction in the amounts of such insurance.
In the event that the Tenant Improvements are damaged by any cause during the
course of the construction thereof, Tenant shall immediately repair the same at
Tenant's sole cost and expense. Tenant's Agents shall maintain all of the
foregoing insurance coverage in force until the Tenant Improvements are fully
completed and accepted by Landlord, except for any Products and Completed
Operation Coverage insurance required by Landlord, which is to be maintained for
ten (10) years following completion of the work and acceptance by Landlord and
Tenant. All policies carried under this Section 3.2.2(D) shall insure Landlord
and Tenant, as their interests may appear, as well as Tenant's Contractor and
Tenant's Agents. All insurance, except Workers' Compensation, maintained by
Tenant's Agents shall preclude subrogation claims by the insurer against anyone
insured thereunder. Such insurance shall provide that it is primary insurance
<PAGE>
as respects the Landlord and that any other insurance maintained by Landlord is
excess and noncontributing with the insurance required hereunder. The
requirements for the foregoing insurance shall not derogate from the provisions
for indemnification of Landlord by Tenant under Section 3.2.2(B) of this Work
Letter.

                 3.2.3 Governmental Compliance. The Tenant Improvements shall
comply in all respects with the following: (i) all building codes and other
state, federal, city or quasi-governmental laws, codes, ordinances and
regulations, as each may apply according to the rulings of the controlling
public official, agent or other person; (ii) applicable standards of the
American Insurance Association (formerly, the National Board of Fire
Underwriters) and the National Electrical Code; and (iii) building material
manufacturer's specifications.

                 3.2.4 Mechanic's Liens. Tenant shall keep the Premises and the
Center free and clear of mechanics' liens arising out of its construction of
Tenant's Work as provided in Article 29. All provisions of Article 29 shall
apply to Tenant's Work as if fully set forth into this Work Letter.

                 3.2.5 Inspection by Landlord. Landlord shall have the right to
inspect the Tenant Improvements at all times, provided however, that Landlord's
failure to inspect the Tenant Improvements shall in no event constitute a waiver
of any of Landlord's rights hereunder nor shall Landlord's inspection of the
Tenant Improvements constitute Landlord's approval of the same. Should Landlord
reasonably disapprove any portion of the Tenant Improvements, Landlord shall
notify Tenant in writing of such disapproval and shall specify the items
disapproved. Any material defects or deviations in, and/or disapproval by
Landlord of, the Tenant Improvements shall be rectified by Tenant at no expense
to Landlord, provided however, that in the event Landlord determines that a
defect or deviation exists or disapproves of any matter in connection with any
portion of the Tenant Improvements and such defect, deviation or matter might
adversely affect the mechanical, electrical, plumbing, heating, ventilating and
air-conditioning or life-safety systems of the Building, the structure or
exterior appearance of the Building or any other tenant's use of such other
tenant's leased premises, Landlord after giving Tenant at least three (3)
business days advance written notice and an opportunity to cure or otherwise
demonstrate compliance, may take such action as Landlord deems necessary, at
Tenant's expense and without incurring any liability on Landlord's part, to
correct any such defect, deviation and/or matter, including, without limitation,
causing the cessation of performance of the construction of the Tenant
Improvements until such time as the defect, deviation and/or matter is corrected
to Landlord's satisfaction.

           3.2.6 Meetings. Commencing upon the execution of this Lease, Tenant
shall hold weekly meetings at a reasonable time, with the Architect and the
Tenant's Contractor regarding the progress of the preparation of the Tenant
Improvement Plans and the construction of the Tenant Improvements, and Landlord
and/or its agents shall receive prior notice of, and shall have the right to
attend, all such meetings, and, upon Landlord's request, certain of Tenant's
Agents shall attend such meetings. Such meetings shall include a detailed review
of the plans, drawings and specifications prepared to date and all participants
in the meeting shall make a good faith effort to raise any issues or concerns
they may have regarding the scope, form or content of any plan submitted.

         3.3 Notice of Completion; Copy of Record Set of Plans. Within ten (10)
days after completion of construction of the Tenant Improvements, Tenant shall
cause a Notice of Completion with respect to the Tenant Improvements to be
recorded in the office of the Recorder of the County of Alameda in accordance
with Section 3093 of the Civil Code of the State of California or any successor
statute, and shall furnish a copy thereof to Landlord upon such recordation. If
Tenant fails to do so, Landlord may execute and file the same on behalf of
Tenant as Tenant's agent for such purpose, at Tenant's sole cost and expense. At
the conclusion of construction, (i) Tenant shall cause the Architect and
Tenant's Contractor (A) to update the Approved Working Drawings as necessary to
reflect all changes made to the Approved Working Drawings during the course of
construction, (B) to certify to the best of their knowledge that the
"record-set" of mylar as-built drawings are true and correct, which
certification shall survive the expiration or termination of this Lease, and (C)
to deliver to Landlord two (2) sets of copies of such record set of drawings
within ninety (90) days following issuance of a certificate of occupancy for the
Premises, and (ii) Tenant shall deliver to Landlord a copy of all warranties,
guaranties, and operating manuals and information relating to the improvements,
equipment, and systems in the Premises.

<PAGE>
                                    SECTION 4

                TENANT IMPROVEMENT ALLOWANCE; CONSTRUCTION COSTS

         4.1 Tenant Improvement Allowance. Tenant shall be entitled to a
one-time tenant improvement allowance (the "Tenant Improvement Allowance") in
the amount set forth in the First Amendment to Building 3 Lease to which this
Work Letter is attached, for the costs relating to the initial design and
construction of the Tenant Improvements. In no event shall Landlord be obligated
to make disbursements pursuant to this Work Letter in a total amount which
exceeds the Tenant Improvement Allowance.

         4.2      Disbursement of the Tenant Improvement Allowance.

                 4.2.1 Tenant Improvement Allowance Items. Except as otherwise
set forth in this Work Letter, the Tenant Improvement Allowance shall be
disbursed by Landlord only for the following items and costs (collectively the
"Tenant Improvement Allowance Items"):

                            A. Payment of the fees of the Architect and the
Engineers

                            B. The payment of plan check, permit and license
fees relating to construction of the Tenant Improvements;

                            C. The cost of construction of the Tenant
Improvements, including, without limitation, testing and inspection costs,
utility usage, trash removal costs, and contractors' fees and general
conditions;

                            D. The cost of any changes in the Base Building when
such changes are required by the Tenant Improvement Plans, such cost to include
all direct architectural and/or engineering fees and expenses incurred in
connection therewith; and

                            E. The cost of any changes to the Tenant Improvement
Plans or Tenant Improvements required by Code.

                  4.2.2 Disbursement of Tenant Improvement Allowance. During the
construction of the Tenant Improvements, Landlord shall make monthly
disbursements of the Tenant Improvement Allowance for Tenant Improvement
Allowance Items:

                            A. Monthly Disbursements. No more frequently than
monthly, during the construction of the Tenant Improvements (or such other date
as Landlord may designate), Tenant shall deliver to Landlord: (i) a request for
payment of Tenant's Contractor, approved by Tenant, in a form to be provided by
Landlord, showing the schedule, by trade, of percentage of completion of the
Tenant Improvements in the Premises, detailing the portion of the work completed
and the portion not completed; (ii) invoices from all of Tenant's Agents, for
labor rendered and materials delivered to the Premises; (iii) executed
mechanic's lien releases from all of Tenant's Agents which shall comply with the
appropriate provisions, as reasonably determined by Landlord, of California
Civil Code Section 3262(d); and (iv) all other information reasonably requested
by Landlord. Tenant's request for payment shall be deemed Tenant's approval of
the work furnished and/or the materials supplied as set forth in Tenant's
payment request. After receipt of the foregoing and provided that Landlord does
not dispute any request for payment based on non-compliance of any work with the
Approved Tenant Improvement Plans, or due to any substandard work, or for any
other reasonable reason, Landlord shall deliver a check to Tenant in an amount
equal to the lesser of: (a) the Allowance Percentage of the Tenant Improvement
costs for which payment is so requested less a ten percent (10%) retention (the
aggregate amount of such retentions to be known as the "Final Retention") or (b)
the balance of the undisbursed Tenant Improvement Allowance (excluding the Final
Retention). Landlord's payment of such amounts shall not be deemed Landlord's
approval or acceptance of the work furnished or materials supplied as set forth
in Tenant's payment request.

                            B. Final Retention. Subject to the provisions of
this Work Letter, a
<PAGE>
check for the Final Retention shall be delivered by Landlord to Tenant within
fifteen (15) days after all the following conditions have been satisfied: (i)
Tenant delivers to Landlord a properly executed unconditional waiver and lien
release from Tenant's Contractor in compliance with applicable sections of the
California Civil Code, (ii) Landlord has determined that no substandard work
exists, (iii) Architect delivers to Landlord a certificate, in a form reasonably
acceptable to Landlord, certifying that the construction of the Tenant
Improvements in the Premises has been substantially completed, (iv) Tenant has
recorded a Notice of Completion with respect to Tenant's Work and thirty (30)
days has expired from the date of such recording with no liens having been filed
during such thirty day period, and (v) there is no existing Event of Default by
Tenant under the Lease nor has Landlord notified Tenant of any default which
would become an Event of Default under the Lease with the passage of time if not
cured.

                  C. Other Terms. Landlord shall only be obligated to make
disbursements from the Tenant Improvement Allowance to the extent costs are
incurred by Tenant for Tenant Improvement Allowance Items. No disbursements
shall be made to pay for Special Improvements unless the Tenant Improvement
Allowance exceeds the costs of all other Tenant Improvements. All costs of
completing Tenant's Work in excess of the Tenant Improvement Allowance shall be
at Tenant's sole cost and expense.

                  D. Other Landlord Costs. Tenant shall also be responsible for
the payment of the fees incurred by, and the cost of documents and materials
supplied by, Landlord and Landlord's consultants in connection with the
preparation and review of the Final Design Drawings and Final Working Drawing as
defined in Section 2 of this Work Letter. The Tenant Improvement Allowance will
not be used to pay the foregoing costs. Tenant shall pay such costs to Landlord
from time to time within ten (10) days after receipt from Landlord of statements
of such expenses and all back-up documentation to support the same.

                                    SECTION 5

                             INTENTIONALLY DELETED.

                                    SECTION 6

                                  MISCELLANEOUS

         6.1 Tenant's Representative. Tenant has designated Dennis Rhett as its
sole representative with respect to the matters set forth in this Work Letter,
each of whom, until further notice to Landlord, shall have full authority and
responsibility to act on behalf of the Tenant as required in this Work Letter.

         6.2 Landlord's Representative. Landlord has designated William Drummond
as its sole representative with respect to the matters set forth in this Work
Letter, who, until further notice to Tenant, shall have full authority and
responsibility to act on behalf of the Landlord as required in this Work Letter.

         6.3 Time of the Essence in This Work Letter. Unless otherwise
indicated, all references herein to a "number of days" shall mean and refer to
calendar days.