Exhibit 10.11


                     SECOND AMENDMENT TO STANDARD FORM LEASE


         THIS SECOND AMENDMENT TO STANDARD FORM LEASE (the  "Amendment") is made
as of January 16, 1997,  by and between STATE OF  CALIFORNIA  PUBLIC  EMPLOYEES'
RETIREMENT SYSTEM, an Agency of the State of California ("Landlord"),  and FORTE
SOFTWARE,  INC.,  a  Delaware  corporation  ("Tenant"),  with  reference  to the
following facts:

         A. Landlord and Tenant  entered into that certain  Standard Form Lease,
dated for reference  purposes as of December 1, 1994, as amended by that certain
First  Amendment  to  Standard  Form  Lease,   dated  as  of  January  31,  1996
(collectively,  the "Lease"). Each capitalized term used in this Amendment,  but
not defined herein, shall have the meaning ascribed to it in the Lease.

         B.  Tenant is  concurrently  entering  into a Sublease  with ICF Kaiser
Engineers,  Inc., an Ohio  corporation  (the  "Sublease"),  to sublease  certain
premises  in the  Building  located  on the  6th  and 7th  floors  thereof  (the
"Sublease  Premises").  In connection  with  entering into the Sublease,  Tenant
desires  to  extend  the Term of the  Lease  pursuant  to Lease  Addendum  No. 1
attached to the Lease so that the Term  Expiration  Date under the Lease and the
expiration of the term of the Sublease coincide.

         C. Landlord and Tenant desire to enter into this  Amendment to evidence
Tenant's  exercise  of its  option  to  extend  the  Term (as  modified  by this
Amendment),  and to make certain other  modifications  to the Lease, all as more
particularly set forth herein.

         NOW, THEREFORE, the parties agree as follows:

         1. Extension of Term.  Tenant hereby exercises its option to extend the
Term pursuant to Lease Addendum No. 1; provided,  however,  notwithstanding  the
provisions  of Lease  Addendum  No. 1,  Landlord  and Tenant agree that the Term
Expiration  Date shall be June 30,  2000.  Accordingly,  the Lease is amended as
follows:

         (a) The  description  of the Term  Expiration  Date in the Basic  Lease
Information is hereby deleted and restated in its entirety as follows: "June 30,
2000 for all of the Leased Premises"; and

         (b) Lease Addendum No. 1 is hereby deleted in its entirety and shall be
of no further force or effect.

                                      -1-
<PAGE>

         2. Base Rent. The description of Base Rent set forth in the Basic Lease
Information is hereby deleted and restated in its entirety as follows:

                  "During the period beginning on the Term Commencement Date and
         ending on October 31, 1998:  $1.65 per square foot of Net Rentable Area
         per month for the 15th  Floor  Premises  and the 17th  Floor  Premises;
         $1.75 per square foot of Net Rentable Area per month for the 17th Floor
         Expansion Premises;  and $1.10 per square foot of Net Rentable Area per
         month for the 24th Floor  Premises for the first month Tenant  occupies
         the 24th Floor  Premises and $1.71 per square foot of Net Rentable Area
         per month  thereafter  for the 24th Floor  Premises.  During the period
         beginning on November 1, 1998 and ending on the Term  Expiration  Date:
         $1.85 per  square  foot of Net  Rentable  Area per month for the Leased
         Premises."

         3. Security  Deposit.  Concurrently  herewith,  Tenant shall deliver to
Landlord the amount of twenty-two  thousand eight hundred one dollars ($22,801),
which amount shall be held by Landlord as part of Tenant's Security Deposit. The
amount of the  Security  Deposit  set forth in the Basic  Lease  Information  is
hereby deleted and restated in its entirety as follows: "$96,428."

         4.       Basic Services.

         (a) Section  4.1(b)(iv) of the Lease is hereby  deleted and restated in
its entirety as follows:

         "(iv)  Electrical  facilities to provide  sufficient power for personal
         computers  and  other  office   machines  of  similar  low   electrical
         consumption,   but  not   including   electricity   required  for  data
         processing,  communications, UPS or power conditioning or supplementary
         air  conditioning.  Any electrical load which singly consumes more than
         0.5  kilowatts at rated  capacity or requires a voltage  other than 120
         volts  single-phase  shall be  conclusively  deemed  to  require  extra
         services.  Total convenience  outlet circuits that are loaded in excess
         or 0.73 kilowatts per hour per square foot per month (assessed on a per
         floor  basis  for  full  floor   occupancy   and  pro  rata  share  for
         multi-tenant  occupancy) shall be conclusively  deemed to require extra
         services. All panels, circuits and disconnects which are subject to the
         above  conditions  shall be  installed  with check meters that shall be
         monitored  by  Landlord  and used as a means for  billing  monthly  the
         excess  services  based on the average cost per  kilowatt  hour for the
         Building for the month that  electrical  consumption  exceeded any such
         standard.  Such check meters  shall be installed at Tenant's  sole cost
         and expense."

         (b)  Notwithstanding  any contrary provision set forth in the Sublease:
Landlord and Tenant agree that the provisions of this section 4 shall also apply
to Tenant's  consumption  of electricity  in the Sublease  Premises;  and Tenant
agrees to pay to Landlord, as Additional Rent, for any excess electrical service
provided to Tenant in the Sublease  Premises in accordance  with the Lease as if
the Sublease Premises were demised to Tenant pursuant to the Lease.

                                      -2-
<PAGE>

         5.       Wiring and Cables.

         (a) The following new  subsection is hereby added to the end of Section
5.8 of the Lease:

                  "(d) In no event shall Tenant install any electrical wiring or
         voice or data  cables  above any  ceiling in any  portion of the Leased
         Premises  unless such wiring or cables are  installed  within  existing
         raceways and chases, or such other raceways, chases or equipment as may
         be  acceptable to Landlord in its sole and absolute  discretion.  If at
         any time  Landlord  determines  that Tenant has violated the  foregoing
         provisions,  then  Landlord  may,  at its  option,  require  Tenant (at
         Tenant's  sole cost and expense) to remove all such wiring,  cables and
         any related  equipment that was not previously  approved by Landlord in
         accordance with this Section 5.8(d), and to repair all damage resulting
         from such  installation  or removal.  Tenant's  obligations  under this
         Section 5.8(d) shall survive the  expiration or earlier  termination of
         this Lease."

         (b)  Notwithstanding  any contrary provision set forth in the Sublease,
Landlord and Tenant agree that the provisions of this section 5 shall also apply
to Tenant's installation of wiring and cables in the Sublease Premises.

         6.       Termination Right.

         (a) Section 6.21 of the Lease (Termination Right) is hereby deleted and
restated in its entirety as follows:

         "6.21  Termination  Right.  Provided  Tenant is not in default under or
         breach of this Lease either at the time Tenant delivers its Termination
         Notice  (as  defined  below)  or on the  Termination  Date (as  defined
         below),  then Tenant may elect to  terminate  this Lease as of the last
         day of any calendar  month on or after June 30, 1999 (the  'Termination
         Date') by delivering to Landlord  written  notice of Tenant's  election
         (the  'Termination  Notice').  The Termination  Notice must specify the
         Termination Date and must be received by Landlord on or before December
         31, 1998.  If Landlord  does not receive the  Termination  Notice on or
         before  December 31, 1998,  then Tenant shall not have any  termination
         rights under this Lease and the  provisions  of this Section 6.21 shall
         be of no  further  force  or  effect.  As  consideration  for  Tenant's
         termination of this Lease,  Tenant shall pay to Landlord,  concurrently
         with Tenant's delivery of its Termination  Notice, by certified or bank
         cashier's  check or by a wire transfer of funds, an amount equal to the
         sum of the  following  amounts:  (a) an amount equal to two (2) months'
         Base Rent in effect on the  Termination  Date;  plus (b) the amount set
         forth  on  Schedule  1  attached  hereto  and  incorporated  herein  by
         reference  next to the month  during  which the  Termination  Date will
         occur (for example,  if the Termination Date selected by Tenant is July
         31, 1999, then Tenant shall pay the sum of two (2) months' Base Rent at
         the  rate  applicable  to July,  1999,  plus the 

                                      -3-
<PAGE>

         amount set forth on Schedule 1 for July 31,  1999.  Landlord and Tenant
         agree that Schedule 1 attached hereto is calculated based upon a tenant
         improvement allowance of $521,230, amortized over the remaining Term of
         this Lease at an interest rate of eleven  percent (11%) per annum,  and
         each amount set forth on Schedule 1 is the remaining  balance due as of
         the last day of the  corresponding  month.  Tenant's right to terminate
         this Lease under this  Section  6.21 is personal to Tenant,  may not be
         exercised  by or be assigned to any person or entity  other than Tenant
         (including, without limitation, any subtenant), and shall terminate and
         be of no further effect upon any assignment of this Lease."

         (b)  Schedules 1, 2 and 3 attached to the Lease are hereby  deleted and
replaced in their entirety with Schedule 1 attached to this Amendment.

         7. Waiver of Jury Trial.  The  following new section is hereby added to
the Lease as Section 6.24:

                  "6.24 Mutual Waivers of Jury Trial and Certain Damages. Tenant
         and  Landlord  each hereby  expressly,  irrevocably,  fully and forever
         releases,  waives and  relinquishes  any and all right to trial by jury
         and all right to receive punitive,  exemplary and consequential damages
         from the other (or any past,  present or future board member,  trustee,
         director, officer, employee, agent,  representative,  or advisor of the
         other) in any  claim,  demand,  action,  suit,  proceeding  or cause of
         action in which  Tenant  and  Landlord  are  parties,  which in any way
         (directly or indirectly)  arises out of, results from or relates to any
         of the  following,  in each case  whether  now  existing  or  hereafter
         arising and whether based on contract or tort or any other legal basis:
         this  Lease;  any past,  present or future  act,  omission,  conduct or
         activity  with  respect  to  this  Lease;  any  transaction,  event  or
         occurrence   contemplated  by  this  Lease;   the  performance  of  any
         obligation  or the  exercise  of any right  under  this  Lease;  or the
         enforcement  of this Lease.  Tenant and Landlord  each agrees that this
         Lease constitutes written consent that trial by jury shall be waived in
         any such claim,  demand,  action,  suit,  proceeding  or other cause of
         action pursuant to California  Code of Civil Procedure  section 631 and
         agrees that Tenant and  Landlord  each shall have the right at any time
         to file  this  Lease  with the clerk or judge of any court in which any
         such claim, demand,  action, suit,  proceeding or other cause of action
         may be pending as statutory  written consent to waiver of trial by jury
         in accordance with California Code of Civil Procedure section 631.

         Initials:  ____________________"

         8.  Tenant  Improvements.  The  provisions  of Exhibit A  (Construction
Agreement)  attached  hereto (the  "Construction  Agreement")  are  incorporated
herein by reference with regard to improvements that Tenant may elect to make to
the Leased Premises or the Sublease Premises. All references in the Lease to the
Construction  Agreement shall hereafter mean Exhibit A to this Amendment  rather
than Exhibit B to the Lease.

                                      -4-
<PAGE>

         9. Brokers.  Landlord has engaged the services of Alliance Management &
Leasing in connection with this Amendment.  Tenant  represents and warrants that
it has not engaged the services of or agreed to compensate any broker, finder or
other person in  connection  with this  Amendment.  Each party shall  indemnify,
defend  and  hold  the  other  party  harmless  from  and  against  any  claims,
liabilities,  damages and expenses  (including,  without limitation,  attorneys'
fees and costs of defense) for fees,  commissions or other amounts sought on the
basis of any agreement or other  commitment made or alleged to have been made by
the party giving the indemnity.

         10.  No  Other  Amendment;  Conflict.  Except  as  set  forth  in  this
Amendment,  the  provisions  of the Lease  shall  remain in full  force.  If the
provisions of this Amendment conflict with the provisions of the Lease, then the
provisions of this Amendment shall prevail.

         11. Counterparts. This Amendment may be signed in multiple counterparts
which, when signed by all parties, shall constitute a binding agreement.

         IN WITNESS WHEREOF,  the parties have executed this Amendment as of the
date first set forth above.

LANDLORD:                     STATE OF CALIFORNIA PUBLIC EMPLOYEES' 
                              RETIREMENT SYSTEM, an Agency
                              of the State of California

                              By  LaSalle Advisors Limited Partnership, 
                                  its authorized agent



                                  By Joseph R. Shea
                                     -----------------

                                  Its Vice President
                                      ----------------



                                  By Richard C. Cunningham
                                     ----------------------

                                  Its Vice President
                                      --------------


TENANT:                        FORTE SOFTWARE, INC., a California corporation



                                  By Robert Gorlin

                                  Its Director of Legal Affairs

                                      -5-
<PAGE>

                                   Schedule 1
                                   ----------


                              Termination Payments
                              --------------------


         Termination Date                             Amount
         ----------------                             ------

         June 30, 1999                               $324,076
         July 31, 1999                               $298,404
         August 31, 1999                             $272,497
         September 30, 1999                          $246,353
         October 31, 1999                            $219,969
         November 30, 1999                           $193,343
         December 31, 1999                           $166,473
         January 31, 2000                            $139,356
         February 29, 2000                           $111,991
         March 31, 2000                              $ 84,375
         April 30, 2000                              $ 56,507
         May 31, 2000                                $ 28,382
         June 30, 2000                               $      0

                                      -1-
<PAGE>

                                    Exhibit A


                             Construction Agreement


                  This  Construction  Agreement  ("Agreement")  is  made  as  of
January 16, 1997,  between  STATE OF  CALIFORNIA  PUBLIC  EMPLOYEES'  RETIREMENT
SYSTEM, an Agency of the State of California  ("Landlord"),  and FORTE SOFTWARE,
INC., a California corporation  ("Tenant"),  in connection with the execution of
that  certain  Second  Amendment  to Standard  Form Lease  between  Landlord and
Tenant,  dated as of January 16, 1997 (the  "Amendment").  The Amendment  amends
that certain Standard Form Lease, dated for reference purposes as of December 1,
1994, between Landlord and Tenant, as amended by that certain First Amendment to
Standard Form Lease, dated as of January 31, 1996  (collectively,  the "Original
Lease").  The Original  Lease and the  Amendment  are  collectively  referred to
herein as the "Lease." Each  capitalized  term used in this  Agreement,  but not
defined herein, shall have the meaning ascribed to it in the Lease. Landlord and
Tenant hereby agree as follows:

                  General

                  The  purpose  of  this   Agreement   is  to  set  forth:   how
improvements  to the Leased  Premises or the Sublease  Premises  that Tenant may
desire  to  construct  from  time  to  time  (the   "Improvements")  are  to  be
constructed; who will do the construction of the Improvements;  who will pay for
the  construction  of the  Improvements;  and the time schedule for  Substantial
Completion of the construction of the Improvements.

                  The provisions of the Lease, except where clearly inconsistent
or inapplicable to this Agreement, are incorporated into this Agreement.

                  Landlord  and Tenant  acknowledge  that  Tenant  will not take
possession of the entire Sublease  Premises at the  commencement of the Sublease
and,  therefore,  that  the  Improvements  in  the  Sublease  Premises  will  be
constructed  in phases.  As used in this  Agreement,  a "Phase of  Construction"
means a period  commencing  when  Contractor (as defined in Section 5(I)) begins
work on  Improvements  within the Leased  Premises or the Sublease  Premises and
ending when  Contractor  substantially  completes such work and withdraws all of
its  equipment  and personnel  from the  Premises.  Landlord and Tenant  further
acknowledge  that  Tenant  presently  intends  to have the  Improvements  to the
Sublease Premises conducted in two Phases of Construction,  with the first Phase
of Construction  encompassing  the Improvements to one-half of the seventh floor
of  the  Building  and  the  second  Phase  of  Construction   encompassing  the
Improvements  to the second half of the seventh floor and all of the sixth floor
of the  Building.  The  foregoing  shall  not,  however,  limit  the  Phases  of
Construction for Tenant's Improvements under this Agreement.

         Delivery of Premises to Tenant and Condition of Premises.  Landlord has
previously  delivered  possession of the Leased Premises to Tenant in accordance
with the Lease;  and Landlord has no obligation to deliver to Tenant  possession
of the Sublease Premises. Tenant agrees that Landlord has no obligation to cause
the Leased Premises or the Sublease Premises to comply with any Laws (as defined
in Section 4) (including,  without  limitation,  the Americans with Disabilities
Act  of  1990,  Pub.  L.  101-336)  which  are  applicable  solely  due  to  the
construction of any Improvements;  and Tenant, at its sole cost, shall cause the
Leased  Premises  and the  Sublease  Premises  to  comply  with all such Laws in
connection  with the  construction of any  Improvements.  Except as set forth in
this Section 2, nothing in this Agreement shall be construed to limit Landlord's
obligation to comply with Laws in accordance with the Lease.

         Preparation/Approval  of Space  Plans.  When  Tenant  desires  that any
Improvements  be  constructed,  Tenant  shall  provide  Designer  (as defined in
Section 4) with such  information  as is  reasonably  requested  by  Designer to
permit  preparation  of a space plan (the "Space  Plan") for such  Improvements.
Tenant, at its sole cost, shall cause Designer to deliver to Landlord such Space
Plan for Landlord's approval,  which approval shall not be unreasonably withheld
or delayed.

         Selection of  Designer/Architect.  Subject to Landlord's  prior written
approval (which approval shall not be unreasonably withheld or delayed),  Tenant
shall select a designer or architect (collectively,  "Designer") who is familiar
with the Building  and with all  applicable  laws,  statutes,  codes,  rules and
regulations  of  governmental   agencies  and  authorities  having  jurisdiction
(collectively,  "Laws"), and with the regulations and procedures  promulgated by
Landlord,  in each instance  applicable to tenant  construction in the Building.
Designer shall prepare working  drawings and  specifications  for the applicable
Improvements  at  Tenant's  sole 

                                      -2-
<PAGE>

cost and expense (the "Working  Drawings").  Landlord  acknowledges  that Tenant
initially  has selected  SPACE as its Designer and Landlord  hereby  approves of
such selection.

                  Preparation of Plans and Construction Schedule and Procedures.
Landlord,  at Landlord's sole cost and expense,  shall provide  instructions and
Building  background  drawings to Designer to complete the Working  Drawings for
the applicable Improvements.  Landlord shall be responsible for the construction
of such Improvements, in accordance with the following schedule:

                  Tenant  shall  cause   Designer  to  submit  to  Landlord  the
applicable   Working   Drawings   prepared  by  Designer  with  respect  to  the
Improvements to be constructed pursuant thereto.

                  Landlord  shall,  as soon as  reasonably  possible  but in all
events within ten (10) business days of receipt, approve the Working Drawings or
designate by notice to Tenant the specific changes Landlord  reasonably requires
to be made  to the  Working  Drawings  as a  condition  to  Landlord's  approval
thereof.  Tenant shall cause Designer to make such changes as soon as reasonably
possible and  re-submit the Working  Drawings for  Landlord's  review.  Landlord
shall, as soon as reasonably possible but in all events within ten (10) business
days of receipt,  approve the revised Working Drawings or designate by notice to
Tenant  what  further  changes  Landlord  reasonably  requires to be made to the
Working  Drawings,  whereupon  Tenant shall cause  Designer to make such further
changes and re-submit the Working  Drawings.  This  procedure  shall be repeated
until the Working Drawings are finally approved by Landlord. Tenant's failure to
receive  Landlord's notice  designating  changes to the Working Drawings (or any
revision  thereof)  within the applicable  time frame  specified  above shall be
conclusively deemed Landlord's approval thereof.

                  Tenant, at its sole cost, shall cause the Engineer (as defined
below) to submit to Landlord,  after Landlord has approved the Working Drawings,
engineering  drawings showing complete plans for telephone outlets,  electrical,
plumbing work, heating, ventilating and air conditioning in connection with such
Improvements (the  "Engineering  Drawings").  The Engineering  Drawings shall be
prepared by a mechanical and electrical  engineer (the  "Engineer")  selected by
Tenant and  approved  by  Landlord,  which  approval  shall not be  unreasonably
withheld or delayed.  Landlord  acknowledges  that Tenant initially has selected
Flack + Kurtz  Consulting  Engineers  LLP as its Engineer  and  Landlord  hereby
approves of such selection.

                  Landlord  shall,  as soon as  reasonably  possible  but in all
events  within  ten (10)  business  days of  receipt,  approve  the  Engineering
Drawings  or  designate  by notice  to  Tenant  the  specific  changes  Landlord
reasonably requires to be made to the Engineering  Drawings.  Tenant shall cause
its engineer to make such changes as soon as  reasonably  possible and re-submit
the  Engineering  Drawings for Landlord's  review.  Landlord  shall,  as soon as
reasonably  possible but in all events within ten (10) business days of receipt,
approve the revised  Engineering  Drawings or designate by notice to Tenant what
further  changes  Landlord  reasonably  requires  to be made to the  Engineering
Drawings, whereupon Tenant shall cause Designer to make such further changes and
re-submit the Engineering  Drawings.  This procedure shall be repeated until the
Engineering  Drawings are finally  approved by Landlord.  Tenant's failure to so
receive  Landlord's notice designating  changes to the Engineering  Drawings (or
any revision  thereof) within the applicable time frame specified above shall be
conclusively deemed Landlord's approval thereof.

                  After Landlord has approved the Engineering Drawings,  Tenant,
at its sole cost, shall submit to Landlord final plans ("Plans"), which shall be
defined as, and shall consist of, complete architectural plans (inclusive of the
approved   Working   Drawings  and  the  approved   Engineering   Drawings)  and
specifications  necessary  to  allow  the  Contractor  to build  the  applicable
Improvements in accordance with those final Plans.

                  Landlord  shall,  as soon as  reasonably  possible  but in all
events within ten (10) business days of receipt,  approve those  elements of the
Plans not  previously  approved by Landlord by  delivering to Tenant a notice in
the form of  Exhibit 1 attached  hereto,  or  designate  by notice to Tenant the
specific changes Landlord  reasonably  requires to be made to such Plans. Tenant
shall cause such changes to be made as soon as reasonably possible and re-submit
the Plans for Landlord's review.  Landlord shall, as soon as reasonably possible
but in all events within ten (10) business days of receipt,  approve the revised
Plans or designate by notice to Tenant what further changes Landlord  reasonably
requires to be made to the Plans,  whereupon  Tenant  shall  cause such  further
changes to be made and re-submit  the Plans.  This  procedure  shall be repeated
until the Plans are finally approved by Landlord. Tenant's failure to so receive
Landlord's notice designating changes to the Plans (or revisions thereof) within
the  applicable  time  frame  specified  above  shall  be  conclusively   deemed
Landlord's approval thereof.

                                      -3-
<PAGE>


                  On or  before  the date that  Landlord  finally  approves  the
Plans,  Landlord may elect by notice to Tenant (which notice,  if not previously
delivered,  shall be included in  Landlord's  notice  approving the Plans in the
form of Exhibit 1 attached  hereto),  to advise Tenant that Landlord  shall have
the right to require  Tenant to remove such  Improvements  on the  expiration or
earlier  termination  of the  Term  of the  Lease,  or  upon  expiration  of the
scheduled term of the Sublease or earlier termination thereof if Tenant does not
remain in possession of the Sublease  Premises  pursuant to the  Non-Disturbance
Agreement dated of even date herewith,  as applicable (the "Removal Notice"). In
determining  whether to deliver a Removal Notice for  Improvements to be made in
any  subsequent  Phase of  Construction,  Landlord shall apply the same criteria
applied by Landlord in determining  which of the Improvements in the first Phase
of  Construction  are subject to a Removal  Notice.  (Such criteria may include,
without limitation, special purpose areas, the quality of construction,  density
of  use,   and  the  balance   between   private   offices  and  open   spaces.)
Notwithstanding  any  contrary  provision  of the  Sublease or the ICF Lease (as
defined in the Sublease):  Landlord agrees that Tenant shall not be obligated to
remove any Improvements from the Sublease Premises unless Landlord has delivered
to Tenant the Removal  Notice;  and Tenant agrees that if Landlord has delivered
to Tenant the Removal Notice, Landlord shall have the right to require Tenant to
remove  such  Improvements  on the  expiration  of  the  scheduled  term  of the
Sublease,  or upon  earlier  termination  thereof  if Tenant  does not remain in
possession of the Sublease Premises pursuant to the  Non-Disturbance  Agreement,
and Tenant shall restore the Sublease  Premises to the condition  existing prior
to the  installation of such  Improvements and shall repair all damage resulting
therefrom.  Where  Landlord  has  delivered  a Removal  Notice  with  respect to
particular  Improvements,  Landlord shall have sole  discretion to enforce or to
waive the requirement that Tenant remove such Improvements;  provided,  however,
that any waiver of such  removal  requirement  may apply to less than all of the
Improvements  initially designated in such Removal Notice only where the partial
application of such removal  requirement will not materially  increase  Tenant's
costs of complying with the Removal Notice.

                  Within fifteen (15) days after Landlord  finally  approves the
Plans for any Improvements, and within fifteen (15) days after Landlord approves
any change  thereto in accordance  with Section 6, and within  fifteen (15) days
after any such Improvements are Substantially Complete,  Tenant shall deliver to
Landlord  invoices or other  reasonably  satisfactory  evidence of all costs and
expenses incurred by Tenant in connection with such Improvements.

                  Landlord  shall  cause  the  general  contractor  selected  by
Landlord  ("Contractor")  to construct the applicable  Improvements  strictly in
accordance  with the  approved  Plans and the schedule  established  pursuant to
Section 6, at  Tenant's  sole and entire cost  (subject  to Tenant's  ability to
utilize the Tenant  Improvement  Allowance (as defined in Section 7)).  Landlord
initially has elected to use Paradigm as the  Contractor.  If Landlord elects to
use any Contractor  other than Paradigm,  Tenant shall have the right to approve
such  Contractor,  which approval will not be unreasonably  withheld or delayed.
Landlord agrees that any  subcontractors who will perform work estimated to cost
in excess of five  thousand  dollars  ($5,000)  shall be selected by Landlord or
Contractor,  from a list  approved by Tenant,  based on  competitive  bidding in
accordance with Landlord's current  competitive  bidding practices.  Tenant also
shall have the right to approve the  construction  contract between Landlord and
Contractor  ("Construction  Contract"),  which approval will not be unreasonably
withheld or delayed.  Landlord shall include in the  Construction  Contract such
provisions   governing  incentives  for  completion  or  penalties  for  delayed
completion as may be mutually acceptable to Tenant and Contractor, provided that
any delay in the commencement of work under the  Construction  Contract which is
requested  by  Tenant to  accommodate  the  negotiation  of such  incentives  or
penalties shall be a Tenant Delay.

                  Landlord shall provide customary  construction  management and
supervision  services  with  respect  to all  work  performed  by or  under  the
direction of Contractor.  In connection therewith, with respect to each Phase of
Construction of the Improvements to be constructed  hereunder,  Tenant shall pay
to Landlord a construction  supervision fee (the "Supervision Fee") equal to the
sum of (i) five and one-half  percent  (5.5%) of the first one hundred  thousand
dollars  ($100,000) of all costs to construct the  Improvements in such Phase of
Construction,  plus  (ii)  four and  one-half  percent  (4.5%)  of all  costs to
construct  the  Improvements  in such  Phase of  Construction  in  excess of one
hundred  thousand  dollars  ($100,000)  up to a maximum of one  million  dollars
($1,000,000),  plus  (iii)  two and  one-half  percent  (2.5%)  of all  costs to
construct  the  Improvements  in such  Phase of  Construction  in  excess of one
million dollars  ($1,000,000).  For purposes of calculating the Supervision Fee,
the costs to construct the  Improvements  in a particular  Phase of Construction
shall be the amount payable to the Contractor under the  Construction  Contract,
which  does  not  include  the  fees  of the  Designer  and  the  Engineer.  The
Supervision Fee shall be included in the Estimated Costs (as defined in

                                      -4-
<PAGE>

Section 7) and shall be paid in accordance with Section 7. Any failure by Tenant
to comply  with the dates and time limits in this  Agreement,  or failure to pay
when  due  any  sums  due to the  Contractor,  which  causes  a  delay  in  such
construction,  shall  automatically  constitute  Tenant  Delays  (as  defined in
Section 8).

                  Tenant agrees and  understands  that Landlord shall not be the
guarantor of, nor  responsible  for, the  correctness or accuracy of any Working
Drawings,  Engineering  Drawings or Plans or compliance of any Working Drawings,
Engineering Drawings or Plans with Laws. The foregoing notwithstanding, Landlord
shall  promptly  notify  Tenant  if  Landlord  discovers  any  incorrectness  or
inaccuracy  in the  Working  Drawings,  Engineering  Drawings  or Plans,  or the
failure of same to comply with Laws.

                  Any change which Tenant makes to any Plans shall be subject to
Landlord's  prior written approval in accordance with Section 6. Any such change
which delays Landlord in causing any Improvements to be  Substantially  Complete
beyond the time that it would have otherwise taken to cause such Improvements to
be Substantially Complete shall also constitute Tenant Delays.

         Construction.

                  The  Improvements  indicated on the applicable  Plans shall be
constructed by Contractor  under the supervision and management of Landlord,  in
accordance with the Schedule (as defined below) and the  Construction  Contract.
Landlord shall exercise and cause Contractor to exercise  reasonable  efforts to
minimize any interference with use of the Leased Premises, the Sublease Premises
and the areas adjacent to the Sublease Premises occupied by ICF Kaiser Engineers
in  connection  with  the   construction  of  the   Improvements.   The  parties
acknowledge,  however,  that some  degree of  interference  with the use of such
areas is unavoidable given the  circumstances  under which the Improvements will
be completed.

                  As used in this  Agreement,  the  "Schedule"  shall  mean  the
schedule for  commencement  and  Substantial  Completion of the  construction of
Improvements  called for under the applicable  Plans.  The Schedule shall in all
events allow for  construction of such  Improvements to commence only after: the
Plans for the  Improvements  have been  approved by Landlord as provided in this
Agreement;  all  necessary  permits and approvals  for the  construction  of the
Improvements  have been  issued by  appropriate  governmental  authorities;  the
Construction  Contract  has been  approved  by  Tenant;  and the total  costs of
constructing the Improvements  have been approved by Tenant.  The Schedule shall
be established in each case as follows:

                           With respect to the Improvements to be constructed in
the first Phase of Construction,  the parties  currently  anticipate (based upon
Contractor's  estimate) that  construction will commence on or about January 16,
1997, and that such Improvements will be Substantially  Complete within ten (10)
weeks after the commencement of construction.

                           With respect to the  Improvements  to be  constructed
after the first Phase of  Construction,  Landlord shall provide  Tenant,  at the
time Landlord  approves the Working  Drawings,  with an estimate of the Schedule
for  the  applicable  Improvements.   Thereafter,  when  Landlord  approves  the
Engineering Drawings, and again when Landlord approves the Plans, Landlord shall
notify  Tenant of any  revisions to the  estimated  Schedule for the  applicable
Improvements.  Landlord's  estimates regarding the Schedule shall be prepared in
consultation with Contractor and shall incorporate reasonable assumptions (based
on information  available from Tenant and other sources) as to the  commencement
date for construction of the applicable Improvements.

                  In the event that  Tenant  requests  any changes to the Plans,
Landlord  shall not  unreasonably  withhold  its  consent  to any such  changes,
provided the changes do not adversely affect the Building's structure,  systems,
equipment, security system or appearance, but if such changes increase the total
cost of the  Improvements  shown on such Plans,  Tenant shall pay such increased
costs to Landlord  as  provided  in Section 7. The costs  charged by Landlord to
Tenant caused by Tenant's  requesting  changes to such Improvements shall be the
amount of money (if any)  Landlord  has to pay to cause  such  Improvements,  as
reflected by revised  Plans,  to be  constructed  above the costs that  Landlord
would have had to pay to cause such Improvements to be constructed if no changes
had been made to such Plans, plus any resulting increase in the Supervision Fee.
If such changes delay Landlord's Substantial Completion of the work shown on the
Plans,  then such delay shall  constitute  Tenant  Delays.  Any other actions of
Tenant,  or  inaction  by Tenant,  which  delays  Landlord  in  completing  such
Improvements  shown on the applicable Plans shall also constitute Tenant Delays.
Whenever possible and practical,  Landlord will utilize, for the construction of
such Improvements,  the items and materials  designated in the applicable Plans.
However,  whenever Landlord determines in its reasonable judgment that it is 

                                      -5-
<PAGE>

not practical or efficient to use such materials, Landlord shall have the right,
upon  receipt of  Tenant's  consent,  which  consent  shall not be  unreasonably
withheld or delayed,  to substitute  comparable  items and materials.  If Tenant
refuses  to grant  such  consent,  and  Landlord  is  delayed  in  causing  such
Improvements to be Substantially  Complete because of Tenant's failure to permit
the substitution of comparable items and materials,  such delay shall constitute
Tenant Delays.

                  If the  Improvements  are not  Substantially  Completed by the
deadline  established  in the  Schedule  (as such  deadline  may be extended for
Tenant Delays and for Force Majeure), Tenant shall have the following rights and
remedies:

                  Landlord shall enforce against Contractor,  for the benefit of
Tenant,  all such rights and  remedies  as may be  included in the  Construction
Contract for delays in the completion of construction  which are attributable to
Contractor.

                  Where the delay is attributable to Landlord's failure or delay
in performing its obligations under the Construction Contract or this Agreement,
Tenant  reserves all rights and remedies  (including,  without  limitation,  the
right to recover  damages)  as may be  available  at law or in equity  which are
caused by Landlord's failure or delay in performing such obligations.

         Tenant Improvement Allowance.

                  Notwithstanding  any  contrary  provision  of  this  Agreement
requiring Tenant to bear all costs of the  Improvements,  Landlord agrees to pay
costs and expenses incurred (including reimbursement to Tenant for its costs and
expenses) in connection  with the design and  construction  of any  Improvements
(including,  without  limitation,  all costs  and  expenses  of plans,  permits,
licenses and approvals,  demolition expenses, and the Supervision Fee), designed
and constructed  pursuant to this Agreement  (collectively,  "Tenant Improvement
Costs") up to the  aggregate  amount of five  hundred  twenty-one  thousand  two
hundred thirty dollars  ($521,230)  (based upon ten dollars  ($10.00) per square
foot of Net  Rentable  Area of the Leased  Premises)  (the  "Tenant  Improvement
Allowance").  The Tenant  Improvement  Costs shall not include costs incurred by
Landlord or its agents in reviewing and approving Space Plans, Working Drawings,
Engineering   Drawings  and  Plans.   Landlord  and  Tenant  agree  such  Tenant
Improvement  Allowance  may be used for the  construction  of the  Improvements;
provided, however, in no event shall the Tenant Improvement Allowance be used to
pay for Tenant's personal property,  equipment,  furniture, fixtures (including,
without limitation,  work stations),  telephone  equipment or cabling,  computer
equipment or cabling,  or any similar  items,  regardless of whether or not such
items are affixed to or built inside interior  partitions of the Leased Premises
or the Sublease Premises. Furthermore, Tenant agrees that it shall have no right
to the balance of the Tenant Improvement  Allowance,  and Landlord shall have no
further  obligation to pay any costs or expenses for any  Improvements,  made or
constructed after December 31, 1998.

                  As soon as practical  after any Plans are approved by Landlord
pursuant to Section  5(f),  Landlord  shall cause  Contractor  to determine  the
estimated Tenant  Improvement  Costs in connection with the Improvements  called
for thereunder  (the "Estimated  Costs"),  and shall advise Tenant in writing of
the amount of Estimated Costs.  Tenant shall approve or disapprove the Estimated
Costs within ten (10) business days after receipt thereof. Landlord's failure to
receive  Tenant's notice  disapproving the Estimated Costs within the applicable
time frame  specified  above  shall be  conclusively  deemed  Tenant's  approval
thereof.  Once the Estimated Costs have been approved by Tenant,  the same shall
not  increase  except  as a result of (i)  changes  to the  Plans  requested  or
approved by Tenant,  (ii) changes or  additions to the Plans  required to comply
with Laws as required by Section 2 of this  Agreement,  (iii)  substitutions  of
materials  requested  or  approved  by Tenant,  or (iv)  Tenant  Delays.  If the
Estimated Costs approved by Tenant exceed the amount of the remaining balance of
the Tenant  Improvement  Allowance,  the excess (referred to herein as "Tenant's
Share of Estimated Costs") shall be paid by Tenant as follows:

                  (1) Tenant's  Share of Estimated  Costs shall be paid in three
equal  installments.  The first  installment shall be due at the commencement of
the construction work, the second installment shall be due on that date which is
the midpoint  between  commencement  and Substantial  Completion of construction
under  the  applicable  Schedule,  and the final  installment  shall be due upon
Substantial Completion of the Improvements. Tenant shall pay the installments of
Tenant's Share of Estimated Costs in cash or immediately available funds.

                  (2)  Promptly  after  such   Improvements  are   Substantially
Complete, Landlord shall advise Tenant of the actual Tenant Improvement Costs in
connection  therewith  (the  "Actual  Costs").  If  the  Tenant's  Share  of the
Estimated  Costs exceed the Actual Costs for which Tenant is  responsible,  then
such  difference  shall be returned  to Tenant by  Landlord's

                                      -6-
<PAGE>

check  payable to Tenant.  If the Actual Costs for which  Tenant is  responsible
exceed what Tenant  previously  has paid as Tenant's  Share of Estimated  Costs,
Tenant shall pay such excess as Additional Rent in cash or immediately available
funds within ten (10) business days after Landlord delivers to Tenant an invoice
therefor.  In the event Tenant must pay any amounts under this Agreement  before
any such Improvements are Substantially  Complete, then Landlord, at its option,
may cease  construction  until such  amounts are paid,  and any delay  resulting
therefrom shall be Tenant Delays.

         Delays.

                  The term  "Tenant  Delays" as used in this  Agreement  and the
Lease shall mean any delay in the completion of any such  Improvements  which is
due to any:  (1) delay in the giving of  authorizations  or approvals by Tenant;
(2)  delay  attributable  to the  acts  or  failures  to act,  whether  willful,
negligent or otherwise, of Tenant, its agents or contractors, where such acts or
any  failures  to act  delay  the  completion  of the  Improvements;  (3)  delay
attributable to the  interference of Tenant,  its agents or contractors with the
completion of any Improvements;  or (4) other matter set forth in this Agreement
or the Lease as Tenant Delays.

                  The term "Force Majeure Delay" as used in the Lease shall mean
and delay in the completion of any  Improvements  which is  attributable to any:
(1) actual delay or failure to perform  attributable  to any strike,  lockout or
other  labor  or  industrial  disturbance  (whether  or not on the  part  of the
employees of either party  hereto),  civil  disturbance,  future order  claiming
jurisdiction,  act of a public enemy, war, riot,  sabotage,  blockade,  embargo,
inability to secure  customary  materials,  supplies or labor  through  ordinary
sources by reason of regulation or order of any  government or regulatory  body;
(2) delay  attributable  to the  failure  of  Landlord  and/or  Tenant to secure
building permits and approvals;  (3) delay in the Substantial  Completion of any
Improvements because of changes in any Laws (including,  without limitation, the
Americans with Disabilities Act of 1990, Pub. L. 101-336), or the interpretation
thereof;  or (4) delay  attributable  to  lightning,  earthquake,  fire,  storm,
hurricane,  tornado,  flood, washout,  explosion,  or any other cause beyond the
reasonable control of the party from whom performance is required, or any of its
contractors or other representatives.  Any prevention,  delay or stoppage due to
any Force Majeure Delay shall excuse the performance of the party affected for a
period of time  equal to any such  prevention,  delay or  stoppage  (except  the
obligations  of either  party to pay money,  including  rent and other  charges,
pursuant to this Agreement or the Lease).  

                  IN WITNESS WHEREOF, the parties have executed the Construction
Agreement as of the date first written above.

LANDLORD:

STATE OF CALIFORNIA
PUBLIC EMPLOYEES' RETIREMENT SYSTEM,
an Agency of the State of California

By       LaSalle Advisors Limited Partnership, its authorized agent



         By                       Joseph R. Shea
              ----------------------------------------
                  Its            Vice President
                       -------------------------------


         By                  Richard C. Cunningham
              ----------------------------------------
                  Its           Vice President
                      --------------------------------
TENANT:

FORTE SOFTWARE, INC.,
a California corporation


         By                     Robert Gorlin
              ----------------------------------------
                   Its     Director of Legal Affairs
                      --------------------------------

                                      -7-
<PAGE>


                                    Exhibit 1

                          ALLIANCE MANAGEMENT & LEASING
                              1800 Harrison Street
                            Oakland, California 94612


                                                     ____________________, 199__


VIA HAND DELIVERY

Forte Software, Inc.
1800 Harrison Street, Suite 2400
Oakland, California  94612

Attn:

     Re:  Approval of Plans  Pursuant  to  Construction  Agreement,  dated as of
January __, 1997 (the "Agreement")

Dear _____________________________________ :

     Pursuant to the  Agreement,  the  undersigned,  on behalf of  Landlord  (as
defined  in the  Agreement),  hereby  approves  the  following  final  plans and
specifications:  [Insert  Title of  Plans],  dated as of , 199___,  prepared  by
[Insert Name of Architect],  bearing Job No. _______________,  and consisting of
________ sheets (the "Plans").

     [Pursuant to Section 5(g) of the  Agreement,  Landlord shall have the right
to require  Tenant  (as  defined in the  Agreement)  to remove the  improvements
{described on Schedule 1 attached  hereto}{shown on the approved Plans identifed
on Schedule 1 attached  hereto}{shown on the approved Plans attached hereto} and
incorporated herein by reference on the expiration or earlier termination of the
term of the Lease (as defined in the  Agreement)  or the Sublease (as defined in
the Agreement), as applicable.]


                                             Very truly yours,

                                             ALLIANCE MANAGEMENT & LEASING



                                             By

                                                 Its __


                                      -8-
<PAGE>


                                   SCHEDULE 1

                    Improvements Which May have to be Removed




[If none, insert the word "NONE."]


                                      -9-