<PAGE>

                                                                    EXHIBIT 10.7
                                   SUBLEASE
                           (645 Almanor, Sunnyvale)

THIS SUBLEASE ("Sublease"), dated November 6, 1998 for reference purposes only,
is entered into by and between NETSCAPE COMMUNICATIONS, INC., a Delaware
corporation ("Netscape") and IBEAM BROADCASTING CORPORATION, a Delaware
corporation ("Subtenant").

                                   RECITALS

     A.  Netscape leases certain premises consisting of an industrial building
(the "Building") containing approximately 132,000 square feet located at 645
Almanor, Sunnyvale, California, pursuant to that certain Lease dated November 1,
1996 between The Prudential Insurance Company Of America as landlord (the
"Master Landlord") and Netscape, as tenant (the "Master Lease"), as more
particularly described therein (the "Premises").  Capitalized terms used but not
defined herein have the same meanings as they have in the Master Lease. A copy
of the Master Lease is attached hereto as Exhibit A.

     B.  Netscape desires to sublease a portion of the Premises to Subtenant,
and Subtenant desires to sublease a portion of the Premises from Netscape on the
terms and provisions hereof.

     NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, Netscape and Subtenant covenant and agree as follows:

                                   AGREEMENT

     1.  Subleased Premises. On and subject to the terms and conditions below,
         Netscape hereby leases to Subtenant, and Subtenant hereby leases from
         Netscape, approximately thirty six thousand four hundred seventy nine
         (36,479) separately demised square feet of the Premises, known as Suite
         100 (the "Subleased Premises"). A description of the Subleased Premises
         is attached hereto as Exhibit B.

     2.  Term. This Sublease shall commence on the later to occur of (i)
         December 1, 1998 or (ii) the completion of Netscape's installation of a
         demising wall pursuant to Section 7 hereof (the "Commencement Date"),
         provided Netscape has theretofore obtained the consent of Master
         Landlord, and shall expire February 15, 2002, unless sooner terminated
         pursuant to any provision hereof.

     3.  Possession. If for any reason Netscape cannot deliver possession of the
         Subleased Premises to Subtenant on the Commencement Date, Netscape
         shall not be subject to any liability therefor, nor shall such failure
         affect the validity of this Sublease or the obligations of Subtenant
         hereunder or extend the term hereof, provided that no rent shall be due
         hereunder until possession of the Subleased Premises has been delivered
         to Subtenant. Notwithstanding
<PAGE>

         anything to the contrary contained herein, if Netscape has not
         delivered the Premises substantially completed to Subtenant on or
         before February 1, 1999, Subtenant shall have the right thereafter to
         cancel this Lease, and upon such cancellation, Netscape shall return
         all sums theretofore deposited by Subtenant with Netscape, and neither
         party shall have any further liability to the other.

     4.  Rent.

         (a)  Commencing on the Commencement Date and continuing throughout the
         term of this Sublease, Subtenant shall pay monthly rent ("Rent") to
         Netscape in the following amounts:

              (i)  Base Rent. Subtenant shall pay to Netscape monthly base rent
                   ---------
         ("Base Rent") in the following amounts:

                   Month                        Monthly Base Rent
                   ------                       -----------------

                   01-12              $1.45/ rentable square foot
                   13-24              $1.50/ rentable square foot
                   25-End of term     $1.55/ rentable square foot

              (ii) Additional Rent. In addition to Base Rent, Subtenant shall
                   ---------------
              also pay to Netscape as additional rent ("Additional Rent")
              Subtenant's pro rata share ("Subtenant's Pro-Rata Share") of
              Building Operating Expenses (as defined below). Netscape and
              Subtenant hereby agree that Subtenant's Pro-Rata Share shall be
              the quotient derived by dividing the number of rentable square
              feet of the Subleased Premises by 132,000. To the extent that
              Netscape notifies Subtenant that any items constituting Additional
              Rent are due and payable under the Master Lease on a monthly
              basis, such Additional Rent shall be paid by Subtenant to Netscape
              as and when Basic Rent is paid. To the extent that such items
              constituting Additional Rent are billed from time to time to
              Netscape by Master Landlord, such Additional Rent shall be paid by
              Subtenant to Netscape within seven (7) days after Subtenant's
              receipt from Netscape of an invoice therefor.

         (b)  "Building Operating Expenses" are defined, for purposes of this
         Sublease, as all actual costs and expenses paid or incurred by Netscape
         in connection with its management, operation, maintenance and repair of
         the Premises, including, without limitation: (i) the cost of
         electricity, natural gas, water, telephone, waste disposal and all
         other utilities, (ii) the cost of maintenance and repairs and all labor
         and material costs related thereto, including, without limitation,
         maintenance and repair of building systems, fire detection and
         sprinkler systems, building signs and directories, roof, common areas
         (including, without limitation, parking areas, loading and unloading
         areas, trash areas, striping, bumpers, irrigation systems, lighting
         facilities, elevators, fences and gates) and the cost of general
         maintenance, cleaning and service contracts and the cost of all
         supplies, tools and equipment required in connection therewith, (iii)
         wages, salaries, payroll taxes and other labor costs and employee
         benefits,

                                      -2-
<PAGE>

          (iv) management fees (which shall not exceed management fees charged
          for similar facilities in the area and in any event, shall not exceed
          5% of all other Building Operating Expenses), (v) fees, charges and
          other costs of all independent contractors engaged by Netscape, (vi)
          reasonable accounting and legal expenses, (vii) depreciation on
          personal property, (viii) janitorial and security systems, (ix) all
          operating expenses (as that term is used in the Master Lease) payable
          by Netscape to Master Landlord pursuant to the Master Lease, and (x)
          any other expenses of any kind whatsoever reasonably incurred in
          connection with the management, operation, maintenance and repair of
          the Building.

          Notwithstanding anything to the contrary contained in this Sublease,
          costs or expenses in connection with services or other benefits of a
          type that are not provided to Subtenant but which are provided to
          other tenants or occupants of the Building (including Netscape) shall
          not be included within Building Operating Expenses.

          (c)  Payment of Rent. If the Commencement Date does not fall on the
          first day of a calendar month, Rent for the first month shall be
          prorated on a daily basis based upon a calendar month. Rent shall be
          payable to Netscape in lawful money of the United States, in advance,
          without prior notice, demand, or offset, on or before the first day of
          each calendar month during the term hereof. All Rent shall be paid to
          Netscape at the address specified for notices to Netscape in Section
          16, below.

          (d)  Subtenant recognizes that late payment of any Rent will result in
          administrative expenses to Netscape, the extent of which additional
          expenses are extremely difficult and economically impractical to
          ascertain. Subtenant therefore agrees that if any Rent shall remain
          unpaid five (5) days after such amounts are due, the amount of such
          Rent shall be increased by a late charge to be paid to Netscape by
          Subtenant in an amount equal to the greater of five hundred dollars
          ($500.00) or five percent (5%) of the amount of the delinquent Rent.

          (e)  Upon execution of this Sublease, Subtenant shall deliver to
          Netscape the sum of fifty two thousand eight hundred ninety four and
          55/100 Dollars ($52,894.55), representing the first month's Base Rent.

     5.   Security Deposit. Upon execution of this Sublease, Subtenant shall
          deposit with Netscape fifty two thousand eight hundred ninety four and
          55/100 Dollars ($52,894.55) as a security deposit ("Security
          Deposit"). If Subtenant fails to pay Rent or other charges when due
          under this Sublease, or fails to perform any of its other obligations
          hereunder, Netscape may use or apply all or any portion of the
          Security Deposit for the payment of any Rent or other amount then due
          hereunder and unpaid, for the payment of any other sum for which
          Netscape may become obligated by reason of Subtenant's default or
          breach, or for any loss or damage sustained by Netscape as a result of
          Subtenant's default or breach. If Netscape so uses any portion of the
          Security Deposit, Subtenant shall restore the Security Deposit to the
          full amount originally deposited within ten (10) days after Netscape's
          written demand. Netscape shall not be required to keep the Security
          Deposit separate from its general

                                      -3-
<PAGE>

          accounts, and shall have no obligation or liability for payment of
          interest on the Security Deposit. The Security Deposit, or so much
          thereof as had not theretofore been applied by Netscape, shall be
          returned to Subtenant within thirty (30) days of the expiration or
          earlier termination of this Sublease, provided Subtenant has vacated
          the Subleased Premises.

     6.   Condition of Subleased Premises. Except as otherwise provided in
          Section 7 hereof, Subtenant has used due diligence in inspecting the
          Subleased Premises and agrees to accept the Subleased Premises in
          "as-is" condition and with all faults as of the date of Subtenant's
          execution of this Sublease, without any representation or warranty of
          any kind or nature whatsoever, or any obligation on the part of
          Netscape to modify, improve or otherwise prepare the Subleased
          Premises for Subtenant's occupancy, and by entry hereunder, Subtenant
          accepts the Subleased Premises in their present condition and without
          representation or warranty of any kind by Netscape. Subtenant hereby
          expressly waives the provisions of subsection 1 of Section 1932 and
          Sections 1941 and 1942 of the California Civil Code and all rights to
          make repairs at the expense of Netscape as provided in Section 1942 of
          said Civil Code.

     7.   Condition of the Subleased Premises upon Commencement. Netscape will
          deliver the Subleased Premises with all building systems in good
          working order and repair, and the Subleased Premises separately
          demised.

     8.   Use. Subtenant may use the Subleased Premises only for the purposes as
          allowed in the Master Lease, and for no other purpose. Subtenant shall
          promptly comply with all applicable statutes, ordinances, rules,
          regulations, orders, restrictions of record, and requirements in
          effect during the term of this Sublease governing, affecting and
          regulating the Subleased Premises, including but not limited to the
          use thereof. Subtenant shall not use or permit the use of the
          Subleased Premises in a manner that will create waste or a nuisance,
          interfere with or disturb other tenants in the Building or violate the
          provisions of the Master Lease.

     9.   Alterations.

          (a)  Subtenant shall not make any alterations to the Subleased
          Premises without the express written consent of Netscape and the
          Master Landlord, which shall not be unreasonably withheld, and shall
          otherwise comply with the Alterations section of the Master Lease as
          incorporated herein.

          (b)  Subject to the consent of the Master Landlord, Netscape hereby
          grants its consent to Subtenant's right of access to the roof and the
          right to install and maintain a satellite dish (es) on the roof.
          Netscape will use commercially reasonable efforts to obtain Master
          Landlord's consent for such access, installation, and maintenance.
          Subtenant agrees to indemnify, defend and hold Netscape and Master
          Landlord harmless from and against any and all actions, claims,
          demands, costs liabilities, losses, reasonable attorneys' fees,
          damages, penalties, and expenses which may be brought or made against
          Netscape or Master Landlord or which Netscape or Master

                                      -4-
<PAGE>

          Landlord may pay or incur to the extent caused by Subtenant's rights
          under this Section 9.

     10.  Parking. Subtenant shall have its proportionate share of parking
          rights as Netscape may have in connection with the Premises pursuant
          to the Master Lease.

     11.  Incorporation of Sublease.

          (a)  All of the terms and provisions of the Master Lease, except as
          provided in subsection (b) below, are incorporated into and made a
          part of this Sublease and the rights and obligations of the parties
          under the Master Lease are hereby imposed upon the parties hereto with
          respect to the Subleased Premises, Netscape being substituted for the
          "Landlord" in the Master Lease, and Subtenant being substituted for
          the "Tenant" in the Master Lease. It is further understood that where
          reference is made in the Master Lease to the "Premises," the same
          shall mean the Subleased Premises as defined herein; where reference
          is made to the "Commencement Date," the same shall mean the
          Commencement Date as defined herein; and where reference is made to
          the "Lease," the same shall mean this Sublease.

          (b)  The following Sections of the Master Lease are not incorporated
          herein: Basic Lease Information (except "Use"), 1, 2, 3, 4, 5, 6, 7,
          9(a), the first three sentences of 9(b), 10(b), 13(c), 23(c), 24, 26,
          28, 30, 37 and 40; Exhibits B-l, B-2, C, C-l and E.

          (c)  Subtenant hereby assumes and agrees to perform for Netscape's
          benefit, during the term of this Sublease, all of Netscape's
          obligations with respect to the Subleased Premises under the Master
          Lease, except as otherwise provided herein. Subtenant shall not commit
          or permit to be committed any act or omission which violates any term
          or condition of the Master Lease. Except as otherwise provided herein,
          this Sublease shall be subject and subordinate to all of the terms of
          the Master Lease.

     12.  Insurance. Except as modified by this Section 12, Subtenant shall be
          responsible for compliance with the insurance provisions of the Master
          Lease. The minimum coverages as set forth in the Master Lease shall be
          modified for the purposes of this Sublease so that they shall not
          exceed $2,000,000 for each type of insurance named therein. Such
          insurance shall insure the performance by Subtenant of its
          indemnification obligations hereunder and shall name Master Landlord
          and Netscape as additional insureds. All insurance required under this
          Sublease shall contain an endorsement requiring thirty (30) days
          written notice from the insurance company to Subtenant and Netscape
          before cancellation or change in the coverage, insureds or amount of
          any policy. Subtenant shall provide Netscape with certificates of
          insurance evidencing such coverage prior to the commencement of this
          Sublease.

     13.  Utilities. Subject to reimbursement pursuant to Section 4(a)(ii) of
          this Sublease, Netscape shall provide the Subleased Premises with
          commercially reasonable

                                      -5-
<PAGE>

          amounts of water, electricity and janitorial service. Netscape
          reserves the right to install a separate meter to measure the
          consumption of any utility supplied by Netscape. If it is reasonably
          determined that Subtenant has been using more than a commercially
          reasonable amount of any utility supplied by Netscape, then such
          installation shall be at the sole cost to Subtenant. Subtenant shall
          separately contract with the appropriate utility for any services
          desired by Subtenant and not provided by Netscape.

     14.  Signage. Subject to approval by Master Landlord, which Netscape shall
          use commercially reasonable efforts to obtain, Netscape shall cause to
          be installed, at its own cost and expense, monument signage for the
          Subtenant.

     15.  Default. In addition to defaults contained in the Master Lease,
          failure of Subtenant to make any payment of Rent when due hereunder
          shall constitute an event of default hereunder.

     16.  Notices. The addresses specified in the Master Lease for receipt of
          notices to each of the parties are deleted and replaced with the
          following:

          To Netscape at:     Netscape Communications, Inc.
                              501 East Middlefield Road
                              Mountain View, California 94043
                              Attn: Director of Real Estate

          With copy to:       Cooley Godward LLP
                              5 Palo Alto Square
                              3000 El Camino Real
                              Palo Alto, CA 94306
                              Attn: Toni P. Wise

          To Subtenant at:    IBEAM BROADCASTING CORPORATION
                              2903 Bunker Hill Lane, Suite 201
                              Santa Clara, CA 95054
                              Attn: Chief Financial Officer

          After Commencement
          Date:               At the Subleased Premises

     17.  Netscape's Obligations.

          (b)  To the extent that the provision of any services or the
          performance of any maintenance or any other act respecting the
          Premises or Building is the responsibility of Master Landlord
          (collectively "Master Landlord Obligations"), upon Subtenant's
          request, Netscape shall make reasonable efforts to cause Master
          Landlord to perform such Master Landlord Obligations, provided,
          however, that in no event shall Netscape be liable to Subtenant for
          any liability, loss or damage whatsoever in the event that Master
          Landlord should fail to perform the same, nor shall Subtenant be
          entitled to

                                      -6-
<PAGE>

          withhold the payment of Rent or terminate this Sublease. It is
          expressly understood that the services and repairs which are
          incorporated herein by reference, including but not limited to the
          structural portions of the roof and building, will in fact be
          furnished by Master Landlord and not by Netscape, except to the extent
          otherwise provided in the Master Lease. In addition, Netscape shall
          not be liable for any maintenance, restoration (following casualty or
          destruction) or repairs in or to the Building or Subleased Premises,
          other than its obligation hereunder to use reasonable efforts to cause
          Master Landlord to perform its obligations under the Master Lease.
          With respect to any maintenance or repair to be performed by Master
          Landlord respecting the Subleased Premises, the parties expressly
          agree that Subtenant shall have the right to contact Master Landlord
          directly to cause it to so perform.

          (b)  Except as otherwise provided herein, Netscape shall have no other
          obligations to Subtenant with respect to the Subleased Premises or the
          performance of the Master Landlord Obligations.

     18.  Early Termination of Sublease. If, without the fault of Netscape, the
          Master Lease should terminate prior to the expiration of this
          Sublease, Netscape shall have no liability to Subtenant on account of
          such termination. To the extent that the Master Lease grants Netscape
          any discretionary right to terminate the Master Lease, whether due to
          casualty, condemnation, or otherwise, Netscape shall be entitled to
          exercise or not exercise such right in its complete and absolute
          discretion.

     19.  Consent of Master Landlord and Netscape. If Subtenant desires to take
          any action which requires the consent or approval of Netscape pursuant
          to the terms of this Sublease, prior to taking such action, including,
          without limitation, making any alterations, then, notwithstanding
          anything to the contrary herein, (a) Netscape shall have the same
          rights of approval or disapproval as Master Landlord has under the
          Master Lease, and (b) Subtenant shall not take any such action until
          it obtains the consent of Netscape and Master Landlord, as may be
          required under this Sublease or the Master Lease. This Sublease shall
          not be effective unless and until any required written consent of the
          Master Landlord shall have been obtained.

     20.  Indemnity. Subtenant shall indemnify, defend, protect, and hold
          Netscape and Master Landlord harmless from and against all actions,
          claims, demands, costs liabilities, losses, reasonable attorneys'
          fees, damages, penalties, and expenses (collectively "Claims") which
          may be brought or made against Netscape or which Netscape may pay or
          incur to the extent caused by (i) a breach of this Sublease by
          Subtenant, (ii) any violation of law by Subtenant or its employees,
          agents, contractors or invitees (collectively, "Agents") relating to
          the use or occupancy of the Subleased Premises, (iii) any act or
          omission by Subtenant or its Agents resulting in contamination of any
          part or all of the Subleased Premises by Hazardous Materials, or (iv)
          the negligence or willful misconduct of Subtenant or its Agents.

     21.  Brokers. Each party hereto represents and warrants that it has dealt
          with no broker in connection with this Sublease and the transactions
          contemplated herein, except

                                      -7-
<PAGE>

          Cornish & Carey Commercial/ONCOR International. Each party shall
          indemnify, protect, defend and hold the other party harmless from all
          costs and expenses (including reasonable attorneys' fees) arising from
          or relating to a breach of the foregoing representation and warranty.

     22.  No Third Party Rights. The benefit of the provisions of this Sublease
          is expressly limited to Netscape and Subtenant and their respective
          permitted successors and assigns. Under no circumstances will any
          third party be construed to have any rights as a third party
          beneficiary with respect to any of said provisions.

     23.  Counterparts. This Sublease may be signed in two or more counterparts,
          each of which shall be deemed an original and all of which shall
          constitute one agreement.

     24.  Conditions Precedent. The Master Landlord's consent to this Sublease
          and the terms and conditions of Section 9 hereunder is a condition
          precedent to the effectiveness of this Sublease.

                                      -8-
<PAGE>

IN WITNESS WHEREOF, the parties have executed this Sublease as of the date first
written above.

<TABLE>
<CAPTION>
NETSCAPE                                              SUBTENANT
<S>                                                   <C>
Netscape Communications, Inc.,                        IBEAM Broadcasting Corporation,
a Delaware corporation                                a Delaware corporation

By: Ed Axelsen                                        By:  Michael Bowles
    ----------------------------------------------       ----------------------------------------

Sig: /s/ Ed Axelsen                                   Sig: /s/ Michael Bowles
    ----------------------------------------------        ---------------------------------------

Its:  Director of Real Estate and Facilities          Its: President
     ---------------------------------------------        ---------------------------------------

By:_______________________________________________    By:________________________________________

Sig:______________________________________________    Sig:_______________________________________

Its:______________________________________________    Its:_______________________________________
</TABLE>

                                      -9-
<PAGE>

                          CONSENT OF MASTER LANDLORD
                          --------------------------

     The PRUDENTIAL INSURANCE COMPANY OF AMERICA, the Master Landlord under the
Master Lease hereby consents to the Sublease attached hereto, and all of the
terms and conditions contained therein (including, without limitation, the
provisions of Section 9).

The Prudential Insurance Company of America,
a New Jersey corporation.

By:___________________________

Its:__________________________

Date:_________________________

                                      -10-
<PAGE>

                                   EXHIBIT A
                                 MASTER LEASE

                                      -11-
<PAGE>

                                     LEASE

                                    BETWEEN


                  THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

                           A NEW JERSEY CORPORATION


                                      AND


                      NETSCAPE COMMUNICATIONS CORPORATION

                            A DELAWARE CORPORATION


                          FOR THE PREMISES LOCATED AT


                              645 ALMANOR AVENUE

                          SUNNYVALE, CALIFORNIA 94086



                            DATED: NOVEMBER 1, 1996


                                       1
<PAGE>

                            BASIC LEASE INFORMATION
                            -----------------------

                     DATE:        November 1, 1996

                 LANDLORD:        THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a
                                  New Jersey corporation

                   TENANT:        NETSCAPE COMMUNICATIONS CORPORATION, a
                                  Delaware corporation

                 PREMISES:        Building Address:    645 Almanor Avenue
                                                       Sunnyvale, CA 94086

                      USE:        Office, research and development, light
                                  manufacturing and distribution not involving
                                  Hazardous Substances

                     TERM:        Commencing on Commencement Date as defined in
                                  Section 2(a) and expiring sixty (60) months
                                  after Base Rent Commencement Date

    ESTIMATED COMMENCEMENT
                     DATE:        November 3, 1996

                BASE RENT:        Months                    Base Rent
                                  ------                    ---------
                                  (measured from Base Rent Commencement Date as
                                  defined in Section 4)

                                  1-36                     $97,500.00 per month
                                  37-60                   $109,200.00 per month

             ADVANCE RENT:        $97,500

TENANT'S PERCENTAGE SHARE:        100%

         SECURITY DEPOSIT:        None

                  BROKERS:        Tenant's Broker:    Cornish & Carey Commercial

                                  Landlord's Broker:  ~BT Commercial Real Estate

         CONTRACT MANAGER:        Voit Management Company, L.P.

      ADDRESS FOR NOTICES:        Landlord:   The Prudential Insurance Company
                                              of America
                                              Four Embarcadero Center, Suite
                                              2700
                                              San Francisco, CA 94111-4180

                                      -1-
<PAGE>

                                  Contract
                                  Manager:  With a copy to:
                                            Voit Management Company, L.P.
                                            1111 Broadway, Suite 1510
                                            Oakland, CA 94607

                                  Tenant:   Netscape Communications Corporation
                                            645 Almanor Avenue
                                            Sunnyvale, CA 94086

                                            With a copy to:
                                            Legal Department
                                            Netscape Communications Corp.
                                            501 East Middlefield Road
                                            Mountain View, CA 94043

                                      -2-
<PAGE>

EXHIBITS AND ADDENDUM:   Exhibit A - Site Plan of Premises
                         Exhibit B-1 - Commencement Date Memorandum
                         Exhibit B-2 - Base Rent Commencement Date Memorandum
                         Exhibit C - ADA and HVAC Improvements
                         Exhibit D - Rules and Regulations
                         Exhibit E - Environmental Reports


          INITIALS:  /s/ MB                     /s/ PNC
                     ---------------------      ------------------------
                     Landlord                   Tenant


                                      -3-
<PAGE>

THIS LEASE, which is effective as of the date set forth in the Basic Lease
Information, is entered into by Landlord and Tenant, as set forth in the Basic
Lease Information. Terms which are capitalized in this Lease and not expressly
defined herein shall have the meanings set forth in the Basic Lease Information.

     1.   Premises.  Landlord leases to Tenant, and Tenant leases from
          --------
Landlord, the Premises described in the Basic Lease Information (as shown in
Exhibit A), together with all improvements located thereon.2.

     2.   Term.
          ----

          (a)  Lease Term. The Term of this Lease shall commence on the later of
               ----------
November 3, 1996 or the date Landlord tenders possession of the Premises to
Tenant (the "Commencement Date") and, unless terminated on an earlier date in
accordance with the terms of this Lease, shall expire on the date which is the
date before the fifth anniversary of the Base Rent Commencement Date (the
"Expiration Date"), as defined in Section 4 ("Term").

          (b)  Premises Not Delivered. If, for any reason, Landlord cannot
               ----------------------
deliver possession of the Premises to Tenant by the Estimated Commencement Date
(as set forth in the Basic Lease Information), (i) the Term shall not commence
until the Commencement Date; (ii) the failure shall not affect the validity of
this Lease, or the obligations of Tenant under this Lease; and (iii) Landlord
shall not be subject to any liability.

          (c)  Drop Dead Date. Notwithstanding anything to the contrary
               --------------
contained herein, if Landlord has not delivered the Premises to Tenant on or
before January 1, 1997, Tenant shall have the right as its exclusive remedy
thereafter to cancel this Lease, and upon such cancellation, Landlord shall
return all sums theretofore deposited by Tenant with Landlord, and neither party
shall have further liability to the other.

          (d)  Commencement Date Memorandum.  When the Commencement Date is
               ----------------------------
determined, the parties shall execute a Commencement Date Memorandum, in the
form attached hereto as Exhibit B-1, setting forth the Commencement Date.
                        -----------

     3.   Rent.  As used in this Lease, the term "Rent" shall include: (i) the
          ----
Base Rent; (ii) Tenant's Percentage Share of the Operating Expenses paid or
incurred by Landlord during the calendar year; and (iii) all other amounts which
Tenant is obligated to pay under the terms of this Lease. All amounts of money
payable by Tenant to Landlord shall be paid without prior notice or demand,
deduction or offset. This Lease is intended to be a triple net lease, with all
costs, expenses and charges (including the Operating Expenses) paid by Tenant.
Tenant hereby acknowledges that late payment by Tenant to Landlord of Rent will
cause Landlord to incur costs not contemplated by this Lease, the exact amount
of which will be difficult to ascertain. Such costs include, but are not limited
to, processing and accounting charges, and late charges which may be imposed on
Landlord by the terms of any trust deed covering the Premises. Accordingly, if
any installment of Rent or any other sums due from Tenant shall not be received
by Landlord when due, Tenant shall pay to Landlord a late charge equal to six
percent (6%) of such overdue amount. The parties hereby agree

                                       1
<PAGE>

that such late charge represents a fair and reasonable estimate of the costs
Landlord will incur by reason of late payment by Tenant. Acceptance of such late
charge by Landlord shall in no event constitute a waiver of Tenant's default
with respect to such overdue amount, nor prevent Landlord from exercising any of
the other rights and remedies granted hereunder. In addition, any amount which
is not paid when due shall bear interest from the date due until the date paid
at the rate ("Interest Rate") which is the lesser of fifteen percent (15%) per
annum or the maximum rate permitted by law.

     4.   Base Rent.  Tenant shall pay Base Rent to Contract Manager (or other
          ---------
entity designated by Landlord), in advance, on the first day of each calendar
month of the Term commencing as of the Base Rent Commencement Date, at Contract
Manager's address for notices (as set forth in the Basic Lease Information) or
at such other address as Landlord may designate. The Base Rent shall be the
amount set forth in the Basic Lease Information. As used herein, the term "Base
Rent Commencement Date" shall mean the date which is the earlier of (a) ninety
days after the Commencement Date, or (b) the date that Tenant commences business
operations on the Premises. When the Base Rent Commencement Date is determined,
the parties shall execute a Base Rent Commencement Date Memorandum, in the form
attached hereto as Exhibit B-2, setting forth the Base Rent Commencement Date
                   -----------
and the expiration date ("Expiration Date") of this Lease.

     5.   Operating Expenses.
          ------------------

          (a)  Operating Expenses as Portion of Rent.  Tenant shall pay as
               -------------------------------------
additional Rent Tenant's Percentage Share of the Operating Expenses paid or
incurred by Landlord during the calendar year.

          (b)  Definition of Operating Expenses.  The term "Operating Expenses"
               --------------------------------
shall mean (i) all of Landlord's direct costs and expenses of operation, repair
and maintenance of the Premises, as determined by Landlord in accordance with
generally accepted accounting principles or other recognized accounting
principles, consistently applied; (ii) a reasonably amortized portion of the
costs of any capital improvements made to the Premises by Landlord which
comprise labor-saving devices or other equipment intended to improve the
operating efficiency of any system within the Premises (such as an energy
management computer system) to the extent of cost savings in Operating Expenses
as a result of the device or equipment, as reasonably determined by Landlord;
and (iii) costs allocable to the Premises of any capital improvements made to
the Premises by Landlord that are required under any governmental law or
regulation that was not applicable to the Premises at the time they were
constructed, and/or that are reasonably required for the health and safety of
tenants in the Premises, and/or are installed to repair or replace property
located in the Premises as of the Commencement Date, the costs to be amortized
over such reasonable period as Landlord shall reasonably determine together with
interest on the unamortized balance at the Interest Rate or such higher rate as
may have been paid by Landlord on funds borrowed for the purpose of constructing
the capital improvements. The term "Operating Expenses" shall include the cost
of all insurance which Landlord or Landlord's lender reasonably deems necessary
for the Premises; a reasonable management fee; dues imposed by any property
owner's association ("Association"); and the Real Property Taxes (as defined in
subsection 5(f)). If Landlord elects to self-insure or includes the Premises
under blanket insurance policies covering multiple properties, then the term
"Operating Expenses" shall include the portion of the cost of such self-
insurance or blanket insurance allocated

                                      -2-
<PAGE>

by Landlord to this Premises. The definition of Operating Expenses shall not be
deemed to impose any obligations on Landlord to perform any obligations under
this Lease. Landlord's sole obligations regarding maintenance, repair or
otherwise related to the condition of the Premises are specified in Section 7
and subsection 10(b) of the Lease.

          (c)  Exclusions from Operating Expenses.  The term "Operating
               ----------------------------------
Expenses" shall not include (i) Leasing commissions, attorneys' fees, costs,
disbursements, and other expenses incurred in connection with negotiations or
disputes with tenants, or in connection with leasing, renovating, or improving
space for tenants; (ii) the cost of any service sold to Tenant for which
Landlord is reimbursed as an additional charge or rental over and above the
basic rent and escalations payable under this Lease; (iii) any depreciation on
the Premises; (iv) increases in costs incurred due to Landlord's default of any
terms or conditions of this Lease (beyond applicable notice and cure periods);
(v) overhead profit increments paid to Landlord's subsidiaries or affiliates for
management or other services on or to the building or for supplies or other
materials to the extent that the cost of the services, supplies, or materials
exceeds the cost that would have been paid had the services, supplies or
materials been provided by unaffiliated unionized parties on a competitive
basis; (vi) all interest, loan fees, and other carrying costs related to any
mortgage or deed of trust and all rental and other amounts payable due under any
ground or underlying lease; (vii) any compensation paid to clerks, attendants,
or other persons in commercial concessions operated by Landlord on the Premises;
(viii) advertising and promotional expenditures; (ix) costs of repairs and other
work occasioned by fire, windstorm, or other casualty to the extent insured by
Landlord; provided, however, reasonable deductibles under any such policy may be
included in Operating Expenses; (x) any fines, or penalties incurred due to
violations by Landlord of any governmental rule or authority, which is not the
responsibility of Tenant under the Lease, or costs due to Landlord's gross
negligence or willful misconduct; (xi) management costs to the extent they
exceed 5% of Base Rent plus other Operating Expenses; (xii) costs for sculpture,
paintings, or other objects of art (nor insurance thereon or extraordinary
security in connection therewith); (xiii) wages, salaries, or other compensation
paid to any executive employees above the grade of building manager; (ix) the
cost of correcting any building code or other violations which were violations
prior to the Commencement Date, provided that a condition which was constructed
in compliance with laws at the time of construction shall be deemed to be in
compliance with applicable law notwithstanding that such law has thereafter been
changed or amended; and (x) costs incurred to contain, remove or remediate any
contamination of the ground water under the Premises by Hazardous Substances.

          (d)  Estimates of Operating Expenses.  During December of each
               -------------------------------
calendar year during the Term, or as soon thereafter as practicable, Landlord
shall give Tenant written notice of Landlord's estimate of the amount of
Operating Expenses which will be payable for the ensuing calendar year. On or
before the first day of each month during the ensuing calendar year, Tenant
shall pay to Landlord one-twelfth (1/12) of the estimated amount; provided,
however, that if notice is not given in December, Tenant shall continue to pay
on the basis of the then applicable Rent until the month after the notice is
given. If at any time it reasonably appears to Landlord that the amount payable
for the current calendar year will vary from Landlord's estimate by more than
five percent (5%), Landlord may give notice to Tenant of Landlord's revised
estimate for the year, and subsequent payments by Tenant for the year shall be
based on the revised estimate; provided, however, that Landlord shall not give
notice of a revised estimate for any year more frequently than once a calendar
quarter.

                                      -3-
<PAGE>

          (e)  Annual Adjustment.  Within one hundred twenty (120) days after
               -----------------
the close of each calendar year of the Term, or as soon after the one hundred
twenty (120) day period as practicable, Landlord shall deliver to Tenant a
statement of the actual Operating Expenses for the prior calendar year. If, on
the basis of the statement, Tenant owes an amount that is less than the
estimated payments for the calendar year previously made by Tenant, Landlord
shall apply the excess to the next payment of Operating Expenses due. If, on the
basis of the statement, Tenant owes an amount that is more than the estimated
payments for the calendar year previously made by the Tenant, Tenant shall pay
the deficiency to Landlord within thirty (30) days after delivery of the
statement. The statement of Operating Expenses shall be presumed correct and
shall be deemed final and binding upon Tenant unless (i) Tenant in good faith
objects in writing thereto within thirty (30) days after delivery of the
statement to Tenant (which writing shall state, in reasonable detail, all of the
reasonable detail, all of the reasons for the objection); and (ii) Tenant pays
in full, within thirty (30) days after delivery of the statement to Tenant, any
amount owed by Tenant with respect to the statement which is not in dispute.
Tenant's failure to pay the amount shown on Landlord's statement within thirty
(30) days after delivery thereof or Tenant's failure to pay in a timely manner
the revised estimate of Landlord's determination of Operating Expenses shall be
deemed an irrevocable waiver of Tenant's right to contest and/or receive any
credit or reimbursement for an overcharge of Operating Expenses shown on the
Landlord's statement under which payment is required at that time. If Tenant
objects to Landlord's allocation to the Premises of the cost of self-insurance
or blanket insurance, such allocation shall nonetheless be presumed correct and
shall be deemed final and binding upon Tenant unless Tenant's timely written
objection includes credible evidence that Landlord could have obtained
substantially comparable insurance coverage for this Premises alone at lower
cost.

          (f)  Tenant's Right to Audit Landlord's Records.  Within 90 days
               ------------------------------------------
after timely giving Landlord its notice of its objection to Landlord's statement
of actual Operating Expenses in accordance with Section 5(e), (the "Landlord's
Statement"), Tenant shall have the right to audit at Landlord's local offices,
at Tenant's expense, Landlord's accounts and records relating to Operating
Expenses and Real Property Taxes. Such audit shall be conducted by a certified
public accountant approved by Landlord, which approval shall not be unreasonably
withheld, and shall be completed within such ninety (90) day period. If such
audit reveals that Landlord has overcharged Tenant, the amount overcharged shall
be paid (or at Landlord's option credited toward amounts next payable by Tenant
under this Lease) to Tenant within 30 days after the audit is concluded. In
addition, if, following such audit, the parties agree that Landlord's Statement
of Operating Expenses exceeds the actual Operating Expenses which should have
been charged to Tenant by more than 15%, the cost of such audit shall be paid by
Landlord.

          (g)  Definition of Real Property Taxes.  The term "Real Property
               ---------------------------------
Taxes" shall mean any ordinary or extraordinary form of assessment or special
assessment, license fee, rent tax, levy, penalty (if a result of Tenant's
delinquency), or tax, other than net income, estate, succession, inheritance,
transfer or franchise taxes, imposed by any authority having the direct or
indirect power to tax, or by any city, county, state or federal government for
any maintenance or improvement or other district or division thereof. The term
shall include all transit charges, housing fund assessments, real estate taxes
and all other taxes relating to the Premises, all other taxes which may be
levied in lieu of real estate taxes, all assessments, assessment bonds, levies,
fees and other governmental charges (including, but not limited to, charges for
traffic facilities, improvements,

                                      -4-
<PAGE>

child care, water services studies and improvements, and fire services studies
and improvements) for amounts necessary to be expended because of governmental
orders, whether general or special, ordinary or extraordinary, unforeseen as
well as foreseen, of any kind and nature for public improvement, services,
benefits or any other purposes which are assessed, levied, confirmed, imposed or
become a lien upon the Premises or become payable during the Term.

          (h)  Acknowledgment of Parties. It is acknowledged by Landlord and
               -------------------------
Tenant that Proposition 13 was adopted by the voters of the State of California
in the June, 1978 election, and that assessments, taxes, fees, levies and
charges may be imposed by governmental agencies for such purposes as fire
protection, street, sidewalk, road, utility construction and maintenance, refuse
removal and for other governmental services which formerly may have been
provided without charge to property owners or occupants. It is the intention of
the parties that all new and increased assessments, taxes, fees, levies and
charges due to Proposition 13 or any other cause are to be included within the
definition of Real Property Taxes for purposes of this Lease.

          (i)  Taxes on Tenant Improvements and Personal Property.
               --------------------------------------------------
Notwithstanding any other provision hereof, Tenant shall pay the full amount of
any Real Property Taxes during the Term resulting from any and all alterations
and tenant improvements of any kind whatsoever placed in, on or about the
Premises for the benefit of, at the request of, or by Tenant. Tenant shall pay,
prior to delinquency, all taxes assessed or levied against Tenant's personal
property in, on or about the Premises. When possible, Tenant shall cause its
personal property to be assessed and billed separately from the real or personal
property of Landlord.

     6.   Proration of Rent. If the Commencement Date is not the first day of
          -----------------
the month, or if the end of the Term is not the last day of the month, Rent
shall be prorated on a monthly basis (based upon a thirty (30) day month) for
the fractional month during the month which this Lease commences or terminates.
The termination of this Lease shall not affect the obligations of Landlord and
Tenant pursuant to subsection 5(e) which are to be performed after the
termination.

     7.   Tenant Improvements.
          -------------------

          (a)  Landlord shall cause the electrical system, plumbing and roof to
be in good and operable condition and repair as of the Commencement Date.
However, Landlord shall not be obligated to make any alteration or repair
required as a result of improvements to be installed by Tenant in the Premises.
Landlord shall be conclusively deemed to have satisfied the foregoing obligation
unless Tenant identifies specific items of noncompliance by delivery of written
notice to Landlord within sixty (60) days after the Commencement Date. Upon
Landlord's correction of such items, Landlord's obligations under this
subsection (a) shall be deemed fully satisfied.

          (b)  Tenant shall install the ADA Improvements and HVAC Improvements
shown on attached Exhibit C and Landlord shall reimburse Tenant up to $47,500
                  ---------
for costs incurred by Tenant in connection with the ADA Improvements and up to
$75,000 for costs incurred by Tenant in connection with the HVAC Improvements in
accordance with Exhibit C.
                ---------

                                      -5-
<PAGE>

          (c)  Except as specified in subsections (a) above and (d) below,
Tenant shall accept the Premises "as-is" and with all faults and Landlord shall
have no obligations to improve or modify the Premises.

          (d)  Landlord covenants and represents that it has full and complete
authority to enter into this Lease under all of the terms, covenants and
provisions set forth herein and so long as Tenant performs each and every term,
provision and condition herein contained on the part of Tenant to be performed,
Tenant may peacefully and quietly enjoy the Premises in accordance with the
terms of this Lease.

     8.   Uses of Premises.
          ----------------

          (a)  Tenant shall use the Premises solely for the use set forth in the
Basic Lease Information, and Tenant shall not use the Premises for any other
purpose without obtaining the prior written consent of Landlord, which consent
shall not be unreasonably withheld. Tenant shall, at its own cost and expense,
comply with all laws, rules, regulations, orders, permits, licenses and
ordinances issued by any governmental authority which relate to the condition,
use or occupancy of the Premises during the term of this Lease. Notwithstanding
the foregoing or anything to the contrary contained in this Lease, Tenant shall
not be responsible for compliance with any laws, codes, ordinances or other
governmental directives where such compliance is not related specifically to or
required as a result of Tenant's use, occupancy and/or alteration of the
Premises. For example, if any governmental authority should require the Premises
to be structurally strengthened against earthquake and such measures are imposed
as a general requirement applicable to all tenants rather than as a condition of
Tenant's specific use or occupancy of or alterations to the Premises, such work
shall be performed by Landlord and included in a capital expense under Operating
Expenses. Tenant shall not use the Premises in any manner that will constitute
waste or nuisance.

          (b)  "Hazardous Substance" shall mean the substances including within
the definitions of the term "Hazardous Substance" under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Section 9601 et seq., and the California Carpenter-Presley-Tanner
                    ------
Hazardous Substance Account Act, California Health & Safety Code Section 25300
et seq., and regulations promulgated thereunder, as amended. "Hazardous Waste"
------
shall mean (a) any waste listed as or meeting the identified characteristics of
a "Hazardous Waste" under the Resource Conservation and Recovery Act of 1976, 42
U.S.C. Section 6901 et seq., and regulations promulgated pursuant thereto,
                    ------
collectively "RCRA," or (b) any waste meeting the identified characteristics of
"Hazardous Waste" under California Hazardous Waste Control Law, California
Health and Safety Code Section 25100 et. seq., and regulations promulgated
                                     -------
pursuant thereto, collectively "CHWCL". "Hazardous Waste Facility" shall mean a
hazardous waste facility as defined under CHWCL.

          (c)  Tenant covenants that, at its sole cost and expense, it will
comply with all applicable laws, rules, regulations, orders, permits, licenses
and operating plans of any governmental authority with respect to the use,
handling, generation, transportation, storage, treatment and/or disposal of
Hazardous Substances or Wastes brought on to the Premises by Tenant and/or
Tenant's agents, contractors, employees, invitees, licensees, sublessees or
other person on or about the Premises during the term, and Tenant will provide
Landlord copies of all permits, registrations or

                                      -6-
<PAGE>

other similar documents that authorize Tenant to conduct any such activities in
connection with its authorized use of the Premises. Additionally, Tenant agrees
to comply with the Rules and Regulations attached hereto as Exhibit D, the
                                                            ---------
requirements of the Board of Fire Underwriters or Landlord's insurance carrier,
and to comply with covenants, conditions and restrictions ("CC&R's"), if any,
applicable to the Property.

          (d)  Tenant agrees that it shall not operate on the Premises any
facility required to be permitted or licensed as a Hazardous Waste Facility or
for which interim status as such is required. Nor shall Tenant store any
Hazardous Wastes on the Premises for ninety (90) days or more.

          (e)  No underground storage tanks shall be permitted on the Premises.

          (f)  If applicable, Tenant shall provide to Landlord in writing the
following information and/or documentation at the Commencement Date and within
sixty (60) days of any change in the required information and/or documentation:

               (i)    A list of all Hazardous Substances and/or Wastes that
Tenant uses, handles, generates, transports, stores, treats or disposes in
connection with its operations on the Premises.

               (ii)   Copies of all Material Safety Data Sheets ("MSDS's")
required to be completed with respect to operations of Tenant at the Premises in
accordance with Title 8, California Code of Regulations Section 5194 or 42
U.S.C. Section 11021, or any amendments thereto. In lieu of this requirement,
Tenant may provide a Hazardous Materials Inventory Sheet that details the
MSDS's.

               (iii)  Copies of all hazardous waste manifests, as defined in
Title 26, California Code of Regulations Section 22-66260.10, that Tenant is
required to complete in all connections with its operations at the Premises.

               (iv)   A copy of any Hazardous Materials Management Plans
required with respect to Tenant's operations.

               (v)    Copies of any Contingency Plans and Emergency Procedures,
if any, required of Tenant due to its operations in accordance with Title 26,
Section 22-66260.10, of the California Code of Regulations, and any amendments
thereto.

               (vi)   Copies of any biennial reports to be furnished to
California Department of Health Services relating to Hazardous Substances or
Wastes.

               (vii)  Copies of all industrial waste water discharge permits.

          (g)  Tenant shall secure Landlord's prior written approval for any
proposed receipt, storage, possession, use, transfer or disposal of "Radioactive
Materials" or "Radiation", as such materials are defined in Title 26, California
Code of Regulations Sections 17-30100 or possessing the characteristics of the
materials so defined, which approval Landlord may withhold in

                                      -7-
<PAGE>

its sole and absolute discretion. The Tenant in connection with any authorized
receipt, storage, possession, use, transfer or disposal of radioactive materials
or radiation shall:

               (i)    Comply with all federal, state and local laws, rules,
regulations, orders, licenses and permits;

               (ii)   Furnish Landlord with a list of all radioactive materials
or radiation received, stored, possessed, used, transferred or disposed; and

               (iii)  Furnish Landlord with all licenses, registration
materials, inspection reports, orders and permits in connection with the
receipt, storage, possession, use, transfer or disposal or radioactive materials
or radiation.

          (h)  Tenant agrees to comply with any and all applicable laws, rules,
regulations, and orders with respect to the release into the environment of any
Hazardous Wastes or Substances or Radiation or Radioactive Materials brought on
to the Premises by Tenant and/or Tenant's agents, contractors, employees,
invitees, licensees, sublessees or other person on or about the Premises during
the Term. Tenant agrees to notify Landlord in writing of any unauthorized
release into the environment within twenty-four (24) hours of the time at which
Tenant becomes aware of such release.

          (i)  Tenant shall indemnify, defend, and hold Landlord harmless from
any and all claims, losses (including, but not limited to, loss of rental income
and loss due to business interruption), damages, (including diminution in value
or loss of rental value following expiration or earlier termination of the Term)
liabilities, costs, legal fees, and expenses of any sort arising out of or
relating to any unauthorized release into the environment of Hazardous
Substances or Wastes or Radiation or Radioactive Materials by Tenant or any of
Tenant's agents, contractors or invitees, or Tenant's failure to comply with
Subparagraphs (a)-(h) of this section of the Lease.

          (j)  Tenant agrees to cooperate with Landlord in furnishing Landlord
with complete information regarding Tenant's receipt, handling, use, storage,
transportation, generation, treatment and/or disposal of Hazardous Substances or
Wastes or Radiation or Radioactive Materials. Upon reasonable prior written
notice, Tenant agrees to grant Landlord reasonable access at reasonable times to
the Premises to inspect Tenant's receipt, handling, use, storage,
transportation, generation, treatment and/or disposal of Hazardous Substances
Wastes or Radiation or Radioactive Materials without being deemed guilty of any
disturbance of Tenant's use or possession and without being liable to Tenant in
any manner.

          (k)  Notwithstanding Landlord's rights of inspection and review under
this paragraph, Landlord shall have no obligation or duty to so inspect or
review, and no third party shall be entitled to rely on Landlord to conduct any
sort of inspection or review by reason of the provisions of this paragraph.

                                      -8-
<PAGE>

          (l) The following provisions shall apply to any Existing
Contamination (as defined below):

               (i)    Tenant acknowledges that (1) certain Hazardous Substances
may be located on, about or under the Premises; (2) Landlord has made available
to Tenant the environmental reports referenced on attached Exhibit E
                                                           ---------
(collectively the "Environmental Reports"); (3) neither Landlord nor any agent
or contractor of Landlord has made any representation or warranty concerning the
environmental condition of the Premises; (iv) neither Landlord nor any agent or
contractor of Landlord has made any representation or warranty concerning the
accuracy or completeness of the Environmental Reports; (v) Tenant shall make
such additional assessments, tests or inquiries regarding the environmental
condition of the Premises as Tenant may deem necessary or appropriate; provided
that Tenant shall not conduct any tests on or about the Premises unless Tenant
has obtained the prior written approval of Landlord regarding the nature and
scope of such testing; and (4) subject to Landlord's indemnity referenced below,
Tenant shall accept the Premises in its "AS IS" environmental condition. As used
herein, the term "Existing Contamination" shall mean the identity of Hazardous
Substances referenced in the Environmental Reports as being located on, under or
in the vicinity of the Premises as of the date of this Lease or otherwise proven
by Tenant to have been located on or under the Premises as of the date of this
Lease or to have migrated under the Premises during the term of this Lease
(other than migration caused by the acts or omissions of Tenant and or Tenant's
agents, contractors, licensees or invitees or other persons on the Premises
during the term of this Lease).

               (ii)   Subject to the provisions of this subsection, Landlord
shall indemnify, defend and hold harmless Tenant from and against any
Environmental Claim (as defined below) asserted against Tenant and, subject to
the limitations referenced in the following paragraph, any out of pocket costs,
fees and expenses, including attorneys' and consultant's fees, paid by Tenant in
connection with such Environmental Claim, provided that the foregoing indemnity
shall not apply to the extent that any such Environmental Claim arises out of or
is caused or exacerbated by the negligence or intentional act or intentional
failure to act of Tenant or any affiliate of Tenant and/or their respective
agents, contractors, employees, licensees, invitees, sublessees and/or
assignees. As used in this Lease, the term "Environmental Claim" shall mean any
claim, demand, loss, damage and/or liability asserted against Tenant with
respect to the Existing Contamination (i) by a governmental authority for the
investigation abatement, clean up or remediation of or other action related to
Existing Contamination on the Premises, or (ii) by any third party who is not an
affiliate, subsidiary, partner, agent, employee or invitee of Tenant. The
parties acknowledge that the term "Environmental Claim" shall not include under
any circumstance (a) lost profits, business interruption, whether in connection
with a claim related to the Existing Contamination or otherwise, or (b) any
consequential damages suffered or incurred by Tenant, or (c) any claim related
to Hazardous Substances on the Premises which are not included within the scope
of the term "Existing Contamination".

               (iii)  In the event an Environmental Claim is asserted against
Tenant for which Tenant intends to seek indemnification pursuant to the
foregoing paragraph, Tenant shall promptly deliver written notice to Landlord of
such Environmental Claim and Landlord shall have exclusive authority related to
the response to and defense of the Environmental Claim. No cost, fee or expense
paid or incurred by Tenant with respect to an Environmental Claim shall be
required to

                                      -9-
<PAGE>

be reimbursed or indemnified by Landlord unless Landlord has previously approved
such expense in writing or Landlord has denied approval of such expense on the
basis that the foregoing indemnity does not cover the specific Environmental
Claim for which such expense was incurred and thereafter it is determined
pursuant to a final non-appealable judicial order that the foregoing indemnity
does cover the specific Environmental Claim for which such expense was incurred.
Tenant shall cooperate with landlord in connection with the response to and
defense of any Environmental Claim and shall make available to Landlord such
information and personnel as Landlord may reasonably request in order to respond
to or defend such Environmental Claim.

          (m)  This Section 8 of the Lease shall survive termination of the
Lease.

     9.   Alterations.
          -----------

          (a)  Initial Alterations.
               -------------------

                 (i)   Preliminary Plans. Preliminary plans and specifications
                       -----------------
for construction of the tenant improvements to be initially installed by Tenant
in the Premises ("Initial Alterations") shall be prepared by a licensed
architect as is proposed by Tenant and reasonably approved by Landlord (the
"Architect"). The preliminary plans and specifications shall be submitted to
Landlord for Landlord's approval which approval shall not be unreasonably
withheld, provided that Landlord may withhold such consent, in Landlord's sole
discretion, if the construction contemplated by such preliminary plans will
affect the structure, roof, or the exterior appearance of the Premises, or will
have an adverse affect on the utility systems of the Premises. The preliminary
plans and specifications approved as set forth above are referred to herein as
the "Approved Preliminary Plans."

                 (ii)  Working Drawings. Promptly following approval of the
                       ----------------
Approved Preliminary Plans, Tenant shall instruct the Architect to produce, and
submit to Landlord for review and approval, which approval shall not be
unreasonably withheld, working drawings and specifications. The working drawings
and specifications which have been approved as provided herein are hereinafter
referred to as the "Approved Working Drawings."

                 (iii) Selection of Contractor. Tenant shall engage a general
                       -----------------------
contractor as is proposed by Tenant and reasonably approved by Landlord (the
"Contractor") to construct the Initial Alterations.

                 (iv)  Construction. Tenant shall cause construction of the
                       ------------
Initial Alterations to be completed in a good and workmanlike manner and in
compliance with all applicable laws, rules and regulations. Tenant shall provide
access to Landlord at all reasonable times for the purpose of inspecting the
construction of the Initial Alterations and shall cooperate with Landlord and
Landlord's agents during such inspections and provide to Landlord and Landlord's
agents such information as Landlord or Landlord's agents may reasonably request.

                 (v)   Change Requests. No changes to the Approved Working
                       ---------------
Drawings requested by Tenant shall be made without Landlord's prior approval.
Any changes to the Approved

                                     -10-
<PAGE>

Working Drawings shall be in writing and shall be signed by both Landlord and
Tenant prior to the change being made.

               (vi) Plans and Specifications. Upon completion, Tenant shall
                    ------------------------
deliver to Landlord a complete set of "as-built" plans and specifications for
the Initial Alterations.

          (b)  Additional Alterations. As used in this Section 9, the term
               ----------------------
"alteration" shall include the Initial Alterations and any subsequent
alteration, addition or improvement. Tenant shall give Landlord not less than
ten (10) days' notice of any alteration Tenant desires to make to the Premises.
Except for the Initial Alterations, Tenant shall not make any alteration in, on
or about the Premises without the prior written consent of Landlord unless the
alteration does not require a building permit, affect the Building structure,
the exterior appearance of the Building, the roof or the Building systems (e.g.,
                                                                           -----
electrical systems) and the cost of the alteration is not in excess of Twenty
Thousand Dollars ($20,000.00) in each particular instance or in excess of Eighty
Thousand Dollars ($80,000.00) in any calendar year. Tenant shall comply with all
rules, laws, ordinances and requirements applicable at the time Tenant makes any
alteration and shall deliver to Landlord a complete set of "as built" plans and
specifications for each alteration. Tenant shall be solely responsible for
maintenance and repair of all alterations made by Tenant.

          (c)  Liens. If, because of any act or omission of Tenant or anyone
               -----
claiming by, through, or under Tenant, any mechanics' lien or other lien is
filed against the Premises or against other property of Landlord (whether or not
the lien is valid or enforceable), Tenant, at its own expense, shall cause it to
be discharged of record within a reasonable time, not to exceed thirty (30)
days, after the date of the filing. In addition, Tenant shall defend and
indemnify Landlord and hold it harmless from any and all claims, losses,
damages, judgments, settlements, costs and expenses, including attorneys' fees,
resulting from the lien.

          (d)  Ownership of Alterations. Any alteration made by Tenant
               ------------------------
immediately shall become landlord's property. Except as provided in subsection
9(d), Landlord may require Tenant, at Tenant's sole expense and by the end of
the Term, to remove any alterations made by Tenant (including any alterations
which do not require Landlord's consent) and to restore the Premises to its
condition prior to the alteration, provided that Tenant shall not be required to
remove such alterations if, in response to Tenant's request pursuant to
subsection (d) below, Landlord has notified Tenant at the time Landlord consents
to such alteration that such removal will not be required.

          (e)  Request Regarding Removal Obligation. At the time that Tenant
               ------------------------------------
requests Landlord's consent to any alteration, Tenant may request that Landlord
notify Tenant if Landlord will require Tenant, at Tenant's sole expense, to
remove any or all of the alteration by the end of the Term, and to restore the
Premises to its condition prior to the alteration.

     10.  Repairs.
          -------

          (a)  Tenant's Obligation. Except as provided in subsection 10(b),
               -------------------
Tenant, at all times during the Term and at Tenant's sole cost and expense,
shall keep the Premises and every part thereof in good condition and repair,
including without limitation any replacement of any element of the Premises
requiring replacement, ordinary wear and tear, damage thereto not caused by
Tenant,

                                     -11-
<PAGE>

by fire, earthquake, acts of God or the elements excepted. Tenant hereby waives
all right to make repairs at the expense of Landlord or in lieu thereof to
vacate the Premises as provided in California Civil Code Section 1942 or any
other law, statute or ordinance now or hereafter in effect.

          (b)  Landlord's Obligations. Landlord, at Landlord's expense, shall
               ----------------------
repair and maintain the structural portions of the roof (but not roof membrane
or other non-structural elements of the roof) and structural portions of the
Building unless and to the extent that the maintenance and repair are caused by
the act, neglect, fault or omission of any duty of Tenant, its agents, servants,
employees or invitees, in which case Tenant shall pay to Landlord the cost of
the maintenance and repairs caused in whole or in part by Tenant. There shall be
no abatement of Rent and no liability of Landlord by reason of any injury to or
interference with Tenant's business arising from the making of any repairs,
alterations or improvements in or to the fixtures, appurtenances and equipment
therein. Landlord's cost of performing the foregoing obligations shall be
included in Operating Expenses.

     11.  Damage or Destruction.
          ---------------------

          (a)  Landlord's Obligation to Rebuild. If the Premises are damaged or
               --------------------------------
destroyed, Landlord promptly and diligently shall repair the Premises (subject
to the limitations specified in this Section 11) unless Landlord has the option
to terminate this Lease as provided herein, and Landlord elects to terminate.

          (b)  Right to Terminate. Landlord and Tenant each shall have the
               ------------------
option to terminate this Lease if the Premises is destroyed or damaged by fire
or other casualty, regardless of whether the casualty is insured against under
this Lease, if Landlord reasonably determines that Landlord's obligation to
repair the Premises cannot be completed within two hundred seventy (270) days
after the casualty. If a party desires to exercise the right to terminate this
Lease as a result of a casualty, the party shall exercise the right by giving
the other party written notice of its election to terminate within thirty (30)
days after the damage or destruction, in which event this Lease shall terminate
fifteen (15) days after the date of the notice. If neither Landlord nor Tenant
exercises the right to terminate this Lease, Landlord promptly shall commence
the process of obtaining necessary permits and approvals, and shall commence
repair of the Premises as soon as practicable and thereafter prosecute the
repair diligently to completion, in which event this Lease shall continue in
full force and effect.

          (c)  Limited Obligation to Repair. Landlord's obligation should
               ----------------------------
Landlord elect or be obligated to repair or rebuild, shall be limited to the
Building shell. Tenant, at its option and expense, shall replace or fully repair
all trade fixtures, equipment and any improvements installed by Tenant and
existing at the time of the damage or destruction.

          (d)  Abatement of Rent. In the event of any damage or destruction to
               -----------------
the Premises which does not result in termination of this Lease, the Base Rent
temporarily shall be abated proportionately to the degree the Premises are
untenantable as a result of the damage or destruction, commencing from the date
of the damage or destruction and continuing during the period required by
Landlord to substantially complete Landlord's repair and restoration of the
Premises; provided, however, that nothing herein shall preclude Landlord from
being entitled to collect the full amount

                                     -12-
<PAGE>

of any rent loss insurance proceeds. Tenant shall not be entitled to any
compensation or damages from Landlord for loss of the use of the Premises,
damage to Tenant's personal property or any inconvenience occasioned by any
damage, repair or restoration. Tenant hereby waives the provisions of Section
1932, Subdivision 2, and Section 1933, Subdivision 4, of the California Civil
Code, and the provisions of any similar law hereafter enacted.

          (e)  Damage Near End of Term and Extensive Damage. In addition to the
               --------------------------------------------
rights to termination under subsection 11(b), either Landlord or Tenant shall
have the right to cancel and terminate this Lease as of the date of the
occurrence of destruction or damage if the Premises or the Building is
substantially destroyed or damaged (i.e., there is damage or destruction which
                                    -----
Landlord determines would require more than six (6) months to repair) and made
untenantable during the last twelve (12) months of the Term. Landlord or Tenant
shall give notice of its election to terminate this Lease under this subsection
11(e) within thirty (30) days after Landlord determines that the damage or
destruction would require more than six (6) months to repair. If neither
Landlord nor Tenant elects to terminate the Lease, the repair of the damage
shall be governed by subsection 11(a) or 11(b), as the case may be.

          (f)  Insurance Proceeds. If this Lease is terminated, Landlord may
               ------------------
keep all the insurance proceeds resulting from the damage, except for those
proceeds which specifically insured Tenant's personal property and trade
fixtures.

     12.  Eminent Domain. If all or any part of the Premises is taken for public
          --------------
or quasi-public use by a governmental authority under the power of eminent
domain or is conveyed to a governmental authority in lieu of such taking, and if
the taking or conveyance causes the remaining part of the Premises to be
untenantable and inadequate for use by Tenant for the purpose for which they
were leased, then Tenant, at its option and by giving notice within fifteen (15)
days after the taking, may terminate this Lease as of the date Tenant is
required to surrender possession of the Premises. If a part of the Premises is
taken or conveyed but the remaining part is tenantable and adequate for Tenant's
use, then the Lease shall be terminated as to the part taken or conveyed as of
the date Tenant surrenders possession; Landlord shall make such repairs,
alterations and improvements as may be necessary to render the part not taken or
conveyed tenantable; and the Rent shall be reduced in proportion to the part of
the Premises taken or conveyed. All compensation awarded for the taking or
conveyance shall be the property of Landlord without any deduction therefrom for
any estate of Tenant, and Tenant hereby assigns to Landlord all its right, title
and interest in and to the award. Tenant shall have the right, however, to
recover from the governmental authority, but not from Landlord, such
compensation as may be awarded to Tenant on account of the interruption of
Tenant's business, moving and relocation expenses; and removal of Tenant's trade
fixtures and personal property.

     13.  Indemnity and Insurance.
          -----------------------

          (a)  Indemnity. Tenant shall be responsible for, shall insure against,
               ---------
and shall indemnify Landlord and its constituent parts and hold them harmless
from, any and all liability for any claim, demand, liability, loss, damage or
injury to person or property occurring in, on or about the Premises, and Tenant
hereby releases Landlord and its constituent parts from any and all liability
for the same except arising from Landlord's gross negligence or willful
misconduct. Tenant's

                                     -13-
<PAGE>

obligation to indemnify Landlord and its constituent parts hereunder shall
include the duty to defend against any claims asserted by reason of any loss,
damage or injury, and to pay any judgements, settlements, costs, fees and
expenses, including attorneys' fees, incurred in connection therewith.

          (b)  Insurance. At all times during the term of this Lease, Tenant
               ---------
shall carry, at its own expense, for the protection of Tenant, Landlord,
Landlord's constituent parts and Landlord's management agents, as their
interests may appear, one or more policies of comprehensive general public
liability and property damage insurance, issued by one or more insurance
companies acceptable to Landlord, with minimum coverages of One Million Dollars
($1,000,000.00) for injury to one person in any one accident, Three Million
Dollars ($3,000,000.00) for injuries to more than one person in any one accident
and Two Million Dollars ($2,000,000.00) in property damage per accident and
insuring against any and all liability for which Tenant is responsible under
this Lease. The insurance policy or policies shall name Landlord, Landlord's
constituent parts and Landlord's management agents as additional insureds, and
shall provide that the policy or policies may not be cancelled on less than
thirty (30) days' prior written notice to Landlord. Tenant shall furnish
Landlord with certificates evidencing the insurance. If Tenant fails to carry
the insurance and furnish Landlord with copies of all the policies after a
request to do so, Landlord shall have the right to obtain the insurance and
collect the cost thereof from Tenant as additional Rent.

          (c)  Property Insurance. Landlord shall maintain fire and all risk
               ------------------
insurance on the Building shell and may, but shall not be obligated to maintain
insurance on any improvements installed within the Premises. Tenant shall
separately insure all improvements made by Tenant to the Premises.

     14.  Assignment and Subletting.
          -------------------------

          (a)  Landlord's Consent. Tenant shall not assign, sublet or otherwise
               ------------------
transfer all or any portion of Tenant's interest in this Lease (collectively,
"sublet") without Landlord's prior written consent, which consent shall not be
unreasonably withheld except as permitted under Section 14(h), below. Consent by
Landlord to one sublet shall not be deemed to be a consent to any subsequent
sublet.

          (b)  Effect of Sublet. Each sublet to which Landlord has consented
               ----------------
shall be by an instrument in writing, in a form satisfactory to Landlord as
evidenced by Landlord's written approval. Each sublessee shall agree in writing,
for the benefit of Landlord, to assume, to be bound by and to perform the terms,
conditions and covenants of this Lease to be performed by Tenant. Tenant shall
not be released from personal liability for the performance of each term,
condition and covenant of this Lease, and Landlord shall have the right to
proceed against Tenant without proceeding against the subtenant.

          (c)  Information to be Furnished. If Tenant desires at any time to
               ---------------------------
sublet the Premises, Tenant first shall notify Landlord of its desire to do so
and shall submit in writing to Landlord: (i) the name of the proposed subtenant;
(ii) the nature of the proposed subtenant's business to be carried on in the
Premises; (iii) the terms and provisions of the proposed sublease and a copy of
the proposed sublease form; and (iv) such financial information, including
financial statements, as Landlord reasonably may request concerning the proposed
subtenant.

                                     -14-
<PAGE>

          (d)  Landlord's Election.  At any time within twenty (20) days
               -------------------
after Landlord's receipt of the information specified in subsection 14(c),
Landlord, by written notice to Tenant, may elect either (i) to consent to the
sublet by Tenant; or (ii) to refuse its consent to the sublet. If Landlord fails
to elect either of the alternatives within the twenty (20) day period, it shall
be deemed that Landlord has refused its consent to the sublet. If Landlord
refuses its consent, Landlord shall deliver to Tenant a statement of the basis
for its refusal. Any attempted sublet without Landlord's consent shall not be
effective.

          (e)  Payment Upon Sublet.  If Landlord consents to the sublet, Tenant
               -------------------
thereafter may enter into a valid sublet of the Premises or portion thereof,
upon the terms and conditions set forth in the information furnished by Tenant
to Landlord pursuant to subsection 14(c), subject to the condition that fifty
percent (50%) of any excess of the monies due to Tenant under the sublet
("subrent") over the Rent required to be paid by Tenant plus the amortized cost
incurred by Tenant for the Initial Alterations constructed by Tenant within the
Premises hereunder shall be paid to Landlord. Any subrent to be paid to Landlord
pursuant hereto shall be payable to Landlord as and with the Base Rent payable
to Landlord hereunder pursuant to the terms of Section 4. The term "subrent" as
used herein shall include any consideration of any kind received, or to be
received, by Tenant from the subtenant, if the sums are related to Tenant's
interest in this Lease or in the Premises, including, without limitation, bonus
money, and payments (in excess of fair market value thereof) for Tenant's
assets, fixtures, inventory, accounts, goodwill, equipment, furniture, general
intangibles and any capital stock or other equity ownership of Tenant. For
purposes of the foregoing calculation, any credit to Tenant for the Initial
Alterations constructed by Tenant in the Premises shall be amortized over a five
(5) year period from the date such cost is incurred with interest on the
unamortized balance at the rate of ten percent (10%) per year. Accordingly, for
any subletting which occurs beyond the initial sixty months of the Term, there
shall be no deduction from subrents for costs incurred by Tenant for the Initial
Alterations.

          (f)  Executed Counterparts.  No sublet shall be valid nor shall any
               ---------------------
subtenant take possession of the Premises until an executed counterpart of the
sublease has been delivered to Landlord and approved in writing.

          (g)  Intentionally Omitted

          (h)  Transfers to Affiliates.  Tenant may assign this Lease or sublet
               -----------------------
the Premises, without Landlord's consent, to any corporation which controls, is
controlled by or is under common control with Tenant, or to any corporation
resulting from the merger or consolidation with Tenant, or to any person or
entity which acquired all the assets of Tenant as a going concern of the
business that is being conducted on the Premises, provided that the assignee
assumes, in full, the obligations of Tenant under this Lease.

          (i)  Costs.  In the event Tenant shall assign or sublet the Premises
               -----
or request the consent of Landlord to any assignment, subletting, hypothecation
or other action requiring Landlord's consent hereunder, then Tenant shall pay a
processing fee in the amount of $500 plus Landlord's reasonable attorneys' fees
incurred in connection therewith.

                                     -15-
<PAGE>

     15.  Default.
          -------

          (a)  Tenant's Default.  At the option of Landlord, a material breach
               ----------------
of this Lease by Tenant shall exist if any of the following events (severally,
"Event of Default"; collectively, "Events of Default") shall occur: (i) if
Tenant shall have failed to pay Rent, including Tenant's Percentage Share of
Operating Expenses, or any other sum required to be paid hereunder, together
with interest at the Interest Rate, from the date the amount became due through
the date of payment, inclusive; (ii) if Tenant shall have failed to perform any
term, covenant or condition of this Lease except those requiring the payment of
money, and Tenant shall have failed to cure the breach within thirty (30) days
after written notice from Landlord if the breach could reasonably be cured
within the thirty (30) day period; provided, however, if the failure could not
reasonably be cured within the thirty (30) day period, then Tenant shall not be
in default unless it has failed to promptly commence and thereafter continue to
make diligent and reasonable efforts to cure the failure as soon as practicable
as reasonably determined by Landlord; (iii) if Tenant shall have assigned its
assets for the benefit of its creditors; (iv) if the sequestration of,
attachment of, or execution on, any material part of the property of Tenant or
on any property essential to the conduct of Tenant's business shall have
occurred, and Tenant shall have failed to obtain a return or release of the
property within thirty (30) days thereafter, or prior to sale pursuant to any
sequestration, attachment or levy, whichever is earlier; (v) if a court shall
have made or entered any decree or order adjudging Tenant to be insolvent, or
approving as properly filed a petition seeking reorganization of Tenant, or
directing the winding up or liquidation of Tenant, and the decree or order shall
have continued for a period of thirty (30) days; (vi) if Tenant shall make or
suffer any transfer which constitutes a fraudulent or otherwise avoidable
transfer under any provision of the federal Bankruptcy Laws or any applicable
state law; or (vii) if Tenant shall have failed to comply with the provisions of
Section 23 or 25. An Event of Default shall constitute a default under this
Lease. Notwithstanding the foregoing, an Event of Default shall not be deemed to
have occurred with respect to the first two failures to pay Rent when due during
any twelve month period until three (3) days after delivery of notice of
nonpayment from Landlord to Tenant. Any subsequent failure to pay Rent during
such twelve month period shall not require any such notice in order to establish
an Event of Default. Any notice delivered pursuant to this Section 15(a) shall
be in lieu of and not in addition to any notice required under California Code
of Civil Procedure Section 1161 et seq.
                                ------

          (b)  Remedies Upon Tenant's Default.  Upon an Event of Default,
               ------------------------------
Landlord shall have the following remedies, in addition to all other rights and
remedies provided by law, equity, statute or otherwise provided in this Lease,
to which Landlord may resort cumulatively or in the alternative:


               (i)  Landlord may continue this Lease in full force and effect,
and this Lease shall continue in full force and effect as long as Landlord does
not terminate Tenant's right to possession, and Landlord shall have the right to
collect Rent when due. During the period Tenant is in default, Landlord may
enter the Premises and relet it, or any part of it, to third parties for
Tenant's account, provided that any Rent in excess of the Rent due hereunder
shall be payable to Landlord. Tenant shall be liable immediately to Landlord for
all costs Landlord incurs in reletting the Premises, including, without
limitation, brokers' commissions, expenses of cleaning and redecorating the
Premises required by the reletting and like costs. Reletting may be for a period
shorter or longer than the remaining Term of this Lease. Tenant shall pay to
Landlord the Rent and other sums due

                                     -16-
<PAGE>

under this Lease on the dates the Rent is due, less the Rent and other sums
Landlord receives from any reletting. No act by Landlord allowed by this
subsection (i) shall terminate this Lease unless Landlord notifies Tenant in
writing that Landlord elects to terminate this Lease.

               (ii) Landlord may terminate Tenant's right to possession of the
Premises at any time by giving written notice to that effect. No act by Landlord
other than giving written notice to Tenant shall terminate this Lease. Acts of
maintenance, efforts to relet the Premises or the appointment of a receiver on
Landlord's initiative to protect Landlord's interest under this lease shall not
constitute a termination of Tenant's right to possession. On termination,
Landlord shall have the right to remove all personal property of Tenant and
store it at Tenant's cost and to recover from Tenant as damages: (a) the worth
at the time of award of unpaid Rent and other sums due and payable which had
been earned at the time of termination; plus (b) the worth at the time of award
of the amount by which the unpaid Rent and other sums due and payable which
would have been payable after termination until the time of award exceeds the
amount of the Rent loss that Tenant proves could have been reasonably avoided;
plus (c) the worth at the time of award of the amount by which the unpaid Rent
and other sums due and payable for the balance of the Term after the time of
award exceeds the amount of the Rent loss that Tenant proves could be reasonably
avoided; plus (d) any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform Tenant's obligations
under this Lease, or which, in the ordinary course of things, would be likely to
result therefrom, including, without limitation, any costs or expenses incurred
by Landlord: (1) in retaking possession of the Premises, including reasonable
attorneys' fees and costs therefor; (2) maintaining or preserving the Premises
for reletting to a new tenant, including repairs or alterations to the Premises
for the reletting; (3) leasing commissions; (4) any other costs necessary or
appropriate to relet the Premises; and (5) at Landlord's election, such other
amounts in addition to or in lieu of the foregoing as may be permitted from time
to time by the laws of the State of California.

The "worth at the time of award" of the amounts referred to in subsections
(ii)(a) and (ii)(b) is computed by allowing interest at the Interest Rate, on
the unpaid Rent and other sums due and payable from the termination date through
the date of award. The "worth at the time of award" of the amount referred to in
subsection (ii)(c) is computed by discounting the amount at the discount rate of
the Federal Reserve Bank of San Francisco at the time of award, plus one percent
(1%). Tenant waives redemption or relief from forfeiture under California Code
of Civil Procedure Sections 1174 and 1179, or under any other present or future
law, if Tenant is evicted or Landlord takes possession of the Premises by reason
of any default of Tenant hereunder.

          (c)  Landlord's Default.  Landlord shall not be deemed to be in
               ------------------
default in the performance of any obligation required to be performed by
Landlord hereunder unless and until Landlord has failed to perform the
obligation within thirty (30) days after receipt of written notice by Tenant to
Landlord specifying wherein Landlord has failed to perform the obligation;
provided, however, that if the nature of Landlord's obligation is such that more
than thirty (30) days are required for its performance, then Landlord shall not
be deemed to be in default if Landlord shall commence the performance within the
thirty (30) day period and thereafter shall diligently prosecute the same to
completion.

                                     -17-
<PAGE>

     16.  Landlord's Right to Perform Tenant's Covenants.  If Tenant shall at
          ----------------------------------------------
any time fail to make any payment or perform any other act on its part to be
made or performed under this Lease, Landlord may, but shall not be obligated to,
make the payment or perform any other act to the extent Landlord may deem
desirable and, in connection therewith, pay expenses and employ counsel. Any
payment or performance by Landlord shall not waive or release Tenant from any
obligations of Tenant under this Lease. All sums so paid by Landlord, and all
penalties, interest and costs in connection therewith, shall be due and payable
by Tenant on the next day after any payment by Landlord, together with interest
thereon at the Interest Rate, from that date to the date of payment thereof by
Tenant to Landlord, plus collection costs and attorneys' fees. Landlord shall
have the same rights and remedies for the nonpayment thereof as in the case of
default in the payment of Rent.

     17.  (Intentionally Omitted)

     18.  Surrender of Premises.  By taking possession of the Premises, except
          ---------------------
as provided in Section 7, Tenant shall be deemed to have accepted the Premises
in good, clean and completed condition and repair, subject to all applicable
laws, codes and ordinances. On the expiration or early termination of this
Lease, except as provided in Section 9, Tenant shall surrender the Premises to
Landlord in its condition as of the Commencement Date, normal wear and tear
excepted. Tenant shall remove from the Premises all of Tenant's personal
property, trade fixtures and any alterations required to be removed pursuant to
Section 9. Tenant shall repair damage or perform any restoration work required
by the removal. If Tenant fails to remove any personal property, trade fixtures
or alterations after the end of the Term, Landlord may remove the property and
store it at Tenant's expense, including interest at the Interest Rate. If the
Premises are not so surrendered at the termination of this Lease, Tenant shall
indemnify Landlord against all loss or liability resulting from delay by Tenant
in so surrendering the Premises, including, without limitation, any claims made
by any succeeding tenant, losses to Landlord due to lost opportunities to lease
to succeeding tenants, and reasonable attorneys' fees and costs.

     19.  Holding Over.  If Tenant remains in possession of all or any part of
          ------------
the Premises after the expiration of the Term or the termination of this Lease,
the tenancy shall be month-to-month only and shall not constitute a renewal or
extension for any further term. In such event, Base Rent shall be increased in
an amount equal to one hundred fifty percent (150%) of the Base Rent during the
last month of the Term (including any extensions), and any other sums due under
this Lease shall be payable in the amount, and at the times, specified in this
Lease. The month-to-month tenancy shall be subject to every other term,
condition, covenant and agreement contained in this Lease and Tenant shall
vacate the Premises immediately upon Landlord's request.

     20.  Access to Premises.  Tenant shall permit Landlord and its agents to
          ------------------
enter the Premises at all reasonable times upon reasonable notice, except in the
case of an emergency (in which event no notice shall be necessary), to inspect
the Premises; to post Notices of Nonresponsibility and similar notices and to
show the Premises to interested parties such as prospective mortgagors,
purchasers and tenants; to make necessary alterations, additions, improvements
or repairs either to the Premises, the Building or other premises within the
Building; and to discharge Tenant's obligations hereunder when Tenant has failed
to do so within a reasonable time after written notice from Landlord. The above
rights are subject to reasonable security

                                     -18-
<PAGE>

regulations of Tenant, and to the requirement that Landlord shall at all times
act in a manner to cause the least possible interference with Tenant's
operations.

     21.  Signs.  The size, design, color, location and other physical aspects
          -----
of any sign in or on the Building shall be subject to the CC&R's, if any, Rules
and Landlord's approval prior to installation, and to any appropriate municipal
or other governmental approvals. The costs of any permitted sign, and the costs
of its installation, maintenance and removal, shall be at Tenant's sole expense
and shall be paid within ten (10) days of Tenant's receipt of a bill from
landlord for the costs.

     22.  Waiver of Subrogation.  Anything in this Lease to the contrary
          ---------------------
notwithstanding, Landlord and Tenant each hereby waives and releases the other
of and from any and all rights of recovery, claim, action or cause of action
against the other, its subsidiaries, directors, agents, officers and employees,
for any loss or damage that may occur in the Premises; to improvements to the
Premises or personal property (building contents) within the Premises; or to any
furniture, equipment, machinery, goods and supplies not covered by this Lease
which Tenant may bring or obtain upon the Premises or any additional
improvements which Tenant may construct on the Premises by reason of fire, the
elements or any other cause which is required to be insured against under this
lease, regardless of cause or origin, including negligence of Landlord or Tenant
and their agents, subsidiaries, directors, officers and employees, to the extent
insured against under the terms of any insurance policies carried by Landlord or
Tenant and in force at the time of any such damage, but only if the insurance in
question permits such a partial release in connection with obtaining a waiver of
subrogation from the insurer.  Because this Section 22 will preclude the
assignment of any claim mentioned in it by way of subrogation or otherwise to an
insurance company or any other person, each party to this Lease agrees
immediately to give to each insurance company written notice of the terms of the
mutual waivers contained in this Section and to have the insurance policies
properly endorsed, if necessary, to prevent the invalidation of the insurance
coverages by reason of the mutual waivers contained in this Section.

     23.  Subordination.
          -------------

          (a)  Subordinate Nature. Except as provided in subsection 23(b),
               ------------------
this Lease is subject and subordinate to all ground and underlying leases,
mortgages and deeds of trust which now or may hereafter affect the Premises, the
CC&R's, if any, and to all renewals, modifications, consolidations, replacements
and extensions thereof. Subject to subsection (c) below, within ten (10) days
after Landlord's written request therefor, Tenant shall execute any and all
documents required by Landlord, the lessor under any ground or underlying lease
("Lessor"), or the holder or holders of any mortgage or deed of trust ("Holder")
to make this Lease subordinate to the lien of any lease, mortgage or deed of
trust, as the case may be.

          (b)  Possible Priority of Lease. If a Lessor or a Holder advises
               --------------------------
Landlord that it desires or requires this Lease to be prior and superior to a
lease, mortgage or deed of trust, Landlord may notify Tenant. Within seven (7)
days of Landlord's notice, Tenant shall execute, have acknowledged and deliver
to Landlord any and all documents or instruments, in the form presented to
Tenant, which Landlord, Lessor or Holder deems necessary or desirable to make
this Lease prior and superior to the lease, mortgage or deed of trust.

                                     -19-
<PAGE>

          (c)  Recognition or Attornment Agreement.  If Landlord or Holder
               -----------------------------------
requests Tenant to execute a document subordinating this lease, the document
shall provide that, so long as Tenant is not in default, Lessor or Holder shall
agree to enter into either a recognition or attornment agreement with Tenant, or
a new lease with Tenant upon the same terms and conditions as to possession of
the Premises, which shall provide that Tenant may continue to occupy the
Premises so long as Tenant shall pay the Rent and observe and perform all the
provisions of this Lease to be observed and performed by Tenant.

     24.  Transfer of the Property.  Upon transfer of the Property and
          ------------------------
assignment of this Lease, Landlord shall be entirely freed and relieved of all
liability under any and all of its covenants and obligations contained in or
derived from this Lease occurring after the consummation of the transfer and
assignment. Tenant shall attorn to any entity purchasing or otherwise acquiring
the Premises at any sale or other proceeding.

     25.  Estoppel Certificates.  Within ten (10) days following written
          ---------------------
request by Landlord, Tenant shall execute and deliver to Landlord an estoppel
certificate, in the form prepared by Landlord. The certificate shall: (i)
certify that this Lease is unmodified and in full force and effect or, if
modified, state the nature of the modification and certify that this lease, as
so modified, is in full force and effect, and the date to which the Rent and
other charges are paid in advance, if any; (ii) acknowledge that there are not,
to Tenant's knowledge, any uncured defaults on the part of Landlord hereunder,
or if there are uncured defaults on the part of the Landlord, state the nature
of the uncured defaults; and (iii) evidence the status of the Lease as may be
required either by a lender making a loan to Landlord to be secured by deed of
trust or mortgage covering the Premises or a purchaser of the Property from
Landlord.

     26.  Mortgagee Protection.  In the event of any default on the part of
          --------------------
Landlord, Tenant will give notice by registered of certified mail to any
beneficiary of a deed of trust or mortgagee of a mortgage covering the Premises
and shall offer the beneficiary or mortgagee a reasonable opportunity to cure
the default, including time to obtain possession of the Premises by power of
sale or a judicial foreclosure, if such should prove necessary to effect a cure.

     27.  Attorneys' Fees.  If either party shall bring any action or legal
          ---------------
proceeding for damages for an alleged breach of any provision of this Lease, to
recover rent or other sums due, to terminate the tenancy of the Premises or to
enforce, protect or establish any term, condition or covenant of this Lease or
right of either party, the prevailing party shall be entitled to recover, as a
part of the action or proceedings, or in a separate action brought for that
purpose, such attorneys' fees and court costs as may be fixed by the court or
jury. The prevailing party shall be the party which secures a final judgment in
its favor.

     28.  Brokers.  Each party warrants and represents to the other that it
          -------
has had no dealings with any real estate broker or agent in connection with the
negotiation of this Lease, except for any brokers(s) specified in the Basic
Lease Information, and that it knows of no other real estate broker or agent who
is or might be entitled to a commission in connection with this Lease.  The
representing party shall indemnify and hold harmless the other from and against
any and all liabilities or expenses arising out of claims made by any other
broker or individual for commissions or fees resulting from this Lease arising
out of the action of such party.

                                     -20-
<PAGE>

     29.  Parking.  Tenant shall have the right to park in the parking
          -------
facilities located on the Premises. Landlord shall not be liable to Tenant, nor
shall this Lease be affected, if any parking is impaired by moratorium,
initiative, referendum, law, ordinance, regulation or order passed, issued or
made by any governmental or quasi-governmental body. Tenant acknowledges that
the area shown as "SFWD Property" on Exhibit A is not included as part of the
                                     ---------
Premises, except that the Premises does include the right to cross the SFWD
Property to park vehicles on the northwest portion of the Premises.

     30.  Utilities and Services.  Tenant shall be solely responsible for
          ----------------------
obtaining and paying for all utilities and services, including heating, air
conditioning, ventilation (i.e., HVAC service contracts, janitorial and
security) in connection with the Premises. Landlord shall not be liable for, and
Tenant shall not be entitled to any abatement or reduction of Rent by reason of,
no eviction of Tenant shall result from and, further, Tenant shall not be
relieved from the performance of any covenant or agreement in this Lease because
of, Landlord's failure to furnish or Tenant's failure to obtain any such utility
or service any of the foregoing.

     31.  Modification for Lender.  If, in connection with obtaining financing
          -----------------------
for the Premises or any portion thereof, Landlord's lender shall request
reasonable modification to this Lease as a condition to such financing (which
shall not materially change Tenant's rights or obligations hereunder), Tenant
shall not unreasonably withhold, delay or defer its consent thereto, provided
such modifications do not materially affect Tenant's rights hereunder.

     32.  Acceptance.  Delivery of this Lease, duly executed by Tenant,
          ----------
constitutes an offer to lease the Premises as set forth herein, and under no
circumstances shall such delivery be deemed to create an option or reservation
to lease the Premises for the benefit of Tenant. This Lease shall become
effective and binding only upon execution hereof by Landlord and delivery of a
signed copy to Tenant. Upon acceptance of Tenant's offer to lease under the
terms hereof and receipt by Landlord of the Rent for the first month of the Term
and the Security Deposit in connection with Tenant's submission of the offer,
Landlord shall be entitled to retain the sums and apply them to damages, costs
and expenses incurred by Landlord if Tenant fails to occupy the Premises. If
Landlord rejects the offer, the sums shall be returned to Tenant.

     33.  Use of Names.  Tenant shall not use the name of the Building or the
          ------------
name of the business park in which the Building is located in the name or title
of its business or occupation without Landlord's prior written consent, which
consent Landlord may withhold in its sole discretion. Landlord reserves the
right to change the name of the Building without Tenant's consent and without
any liability to Landlord.

     34.  Recording.  Neither Landlord nor Tenant shall record this Lease, nor a
          ---------
short form memorandum of this lease, without the prior written consent of the
other.

     35.  Quitclaim.  Upon any termination of this Lease pursuant to its terms,
          ---------
Tenant, at Landlord's request, shall execute, have acknowledged and deliver to
Landlord a quitclaim deed of all Tenant's interest in the Premises, Building and
Property created by this Lease.

                                     -21-
<PAGE>

     36.  Notices.  Any notice or demand required or desired to be given under
          -------
this Lease shall be in writing and shall be given by hand delivery, telecopy or
the United States mail. Notices which are sent by telecopy shall be deemed to
have been given upon receipt. Notices which are mailed shall be deemed to have
been given when seventy-two (72) hours have elapsed after the notice was
deposited in the United States mail, registered or certified, the postage
prepaid, addressed to the party to be served. As of the date of execution of
this Lease, the addresses of Landlord and Tenant are as specified in the Basic
Lease Information. Either party may change its address by giving notice of the
change in accordance with this Section.

     37.  Landlord's Exculpation.  In the event of default, breach or violation
          ----------------------
by Landlord (which term includes Landlord's partners, co-venturers and co-
tenants, and officers, directors, employees, agents and representatives of
Landlord and Landlord's partners, co-venturers and co-tenants) of any of
Landlord's obligations under this Lease, Landlord's liability to Tenant shall be
limited to its ownership interest in the Building and Property or the proceeds
of a public sale of the ownership interest pursuant to the foreclosure of a
judgment against Landlord. Landlord shall not be personally liable, or liable in
any event, for any deficiency beyond its ownership interest in the Building and
Property.

     38.  Additional Structures.  Any diminution or interference with light,
          ---------------------
air or view by any structure which may be erected on land adjacent to the
Building shall in no way alter this Lease or impose any liability on Landlord.

     39.  General.
          -------

          (a)  Captions.  The captions and headings used in this Lease are for
               --------
the purpose of convenience only and shall not be construed to limit or extend
the meaning of any part of this Lease.

          (b)  Time.  Time is of the essence for the performance of each term,
               ----
condition and covenant of this Lease.

          (c)  Severability.  If any provision of this Lease is held to be
               ------------
invalid, illegal or unenforceable, the invalidity, illegality, or
unenforceability shall not affect any other provision of this Lease, but this
Lease shall be construed as if the invalid, illegal or unenforceable provision
had not been contained herein.

          (d)  Choice of Law; Construction.  This Lease shall be construed and
               ---------------------------
enforced in accordance with the laws of the State of California. The language in
all parts of this Lease shall in all cases be construed as a whole according to
its fair meaning and not strictly for or against either Landlord or Tenant.

          (e)  Gender; Singular, Plural.  When the context of this Lease
               ------------------------
requires, the neuter gender includes the masculine, the feminine, a partnership
or corporation or joint venture, and the singular includes the plural.

          (f)  Binding Effect.  The covenants and agreements contained in this
               --------------
Lease shall be binding on the parties hereto and on their respective successors
and assigns (to the extent this Lease is assignable).

                                     -22-
<PAGE>

          (g)  Waiver.  The waiver of Landlord of any breach of any term,
               ------
condition or covenant of this Lease shall not be deemed to be a waiver of the
provision or any subsequent breach of the same or any other term, condition or
covenant of this Lease. The subsequent acceptance of Rent hereunder by Landlord
shall not be deemed to be a waiver of any preceding breach at the time of
acceptance of the payment. No covenant, term or condition of this Lease shall be
deemed to have been waived by Landlord unless the waiver is in writing signed by
Landlord.

          (h)  Entire Agreement.  This Lease is the entire agreement between
               ----------------
the parties, and there are no agreements or representations between the parties
except as expressed herein. Except as otherwise provided herein, no subsequent
change or addition to this Lease shall be binding unless in writing and signed
by the parties hereto.


          (i)  Waiver of Jury.  To the extent permitted by law, Tenant hereby
               --------------
waives any right it may have to a jury trial in the event of litigation between
Tenant and Landlord pertaining to this Lease.

          (j)  Counterparts.  This Lease may be executed in counterparts, each
               ------------
of which shall be an original, but all counterparts shall constitute one (1)
instrument.

          (k)  Exhibits.  The Basic Lease Information and all exhibits attached
               --------
hereto are hereby incorporated herein and made an integral part hereof.

          (l)  Addendum.  The Addendum, if any, attached hereto is hereby
               --------
incorporated herein and made an integral part hereof.

     40.  Option to Extend.
          ----------------

          (a)  Terms of Option.  Provided that an Event of Default does not
               ---------------
exist under this Lease either at the time of exercise of the right to extend or
on the Expiration Date, Tenant shall have the non-assignable (except to an
affiliate of Tenant pursuant to Subsection 14(h)) right, at its option, to
extend this Lease for one (1) period of five (5) years ( the "Extension Term")
commencing on the Expiration Date. For purposes of this Section 40, the term
Expiration Date shall be deemed to be the last day of the original term. If
Tenant elects to extend this Lease for the Extension Term, Tenant shall give
unequivocal written notice ("Exercise Notice") of its exercise to Landlord not
less than six (6) months, nor more than nine (9) months prior to the Expiration
Date. Tenant's failure to give the Exercise Notice in a timely manner shall be
deemed a waiver of all of Tenant's rights to extend under this Section 40. The
terms, covenants and conditions applicable to the Extension Term shall be the
same terms, covenants and conditions of this Lease except that (i) Tenant shall
not be entitled to any further option to extend under this Section 40, and (ii)
the Base Rent for the Premises during the Extension Term shall be determined as
provided in subsection 40(b) below, and (iii) Landlord shall have no obligation
to improve or otherwise modify the Premises.


          (b)  Determination of Base Rent During Extension Term.
               ------------------------------------------------

               (i)  Agreement on Rent.  Subject to the limitations of this
                    -----------------
Section, Landlord and Tenant agree that the Base Rent during each Extension Term
shall be equal to ninety five percent (95%) of the fair market rental value of
the Premises at the time Tenant exercises its

                                     -23-
<PAGE>

option to extend the Term. Landlord and Tenant shall have thirty (30) days after
Landlord receives the Exercise Notice with respect to such Extension Term in
which to agree on the Base Rent during the Extension Term. In determining the
fair market rental value of the Premises during the Extension Term,
consideration shall be given to the uses of the Premises permitted under this
Lease, the quality, size, design and location of the Premises, and the rental
value of comparable space located in the proximity of the Premises. In no event
shall the Base Rent for the Extension Term be less than the Base Rent last
payable under this Lease during the last full month prior to the commencement of
the Extension Term. If Landlord and Tenant agree on the Base Rent for the
Extension Term during the thirty (30) day period, they shall immediately execute
an amendment to this Lease stating the Base Rent.

               (ii) Selection of Appraisers.  If Landlord and Tenant are unable
                    -----------------------
to agree on the Base Rent for the Extension Term within the thirty (30) day
period, then within fifteen (15) days after the expiration of the thirty (30)
day period, Landlord and Tenant each, at its cost and by giving notice to the
other party, shall appoint a competent and disinterested real estate appraiser
with at least five (5) years full-time commercial appraisal experience in area
in which the Premises is located to appraise and set the Base Rent during the
Extension Term. If either Landlord or Tenant does not appoint an appraiser
within ten (10) days after the other party has given notice of the name of its
appraiser, the single appraiser appointed shall be the sole appraiser and shall
set the Base Rent during the Extension Term. If two (2) appraisers are appointed
by Landlord and Tenant as stated in this section, they shall meet promptly and
attempt to set the Base Rent for the Extension Term. If the two (2) appraisers
are unable to agree within thirty (30) days after the second appraiser has been
appointed, they shall attempt to select a third appraiser meeting the
qualifications stated in this section within ten (10) days after the last day
the two (2) appraisers are given to set the Base Rent. If they are unable to
agree on the third appraiser, either Landlord or Tenant, by giving ten (10)
days' notice to the other party, can apply to the then president of the real
estate board of Santa Clara County, or to the Presiding Judge of the Superior
Court of Santa Clara County for, the selection of a third appraiser who meets
the qualifications stated in this section. Landlord and Tenant each shall bear
one-half (1/2) of the cost of appointing the third appraiser and of paying the
third appraiser's fee. The third appraiser, however selected, shall be a person
who has not previously acted in any capacity for either Landlord or Tenant.

               (iii)  Value Determined By Three (3) Appraisers.  Within thirty
                      ----------------------------------------
(30) days after the selection of the third appraiser, a majority of the
appraisers shall set the Base Rent for the Extension Term. If a majority of the
appraisers is unable to set the Base Rent within the stipulated period of time,
Landlord's appraiser shall arrange for simultaneous exchange of written
appraisals of the fair market rental value of the Premises from each of the
appraisers and the three (3) appraisals shall be added together and their total
divided by three (3); ninety five percent (95%) of the resulting quotient shall
be the Base Rent for the Premises during the Extension Term. If, however, the
low appraisal and/or the high appraisal are/is more than ten percent (10%) lower
and/or higher than the middle appraisal, the low appraisal and/or the high
appraisal shall be disregarded. If only one (1) appraisal is disregarded, the
remaining two (2) appraisals shall be added together and their total divided by
two (2); ninety five percent (95%) of the resulting quotient shall be the Base
Rent for the Premises during the Extension Term. If both the low appraisal and
the high appraisal are disregarded as stated in this Paragraph, ninety five
percent (95%) of the middle appraisal shall be the Base Rent for the Premises
during the Extension Term.

                                     -24-
<PAGE>

          (iv) Notice to Landlord and Tenant. After the Base Rent for the
               -----------------------------
Extension Term has been set, the appraisers shall immediately notify Landlord
and Tenant, and Landlord and Tenant shall immediately execute an amendment to
this Lease stating the Base Rent.

                 [Remainder of page intentionally left blank]

                                     -25-
<PAGE>

IN WITNESS WHEREOF, the parties have executed this Lease as of the date first
written above.

                            "Landlord"

                            VOIT MANAGEMENT COMPANY, L.P., as Agent for
                            THE PRUDENTIAL INSURANCE COMPANY
                            OF AMERICA,
                            a New Jersey corporation

                            By /s/ Mary E. Davis
                               ----------------------------------------------

                            Name Mary E. Davis
                                 --------------------------------------------

                            Title Vice President
                                  -------------------------------------------

                            "Tenant"

                            NETSCAPE COMMUNICATIONS CORPORATION
                            a Delaware corporation

                            By /s/ Peter Currie
                               ----------------------------------------------

                            Name Peter Currie
                                 --------------------------------------------

                            Title E.U.P., C.F.O.
                                  -------------------------------------------

                                      -1-
<PAGE>

                                   EXHIBIT A



                             [Diagram of Premises]

                                      -1-
<PAGE>

                                  EXHIBIT B-1

                         COMMENCEMENT DATE MEMORANDUM
                         ----------------------------

LANDLORD:      THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
               a New Jersey corporation

TENANT:        NETSCAPE COMMUNICATIONS CORPORATION,
               a Delaware corporation

LEASE DATE:    November 1, 1996

PREMISES:      645 Almanor Avenue, Sunnyvale, California 94086

Pursuant to Section ___ of the above-referenced Lease, the Commencement Date
hereby is established as ____________________.

TENANT:                             LANDLORD:

NETSCAPE COMMUNICATIONS             VOIT MANAGEMENT COMPANY, L.P.,
CORPORATION,                        as Agent for THE PRUDENTIAL
a Delaware corporation              INSURANCE OF AMERICA,
                                    a New Jersey corporation

By____________________________      By________________________________

Name__________________________      Name______________________________

Title_________________________      Title_____________________________

                                      -2-
<PAGE>

                                  EXHIBIT B-2
                                  -----------

                    BASE RENT COMMENCEMENT DATE MEMORANDUM
                    --------------------------------------

LANDLORD:      THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
               a New Jersey corporation

TENANT:        NETSCAPE COMMUNICATIONS CORPORATION,
               a Delaware corporation

LEASE DATE:    November 1, 1996

PREMISES:      645 Almanor Avenue, Sunnyvale, California 94086

Pursuant to Section 4 of the above-referenced Lease, the Base Rent Commencement
Date hereby is established as ____________________, and the Expiration Date is
hereby established as ___________________.

TENANT:                             LANDLORD:

NETSCAPE COMMUNICATIONS             VOIT MANAGEMENT COMPANY, L.P.,
CORPORATION,                        as Agent for THE PRUDENTIAL
a Delaware corporation              INSURANCE OF AMERICA,
                                    a New Jersey corporation

By____________________________      By__________________________________

Name__________________________      Name________________________________

Title_________________________      Title_______________________________

                                      -3-
<PAGE>

                                   EXHIBIT C
                                   ---------

                           ADA and HVAC Improvements

     Within ninety (90) days after the Commencement Date, Tenant shall cause
certain improvements shown on the report included as part of this Exhibit C as
Schedule C-1 (the "ADA Improvements") and also certain improvements to be made
to the heating, ventilation and air conditioning system servicing the Premises
(the "HVAC Improvements") to be installed on the Premises in a good and
workmanlike manner and in compliance with all laws.  Landlord shall reimburse
Tenant up to $47,500 for costs incurred by Tenant in installing the ADA
Improvements and up to $75,000 for costs incurred by Tenant in installing the
HVAC Improvements as follows.  Upon completion of the ADA Improvements or the
HVAC Improvements, as the case may be, Tenant shall submit to Landlord invoices
and other reasonable substantiating documentation with respect to the cost of
the completed improvements, and, within forty-five (45) days after Landlord's
receipt thereof, Landlord shall pay to Tenant the amounts requested in the
submitted invoices up to $47,500 with respect to the ADA Improvements and up to
$75,000 with respect to the HVAC Improvements, provided that the following
conditions have been satisfied: (1) on the date of such request, Tenant is not
in default (beyond the applicable cure period specified in the Lease) of
Tenant's obligations under the Lease; (2) the work and/or materials for which
reimbursement is requested has been completed in a good and workmanlike manner
and in compliance with all laws; (3) Tenant shall have delivered to Landlord
such mechanic's lien waivers as Landlord may reasonably request to assure lien-
free construction and completion of such improvements; and (4) there shall have
been no mechanic's liens, recorded against the Premises in connection with such
improvements.  Notwithstanding that the actual cost of designing and installing
the ADA Improvements and/or the HVAC Improvements may exceed the $47,500 or
$75,000 amounts specified above, Landlord shall have no obligation to provide
any additional funds for such excess costs or any other improvements related
thereto or to otherwise make any improvements or modifications required under
laws related to access for disabled persons or the heating, ventilation and air
conditioning system.

                                      -1-
<PAGE>

                          First Amendment to Sublease


THIS FIRST AMENDMENT (this "Amendment"), is entered into this 29 day of
November, 1999, by and between Netscape Communications, Inc., ("Netscape") and
iBeam BroadcastingCorporation, ("Subtenant").

                                   Recitals

     WHEREAS, Netscape currently leases certain premises consisting of
approximately 132,000 square feet of space located at 645 Almanor, Sunnyvale,
California (the "Premises"), pursuant to that certain Lease dated November 1,
1996, between Netscape and The Prudential Insurance Company of America
("Landlord");

     WHEREAS, Netscape and Subtenant entered into that certain Sublease dated as
of November 6, 1998 (the "Sublease"), which provided for Netscape leasing to
Subtenant approximately thirty six thousand four hundred seventy nine (36,479)
square feet of space which square footage included a proportionate share of
building common; and

     WHEREAS, Subtenant desires to lease additional space of the Premises from
Netscape and Netscape has agreed to lease such space to Subtenant; pursuant to
the terms and conditions hereof, as well as to correct the legal name of
Netscape.

     NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, Netscape and Subtenant covenant and agree as follows:

     1.  In the introduction paragraph of the Sublease, delete "Netscape
Communications, Inc.," and replace it with "Netscape Communications
Corporation," the correct legal name of Netscape.

     2.  Section 1 of the Sublease is hereby amended as follows:

         (i)  In line 3, replace the words and number "thirty six thousand four
              hundred seventy nine (36,479)" with the words and number "twenty-
              nine thousand six hundred and forty-five 29,645)".

         (ii) To the end of the Section add the following:

              On and subject to the terms and conditions contained herein, as
              amended, Netscape hereby agrees to lease to Subtenant, and
              Subtenant hereby agrees to lease from Netscape, approximately
              twenty eight thousand two hundred and fifty (28,250) additional
              rentable square feet of space in the Premises, as indicated on
              Exhibit C attached hereto and incorporated herein by this
              reference (the "Additional Subleased Premises"). As of the date of
              this Amendment, Subtenant is subleasing from Netscape a total of
              57,895 rentable square feet of the Premises.

                                      -1-
<PAGE>

     3.    Additional Rent.  As of the date hereof, Subtenant's pro rata share
           ---------------
of Building Operating Expenses (as defined in the Sublease) shall be 47%.
Additional Rent shall be paid by Subtenant in accordance with the terms and
provisions of Section 4(ii) of the Sublease, as amended.

     4.    Term.  Section 2 of the Sublease is hereby amended by adding the
           ----
following language to the end of the Section:

     The term for the Additional Subleased Premises shall commence on December
     1, 1999 (the "Additional Subleased Premises Commencement Date"), provided
     Netscape has obtained the consent of the Landlord, and shall expire on
     February 15, 2002, unless sooner terminated pursuant to any provisions
     hereof.  As of November 15, 1999, Subtenant shall have the right to enter
     the Additional Subleased Premises to take reasonable preparatory measures
     for its occupancy of the Additional Subleased Premises, including, without
     limitation, the installation of its trade fixtures, furnishings, and
     telephone and computer equipment.  Such entry shall be subject to all of
     the terms and conditions of this Sublease, as amended, except that
     Subtenant shall not be required to pay any rent on account thereof until
     December 1, 1999.

     5.    Rent.
           ----

     (a)   The first sentence of Section 4(a)(i) of the Sublease is hereby
amended by adding "for the Subleased Premises" after "Monthly base rent," and
changing ("Base Rent") to ("Subleased Premises Base Rent").

     (b)   Section 4(a) is hereby amended by adding the following subsection
(iii):

     (iii) Base Rent for Additional Subleased Premises:  Subtenant shall pay
     Netscape monthly base rent for the Additional Subleased Premises (the
     "Additional Subleased Premises Base Rent") in the following amounts:

          Months                   Monthly Base Rent

          12/1/99-11/30/00         $1.60/rentable square foot
          12/1/00-11/30/01         $1.65/rentable square foot
          12/1/01-2/15/02          $1.70/rentable square foot

     6.    Condition of Additional Subleased Premises. Section 6 of the Sublease
           ------------------------------------------
is hereby amended by adding the following language to the end of the Section:

           Subtenant has used due diligence in inspecting the Additional
           Subleased Premises and agrees to accept the Additional Subleased
           Premises in "as-is" condition, and with all faults as of the
           Additional Subleased Premises Commencement Date, without any
           representation or warranty of any kind or nature whatsoever, or any
           obligation on the part of Netscape to modify, improve or otherwise
           prepare the Additional Subleased Premises for Subtenant's occupancy,
           and by entry hereunder, Subtenant accepts the Additional Subleased
           premises in their present condition and without representation or
           warranty of any kind by Netscape. Subtenant hereby expressly waives
           the

                                      -2-
<PAGE>

          provisions of Section 1 of Section 1932 and Sections 1941 and 1942 of
          the California Civil Code and all rights to make repairs at the
          expense of Netscape as provided in Section 1942 if said civil code.
          Notwithstanding the foregoing, Netscape will deliver the Additional
          Subleased Premises with all building systems in good working order and
          repair. Subtenant shall make no modifications or repairs to the
          building HVAC system without receiving the prior written consent of
          Netscape.

     7.   Security Deposit.  Section 5 of the Sublease is hereby amended by
          -----------------
adding the following language to the end of the first sentence of the Section,
prior to the words ("Security Deposit"):

          for the Subleased Premises, and Subtenant shall deposit with Netscape
          upon the execution of the Sublease fifty two thousand eight hundred
          ninety four and 55/100 Dollars ($52,894.55) as a security deposit for
          the Additional Subleased Premises, for a total security deposit of
          $105,789.10 ("Security Deposit").

     8.   Subject to Landlord's consent to the removal of the demising wall,
Netscape hereby agrees to pay one-half of the cost of removing the demising wall
in the Additional Subleased Premises, as shown on Exhibit D attached hereto and
incorporated hereby by this reference. Notwithstanding the foregoing, in no
event shall Netscape's share of such costs exceed $6,425.00. Upon completion of
such work, Subtenant shall submit a proper invoice to Netscape for payment of
Netscape's share of such work, which invoice shall include documentation
providing Netscape with the names and addresses of all contractors,
subcontractors and materialmen who provided labor and materials in connection
with this work, final lien waivers from all such contractors, subcontractors and
materialmen covering all work and materials in connection with this work, and
proof of all required inspections and issuance of any required approvals and
sign-offs by public authorities, if necessary.

     9.   Netscape shall have the right to enter into the Subleased Premises for
any reason whatsoever, upon reasonable notice to Subtenant. In the event of an
emergency, Netscape shall immediately be permitted to enter into the Subleased
Premises.

     10.  Additional Requirements.  Within 30 days of the execution of this
Amendment, Subtenant shall provide Netscape with copies of all necessary plans
and permits for any past or future construction performed or to be performed on
behalf of Subtenant.  Subtenant acknowledges that the obligation to provide such
plans and permits is a material provision of this amendment and the Sublease and
failure to perform this obligation shall be a breach hereof.  In the event any
repairs, modifications or alterations ("Alterations") to the Subleased Premises
or the Additional Subleased Premises do not comply with the laws, regulations
and codes relating to such Alterations and in effect at the time they were
performed, Subtenant shall undertake all necessary work to bring such
Alterations into compliance therewith.  Without limiting the force and effect of
any other provisions of the Sublease or this Amendment, Subtenant shall
indemnify, defend, protect, and hold Netscape and Master Landlord harmless from
and against all Claims (as defined in Section 20 of the Sublease) which may be
brought or made against Netscape or Master Landlord or which Netscape may pay or
incur to the extent caused by

                                      -3-
<PAGE>

Subtenant's failure to comply with the laws, regulations and codes pertaining to
the undertaking of Alterations.

     11.  Except as provided for in this Amendment, all references in the
Sublease to Subleased Premises, shall include both the Subleased Premises and
the Additional Subleased Premises.

     12.  Except as modified hereby, all terms and conditions of the Sublease
remain in full force and effect.

     13.  No Broker. Netscape and Subtenant each represent and warrant that they
          ---------
have dealt with no broker in connection with this Amendment and the transactions
contemplated hereby, except Cornish & Carey Commercial. Each party shall
indemnify, protect and hold the other party harmless from all costs and expenses
(including reasonable attorneys' fees) arising from or relating to a breach of
the foregoing representation and warranty.

                                      -4-
<PAGE>

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

NETSCAPE                            SUBTENANT

NETSCAPE COMMUNICATIONS             iBEAM BROADCASTING
CORPORATION                         CORPORATION

By: /s/ Mark Stavish                By: /s/ Chris L. Dier
    ---------------------------         ----------------------------------

Name: Mark Stavish                  Name: Chris L. Dier
      -------------------------           --------------------------------
Title: Senior VP                    Title: CEO
       ------------------------            -------------------------------

                                      -5-