<PAGE>
                                                                   EXHIBIT 10.16

                                    SUBLEASE

                                 BY AND BETWEEN

                    FIRST DATA MERCHANT SERVICES CORPORATION

                                    SUBLESSOR

                                       AND

                               R2 TECHNOLOGY, INC.

                                    SUBTENANT



<PAGE>

                                    SUBLEASE

         THIS SUBLEASE ("Sublease") is made and dated as of the 3 day of
January, 2002 by and between FIRST DATA MERCHANT SERVICES CORPORATION, a Florida
corporation, having an address of c/o First Data Properties, 12500 E. Belford
Ave., Suite M16-S Englewood, CO 80112, Attn: Contract Administrator
("Sublessor") and R2 TECHNOLOGY, INC. a Delaware corporation, having an address
of 325 Distel Circle, Los Altos, California 94022 ("Subtenant").

                                   WITNESSETH:

         WHEREAS, Sublessor is tenant under that certain Build to Suit Lease
Agreement dated as of March 18, 1997, as amended by First Amendment to Build to
Suit Lease dated as of December 19, 1997 (as amended, the "Main Lease") with
Sunnyvale Partners Limited Partnership, an Illinois limited partnership
("Overlandlord") as landlord, whereby Overlandlord leased to Sublessor land and
improvements consisting of a to-be-constructed two-story office building
containing approximately 75,197 rentable square feet of office space located at
1195 West Fremont Avenue, Sunnyvale, CA (the "Building"),

         WHEREAS, the Building has since been constructed;

         WHEREAS, Sublessor desires to sublet to Subtenant a portion of he
Building comprised of approximately 52,185 rentable square feet located on the
first and second floors of the Building, as more particularly shown and
described on Exhibit B attached hereto and incorporated herein by reference (the
"Premises"), and Subtenant desires to sublet the Premises from Sublessor;

         WHEREAS, the parties are agreeable to entering into a sublease of the
Premises on the terms and conditions set forth below; and

         WHEREAS, unless otherwise defined in this Sublease, all capitalized
terms used herein have the meanings set out for them in the Main Lease.

                                    AGREEMENT

         NOW, THEREFORE, for and in consideration of the mutual promises set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Sublessor and Subtenant hereby
agree as follows:

         1. Incorporation of Recitals. The foregoing recitals are incorporated
            --------------------------
into and made a part of this Sublease as if each were specifically recited
herein.

         2. Demise and Term. Sublessor hereby subleases the Premises to
            ---------------
Subtenant, and Subtenant hereby hires and accepts the Premises from Sublessor.
The Premises shall include the appurtenant right to the use, in common with
others, of the lobbies, entrances, stairs, corridors, elevators and other public
portions of the Building, to the extent that Sublessor has the right to use the
same as Tenant under the Main Lease. The term of this Sublease (the "Term")
shall be the period commencing September 1, 2003 (the "Commencement Date"), and
ending on October


<PAGE>

31, 2006 (the "Expiration Date"), unless sooner terminated as herein
provided. Subtenant shall have no option to renew or extend the term of this
Sublease or to expand the Premises except as expressly set forth in Section 36
hereinafter set forth. Subtenant acknowledges that the estimation of the square
footage of the Premises as set forth above shall be binding on Subtenant, and
such square footage amount shall not be decreased even if the actual square
footage is less than said estimate. Notwithstanding any provision in this
Sublease to the contrary, in the event that Sublessor is unable to deliver
possession of the Premises to Subtenant on the Commencement Date, Sublessor
shall have no obligation or liability to Subtenant for such failure (the parties
agreeing that delivery of the portion of the Premises covered by the Interwoven
Subsublease hereinafter defined shall be deemed to have occurred on the
Commencement Date); provided, however, Subtenant shall not be required to pay
rent for that portion of the Premises which Sublessor is not able to deliver,
and further provided that in the event Sublessor is not able to deliver
possession of the Premises by Subtenant on or before the date that is twelve
(12) months after the Commencement Date (the "Deadline"), Subtenant, as its sole
and exclusive remedy hereunder, shall be entitled to terminate this Sublease by
notice to Sublessor within thirty (30) business days after said Deadline.

         3. Subtenant Alterations. Subtenant shall not make any alterations,
            ---------------------
additions or improvements to the Sublet Premises without the prior consent of
Sublessor. All alterations, installation, removals and restoration shall be
performed in a good and workmanlike manner so as not to damage or alter the
primary structure or structural facilities of the Building and other
improvements situated on the Sublet Premises or of which the Sublet Premises are
a part. All alterations, installations, removals and restoration shall, at
Sublessor's sole discretion, either be removed by Subtenant prior to the end of
the term or earlier termination thereof, or shall remain on the Premises at the
end of the term, provided that when Subtenant requests Sublessor consent,
Subtenant shall at such time request whether removal will be required at the end
of the Term and if Sublessor does not state in its consent that removal will be
required, Subtenant shall not be required to remove such approved alterations,
installations or restorations. All contractors performing any alterations on
behalf of Subtenant shall be subject to Sublessor's approval. Along with
Subtenant's request for Sublessor's consent to Subtenant's proposed general
contractors and/or subcontractors, Subtenant shall notify Sublessor of its
estimate of the total cost of the work involved and, at Sublessor's option,
Subtenant must provide to Sublessor adequate assurance that Subtenant has the
financial resources to pay for such cost. Subtenant's contractor shall be duly
licensed and shall obtain and provide Sublessor with certificates evidencing
worker's compensation, public liability and property damage insurance in amounts
and forms and with companies satisfactory to Sublessor. Subtenant's agreement
with its contractors shall require such contractors to provide daily cleanup of
the work area to the extent such cleanup is necessitated by any such work, and
to take reasonable steps to minimize interference with other tenants' use and
occupancy of the Building. Subtenant and Subtenant's contractors shall comply
with any other reasonable rules, regulations or requirements that Sublessor or
Overlandlord shall impose. Subtenant shall promptly pay any and all costs and
expenses in connection with or arising out of the performance of any such
alterations and shall furnish to Sublessor evidence of such payment upon
request. On completion of any alterations, Subtenant shall submit to Sublessor
(i) as-built drawing showing all the applicable improvements; (ii) a certified
written statement from the architect that the improvements have been completed
in compliance with the approved drawings and applicable laws; (iii) final lien
waivers and releases from the architect showing all contractors and all
subcontractors and

                                       2


<PAGE>

suppliers; and (iv) copy of any certificate of occupancy or other
governmental certificates or permits required by law. In addition, Subtenant
hereby acknowledges that it is Subtenant's sole and exclusive responsibility to
cause the Premises and any alterations, improvements or modifications thereto to
comply with all applicable laws, including the Americans with Disabilities Act
and other ordinances, orders, rules, regulations and requirements of all the
governmental authorities having jurisdiction thereof. Subtenant shall repair or
replace (or at Sublessor's election, reimburse Sublessor for the costs of
repairing or replacing) any portion of the Building or Premises or Sublessor's
property damaged, lost, or destroyed in connection with any such alterations and
shall indemnify, defend and hold the Sublessor harmless from and against any and
all losses, costs, damages, expenses and liabilities, including without
limitation, reasonable attorneys' fees, incurred by Sublessor in connection with
the work, including incurred by Sublessor in connection with any such
alteration, improvement or modification, including but not limited to, claims
based on personal injury or property damage, contract claims or lien claims.

         4. Use. Subtenant shall use and occupy the Premises only for research
            ---
and development and for general office purposes and assembly of computer system
components for distribution and otherwise in strict compliance with the
allowable uses set forth in Section 5 of the Main Lease, as well as all
applicable laws and insurance requirements. Subtenant shall not commit or suffer
to be committed any annoyance, waste, nuisance or any act or thing which is
against public policy or which may disturb the quiet enjoyment of any other
tenant or occupant of the Building. Subtenant agrees not to deface or damage the
Building in any manner.

         5. Subordinate to Main Lease; Quiet Enjoyment. This Sublease is and
            ------------------------------------------
shall be subject and subordinate to the Main Lease. A copy of the Main Lease
(from which certain economic terms have been excised) is attached hereto as
Exhibit A and made a part hereof. Sublessor agrees that upon performance of all
---------
terms, covenants, obligations, conditions provisions hereof on Subtenant's part
to be kept and performed, but subject to the terms of Paragraph 13 hereof,
Sublessor shall not disturb Subtenant in the quiet enjoyment and possession of
the Premises during the term of this Sublease, subject to the terms of the Main
Lease, any ground lease and any financing encumbering the Building. Sublessor
agrees that it will not voluntarily enter into any agreement with Overlandlord
which would result in the termination of the Main Lease prior to the Expiration
Date or which would negatively affect the rights or obligations of Sublessor
under this Sublease. Sublessor shall notify Subtenant of any involuntary change.

         6. Compliance with Main Lease.
            --------------------------

            (a) Except as set forth in the immediately succeeding sentence, the
     terms, covenants and conditions of the Main Lease (the "Incorporated
     Provisions") are incorporated herein by reference. Those sections of the
     Main Lease listed on Exhibit C attached hereto and made a part hereof are
     specifically excluded from the Incorporated Provisions. Except to the
     extent that the Incorporated Provisions are inapplicable or are modified by
     the provisions of this Sublease, the Incorporated Provisions binding or
     inuring to the benefit of the landlord thereunder shall, in respect of this
     Sublease, bind or inure to the benefit of Sublessor, and the Incorporated
     Provisions, binding or inuring to the benefit of the tenant thereunder
     shall, in respect of this Sublease, bind or inure to the

                                       3


<PAGE>

     benefit of Subtenant, with the same force and effect as if such
     Incorporated Provisions were completely set forth in this Sublease, and as
     if the words "Landlord" and "Tenant" or words of similar import, wherever
     the same appear in the Incorporated Provisions, were construed to mean,
     respectively, "Sublessor" and "Subtenant" in this Sublease, and as if the
     words "Premises," or words of similar import, wherever the same appear in
     the Incorporated Provisions, were construed to mean "Premises" in this
     Sublease, and as if the word "Lease," or words of similar import, wherever
     the same appear in the Incorporated Provisions, were construed to mean this
     "Sublease."

            (b) The time limits contained in the Main Lease for the giving of
     notices, making of demands or performing of any act, condition or covenant
     on the part of the tenant thereunder, or for the exercise by the tenant
     thereunder of any right, remedy or option, are changed for the purposes of
     incorporation herein by reference by shortening the same in each instance
     by 5 days, so that in each instance Subtenant shall have 5 days less time
     to observe or perform hereunder than Sublessor has as the tenant under the
     Main Lease, except that:

                 (i) any such time limits which are 7 days or less shall instead
            be shortened in each instance by 3 business days, and

                 (ii) any such time limits which are 3 days or less shall
            instead be shortened in each instance so that such time limits shall
            expire 1 business day prior to the expiration of such time limits
            under the Main Lease.

            (c) If any of the express provisions of this Sublease shall conflict
     with any of the Incorporated Provisions, such conflict shall be resolved in
     every instance in favor of the express provisions of this Sublease. If
     Subtenant receives any notice or demand from Overlandlord under the Main
     Lease, Subtenant shall deliver a copy thereof to Sublessor by overnight
     courier the next business day or as soon thereafter as is reasonably
     possible but in no event later than two business days after Subtenant's
     receipt of such notice. If Sublessor receives any notice of default from
     Overlandlord under the Main Lease, Sublessor shall deliver a copy thereof
     to Subtenant by overnight courier the next business day or as soon
     thereafter as is reasonably possible but in no event later than two
     business days after Sublessor's receipt of such notice.

         7. Performance by Sublessor. Sublessor shall not be required to
            ------------------------
furnish, supply or install anything required under any article of the Main
Lease. Sublessor shall have no liability or responsibility whatsoever for
Overlandlord's failure or refusal to perform under the Incorporated Provisions.
Subtenant shall have the right to instruct Overlandlord with respect to the
performance by Overlandlord of Overlandlord's obligations as landlord under the
Main Lease. Upon Sublessor's receipt of a written notice from Subtenant that
Sublessor has failed to perform an obligation under the Incorporated Provisions,
(because of a failure of Overlandlord to perform its obligation under the Main
Lease) then Sublessor shall use its commercially reasonable efforts to cause
Overlandlord to observe and perform the same, provided, however, that Sublessor
does not guarantee Overlandlord's compliance with the Incorporated Provisions
and further provided that in no event shall Sublessor be required to initiate
any litigation proceedings or file suit against Overlandlord. Any action
undertaken or done by Sublessor or Subtenant shall be at

                                       4


<PAGE>

Subtenant's sole cost and expense, Sublessor shall not be responsible for any
cost or expense related thereto, and Sublessor shall not be subject to
unreasonable administrative burden in connection therewith. Subtenant shall not
in any event have any rights in respect of the Premises greater than Sublessor's
rights under the Main Lease. Notwithstanding any provision to the contrary
contained herein, as to Incorporated Provisions, Sublessor shall not be required
to make any payment or perform any obligation, and Sublessor shall have no
liability to Subtenant for any matter whatsoever, except for (i) Sublessor's
obligation to pay the rent due under the Main Lease, and (ii) Sublessor's
obligation to use reasonable efforts, upon the written request of and at the
expense of Subtenant, to cause Overlandlord to observe and/or perform its
obligations under the Main Lease (or, in the alternative, to direct Subtenant to
pursue its claim against Overlandlord). Sublessor shall not be responsible for
any failure or interruption, for any reason whatsoever, of the services or
facilities that may be appurtenant to or supplied at the Building, by
Overlandlord or otherwise, including, without limitation, heat, air
conditioning, water, elevator service and cleaning service, if any; and no
failure to furnish, or interruption of, any such services or facilities shall
give rise to any: (i) abatement, diminution or reduction of Subtenant's
obligations under this Sublease; (ii) constructive eviction, whether in whole or
in part; or (iii) liability on the part of Sublessor.

         8. No Breach of Main Lease. Subtenant shall not do or permit to be done
            -----------------------
any act or thing which may constitute a breach or violation of any term,
covenant or condition of the Main Lease.

         9. No Privity of Estate. Nothing contained in this Sublease shall be
            --------------------
construed to create privity of estate or privity of contract between Subtenant
and Overlandlord.

         10. Indemnity. Subtenant hereby does and shall indemnify, defend and
             ---------
hold harmless Sublessor and Overlandlord from and against all losses, costs,
damages, expenses and liabilities, including, without limitation, reasonable
attorneys' fees, which Sublessor and/or Overlandlord may incur or pay by reason
of: (i) Subtenant's use, occupancy or management of the Premises; (ii) any
accidents, damages or injuries to persons or property occurring in, on or about
the Premises; (iii) any breach or default hereunder on Subtenant's part; (iv)
any work done by or on behalf of Subtenant in or to the Premises, or (v) any
act, omission or negligence occurring in, on or about the Premises on the part
of Subtenant and/or its officers, employees, agents, customers, invitees or any
person claiming through or under Subtenant. The foregoing indemnification of
Sublessor shall exclude the gross negligence and willful misconduct of
Sublessor, its agents and employees. The foregoing indemnification of
Overlandlord shall exclude the gross negligence of Overlandlord, its agents and
employees.

         11. Rent.
             ----

            (a) Subtenant shall pay to Sublessor Base Rent (the "Base Rent") in
     accordance the following table:

            Period       Rent Per s.f. per   Monthly Base      Annual Base Rent
                            month                 Rent
       9/1/03 - 8/31/04     $2.59              $135,159.15      $1,621,909.80

                                       5

<PAGE>


       9/1/04 - 8/31/05     $2.69              $140,377.65      $1,684,531.80
       9/1/05 - 8/31/06     $2.80              $146,118.00      $1,753,416.00
      9/1/06 - 10/31/06     $2.91              $151,858.35      $1,822,300.20


     (b)    Subtenant shall pay the Monthly Base Rent to Sublessor in advance of
            the first day of each month during the Term at the offices of
            Sublessor identified at the beginning of this Sublease or elsewhere
            as Sublessor shall direct. In addition to the Monthly Base Rent,
            Subtenant shall also be responsible for and shall pay the applicable
            material or service provider (including as the case may be,
            Sublessor or Overlandlord) directly for any and all other amounts
            payable with respect to providing: (i) gas, heat, air conditioning,
            electricity, telephone, water, sewer, security services and
            janitorial services to the Premises; and (ii) Subtenant's
            Proportionate Share (as defined in the following sentence) of all
            costs with respect to the Building's common area and systems and the
            Building structure, including without limitation, costs of
            maintenance, repair and replacement of the Building structure,
            common area and systems, costs of utilities and security for the
            common areas and a property management fee to the property manager
            selected by Sublessor or Overlandlord; and (iii) Subtenant's
            Proportionate Share of any other operating expenses to be paid by
            Sublessor under the Main Lease (including without limitation, the
            Impositions and insurance costs). Subtenant's Proportionate Share
            shall be 69.4%. The cost of any repair which is capital in nature
            shall be amortized on a straight line basis over its useful life
            ("Useful Life") at an interest rate not to exceed ten percent (10%)
            and Subtenant shall pay Sublessor the amount equal to Subtenant's
            prorata share of the annualized (2) amortization during the Term of
            this Sublease. The Useful Life of a capital item shall be determined
            by the United States Internal Revenue Services standard depreciation
            schedule in effect on the date that the applicable capital
            expenditure is made. Subtenant shall also pay Sublessor for
            Subtenant's Proportionate Share of the annualized amortization of
            any improvement or replacement which is capital in nature, provided
            that the item is intended to result in a cost savings, then only to
            the extent of savings actually realized. All the foregoing amounts
            shall hereinafter collectively be referred to as the "Additional
            Charges."

     (c)    In addition to the Base Rent obligations set forth above and the
            Additional Charges obligations set forth above, Subtenant shall pay
            the Rent Reimbursement (as hereinafter defined) to Sublessor as
            hereinafter set forth. The parties acknowledge and agree that for
            the period commencing on or about January 15, 2002 and expiring
            September 1, 2003, Subtenant is occupying the Premises pursuant to a
            Subsublease with the current Subtenant of the Premises, Interwoven,
            Inc. ("Interwoven"). In order to induce Interwoven to enter into
            such Sublease, Sublessor agreed to provide Interwoven with a Base
            Rent abatement in the amount of $360,000. Subtenant has agreed to
            reimburse Sublandlord for such amount (the "Rent Reimbursement"),
            which amount shall be reimbursed on a monthly basis in equal amounts
            over the term of the Sublease. Said $360,000 Rent Reimbursement
            shall be amortized over the course of the initial Sublease term
            without interest, with $9,473.68 due each month at the same time
            that Monthly Base Rent is due.



                                       6


<PAGE>

     (d)    "Rent" (which term shall include the Base Rent, the Rent
            Reimbursement and any Additional Charges) shall be paid promptly
            when due, without notice or demand therefor and without deduction,
            abatement, counterclaim or setoff of any amount for any reason
            whatsoever. Base Rent, the Rent Reimbursement and Additional Charges
            shall be paid to Sublessor by good unendorsed check of Subtenant at
            the address of Sublessor set forth at the beginning of this Sublease
            or to such other person and/or at such other address as Sublessor
            may from time to time designate by notice to Subtenant. No payment
            by Subtenant or receipt by Sublessor of any lesser amount than the
            amount stipulated to be paid hereunder shall be deemed other than on
            account of the earliest stipulated Base Rent, Rent Reimbursement or
            Additional Charges due under this Sublease; nor shall any
            endorsement or statement on any check or letter be deemed an accord
            and satisfaction, and Sublessor may accept any check or payment
            without prejudice to Sublessor's right to recover the balance due or
            to pursue any other remedy available to Sublessor.

     (e)    Upon the execution of (i) this Sublease by both Sublessor and
            Subtenant and (ii) consent to this Sublease by Overlandlord as
            provided herein, this Sublease shall become effective.
            Notwithstanding anything in this Sublease to the contrary, Subtenant
            shall pay all charges incurred by Subtenant (including but not
            limited to fees, if any, charged by Overlandlord) in connection with
            Subtenant's relocation to the Premises and the installation of all
            equipment and utility services for the Premises which are required
            by Subtenant, including, but not limited to, telephones, computers,
            and additional electric service.

         12. Condition of Premises. Sublessor shall deliver the Premises to
             ---------------------
Subtenant and Subtenant shall accept the Premises on the Commencement Date in
"AS IS WITH ALL FAULTS" condition and subject to all applicable zoning,
municipal, county and state laws, ordinances and regulations, restrictions of
record and other requirements governing and regulating the use of the Premises
(sometimes hereinafter, the "Laws") and to all matters disclosed thereby.
Subtenant hereby acknowledges that the Premises is otherwise in good condition
and satisfactory in all respects for Subtenant's occupancy. Sublessor shall have
no obligations under this Sublease or otherwise to perform any work,
alterations, installations or to remove any asbestos or asbestos containing
material or other hazardous or toxic materials or substances, if any, from the
Premises or elsewhere ("Hazardous Materials"). Sublessor makes no
representations or warranties whatsoever with respect to the presence of
Hazardous Materials in the Premises or Building, or with respect to whether or
not the Building and/or Premises is in compliance with Laws (including, without
limitation, environmental laws and the Americans with Disabilities Act). In
addition, Sublessor makes no representations or warranties as to the suitability
of the Premises for the conduct of Subtenant's business. In making and executing
this Sublease, Subtenant has relied solely on such investigations, examinations
and inspections as Subtenant has chosen to make. Subtenant acknowledges that
Sublessor has afforded Subtenant the opportunity for full and complete
investigations, examinations, and inspections of the Premises. Subtenant shall
at Subtenant's expense promptly comply with all Laws in effect during the term
hereof. Sublessor acknowledges that Subtenant has no responsibility for
repairing or remediating the presence of Hazardous Materials or ADA violations
with respect to the period predating Subtenant's occupancy of the Premises under
the above-referenced Subsublease with Interwoven with respect to the Premises,
subject to such Subsublease. With respect to the

                                       7


<PAGE>

additional premises occupied by Subtenant hereunder (the Suite 1000 portion
shown on Exhibit B) Sublessor acknowledges that Subtenant has no responsibility
for repairing or remediating the presence of Hazardous Materials or ADA
violations with respect to the period preceding the Commencement Date.

         13. Consents and Approvals. In any instance when Sublessor's consent or
             ----------------------
approval is required under this Sublease, Sublessor's refusal to consent to or
approve any matter or thing shall be deemed reasonable and in good faith if such
consent or approval has not been obtained from Overlandlord; provided however,
if Sublessor has no independent objection to such matter, Sublessor agrees to
use reasonable efforts, at the sole cost and expense of Subtenant (including,
without limitation, reasonable attorneys' fees and expenses), to obtain the
consent or approval of Overlandlord and will indicate to Overlandlord in those
cases where its approval is conditioned upon Overlandlord's approval that it has
no objection thereto and agrees that if such consent of Overlandlord shall not
be required, Sublessor shall not unreasonably withhold or delay its consent to
such matter. In the event that Subtenant shall seek the approval by or consent
of Sublessor and Sublessor shall fail or refuse to give such consent or
approval, Subtenant shall not be entitled to any damages from Sublessor for any
withholding or delay of such approval or consent by Sublessor.

         14. Notice. All notices, consents, approvals, demands and requests
             ------
which are required or desired to be given by either party to the other hereunder
shall be in writing and shall be personally delivered, sent by telefax or by
reputable overnight courier delivery service or sent by United States registered
or certified mail and deposited in a United States post office, return receipt
requested and postage prepaid. Notices, consents, approvals, demands and
requests which are served upon Sublessor or Subtenant in the manner provided
herein shall be deemed to have been given or served for all purposes hereunder
on the day personally delivered or refused, the next business day after sending
by overnight courier as aforesaid or on the third business day after mailing as
aforesaid. All notices, consents, approvals, demands, and requests given to
Sublessor or Subtenant shall be addressed to the address set forth at the
beginning of this Sublease with notices to Sublessor being addressed to the
attention of Contract Administrator, First Data Properties, 12500 East Belford
Avenue, Suite M16-S, Englewood, CO 80112, facsimile: (720) 332-0098, with a copy
at the same time and in the same manner to Blackwell Sanders Peper Martin LLP,
720 Olive Street, 24th Floor, St. Louis, MO 63101 Attention: Susan M. Altnether,
Real Estate Paralegal, facsimile: (314) 345-6060. The facsimile number of
Subtenant is (650) 254-7201. Either party may from time to time change the names
and/or addresses to which notices , consents, approvals, demands and requests
shall be addressed by a notice given in accordance with the provisions of this
Paragraph.

         15. Termination of Main Lease. It is understood and agreed by and
             -------------------------
between the parties hereto that the existence of this Sublease is dependent and
conditioned upon the continued existence of the Main Lease and this Sublease
shall automatically terminate on the termination, cancellation or expiration of
the Main Lease for any reason (whether pursuant to a termination right in the
Main Lease or otherwise) and in such event Sublessor shall not have any
liability to Subtenant except as expressly provided in the following sentence.
If for any reason the term of the Main Lease shall terminate prior to the
Expiration Date, this Sublease shall thereupon be terminated and Sublessor shall
not be liable to Subtenant by reason thereof unless

                                       8


<PAGE>

both (a) Subtenant  shall not then be in default hereunder,  and (b) said
termination shall have been effected because of the breach or default of
Sublessor as tenant under the Main Lease.

         16. Maintenance and Repairs. Subtenant shall, at Subtenant's sole cost
             -----------------------
and expense, keep and maintain the Premises in good condition and repair,
including without limitation, all necessary maintenance and repairs to all
portions of the Premises and all exterior entrances, all glass, window
casements, show window moldings, all partitions, doors, door jams, door closers
and hardware fixtures exclusive of normal maintenance services. All damage or
injury to the Building and/or common areas caused by the act or negligence of
Subtenant, its employees, agents, or visitors shall be repaired by Subtenant at
Subtenant's sole cost and expense. Subtenant shall promptly replace any portion
of the Premises which cannot be fully repaired, regardless of whether the
benefit of such replacement extends beyond the Term. It is the intention of
Sublessor and Subtenant that at all times during the Term Subtenant shall at its
cost maintain the Premises in an attractive, first-class and fully operative
condition and in compliance with all applicable laws. Notwithstanding the
foregoing, Sublessor hereby agrees: (a) to perform the repair obligations as
described in Section 7(A) of the Main Lease and Subtenant agrees to pay for its
share of such repair costs after the opportunity to review Sublessor's receipts
for such repair costs. The cost of any repair which is capital in nature shall
be amortized in accordance with the terms and provisions of Paragraph 11(b)
above; or (b) in the alternative, Sublessor may elect to have Sublessee perform
such repair obligations as described in Section 7(A) and any such repair that is
capital in nature shall be amortized in accordance with the terms and provisions
of Paragraph 11(b) above.

         17. Assignment and Sublettings. Subtenant shall not, by operation of
             --------------------------
law, merger, consolidation or otherwise, assign, sell, mortgage, pledge or in
any manner transfer this Sublease or any interest therein, or sublet the
Premises or any part or parts thereof, or grant any concession or license or
otherwise permit occupancy of all or any part of the Premises by any person,
except with the prior written consent of Sublessor. Any change in control of the
Subtenant shall be deemed an assignment requiring Sublessor's consent . Change
in control shall be defined as the transfer of any majority or controlling
interest in any entity which is the Subtenant hereunder. Sublessor shall not
unreasonably withhold its consent to an assignment of this Sublease or a
sublease of the Premises by Subtenant (which assignment or sublease may
nevertheless require the consent of Overlandlord), provided that it shall be
deemed reasonable of Sublessor to withhold its consent if: (a) the assignee or
sublessee proposed by Subtenant does not demonstrate to the reasonable
satisfaction of Sublessor that such proposed assignee or sublessee has a net
worth and financial capacity equal to or greater than the net worth and
financial capacity of Subtenant; or (b) the proposed assignment or sublease
would violate the exclusive use provisions of any other sublease or occupancy
agreement affecting the Building. Neither the consent of Sublessor to an
assignment, subletting ,concession or license, nor the references in this
Sublease to assignees, subtenants, concessionaires or licensees, shall in any
way be construed to relieve Subtenant of the requirement of obtaining the
consent of Sublessor to any further assignment, subletting, concession or
license for all or any part of the Premises. In the event Sublessor consents to
any assignment of this Sublease or sublease of the Premises, the assignee or
sublessee shall execute and deliver to Sublessor an agreement in form and
substance satisfactory to Sublessor whereby the assignee or sublessee shall
assume all of Subtenant's obligations under this Sublease from and after the
date of the applicable transfer. Notwithstanding any assignment or subletting,
including, without limitation, any assignment or subletting permitted or
consented

                                       9


<PAGE>

to, the original Subtenant named herein and any other person(s) who at any
time was or were Subtenant shall remain fully liable on this Sublease, and if
this Sublease shall be amended, modified, extended or renewed, the original
Subtenant named herein and any other person(s) who at any time was or were
Subtenant shall remain fully liable on this Sublease as so amended, modified,
extended or renewed. Any violation of any provision of this Sublease by any
assignee, subtenant or other occupant shall be deemed a violation by the
original Subtenant named herein, the then Subtenant and any other person(s) who
at any time was or were Subtenant, it being the intention and meaning that the
original Subtenant named herein, the then Subtenant and any other person(s) who
at any time was or were Subtenant shall all be liable to Sublessor for any and
all acts or omissions of any and all assignees, subtenants and other occupants
of the Premises claiming by, through or under Subtenant. If this Sublease shall
be assigned or if the Premises or any part thereof shall be sublet or occupied
by any person or persons other than the original Subtenant named herein,
Sublessor may collect rent from any such assignee and/or any subtenants or
occupants, and apply the net amounts collected to the Base Rent, Rent
Reimbursement and Additional Charges, but no such assignment, subletting,
occupancy or collection shall be deemed a waiver of any of the provisions of
this Paragraph, or the acceptance of the assignee, subtenant or occupant as
Subtenant, or a release of any person from the further performance by such
person of the obligations of Subtenant under this Sublease. Sublessor shall be
entitled to 50% of profits arising from any such transaction. Subtenant shall be
responsible for the payment of all costs and expenses (including without
limitation reasonable attorneys' fees) incurred by Sublessor in connection with
any request for consent to assignment or subsublease, whether or not such
consent is granted. No consent shall be required in the event of an initial or
subsequent public offering, or in the event Subtenant becomes a public company
Subtenant returns to a private company status. Subtenant shall provide Sublessor
with notice of any such public offering or change in status to a private company
within thirty (30) days after the operative event.

         18. Insurance. Subtenant shall provide and maintain throughout the term
             ---------
of this Sublease a policy or policies of comprehensive public liability
insurance in standard form naming Sublessor and Overlandlord as additional
insureds and otherwise complying with the requirements of the Main Lease with
limits of not less than $2,000,000.00 combined single limit for both bodily
injury or death and for property damage, including water damage. Subtenant shall
also provide and maintain throughout the term of this Sublease all other
insurance coverage required by the Main Lease, naming Sublessor and Overlandlord
as additional insureds. A policy, binder or other reasonable satisfactory
evidence of such insurance shall be delivered to Sublessor by Subtenant no less
than ten (10) days before the Commencement Date. Subtenant shall procure and pay
for renewals or replacements of such insurance from time to time before the
expiration thereof, and Subtenant shall deliver to Sublessor such renewal or
replacement policy or binder or other reasonably satisfactory evidence of such
insurance at least 30 days before the expiration of any existing policy. All
such policies shall be issued by companies licensed to do business in the state
where the Building and Premises are located and shall contain a provision
whereby the same cannot be cancelled or modified unless Sublessor is given at
least 30 days' prior written notice by certified or registered mail of such
cancellation or modification.

         19. Right to Cure Subtenant's Defaults and Damages. If Subtenant shall
             ----------------------------------------------
at any time fail to make any payment or perform any other obligation of
Subtenant hereunder within the applicable cure period, if any, then Sublessor
shall have the right, but not the obligation, after

                                       10


<PAGE>

five days' notice to Subtenant, or without notice to Subtenant in the case
of any emergency, and without waiving or releasing Subtenant from any
obligations of Subtenant hereunder, to make such payment or perform such other
obligation of Subtenant in such manner and to such extent as Sublessor shall
deem necessary, and in exercising any such right, to pay any incidental costs
and expenses, employ attorneys, and incur and pay reasonable attorneys' fees.
Subtenant shall pay to Sublessor upon demand all sums so paid by Sublessor and
all incidental costs and expenses of Sublessor in connection therewith, together
with interest thereon at the rate of 2% per calendar month or any part thereof
or the then maximum rate of interest which may lawfully be collected from
Subtenant, whichever shall be less, from the date of the making of such
expenditures.

         20. Remedies of Sublessor.
             ---------------------

            (a) "Default" shall mean a default by Subtenant under any provision
         of this Sublease which default has not been cured within any applicable
         grace or cure period.

            (b) If a Default occurs, Sublessor shall have, in addition to all
         its rights and remedies contained in the Incorporated Provisions
         pursuant to Section 6 hereof, the following rights and remedies; all of
         Sublessor's rights and remedies under this Sublease are distinct,
         separate and cumulative, and none will exclude any other right or
         remedy allowed by law:

                 (i) Sublessor may, with or without notice of such election and
            with or without entry or other action by Sublessor, immediately
            terminate this Sublease, in which event the Term of this Sublease
            shall end and all right, title, and interest of Subtenant hereunder
            shall expire; or

                 (ii) Sublessor may enforce the provisions of this Sublease and
            may enforce and protect the rights of the Sublessor hereunder by a
            suit or suits in equity or at law for the specific performance of
            any covenant or agreement herein or for the enforcement of any other
            appropriate legal or equitable remedy, including the recovery of all
            moneys due or to become due under any of the provisions of this
            Sublease.

                 (iii) If Sublessor elects to terminate the right to possession
            only without terminating the Sublease, Subtenant shall immediately
            surrender the Premises to Sublessor, and if Subtenant fails to do
            so, Sublessor may, without prejudice to any other remedy which it
            may have for possession or arrearages in rent, enter upon and take
            possession of the Premises and expel or remove Subtenant and any
            other person who may be occupying the Premises or any part thereof,
            without being liable for prosecution or any claim or damages
            therefor; and Sublessor may recover from Subtenant the following:

                     (aa) The worth at the time of award of any unpaid rent
                 which has been earned at the time of such termination; plus

                     (bb) The worth at the time of award of the amount by which
                 the unpaid rent which would have been earned after termination
                 until

                                       11


<PAGE>

                 the time of award exceeds the amount of such rental loss that
                 Subtenant proves could have been reasonably avoided; plus

                     (cc) The worth at the time of award of the amount by which
                 the unpaid rent for the balance of the Term after the time of
                 award exceeds the amount of such rental loss that Subtenant
                 proves could have been reasonably avoided; plus

                     (dd) Any other amount necessary to compensate Sublessor for
                 all the detriment proximately caused by Subtenant's failure to
                 perform its obligations under this Sublease or which in the
                 ordinary course of things would be likely to result therefrom,
                 specifically including but not limited to, brokerage
                 commissions and advertising expenses incurred, expenses of
                 remodeling the Premises or any portion thereof for a new
                 subtenant, whether for the same or a different use, and any
                 special concessions made to obtain a new subtenant; and

                     (ee) At Sublessor's election, such other amounts in
                 addition to or in lieu of the foregoing as may be permitted
                 from time to time by applicable law.

            The term "rent" as used in this Section 20 shall be deemed to be and
            to mean all sums of every nature required to be paid by Subtenant
            pursuant to the terms of this Sublease, whether to Sublessor or to
            others. As used in Paragraphs 20 (b)(iii), (aa) and (bb) above, the
            "worth at the time of award" shall be computed by allowing interest
            at the interest rate set forth in Section 19 of this Sublease. As
            used in Paragraph 20(b)(iii)(cc) above, the "worth at the time of
            award" shall be computed by discounting such amount at the discount
            rate of the Federal Reserve Bank of San Francisco at the time of
            award plus one percent (1%).

            (c) Sublessor shall have the remedy described in California Civil
         Code Section 1951.4 (lessor may continue lease in effect after lessee's
         breach and abandonment and recover rent as it becomes due, if lessee
         has the right to sublet or assign, subject only to reasonable
         limitations). Accordingly if Sublessor does not elect to terminate this
         Sublease on account of any default by Subtenant, Sublessor may, from
         time to time, without terminating this Sublease, enforce all of its
         rights and remedies under this Sublease, including the right to recover
         all rent as it becomes due.

            (d) Subtenant will pay upon demand all of Sublessor's costs,
         charges, and expenses, including reasonable attorneys' fees, and fees
         and expenses of agents and others retained by Sublessor in any
         litigation, negotiation, or transaction in which Sublessor seeks to
         enforce the terms or provisions of this Sublease.

         21. Brokerage. Sublessor and Subtenant each represents to the other
             ---------
that no broker or other person had any part, or was instrumental in any way, in
bringing about this Sublease.


                                       12


<PAGE>

Sublessor and Subtenant each agree to indemnify, defend and hold harmless
the other from and against, any claims made by any broker or any person for a
brokerage commission, finder's fee, or similar compensation, by reason of or in
connection with this Sublease, and any loss, liability, damage, cost and expense
(including, without limitation, reasonable attorneys' fees) in connection with
such claims if such broker or other person had, or claimed to have, dealings
with such party in bringing about this Sublease. The provisions of this
Paragraph shall survive the expiration or termination of this Sublease.

         22. Waiver of Jury Trial and Right to Counterclaim. Subtenant hereby
             ----------------------------------------------
waives all right to trial by jury in any summary or other action, proceeding or
counterclaim arising out of or in any way connected with this Sublease.
Subtenant also hereby waives all right to assert or interpose a counterclaim in
any summary proceeding or other action or proceeding to recover or obtain
possession of the Premises unless legally required to do so to preserve the
claim.

         23. No Waiver. The failure of Sublessor to insist in any one or more
             ---------
cases upon the strict performance or observance of any obligation of Subtenant
hereunder or to exercise any right or option contained herein shall not be
construed as a waiver or relinquishment for the future of any such obligation of
Subtenant or any right or option of Sublessor. Sublessor's receipt and
acceptance of Base Rent, Rent Reimbursement or Additional Charges, or
Sublessor's acceptance of performance of any other obligation by Subtenant, with
knowledge of Subtenant's breach of any provision of this Sublease, shall not be
deemed a waiver of such breach. No waiver by Sublessor of any term, covenant or
condition of this Sublease shall be deemed to have been made unless expressed in
writing and signed by Sublessor.

         24. Complete Agreement. There are no representations, agreements,
             ------------------
arrangements or understandings, oral or written, between the parties relating to
the subject matter of this Sublease which are not fully expressed in this
Sublease. This Sublease cannot be changed or terminated orally or in any other
manner other than by a written agreement executed by both parties.

         25. Successors and Assigns. The provisions of this Sublease, except as
             ----------------------
herein otherwise specifically provided, shall extend to, bind and inure to the
benefit of the parties hereto and their respective personal representatives,
heirs, successors and permitted assigns. In the event of any assignment or
transfer of the leasehold estate under the Main Lease, the transferor or
assignor, as the case may be, shall be and hereby is entirely relieved and freed
of all obligations under this Sublease arising after the date of any such
assignment or transfer.

         26. Interpretation. Irrespective of the place of execution or
             --------------
performance, this Sublease shall be governed by and construed in accordance with
the laws of the state where the Premises is located. If any provision of this
Sublease or the application thereof to any person or circumstance shall, for any
reason and to any extent, be invalid or unenforceable, the remainder of this
Sublease and the application of that provision to other persons or circumstances
shall not be affected but rather shall be enforced to the extent permitted by
law. The table of contents, captions, headings and titles, if any, in this
Sublease are solely for convenience of reference and shall not affect its
interpretation. This Sublease shall be construed without regard to any
presumption or other rule requiring construction against the party causing this
Sublease to be drafted. Each covenant, agreement, obligation or other provision
of this Sublease shall be deemed and construed as a separate and independent
covenant of the party bound by,

                                       13


<PAGE>

undertaking or making same, not dependent on any other provision of this
Sublease unless otherwise expressly provided. All pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine or neuter, singular
or plural, as the identity of the parties may require. The word "person" as used
in this Sublease shall mean a natural person or persons, a partnership, a
corporation or any other form of business or legal association or entity. This
Sublease may be executed in counterparts or with counterpart signature pages.

         27. Consent of Landlord Under Main Lease. This Sublease shall not be
             ------------------------------------
operative or effective for any purpose whatsoever unless and until Overlandlord
shall have given its written consent as provided hereto or in a separate consent
making reference to this Sublease and any conditions precedent with respect to
such consent have been satisfied or waived. Sublessor shall have no obligation
to satisfy any such conditions precedent provided, however, that Subtenant may,
but shall not be obligated to, satisfy any such conditions precedent and
Sublessor shall reasonably cooperate with Subtenant (at no cost or expense to
Sublessor) in this regard.

         28. Holding Over. Subtenant shall pay Sublessor a sum for each day that
             ------------
Subtenant retains possession of the Premises or any part thereof after
termination of this Sublease, by lapse of time or otherwise, equal to two (2)
times the sum which Sublessor is required to pay Overlandlord for the Premises,
and Subtenant shall also pay damages consequential as well as direct, sustained
by Sublessor by reason of such retention. Nothing in this Section contained,
however, shall be construed or operate as a waiver of Sublessor's right of
reentry or any other right of Sublessor under this Sublease or of Overlandlord
under the Main Lease.

         29. Security Deposit. Subtenant agrees to deposit with Sublessor, no
             ----------------
later than four (4) months prior to the Commencement Date of this Sublease,
$270,318.30 as security for the full and faithful performance by Subtenant of
every term, provision, covenant, and condition of this Sublease. The security
deposit will be held by Sublessor, provided however, that Sublessor will have no
obligation to segregate the amount from Sublessor's other funds or to pay any
interest on such funds. Upon the occurrence of a Default by Subtenant in respect
to any of the terms, provisions, covenants, or conditions of this Sublease,
including, but not limited to, payment of Rent, Sublessor may use, apply, or
retain the whole or any part of the security so deposited for the payment of any
such Rent in default, or for any other sum which Sublessor may expend or be
required to expend by reason of Subtenant's Default, including, without
limitation, any damage or deficiency in the reletting of the Premises, whether
such damage or deficiency accrued before or after any reentry by Sublessor. If
any of the deposit is so used, Subtenant, on written demand by Sublessor, will
promptly pay to Sublessor such additional sum as may be necessary to restore the
deposit to the original amount set forth in this Section. If Subtenant fully and
faithfully complies with all of the terms, provisions, covenants, and conditions
of this Sublease, the deposit, or any balance thereof will be returned to
Subtenant after the last to occur of the following:

            (a) the time fixed as the expiration of the Term of this Sublease;

            (b) the surrender of the Premises by Subtenant to Sublessor in
         accordance with this Sublease;



                                       14


<PAGE>

            (c) the receipt of Sublessor of all sums due pursuant to the
         Sublease. Except as otherwise required by law, Subtenant will not be
         entitled to any interest on such deposit.

         30. Liens. In addition to, and not in limitation of, the obligations of
             -----
Sublessor contained in Section 3 hereof, Subtenant shall at all times keep the
Premises free from mechanic's liens, materialmen or supplier liens arising out
of or related to work or services performed, materials or supplies furnished or
obligations incurred by Subtenant or in connection with work made, permitted or
done by or on behalf of Subtenant in, on or around the Premises. In the event
any lien is filed or imposed and not released of record by payment or posting of
a proper bond within ten (10) days following the imposition of any such lien,
Sublessor shall have, in addition to all other remedies provided herein, under
the Main Lease and at law, the right, but not the obligation, to cause the same
to be released by such means as Sublessor shall deem proper, including payment
of the claim giving rise to such lien. All sums paid by Sublessor on behalf of
Subtenant and all expenses incurred by Sublessor in connection therewith shall
be payable to Sublessor by Subtenant on demand with interest at the interest
rate provided in the Main Lease or if none is provided in the Main Lease, at the
lower of the following: (a) eighteen percent (18%); or (b) the maximum rate
permitted by law (the "Interest Rate"). Sublessor shall have the right at all
times to post and keep posted on the Premises any notice permitted or required
by law, or which Sublessor shall deem proper, for the protection of Sublessor,
Overlandlord, the Premises and any other party having an interest therein, from
mechanic's and materialmen's liens, and Subtenant shall give Sublessor not less
than five (5) business days prior written notice of the commencement of any work
in the Premises which could give rise to a claim for mechanic's or materialmen's
liens to permit Sublessor to post and record a timely notice of
non-responsibility. NOTICE IS HEREBY GIVEN THAT SUBLESSOR IS NOT AND SHALL NOT
BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO
SUBTENANT OR TO ANYONE HOLDING THE PREMISES OR ANY PART THEREOF, AND THAT NO
MECHANICS' OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH
TO OR AFFFECT THE INTEREST OF SUBLESSOR IN AND TO THE PREMISES, AGGREGATE
PREMISES OR BUILDING.

         31. Surrender. Subtenant shall, on the Expiration Date, surrender the
             ---------
Premises to Sublessor in the condition required by the Main Lease (which
obligation shall include the removal of any improvements, additions, fixtures or
alterations located in the Premises and designated by Overlandlord for removal,
as well as the repair and restoration of any damage caused by such removal).

         32. Late Charges and Interest. Subtenant acknowledges that any failure
             -------------------------
by it to timely pay any of its obligations hereunder will result in and cause
monetary loss to Sublessor beyond the amount unpaid by Subtenant, the exact
amount of such costs being extremely difficult and impracticable to fix. Such
costs include, without limitation, processing and accounting charges and late
charges that may be imposed on Sublessor by the Overlandlord under the Main
Lease. Therefore, in addition to any other rights and remedies provided
Sublessor, and any and all late charges that Sublessor is required to pay
Overlandlord under the Main Lease, any and all payments, whether for rentals due
or other charges, adjustments or assessments, which remain unpaid for five (5)
days after the respective due date, will be subject to an administrative service

                                       15


<PAGE>

charge of five percent (5%) of the late payment. The parties agree that this
charge represents a fair and reasonable estimate of the costs Sublessor will
incur by reason of such late payment by Subtenant and that such administrative
service charge is intended to be liquidated damages and not a penalty with
respect to any such late payment. Acceptance of any such administrative service
charge shall not constitute a waiver of Subtenant's default with respect to the
overdue amount, or prevent Sublessor from exercising any of the other rights and
remedies available to Sublessor. In addition to the foregoing and all other
rights and remedies provided Sub lessor, all amounts payable hereunder which
remain unpaid for five (5) days after their respective due dates shall bear
interest at the Interest Rate from the date that the same became due and payable
to and including the date of payment, whether or not demand is made therefor.

         33. Access. Sublessor and/or Overlandlord shall have the right to enter
             ------
into and upon the Premises at all reasonable hours and, except in the case of
emergency (for which no notice shall be required) upon reasonable prior verbal
notice, for any purpose permitted pursuant to the terms of the Main Lease or
this Sublease, and to show the Premises to prospective mortgagees, purchasers,
and tenants.

         34. Access to Utility Controls and Roof. Sublessor and Subtenant
             -----------------------------------
acknowledge that access to the roof of the Building and the controls for the
HVAC system, public address system and certain other utilities serving the
Premises are located on a portion of the second floor of the Building which is
not within the Premises. Sublessor agrees that it shall provide Subtenant with
access to such roof access and utility controls to the extent they serve the
Premises upon reasonable prior notice given by Sublessor to Subtenant. Sublessor
shall have the right to require Subtenant's agents or employees to be
accompanied by an agent or employee of Sublessor during such periods of access.
Subtenant's access shall not unreasonably interfere with the occupant of the
space where the roof access and utility controls are located.

         35. No Offer. The submission of this Sublease shall not be deemed to be
             --------
an offer, an acceptance, or a reservation of the Premises; and Sublessor shall
not be bound hereby until Sublessor has delivered to Subtenant a fully executed
copy of this Sublease, signed by both of the parties on the last page of this
Sublease in the spaces herein provided. Until such delivery, Sublessor reserves
the right to exhibit and lease the Premises to other prospective tenants

         36. Parking. Sublessor agrees that Subtenant will be permitted to use
             -------
no more than a proportionate number of the spaces allocated to Sublessor, based
on the ratio that the square footage of the Premises bears to the square footage
of the Building. Such spaces shall be available to Subtenant hereunder only to
the extent they are available to Sublessor under the Main Lease and shall be
subject to all of the terms and conditions of the Main Lease. Subtenant shall
have no rights or privileges greater that the rights and privileges accorded to
Sublessor under the Main Lease and Subtenant covenants to comply with all
parking regulations and requirements imposed by Sublessor or Overlandlord
regarding parking.

         37. Renewal Option. Provided Subtenant is not in default and has not
             --------------
been in default, Subtenant may renew the term of this Sublease for an additional
38 months (commencing November 1, 2006 and terminating at 5:00 p.m. on December
31, 2009), on the terms and conditions hereinafter set forth. Subtenant shall
provide Sublessor with at least 12 months and no more than 18 months advance
notice of Subtenant's exercise of such option. Subtenant shall

                                       16


<PAGE>

execute and deliver an amendment to the Sublease evidencing the exercise of
such option and in a form otherwise reasonably satisfactory to Sublessor within
ten (10) business days after Sublessor's request or such renewal shall have no
effect. All terms and conditions of such renewal shall be on the same terms and
conditions as the original Sublease with the exception of the following: (1)
this renewal option shall be null and void and shall no longer apply; and (2)
Base Rent for the initial 12 months shall be at the rate of $3.03 per rentable
square foot per month, and shall therefore increase at a rate of 4% per year on
an annual basis.

         38. Hazardous Materials.
             -------------------

            (a) Definitions. As used herein, the term "Hazardous Material" shall
                -----------
         mean any hazardous or toxic substance, material or waste which is or
         becomes regulated by any state, federal, or local government authority,
         including without limitation all of those materials and substances
         designated as hazardous or toxic by the Environmental Protection
         Agency, the Department of Labor, the Department of Transportation, the
         Department of Agriculture, the Department of Health Services or the
         Food and Drug Agency, as well as any chemicals, materials, substances
         or wastes which are now or hereafter defined as or included in the
         definition of "hazardous substances", "hazardous materials", "toxic
         substances", "extremely hazardous substances", "toxic pollutants", or
         words of similar import, under any applicable Environmental Laws.
         Without limiting the generality of the foregoing, the term "Hazardous
                                                                     ---------
         Material" shall include (1) any substance, product, waste or other
         --------
         material of any nature whatsoever which may give rise to liability
         under any statutory or common law theory based on negligence, trespass,
         intentional tort, nuisance or strict liability or under any reported
         decisions of a state or federal court; (2) gasoline, diesel fuel, or
         other petroleum hydrocarbons; (3) polychlorinated biphenyls; (4)
         asbestos containing materials; (5) urea formaldehyde foam insulation;
         (6) radon gas; (7) mercury; and (8) lead-based paints. As used herein,
         the term "Environmental Laws" shall mean all applicable statutes,
         regulations, rules, ordinances, codes, licenses, permits, orders,
         approvals, authorizations and similar items, of any state, federal, or
         local government authority, and all principles of common law pertaining
         to the regulation and protection of human health, safety, and damages
         to natural resources, including, without limitation, Releases and
         threatened Releases or otherwise relating to the operation,
         manufacture, processing, distribution, use, treatment, storage,
         disposal, transport, or handling of Hazardous Materials. As used
         herein, the term "Release" shall mean any emission, spill, seepage,
         leak, escape, leaching, discharge, injection, pumping, pouring,
         emptying, dumping, disposing or release of Hazardous Materials.

            (b) Use Restriction. To the extent permitted by Overlandlord,
                ---------------
         provided Subtenant complies with Environmental Laws (as such term is
         defined hereinafter), Subtenant shall be permitted to use KODAK Medical
         X-Ray Developer, Working Solution and KODAK Medical X-Ray Liquid Fixer
         and Replenisher in an amount not to exceed twenty (20) gallons in the
         aggregate per month. To the extent Subtenant desires to use different
         or additional Hazardous Materials or greater amounts of said Hazardous
         Materials, Subtenant shall be required to obtain Sublessor and
         Overlandlord's consent, which consent may be withheld in said party's
         sole and absolute discretion. Except as expressly set forth above,
         Subtenant shall not cause or permit any Hazardous Material to

                                       17


<PAGE>

         be used, stored, generated, discharged, treated, transported to or
         from, Released or disposed of in, on, over, through, or about the
         Premises, or any other land or improvements in the vicinity of the
         Premises, without the prior written consent of Overlandlord and
         Sublessor, which consent may be withheld in the sole and absolute
         discretion of Sublessor; provided, however, that Subtenant may use
         small quantities of household cleaners and office supplies typically
         used in connection with professional offices. Without limiting the
         generality of the foregoing, (a) any use, storage, generation,
         discharge, treatment, transportation, Release, or disposal of Hazardous
         Material by Subtenant shall strictly comply with all applicable
         Environmental Laws, and (b) if the presence of Hazardous Material on
         the Premises caused or permitted by Subtenant or its agents, employees,
         invitees, visitors or contractors results in contamination of the
         Premises or any soil, air, ground or surface waters under, through,
         over, on, in or about the Premises, Subtenant, at its expense, shall
         promptly take all actions necessary to report, investigate and/or
         remediate such condition in accordance with all applicable
         Environmental Laws.

            (c) Notification. In addition, if the Subtenant knows or has
                ------------
         reasonable cause to believe that a Release or other environmental
         condition required to be reported to local, state, or federal
         regulatory authorities has occurred on the Premises, Subtenant must
         give written notice of the Release and/or condition to Overlandlord and
         Sublessor within a reasonable period of time following the discovery of
         the Release or environmental condition. Subtenant must provide notice
         of any local, state, or federal governmental filings or claims made or
         notices received by Subtenant from any regulatory authority or third
         party relating to any threatened claim or alleged violation of
         Environmental Laws or environmental matters.

         39. Rules and Regulations; Common Areas. Subtenant shall comply with
             -----------------------------------
all reasonable rules and regulations and all subsequent amendments and
modifications established by Sublessor or Overlandlord with respect to the
Building and common areas thereof, and shall cause its employees, customers,
contractors, agents and invitees to so comply. Sublessor agrees that Subtenant
shall not be required to comply with any such rules or regulations if they will
have a material adverse effect on Subtenant's use of the premises. Without
liability to Subtenant and without effecting an eviction or disturbance of
Subtenant's use or possession or giving rise to any claim for set-offs or
abatement of Rent, and without imposing any obligation on Sublessor or
Overlandlord to undertake any of the same, Sublessor (or Overlandlord, as the
case may be) shall have the right to: (a) make changes, repairs, additions or
alterations to the common areas of the Building, including without limitation
changes in the location, size, shape and number of driveways, entrances, parking
areas, loading areas, ingress/egress, direction of traffic, landscaped areas and
walkways and changes in the arrangement or location of entrances or passageways,
doors and doorways, corridors, stairs, toilets or other public parts of the
Building; (b) close any of the common areas for maintenance purposes, including
entrances, doors, corridors or other facilities; (c) perform any acts related to
the safety, protection, preservation, reletting or improvement of the Building;
(d) change the name or street address of the Building or suite number of the
Premises; (e) to require all persons entering or leaving the Building to
identify themselves to security personnel by registration or otherwise; and (f)
to close the Building after-hours and on week-ends. With respect to items a, b,
and c, Sublessor may not undertake any such actions if they will have a material
adverse effect on Subtenant's use of the Premises. With

                                       18


<PAGE>

respect to item (d), if Sublessor elects on its own (as opposed to being
required by the Post office or other authority) to change the name or street
address of the Building or suite number of the Premises, Sublessor will
reimburse Subtenant for the actual reasonable costs of replacing Subtenant's
stationery. With respect to item (f), Subtenant may request that Sublessor keep
the Building open after hours, provided that Subtenant shall pay all costs of
keeping the Building open during such hours.

         IN WITNESS WHEREOF, Sublessor and Subtenant have executed this Sublease
as of the day and year first above written.

         SUBLESSOR:         FIRST DATA MERCHANT SERVICES CORPORATION


                            By:      /s/ Jeffery B. Baer
                                  --------------------------------------
                            Name:    Jeffery B. Baer
                                  --------------------------------------
                            Title:   Authorized Agent
                                  --------------------------------------

         SUBTENANT:         R2 TECHNOLOGY, INC.

                            By:      /s/ Richard Enck
                                  --------------------------------------
                            Name:    Richard Enck
                                  --------------------------------------
                            Title: Chief Operating Officer
                                  --------------------------------------

ACKNOWLEDGED AND CONSENTED TO:

         Sunnyvale Partners Limited Partnership, Landlord under the Main Lease,
hereby consents to the sublease of the Premises as described in the foregoing
Sublease and confirms that the consent given hereby satisfies the requirements
for landlord's consent of the subletting of the Premises set forth in the Main
Lease. Landlord agrees not to disturb Subtenant's quiet enjoyment and possession
of the Premises for so long as Subtenant faithfully performs its obligations
under the Sublease. If during the term of this Sublease, the Main Lease is
terminated and Subtenant's is not in default of the Sublease or the Incorporated
Provisions of the Main Lease, then: (a) Overlandlord shall not terminate or
disturb Subtenant's possession of the Premises under the Sublease; (b)
Overlandlord shall be bound to Subtenant Under all of the terms and conditions
of the Sublease; (c) Subtenant shall recognize and attorn to Overlandlord as
Subtenant's direct landlord under the Sublease; and (d) the sublease shall
continue in full force and effect as a direct lease in accordance with its
terms, between Overlandlord and Subtenant.

         OVERLANDLORD:      SUNNYVALE PARTNERS LIMITED PARTNERSHIP

                            By: Sunnyvale, Inc.

                            By:      /s/ Jami G. Mantell
                                  --------------------------------------
                            Name:    Jami G. Mantell
                                  --------------------------------------
                            Title:   Manager
                                  --------------------------------------





                                       19


<PAGE>

                                    EXHIBIT A

                                 THE MAIN LEASE
                                 --------------



<PAGE>


                          BUILD-TO-SUIT LEASE AGREEMENT
                          -----------------------------

                Landlord: SUNNYVALE PARTNERS LIMITED PARTNERSHIP

                Tenant: FIRST DATA MERCHANT SERVICES CORPORATION

                                 March 18, 1997



<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                 Page

<S>      <C>                                                                     <C>
1.       Description                                                              1
2.       Term and Occupancy                                                       1
3.       Rent                                                                     2
4.       Construction                                                             3
5.       Use                                                                      6
6.       Condition of Demised Premises                                            7
7.       Maintenance and Repairs                                                  8
8.       Alterations                                                              9
9.       Signs                                                                   10
10.      Services                                                                11
11.      Compliance with Law                                                     11
12.      Landlord's Title, Authority, and Quiet Enjoyment:  Tenant's Authority   12
13.      Subordination                                                           13
14.      Assignment and Sublease                                                 14
15.      Lease Extension                                                         15
16.      Impositions                                                             15
17.      Insurance                                                               17
18.      Destruction and Restoration                                             20
19.      Condemnation                                                            21
20.      Default by Tenant                                                       25
21.      Landlord's Remedies                                                     26
22.      Default by Landlord                                                     28
23.      Tenant's Remedies                                                       28
24.      Delivery of Executed Lease                                              28
25.      Termination                                                             28
</TABLE>
                                       i

<PAGE>

26.      Notices                                                              29
27.      Brokerage                                                            29
28.      Estoppel                                                             29
29.      Hazardous Substances                                                 30
30.      Holdover                                                             31
31.      Surrender                                                            32
32.      Liens                                                                32
33.      Interest; Late Charge                                                33
34.      Inspections                                                          34
35.      Transfer of Landlord's Interest                                      34
36.      Indemnity                                                            34
37.      Modification of Lease                                                35
38.      Memorandum of Lease                                                  35
39.      Paragraph Captions                                                   35
40.      Entire Agreement                                                     35
41.      Choice of Law and Interpretation                                     35
42.      Prevailing Party                                                     36
43.      Exhibits                                                             36
44.      Guarantee                                                            36
45.      Independent Covenants                                                36
46.      Entry by Landlord                                                    37
47.      [Deleted by intent of parties.]                                      37
48.      Survival of Obligations                                              37
49.      Subject to Landlord's Acquisition of Demised Premises                37
50.      Americans With Disabilities Act                                      38
                                       ii

<PAGE>

51.      Reports by Tenant                                                    39
52.      Option to Purchase                                                   39
53.      No Third Party Beneficiaries                                         40
54.      Counterparts                                                         41
55.      Consents and Approvals                                               41
56.      Limitation on Damages                                                41
57.      Tenant's Property                                                    41

Exhibit A         -        Legal Description

Exhibit B         -        Site Plan

Exhibit C         -        Plans

Exhibit C-1       -        Construction Schedule

Exhibit D         -        Schedule of Rents

Exhibit E         -        Lease Term Agreement

Exhibit F         -        Memorandum of Lease

Exhibit G         -        Landlord's Development Costs

Exhibit H         -        Permitted Exceptions

Exhibit I         -        Escrow Agreement

                                      iii


<PAGE>



          THIS BUILD-TO-SUIT LEASE AGREEMENT (this "Lease") is made as of the
_18_th day of March, 1997 (the "date hereof") between SUNNYVALE PARTNERS LIMITED
PARTNERSHIP, an Illinois limited partnership, having its principal office at c/o
Ridge Sunnyvale, Inc., c/o Ridge Capital Corporation, 257 East Main Street,
Barrington, Illinois 60010 (hereinafter referred to as "Landlord"), and FIRST
DATA MERCHANT SERVICES CORPORATION, having its principal office at 5660 New
Northside Drive, Suite 1400, Atlanta, Georgia 30328 (hereinafter referred to as
"Tenant").

                              W I T N E S S E T H:
                              --------------------

         Landlord, for and in consideration of the rents, covenant and
agreements hereinafter set forth on the part of Tenant to be paid, kept,
observed and performed does hereby lease unto Tenant, and Tenant does hereby
take subject to the conditions herein expressed, all that parcel of land
situated in the City of Sunnyvale, County of Santa Clara, State of California
and legally described on Exhibit A attached hereto and made a part hereof (the
"Land"), together with all improvements located and to be constructed thereon by
Landlord, which are hereinafter called "Landlord's Improvements." Landlord's
Improvements and all improvements, machinery, building equipment, fixtures and
other property of Landlord, real, personal or mixed (except Tenant's trade
fixtures and any other property of Tenant), installed or located thereon,
together with all additions, alterations and replacements thereof are
collectively referred to herein as the "Improvements." The Land and the
Improvements am sometimes hereinafter collectively referred to as the "Demised
Premises". The structure located upon and being a part of the Demised Premises
which is constructed to be used as a two story office building containing
approximately 80,000 "useable square feet" (as defined in Paragraph 4 below) is
hereinafter referred to as the "Building".

          1. Description. Landlord will cause Landlord's Improvements (including
             -----------
the Building and other site improvements depicted on the Site Plan attached
hereto and made a part hereof as Exhibit B) to be constructed in substantial
accordance with the plans and specifications enumerate on Exhibit C (the
"Plans"). Landlord agrees that Landlord shall not make any modifications or
changes to the Plans without Tenant's prior written consent. Landlord further
agrees to make any changes to the Plans requested by Tenant in writing and if
the change requested by Tenant increases or decreases the cost of the Demised
Premises, the Base Rent provided for herein shall be adjusted in accordance with
the provisions of the formula provided on Exhibit D.

          2. Term and Occupancy. A. The term of this Lease shall commence on the
             ------------------
Construction Completion Date, as provided in Paragraph 4 below (hereinafter
referred to as the "Commencement Date"), and shall end on the date which is the
last day of the month that includes the twelfth (12th) anniversary of the
Commencement Date (hereinafter referred to as the "Expiration Date"), unless the
term be extended or earlier terminated as provided herein.

         Landlord shall notify Tenant of the anticipated Construction Completion
Date. Landlord agrees to notify Tenant promptly from time to time of any changes
in the anticipated Construction Completion Date. Tenant shall have the right to
enter the Demised Premises during the approximately ninety (90) day period
preceding the Construction Completion Date for the purpose of installing its
equipment and Tenant does hereby agree to assume all risk of loss or

                                       1


<PAGE>

damage to such equipment, and to indemnify, defend and hold harmless Landlord
from and against any loss or damage to such equipment and all liability, loss or
damage arising from any injury to the property of Landlord, or its contractors,
subcontractors or materialmen, and any death or personal injury to any person or
persons arising out of such installation. Landlord agrees to cooperate with
Tenant so that Tenant's contractors and tradespeople will be permitted to
reasonably perform their work without material interference. Tenant agrees to
cooperate with Landlord so that Landlord's contractors and tradespeople will be
permitted to reasonably perform their work without material interference.

          B. Notwithstanding anything else in this Lease to the contrary, Tenant
shall have the right to terminate this Lease as of the end of the eighth (8th)
Lease Year (the "Early Termination Date") provided that Tenant shall (a) notify
Landlord in writing of its election to terminate at least one (1) year prior to
the Early Termination Date, and (b) pay to the Landlord, concurrently with the
notification to Landlord hereunder, a termination fee by certified or cashier's
check or wire transfer of available funds ("Termination Amount") equal to the
discounted present value (using Landlord's financing interest rate) amount
needed to reduce the remaining unamortized principal balance due on the
indebtedness originally incurred by Landlord to finance the Landlord's
Development Costs (as defined in Paragraph 19F). If Tenant gives such notice as
required hereunder and pays the Termination Amount concurrently therewith, this
Lease shall be deemed terminated as to all rights or obligations hereunder
(except such rights and obligations as Landlord and Tenant would otherwise have
upon normal expiration of the term of this Lease). Any such notice hereunder,
not accompanied by the Termination Amount as provided hereinabove, shall be
deemed invalid and of no force or effect. Upon Landlord's closing on the
permanent loan for the financing of the Landlord's Development Costs, Landlord
shall provide to Tenant a copy of the twenty (20) year permanent loan
amortization (the "Loan Amortization"), which shall include the principal amount
that will be due at the end of the eighth (8th) Lease Year.

          Tenant shall have the right to pay the Termination Amount to any
mortgagee of the Demised Promises or other person with a lien on the Demised
Premises or the rents derived therefrom, but Tenant shall have no such
obligation to do so unless such obligation is specifically set forth in a
non-disturbance or other agreement between Tenant and such mortgagee or other
lienholder. Notwithstanding the foregoing, Tenant acknowledges and agrees that
any payment to any such mortgagee or other lienholder shall only be effectuated
by a two-party or two-payee certified or cashier's check, made payable to both
Landlord and any such mortgagee or other lienholder.

          3. Rent. The annual base rental ("Base Rent") shall be calculated in
             ----
accordance with the provisions set forth on the Schedule of Rents attached
hereto and made a part hereof as Exhibit D. Base Rent shall be paid monthly, in
advance, in equal installments, without offset or deduction by wire transfer in
accordance with separate instruction given by Landlord to Tenant, on the
Commencement Date and on the first day of each month thereafter during the term
hereof; provided however, that if the term of this Lease shall commence on a
date other than the first day of a calendar month or end on a date other than
the last day of a calendar month (i) the first and last month's Base Rent shall
be prorated based upon the ratio that the number of days in the term within such
month bears to the total number of days in such month, and (ii) Base Rent
reserved for the calendar month of any scheduled rent escalation shall be
equitably adjusted upon due

                                       2


<PAGE>

         consideration of the number of days in such month falling within the
preceding Lease Year (as herein defined) and the number of days in such month
falling within the current Lease Year. For purposes of this Lease, the term
"Lease Year" shall mean the 12-month period commencing on the Commencement Date
and each 12-month period thereafter during the term of this Lease (and any
renewal or extension thereof), provided that, if the Commencement Date is not
the first day of a calendar month, the first "Lease Year" shall be the period
commencing on the Commencement Date and ending on the last day of the twelfth
(12th) full calendar month following the Commencement Date and all Base Rent
payable for the month in which the Commencement Date occurs shall be paid on the
first day of the following calendar month. Notwithstanding the foregoing, on or
prior to the date of closing under the Sale Agreement (as defined herein),
Tenant shall also deposit into escrow with First American Title Guaranty Company
the sum of Two Million Dollars ($2,000,000.00) to cover a portion of the
Landlord's Development Costs which shall be disbursed in accordance with the
Escrow Agreement attached hereto as Exhibit I.

          4. Construction.
             ------------

          A. Landlord agrees, at Landlord's sole cost and expense, to cause
construction of Landlord's Improvements in accordance with the following
schedule:

             (a) Landlord shall use reasonable efforts to commence the Site
Preparation Phase (as defined in that certain Real Estate Purchase and Sale
Agreement and Joint Escrow Instructions dated March 18, 1997 (the "Sale
Agreement") between Regis Homes of Northern California, Inc. and Landlord) as
soon as possible following the date Landlord acquires the Land and in any event
on or before the date four (4) business days following the date Landlord
acquires the Land (the "Estimated Construction Commencement Date"), in
accordance with the Plans and in accordance with the construction schedule
attached hereto as Exhibit C-1 (the "Construction Schedule") and shall
                   -----------
diligently pursue construction in an effort to complete Landlord's Improvements
on or before the Estimated Construction Completion Date (as herein defined);
provided, however, if delay is caused or contributed to by act or neglect of
Tenant, or those acting for or under Tenant including, without limitation,
changes ordered by Tenant, or delays caused by labor disputes, casualties, acts
of God or the public enemy, governmental embargo restrictions, shortages of
fuel, labor, or building materials, action or non-action of public utilities, or
of local, State or Federal governments affecting the work, or other similar
causes beyond the Landlord's reasonable control, then the time of commencement
of said construction shall be extended for the additional time caused by such
delay (such delays are each hereinafter referred to as an "excused delay"). The
date on which Landlord actually commences construction of Landlord's
Improvements shall be referred to as the "Construction Commencement Date."

             (b) Landlord shall use all reasonable efforts to substantially
complete construction of Landlord's Improvements as soon as possible following
the Construction Commencement Date in accordance with the Construction Schedule
attached hereto as Exhibit C-1, as may be extended by excused delays (the
"Estimated Construction Completion Date"). The date on which Landlord
substantially completes construction of Landlord's Improvements (except for work
to be performed by Tenant) shall be referred

                                       3


<PAGE>

to as the "Construction Completion Date." Landlord acknowledges that Tenant will
suffer significant damages if Landlord fails to deliver the Demised Premises on
or before the Estimated Construction Completion Date and that time is of the
essence with respect to Landlord's completion of the Landlord's Improvements as
required herein. If Landlord fails to cause the Landlord's Improvements to be
substantially completed on or before the Estimated Construction Completion Date,
as said date may be extended from time to time due to excused delays, Landlord
shall be obligated to pay to Tenant the following sums for each day after the
Estimated Construction Completion Date until the Construction Completion Date up
to the maximum of sixty-five (65) days of delay and thereafter, Landlord shall
be liable for Tenant's actual damages for the delay (which shall include
Tenant's actual costs incurred in connection with holding over at its present
location and/or renting reasonably acceptable substitute space): (a) for the
first thirty (30) days of delay, the sum of One Thousand Dollars ($1,000.00) per
day for each calendar day of delay; (b) for the thirty-first (31st) day through
the sixtieth (60th) day of delay, the sum of Two Thousand Five Hundred Dollars
($2,500.00) per day for each calendar day of delay; and (c) for the sixty-first
(61st) day through the sixty-fifth (65th) day of delay, the sum of Seven
Thousand Five Hundred Dollars ($7,500.00) per day for each calendar day of
delay. Notwithstanding the foregoing, in no event shall Landlord be liable to
Tenant for any punitive, special, incidental, indirect or consequential damages
of any kind whatsoever, each of which is hereby excluded by agreement of the
parties regardless of whether or not any party has been advised of the
possibility of such damages. Landlord shall pay the sums calculated above (other
than actual damages accrued after the 95th day of delay) within thirty (30) days
after the Commencement Date. In connection with the foregoing, Landlord agrees
to deposit into escrow for the benefit of Tenant all damages received from Regis
Contractors of Northern California, L.P. pursuant to Section 1.7 of that certain
Construction Management Agreement dated March 18, 1997. Tenant agrees to deliver
to Landlord an accounting of Tenant's actual damages upon request.

          B. Tenant or its architect will from time to time upon written request
of Landlord or Landlord's construction lender certify that the construction of
Landlord's Improvements has been completed to that point to the reasonable
satisfaction of Tenant. Notwithstanding the foregoing, nothing contained herein
shall be deemed to abrogate, waive or compromise any of Tenant's rights
hereunder with respect to the construction and completion of Landlord's
improvements.

          C. In the event this Lease has not been terminated pursuant to
Paragraph 49 of the Lease, Landlord and Tenant promptly shall execute a document
substantially in the form attached hereto as Exhibit E and made a part hereof,
to establish the Commencement Date and the Expiration Date.

          D. The following phrases shall have the meanings set forth below:

              (a) The phrase "commence[d][s] construction of Landlord's
improvements" as used herein means issuance of all necessary permits needed to
commence construction, a building permit, execution of a construction contract
or contracts for the completion of Landlord's Improvements in accordance with
the Plans, execution of this Lease, and

                                       4


<PAGE>

excavation work has commenced.

              (b) The phrase "substantial[ly] complete[ed] [ion] [of]
construction of Landlord's Improvements as used in this Lease shall mean the
municipality having jurisdiction thereof issues a certificate of occupancy
permitting Tenant to occupy Landlord's Improvements or takes such other action
as may be customary to permit occupancy or use thereof for the purposes provided
herein and Landlord's Improvements am otherwise ready for beneficial use and
occupancy by Tenant subject to completion of any punchlist items (as defined
herein) by Landlord and Landlord's architect certified to Tenant in writing that
Landlord's improvements have been constructed and completed in a good and
workmanlike manner in substantial accordance with the Plans and that to the best
of its knowledge the Plans comply with applicable laws, including without
limitation all building codes, zoning ordinances and regulations and the Act (as
defined herein) and Landlord's Improvements are otherwise ready for beneficial
use and occupancy by Tenant subject to completion of any punchlist items by
Landlord; provided, however, the issuance of a certificate of occupancy or such
other action as may be customary to permit occupancy or use thereof and the
issuance of the architect's certificate shall not be a condition to payment of
rent or commencement of the term if failure to secure such certificate of
occupancy or action or architect's certificate is caused by the act or neglect
of Tenant or if matters required for issuance are the responsibility of Tenant.

              (c) The phrase "usable square feet" means the square feet
contained within the inside of the exterior walls of the Building.

          E. Within fifteen (15) days after the Construction Completion Date,
Tenant, Landlord and Landlord's Architect shall prepare and execute a punchlist
(the "punchlist") of incomplete and incorrect items which shall include details
of construction and mechanical and electrical adjustments which are minor in
character and do not materially interfere with Tenant's use or enjoyment of the
Demised Premises in accordance with the provisions of this Lease, and may also
include landscaping and other items which do not materially affect Tenant's use
of the Demised Premises but which cannot be immediately completed because of
weather, or any items listed on the Plans or the Construction Schedule as items
to be completed after substantial completion of the Landlord's Improvements, if
any (such items are sometimes hereinafter referred to as "punchlist items").
Landlord shall use all reasonable efforts to complete the punchlist items as
soon as possible after its receipt of the punchlist, and to minimize disruption
of Tenant's business and other inconveniences to Tenant, subject to excused
delays. If Landlord fails to complete the punchlist items within ninety (90)
days after the receipt by Landlord of the completed punchlist by Tenant, subject
to excused delays, then Tenant shall have the right, but not the obligation, to
complete the punchlist items and Landlord shall reimburse Tenant for its
reasonable out-of-pocket expenditures in connection there upon presentation of
invoices in sufficient detail and lien waivers covering performance of the work.
Nothing herein contained shall be deemed or construed to permit Tenant to offset
against Base Rent or other charges payable by Tenant hereunder. Landlord shall
deliver to Tenant "as built" working drawings of the Landlord's Improvements
within sixty (60) days after completion of the punchlist items.

          Landlord shall maintain a retainage of a minimum of ten percent (10%)
of the cost the so-called tenant improvement portion of the Landlord
Improvements (the "TI Work") or based on

                                       5


<PAGE>

         an estimated approximate cost for the TI Work. The aforementioned
retainage shall not be released until the punchlist items for TI Work have been
completed to Tenant's reasonable satisfaction.

          F. Landlord shall at its own expense correct or repair any parts of
Landlord's Improvements that fail to conform with the requirements of the Plans
during the period of construction of Landlord's Improvements (unless Tenant is
willing to accept such non-conforming work and so notifies Landlord thereof in
writing). Landlord shall correct any defects in the construction of Landlord's
Improvements not caused by Tenant which appear within a period of one (1) year
from the Construction Completion Date, but not otherwise. Landlord shall obtain
for the joint benefit of Landlord and Tenant, a joint, non-exclusive assignment
of all contractor, subcontractor, equipment, material and manufacturers'
warranties relating to the Landlord's Improvements which shall contain a minimum
of a one (1) year warranty period commencing with the contractors' or
subcontractors' completion of the work included in Landlord's Improvements (the
"Warranties"). Furthermore, on the Construction Completion Date, Landlord shall
assign to Tenant the non-exclusive right to enforce any and all Warranties and
Landlord agrees to reasonably cooperate with Tenant's pursuit of any and all
claims under the Warranties.

          G. Tenant shall have the right to request that changes be made to the
Plans. Within ten (10) days after Tenant's requests, Landlord shall provide an
estimate of the amount that the change will increase or decrease the cost of
completing the Landlord's Improvements and the time adjustment to the
Construction Schedule, if any. If Tenant approves the change following receipt
of the estimates, Landlord shall submit a change order to its contractors to
implement the change requested by Tenant. The estimated increase or decrease in
the time required to complete the Landlord's Improvements resulting from
Tenant's change shall be reflected as an adjustment to the Construction Schedule
and shall be deemed an "excused delay" and any net increase or decrease in
Landlord's construction costs due to Tenant's change order, shall be borne by or
credited to Tenant, as the case may be, by means of an adjustment to the
Schedule of Rents in accordance with the formula established on Exhibit D.

          H. If due to change orders initiated by Tenant, Landlord's Development
Costs exceed the amount of then concurrent with any such change order, Tenant
agrees to deposit into the escrow created by the Escrow Agreement (as defined in
Paragraph 3 hereof) the total amount of any such increase in Landlord's
Development Costs in excess of. Notwithstanding the foregoing, upon the closing
of the permanent financing for the Demised Premises occurring on or after the
Commencement Date, Landlord shall reimburse Tenant for all such increased costs
and the Base Rent shall be adjusted in accordance with the formula established
on Exhibit D; provided, however, Base Rent shall not be adjusted until such time
as Tenant is reimbursed hereunder.

          5. Use.
             ---

          A. The Demised Premises shall be used and occupied for general office
purposes and for any other purpose which does not violate any applicable law,
rule, ordinance or regulation of any applicable government authority having
jurisdiction ("Tenant's Use"). Landlord represents that, to its actual
knowledge, the Demised Premises are currently zoned "O," Administrative

                                       6


<PAGE>

Professional District and R1.7/PD, low medium density residential district
under the zoning ordinance of the City of Sunnyvale, California, which zoning
classification, to Landlord's actual knowledge, will not restrict or limit
Tenant's Use; provided, however, Landlord makes no representation as to whether
a special use permit, zoning, variance or comparable relief from the local
zoning ordinance is required to conduct Tenants Use, and if such special use,
variance or comparable relief is required, Tenant shall obtain the same (at its
sole cost and expense). Landlord further represents, to its actual knowledge
without independent investigation or inquiry and subject to the foregoing
proviso, that there are no other zoning ordinances or any prohibitions
restricting or limiting Tenant's Use in any material respect. In addition,
Tenant may use all or any part of the Demised Premises for any lawful purpose
then permitted by local zoning ordinances and the certificate of occupancy, if
available; provided, however, Tenant may not use or occupy the Demised Premises,
or knowingly permit the Demised Premises to be used or occupied (including
without limitation subleasing the Demised Premises or any part thereof or
assigning this Lease to any other party conducting a business other than
Tenant's Use) or in such a manner as to cause the value or usefulness of the
Demised Premises, or any part thereof, substantially to diminish (reasonable
wear and tear excepted). Tenant shall have the exclusive right to use of and
shall have full access to the Demised Premises twenty-four (24) hours per day,
seven (7) days per week, three hundred sixty-five (365) days per year during the
term.

          B. Tenant may, if Tenant so elects, and for Tenant's sole use, install
and operate within the Building microwave ovens and install and operate within
the Building vending machines to dispense hot and cold beverages, ice cream,
candy, food and cigarettes; such machines shall be maintained in a neat and
sanitary condition and shall comply with all applicable laws and ordinances.
Tenant shall also have the right to use, install and operate within the
Building, all telecommunication lines and other telecommunication and electronic
facilities relating to services to be provided to Tenant and its subtenants and
Landlord agrees to provide all necessary easements upon the Demised Premises
reasonably required by said service provider. Upon termination of the Lease, and
if so requested by Landlord, Tenant shall, at its sole cost and expense, in a
good and workmanlike manner and in as expeditious a manner as possible, remove
any or all of such items from the Demised Premises, to the extent required by
Landlord. Tenant further agrees to repair any damage to the Demised Premises
caused by the removal of such items. In connection with any easements granted
hereunder to service providers, Landlord reserves the right to condition any
such grant upon receipt of acknowledgment from the relevant service provider(s)
that such service provider agrees to vacate the easement, and relinquish all of
its rights in the Demised Premises, effective upon the termination of the Lease.
Notwithstanding anything contained herein to the contrary, if the Lease is in
full force and effect as of the thirteenth (13th) anniversary of the
Commencement Date and Tenant is not then in default hereunder. Landlord waives
its rights hereunder to require Tenant to remove from the Demised Premises any
or at of the items referred to above, upon termination of this Lease.

          6. Condition of Demised Premises. Landlord shall construct and Tenant
             -----------------------------
shall reasonably accept Landlord's Improvements in accordance with the Plans. As
of the Commencement Date, Landlord's Improvements shall be in good working order
and condition and, subject to the items on or to be inserted on the punchlist,
constructed in substantial accordance with the Plans.

                                       7


<PAGE>

          7. Maintenance and Repairs.
             -----------------------
          A. Except as otherwise provided herein, during the term of this Lease,
Tenant shall, at Tenant's sole expense, keep the Demised Premises in good
working order, condition and repair and in compliance with all applicable laws
and shall perform all routine maintenance thereof and all necessary repairs
thereto, interior and exterior, structural and nonstructural ordinary and
extraordinary, foreseen or unforeseen, of every nature, kind and description.
When used in this Paragraph 7, "repairs" shall include all necessary
replacements, renewals, alterations, additions and betterments. If Tenant cannot
keep the Demised Premises or any portion thereof in good working order,
condition and repair, then Tenant shall replace the same in a first-class
manner. Tenant shall comply with manufacturers' recommended schedules for
warranty work. Tenant shall furnish its own cleaning services. All repairs and
replacements made by Tenant shall be at least equal in quality to the original
work and shall be made by Tenant in accordance with all applicable laws. The
necessity for or adequacy of maintenance, repairs and replacements shall be
measured by the standards which are appropriate for improvements of similar
construction and class, provided that Tenant shall in any event make all repairs
and replacements necessary to avoid any structural damage or other damage or
injury to the Demised Premises.

          B. Notwithstanding the provisions of Paragraph 7A, and Tenant's
obligations to pay for all repairs, in the event that at any time during the
term of this Lease after the expiration of the twentieth (20th) Lease Year
(commencing with the Third Extension Term), Tenant reasonably determines that
capital expenditures are required to be expended by Tenant in connection with
maintaining, repairing or replacing the roof or structural components of the
Building, or replacing the parking areas, Building plumbing, electrical heating,
ventilation, or cooling equipment, sprinkler systems, or making any other
capital expenditure required by subsequent law (any such capital expenditure
being herein referred to as a "Specified Capital Item"), then the Tenant shall
submit to Landlord a proposed budget for such capital expenses for the Specified
Capital Items and obtain Landlord's prior written approval thereof, which
approval shall not be unreasonably withheld or delayed. Upon Tenant's obtaining
Landlord's prior written approval of such Specified Capital Items and Tenant
completing such work in accordance with the requirements set forth in this
Lease, then and in that event, the Landlord agrees that it shall reimburse
Tenant for an amount ("Reimbursement Amount") equal to the actual costs incurred
in connection with the Specified Capital Item previously approved by Landlord
multiplied by a fraction, the numerator of which is the portion of the useful
life of such Specified Capital Items remaining after the then existing term and
the denominator of which is the useful life of such Specified Capital Item
(i.e., by way of example, in the event that the approved cost for an approved
Specified Capital Item was Out Thousand Dollars ($1,000) and the useful life of
such Specified Capital Item was eight (8) years and such work was commenced at
the end of the twentieth (20th) Lease Year, then in such event, Landlord would
reimburse Tenant for Five Hundred Dollars ($500) as the Reimbursement Amount).
The "useful life" of a Specified Capital Item shall be determined using the
United States Internal Revenue Service standard depreciation schedule in effect
on the date that the applicable capital expenditure is made. Notwithstanding
anything contained herein to the contrary, in the event that the Tenant
exercises its option to extend the term of the Lease, then simultaneous with the
exercise of such renewal option, the Tenant shall pay to Landlord an amount
equal to the difference between the Reimbursement Amount and the amount Landlord
would have paid as a Reimbursement Amount

                                       8


<PAGE>

had the term been extended by the Extension Term at the time such Specified
Capital Item was commenced (i.e., by way of example, in the event that the
Specified Capital Item was One Thousand Dollars ($1,000) and that the useful
life of the Specified Capital Item was eight (8) years, with such work having
been commenced at the end of the twentieth (20th) Lease Year, whereby Landlord
reimbursed Tenant a Reimbursement Amount of Five Hundred Dollars ($500), then
simultaneous with the exercise of its option to extend the Term for the Fourth
Extension Term, the Tenant would pay to Landlord an amount equal to Five Hundred
Dollars ($500)). The allocation of the costs of Specified Capital Items as set
forth in this Paragraph 7.B. shall not relieve Tenant of Tenant's maintenance
and repair obligations under this Lease

          8. Alterations. Tenant may install tenant finishes in the Demised
             -----------
Premises and make interior alterations, additional installations, modifications,
substitutions, improvements and decorations (collectively, "Alterations") in and
to the Demised Premises, subject only to the following conditions:

                  (i) any Alterations shall be made at Tenant's sole cost and
expense so that the Demised Premises shall at all times be free of liens for
labor and materials supplied to the Demised Premises;

                  (ii) without the prior written approval of Landlord, Tenant
shall make no Alterations (x) which are structural in nature or adversely affect
in any way the structure of the Demised Premises; or (y) which adversely affect
or could render void or invalidate any Warranties under this Lease. In addition,
without the prior written approval of Landlord, Tenant shall make no Alterations
to any portion of the exterior or elevation of the Building.

                  (iii) any Alterations shall be performed in a good and
workmanlike manner and in compliance with all applicable laws and requirements
of governmental authorities having jurisdiction and applicable insurance
requirements and shall not violate any term of any agreement or restriction to
which the Demised Premises are subject;

                  (iv) Tenant, at its sole cost and expense, shall cause its
contractors to maintain builder's risk insurance and such other insurance
(including, without limitation, workers compensation insurance) as is then
customarily maintained for such work, all with insurers licensed by the State of
California;

                  (v) At least fifteen (15) days prior to Tenant's commencement
of any Alterations costing in excess of One Million Dollars ($1,000,000.00), the
plans and specifications therefor shall be submitted to Landlord for Landlord's
review and approval, which approval shall not be unreasonably "withheld or
delayed provided that the provisions of this subparagraph (v) shall not apply to
initial tenant improvements needed to locate a subtenant in the Demised
Premises; and

                  (vi) To the extent not inconsistent with the requirement set
forth above, Tenant shall not be required to obtain Landlord's consent to
Alterations which are a subtenant's initial tenant improvements.

Any Alteration shall, when completed, be of such character as not to reduce the
value or


                                       9


<PAGE>

utility of the Demised Premises or the Building to which such Alteration is made
below its value or utility to Landlord immediately before such Alteration, nor
shall such Alteration alter the exterior of the Improvements or reduce the area
or cubic content of the Building, nor change the character of the Demised
Premises or the Building as to use without Landlord's express written consent.

         No change, alteration, restoration or new construction shall be in or
connect the improvements with any property, building or other improvement
located outside the boundaries of the Land, nor shall the same obstruct or
interfere with any existing casement.

         Tenant shall notify Landlord in writing 30 days prior to commencing any
alterations, additions or improvements to the Demised Premises so that Landlord
shall have the right to record and post notices of nonresponsibility on the
Demised Premises. Within a reasonable time period prior to commencing the
alterations, additions or improvements, Tenant shall provide Landlord with
copies of all plans and specifications prepared in connection with any such
alteration, addition or improvement, as well as copies of each material
amendment and change thereto, if and when applicable.

         All of Tenant's generators and uninterruptible power supply equipment
(but in no event including the primary HVAC system serving the Building), trade
fixtures, movable partitions, furniture, machinery and furnishings installed by
Tenant or assignees, subtenants or licensees of Tenant shall remain the property
of the owner thereof with the right of removal, whether or not affixed and or
attached to the real estate and the owner thereof shall be entitled to remove
the same or any part thereof during the term or at the end of the term provided
herein, provided that such owner shall repair any damage caused by such removal.
Except as otherwise provided herein, all Alterations made or installed by Tenant
shall remain the Property of Tenant and Tenant shall have the right to remove
the Alterations at any time during the term hereof provided Tenant shall repair
any damage resulting therefrom and leave the Demised Premises in a commercially
reasonable condition. Notwithstanding the foregoing, any Alterations on the
Demised Premises at the end of the term shall become the property of Landlord
without payment therefor by Landlord, and shall be surrendered to Landlord at
the expiration of the term of this Lease; provided however, if the Lease term
ends prior to the thirteenth (13th) anniversary of the Lease Commencement Date,
if so requested by Landlord, Tenant shall, at its sole cost and expense and in
as expeditious a manner as possible remove any or all of such Alterations from
the Demised Premises, to the extent required by Landlord. Tenant further agrees
to repair any damage resulting therefrom and leave the Demised Premises in a
commercially reasonable condition.

9.       Signs.
         -----

Tenant may install, at its expense and pursuant to the Plans, a monument
identification sign containing Tenant's name at a location depicted on Exhibit B
unless such location would cause a violation of applicable laws in which event
said monument identification sign shall be moved to a location mutually
acceptable to the parties. Tenant shall also have the right to place any
additional signs at the Demised Premises without the prior consent of Landlord,
provided that such sign or signs (a) do not cause any structural damage or other
damage to the Building; (b) do not violate applicable governmental laws,
ordinances, rules or

                                       10


<PAGE>

regulations; (c) do not violate any existing restrictions affecting the Demised
Premises; and (d) are compatible with the architecture of the Building and the
landscaped area adjacent thereto. Tenant shall remove all signage from the
Demised Premises at the end of the term.

          B. Landlord may place signs on the Demised Premises identifying Tenant
prior to the Construction Completion Date, provided Tenant has approved each
sign, such approval not to be unreasonably withheld.

          10. Services.
              --------

          A. Landlord shall provide all utility equipment, distribution systems,
fixtures and parts to the Demised Premises in accordance with the Plans, and
shall in all other respects prepare the Demised Premises to accept all utilities
to be used by Tenant during the terra of the Lease as contemplated by the Plans
including all connection, tap-in and impact fees, any charges for the
underground installation of electric, gas or other utilities or services, and
other charges relating to the extension of or change in the facilities necessary
to provide the Demised Premises with adequate utilities services. Tenant shall
contract for and pay directly for the cost of usage of all utilities including
all charges for water, heat, gas, light, garbage, electricity, telephone,
sewage, steam, power or other public or private utility services. If after
Landlord's installation of the utility systems required to be provided herein,
any bond, charge or fee is required by the state in which the Demised Premises
are located, or any city or other agency, subdivision, or instrumentality
thereof, or by any utility company furnishing services or utilities to the
Demised Premises, as a condition precedent to continuing to furnish utilities or
services to the Demised Premises, such bond, charge or fee shall be deemed to be
a utility charge payable by Tenant. To the extent existing utility easements on
the Demised Premises are not sufficient to provide utility and communication
services to the Demised Premises for Tenant's Use, Landlord agrees to grant
additional easements to utility providers, including telecommunication and
electronic service providers, if reasonably required by Tenant.

          B. The Demised Premises shall include all of the improvements shown on
the Site Plan, including, without limitation, exclusive use of the paved parking
as set forth on the Site Plan.

          C. Tenant acknowledges that any one or more of the services provided
for in paragraph 10 hereof may be interrupted or suspended by reason of
accident, repair, alterations or improvements necessary to be made, strike,
lockout, misuse or neglect by Tenant or Tenant's agents, employees or invitees,
or by shortages of fuel or other energy supplies to be provided by public or
private utilities or supplies or by other matters, and Landlord shall not be
liable to Tenant therefor, nor shall Tenant have any right to terminate the
Lease or other rights against Landlord in the event of a failure, interruption
or suspension of any of the aforesaid services.

          11. Compliance with Law.
              -------------------

          A. Landlord covenants that the Demised Premises (except trade
fixtures, equipment, machinery or any other item constructed or installed by
Tenant) will materially conform as of the Commencement Date to any applicable
laws, orders, statutes, ordinances, rules, regulations and requirements of
federal, state and municipal governments, including, without limitation, all

                                       11


<PAGE>

applicable rules and regulations of the Board of Fire Underwriters and any
requirements of the certificate of occupancy or any permit with respect to the
Demised Premises and the sidewalks, curbs, roadways, alleys, entrances or other
facilities adjacent or appurtenant thereto. Landlord shall be responsible for
procuring building and other permits and licenses necessary for construction of
Landlord's Improvements.

          B. Tenant shall throughout the term of this Lease, at Tenant's sole
cost, materially comply with or remove or cure any violation of any applicable
laws, orders, statutes, ordinances, rules, regulations and requirements of
federal, state and municipal governments, including, without limitation, any
applicable laws, orders, statutes, ordinances, rules, regulations and
requirements of any federal, state or local government relating to occupational
safety and health (collectively, the "OSHA Regulations"), all applicable rules
and regulations of the Board of Fire Underwriters and any requirements of the
certificate of occupancy or any permit with respect to the Demised Premises and
the sidewalks, curbs, roadways, alleys, entrances or railroad track facilities
adjacent or appurtenant thereto, and whether the compliance, curing or removal
of any such violation and the costs and expenses necessitated thereby shall have
been foreseen or unforeseen, ordinary or extraordinary, and whether or not the
same shall be presently within the contemplation of Landlord or Tenant or shall
involve any change of governmental policy, or require structural or
extraordinary repairs, alterations or additions by Tenant and irrespective of
the costs thereof; provided, however, that Landlord shall be responsible, at
Landlord's sole cost, to make all repairs needed for the Demised Premises to
comply with all laws if said repair is required within one (1) years after the
Commencement Date and is necessary due to a defect in the construction of the
Landlord's Improvements including without limitation, a failure to construct the
Landlord's improvements so that the Demised Premises are in compliance with all
laws as of the Commencement Date. Tenant, at its sole cost and expense, shall
comply with all agreements, contracts, easements, restrictions, reservations or
covenants, if any, affecting the Demised Premises or hereafter created by Tenant
and consented to, in writing, by Tenant or requested, in writing, by Tenant.
Tenant shall also comply with, observe and perform all provisions and
requirements of all policies of insurance at any time in force with respect to
the Demised Premises and shall comply with all development permits issued by
governmental authorities issued in connection with development of the Demised
Premises. Tenant shall procure and maintain all permits and licenses required
for the transaction of Tenant's business at the Demised Premises, including with
limitation, any special use permit, zoning variance or comparable zoning relief
necessary for Tenant's Use.

          12. Landlord's Title, Authority, and Quiet Enjoyment: Tenant's
              ----------------------------------------------------------
Authority.
---------

          A. Landlord represents that it will have, as of the Commencement Date,
marketable fee simple title to the Demised Premises, subject to the exceptions
to title currently encumbering the Premises as described in Exhibit H, and any
additional exceptions to title created in connection with Landlord's acquisition
or development of the Demised Premises, or financing of such acquisition of
development (collectively referred to herein as the "Permitted Exceptions").
Landlord represents that any such additional exceptions to title created in
connection with Landlord's acquisition or development of the Demised Premises or
financing of such acquisition or development shall not materially interfere with
Tenant's intended use of the Demised Premises. Any lien claims properly bonded
over or insured over by title insurance shall be deemed to be Permitted
Exceptions hereunder.

                                       12


<PAGE>

          B. Landlord represents and warrants that it has full and complete
authority to enter into this Lease under all of the terms, conditions and
provisions set forth herein, and so long as Tenant keeps and substantially
performs each and every term, provision and condition herein contained on the
part of Tenant to be kept and performed, Tenant shall peacefully and quietly
enjoy the Demised Premises without hindrance or molestation by Landlord or by
any other person claiming by, through or under Landlord, subject to the terms of
the Lease. Without limiting the foregoing, Landlord covenants to perform all
obligations to be performed by Landlord and to pay as and when due all amounts
to be paid by Landlord under any mortgage, deed of trust, ground lease or other
instrument encumbering the Demised Premises. Each individual executing this
Lease on behalf of Landlord represents and warrants to Tenant that he or she is
duly authorized to do so.

          C. Tenant represents and warrants that it has full and complete
authority to enter into this Lease under all of the terms, conditions and
provisions set forth herein.

          D. Tenant hereby approves the condition of Landlord's title to the
Demised Premises. This Lease shall be subject to the Permitted Exceptions and
Landlord shall not permit or cause any easements, covenants, restrictions,
conditions or other changes in Landlord's title which would materially and
adversely impact Tenant's Use. Landlord shall notify Tenant in writing prior to
permitting or causing any easements, covenants, restrictions, or conditions to
be placed of record.

          13. Subordination. The priority of this Lease and the leasehold estate
              -------------
of Tenant created hereunder are and shall be subject and subordinate to the lien
of any mortgage, deed of trust, sale-leaseback, ground lease or similar
encumbrance, whether such encumbrance is placed against the fee or leasehold
estate, affecting the Demised Premises and to all renewals, modifications,
consolidations, replacements and extensions thereof, and advances thereunder;
provided, however, with respect to any mortgage, deed of trust, sale-leaseback,
ground lease or similar encumbrance such subordination shall be subject to
receipt by Tenant of a nondisturbance agreement in form reasonably required by
any such lienholder or ground Lessor (collectively, a "Mortgagee")and reasonably
acceptable to Tenant. Tenant agrees at any time hereafter, upon twenty (20) days
prior written notice, to execute and deliver any instruments, releases or other
documents that may reasonably be required for the purpose of subjecting and
subordinating this Lease, as above provided, to the lien of any such mortgage,
deed of trust, ground lease, sale-leaseback or similar encumbrance in a form
reasonably acceptable to Tenant and the holder of such mortgage, provided said
subordination provides that all insurance proceeds and condemnation awards will
be made available for the restoration of the Demised Premises, as provided
herein, and that Tenant's rights hereunder will not be disturbed unless Tenant
is in default beyond all applicable cure periods. Any fee which Landlord's
lender or ground lessor may charge for such agreement shall be paid by Landlord.

          In the event of any act or omission of Landlord constituting a default
by Landlord, Tenant shall not exercise any remedy until Tenant his given
Landlord and any mortgagee, ground lessor or sale-leaseback lessor of the
Demised Premises that has provided Tenant with written notice of its interest in
the Demised Premises and a notice address for each such party a prior thirty
(30) day written notice of such act or omission and until a reasonable period of
time to allow Landlord or the mortgagee, ground lessor or sale-leaseback lessor
to remedy such act or

                                       13


<PAGE>

omission shall have elapsed following the giving of such notice; provided,
however, if such act or omission cannot, with due diligence and in good faith,
be remedied within such thirty (30) day period, then Landlord or any such
mortgagee, ground lessor or sale-leaseback lessor shall be allowed such further
period of time as may be reasonably necessary provided that it commence
remedying the same with due diligence and in good faith within said thirty (30)
day period.

          If any Mortgagee shall succeed to the rights of Landlord under this
Lease or to ownership of the Demised Premises, whether through possession or
foreclosure or the delivery of a deed to the Demised Premises, then, upon
written request of such mortgagee so succeeding to Landlord's rights hereunder,
Tenant shall attorn to and recognize such mortgagee, ground lessor or
sale-leaseback lessor as Tenant's landlord under this Lease, and shall promptly
execute and deliver any instrument that such mortgagee may reasonably request to
evidence such attornment (whether before or after making of the mortgage, ground
lease or sale-leaseback lease). In the event of any other transfer of Landlord's
interest hereunder, upon the written request of the transferee and Landlord,
Tenant shall attorn to and recognize such transferee as Tenant's landlord under
this Lease and shall promptly execute and deliver any instrument that such
transferee and Landlord may reasonably request to evidence such attornment.

          14. Assignment and Sublease. Tenant, if there is no Material Breach
              -----------------------
(as herein defined) by Tenant hereunder, shall have the right to assign this
Lease or to sublease all or any portion of the Demised Premises, without
Landlord's written consent in accordance with the terms of this Paragraph 14.

          Tenant may assign this Lease or sublet the Demised Premises to an
affiliate or subsidiary more than fifty percent (50%) of the voting stock of
which is owned directly or indirectly by the direct or remote parent of Tenant
(without Landlord's consent, upon prior written notice to Landlord) and further
Tenant's interest in this Lease may be assigned to and assumed by a successor to
Tenant pursuant to a purchase of all or substantially all of the assets of
Tenant in connection with the sale of such assets or to any entity which
acquires all of Tenant's capital stock (without Landlord's consent upon prior
written notice to Landlord).

          Any assignment or sublease shall require the assignee or subtenant to
comply with all terms of this Lease except for any sublease term, which shall be
at Tenant's discretion (but in no event extend beyond the term of this Lease),
and a copy of such sublease or assignment shall be delivered to Landlord at
least ten (10) days prior to the commencement of such sublease or assignment.

          Any assignee shall assume, by instrument in form and content
satisfactory to Landlord, the due performance of all of Tenant's obligations
under this Lease, including any accrued obligations at the time of the effective
date of the assignment, and such assumption agreement shall state that the same
is made by the assignee for the express benefit of Landlord as a third party
beneficiary thereof.

          Each sublease permitted by this Paragraph 14 shall be subject and
subordinate to all of the terms, covenants and conditions of this Lease and to
all of the rights of Landlord hereunder; and in the event this Lease shall
terminate before the expiration of such sublease, the sublessee thereunder will,
at Landlord's option, attorn to Landlord and waive any rights the sublessee may

                                       14


<PAGE>

have to terminate the sublease or to surrender possession thereunder, as a
result of the termination of this Lease.

          Tenant agrees to pay on behalf of Landlord any and all costs of
Landlord or otherwise occasioned by such assignment or subletting, including
without limitation, the cost of any alteration, addition, improvement or other
renovation or refurbishment to the Demised Premises made in connection with such
assignment or subletting and any cost imposed by any governmental authority in
connection with any of the foregoing.

          Any assignment or subletting under this Paragraph 14 shall not relieve
Tenant (or any guarantor of Tenant's obligations under the Lease or any
assignee) of its obligations hereunder. Any assignment or subletting of this
Lease which is not in compliance with the provisions of this Paragraph 14 shall
be of no effect and void. Except as permitted in this Paragraph 14, Tenant shall
not transfer, sublet, assign, or otherwise encumber its interest in the Lease or
the Demised Premises, unless consented to by Landlord.

          No assignment or subleasing hereunder shall relieve Tenant from any of
Tenant's obligations in this Lease contained.

          All profits from any such assignment or subletting shall be the
property of Tenant and not Landlord.

          15. Lease Extension. If this Lease shall not have been terminated
              ---------------
pursuant to any provisions hereof and there is no Material Breach (as defined
herein) by Tenant hereunder at the time set for exercise of the Extension Terms
(as herein defined) and at the time set for commencement thereof, then Tenant
may, at Tenant's option, extend the term of this Lease for five (5) successive
additional terms of four (4) years each (each an "Extension Term," collectively
the "Extension Terms") commencing on the expiration of the original term, or the
immediately preceding Extension Term, as the case may be. Tenant may exercise
such option by giving Landlord written notice at least ten (10) months prior to
the expiration of the original or the immediately preceding Extension Term, as
the case may be. Upon the giving by Tenant to Landlord of such written notice
and the compliance by Tenant with the foregoing provisions of this Paragraph 15,
this Lease shall be deemed to be automatically extended upon all the Covenants,
agreements, terms, provisions and conditions set forth in this Lease, except
that Base Rent for each such Extension Term shall be as provided on Exhibit D.

          If Tenant fails or omits to so give to Landlord the written notice
referred to above, Landlord shall provide Tenant with written notice of Tenant's
failure to exercise the Extension Term, and upon receipt of such notice, Tenant
shall be allowed fifteen (15) days to exercise the extension option allowed for
herein. If Landlord fails to provide such notice, Tenant's renewal option shall
expire upon the expiration of the then current term. Failure to respond to
Landlord's notice within such fifteen (15) days shall be deemed to be a waiver
by Tenant of its extension option hereunder.

          16. Impositions.
              -----------

          A. Tenant covenants and agrees to pay during the term of this Lease,
as Additional Rent, before any fine, penalty, interest or cost may be added
thereto for the nonpayment thereof,

                                       15



<PAGE>

all impositions described herein that accrue on or after the Commencement
Date, which include without limitation, all real estate taxes, special
assessments, water rates and charges, sewer rates and charges, including any sum
or sums payable for future sewer or water capacity increases, charges for public
utilities, street lighting, excise levies, licenses, permits, inspection fees,
other governmental charges, and all other charges or burdens of whatsoever kind
and nature (including costs, fees, and expenses of complying with any
restrictive covenants or similar agreements to which the Demised Premises are
subject), incurred in the use, occupancy, ownership, operation, leasing or
possession of the Demised Premises, without particularizing by any known name or
by whatever name hereafter called, and whether any of the foregoing be general
or special, ordinary or extraordinary, foreseen or unforeseen (all of which are
sometimes herein referred to as Impositions"), which at any time during the term
may have been or may be assessed, levied, confirmed, imposed upon, or become a
lien on the Demised Premises, or any portion thereof, or any appurtenance
thereto, rents or income therefrom, and such easements or rights as may now or
hereafter be appurtenant or appertain to the use of the Demised Premises.

          B. If, at any time during the term of this Lease, any method of
taxation shall be such that there shall be levied, assessed or imposed on
Landlord, or on the Basic Rent or Additional Rent, or on the Demised Premises or
on the value of the Demised Premises, or any portion thereof, a capital levy,
sales or use tax, gross receipts tax or other tax on the rents received
therefrom, or a franchise tax, or an assessment, levy or charge measured by or
based in whole or in part upon such rents or value, Tenant covenants to pay and
discharge the same, it being the intention of the parties hereto that the rent
to be paid hereunder shall be paid to Landlord absolutely net without deduction
or charge of any nature whatsoever foreseeable or unforeseeable, ordinary or
extraordinary, or of any nature, kind or description, except as in this Lease
otherwise expressly provided. Nothing in this Lease contained shall require
Tenant to pay any municipal, state or federal net income or excess profits taxes
assessed against Landlord, or any municipal, state or federal capital levy,
estate succession, inheritance or transfer taxes of Landlord, or corporation
franchise taxes imposed upon any corporate owner of the fee of the Demised
Premises.

          C. Tenant covenants to furnish Landlord, within 30 days after the date
upon which any Imposition or other tax assessment, levy or charge is payable by
Tenant, official receipts of the appropriate taxing authority, or other
appropriate proof satisfactory to Landlord, evidencing the payment of the same.
The certificate, advice or bill of the appropriate official designated by law to
make or issue the same or to receive payment of any Imposition or other tax,
assessment, levy or charge may be relied upon by Landlord as sufficient evidence
that such Imposition or other tax, assessment, levy or charge is due and unpaid
at the time of the making or issuance of such certificate, advice or bill,
unless Tenant provides Landlord with evidence to the contrary.

          D. At Landlord's written demand after any Event of Default (as defined
in Section 20 hereinafter) and for as long as such Event of Default is uncured,
or upon the request of any Mortgagee of the Demised Premises, (but only after an
Event of Default and for as long as such Event of Default is uncured) Tenant
shall pay to Landlord the known or estimated yearly real estate taxes and
assessments payable with respect to the Demised Premises in monthly payments
equal to one-twelfth of the known or estimated yearly real estate taxes and
assessments next payable with respect to the Demised Premises. From time to time
Landlord may re-estimate the amount of real estate taxes and assessments, and in
such event Landlord shall notify Tenant,

                                       16


<PAGE>

in writing, of such re-estimate and fix future monthly installments for the
remaining period prior to the next tax and assessment due date in an amount
sufficient to pay the re-estimated amount over the balance of such period after
giving credit for payments made by Tenant on the previous estimate. If the total
monthly payments made by Tenant pursuant to this Paragraph 16D shall exceed the
amount of payments necessary for said taxes and assessments, such excess shall
be credited on subsequent monthly payments of the same nature; but if the total
of such monthly payments so made under this paragraph shall be insufficient to
pay such taxes and assessments when due, then Tenant shall pay to Landlord such
amount as may be necessary to make up the deficiency.

          E. Tenant shall have the right at its own expense to contest the
amount or validity, in whole or in part, of any Imposition by appropriate
proceedings diligently conducted in good faith, but only after Tenant provides
Landlord or the Mortgagee reasonable security, or Tenant makes payment of such
Imposition, unless such payment, or a payment thereof under protest, would
operate as a bar to such contest or interfere materially with the prosecution
thereof, in which event, notwithstanding the provisions of Paragraph 16A hereof
Tenant may postpone or defer payment of such Imposition if neither the Demised
Premises nor any portion thereof would, by reason of such postponement or
deferment, be in danger of being forfeited or lost, and (b) Tenant is not then
in Material Breach of this Lease. Upon the termination of any such proceedings,
Tenant shall pay the amount of such Imposition or part thereof, if any, as
finally determined in such proceedings, the payment of which may have been
deferred during the prosecution of such proceedings, together with any costs,
fees, including attorney's fees, interest, penalties, fines and other liability
in connection therewith, and upon such payment Landlord shall return all amounts
or certificates deposited with it with respect to the contest of such
Imposition, as aforesaid, or, at the written direction of Tenant, Landlord shall
make such payment out of the funds on deposit with Landlord and the balance, if
any, shall be returned to Tenant. Tenant shall be entitled to the refund of any
Imposition, penalty, fine and interest thereon received by Landlord which have
been paid by Tenant or which have been paid by Landlord but for which Landlord
has been previously reimbursed in full by Tenant. Landlord shall not be required
to join in any proceedings referred to in this Paragraph 16E unless the
provisions of any law, rule or regulation at the time in effect shall require
that such proceedings be brought by or in the name of Landlord, in which event
Landlord shall join in such proceedings or permit the same ________ brought in
Landlord's name upon compliance with such conditions as Landlord may reasonably
require. Landlord shall not ultimately be subject to any liability for the
payment of any fees, including attorney's fees, costs and expenses in connection
with such proceedings. Tenant agrees to pay all such fees (including reasonable
attorney's fees), costs and expenses or, on demand, to make reimbursement to
Landlord for such payment. If Landlord is provided a certificate of deposit or
other interest bearing instrument as security for the payment of the contested
Imposition, during the time when any such certificate of deposit or other
interest bearing instrument is on deposit with Landlord, and prior to the time
when the same is returned to Tenant or applied against the payment, removal or
discharge of Impositions, as above provided, Tenant shall be entitled to receive
all interest paid thereon, if any. Cash deposits shall not bear interest.

17.      Insurance.
         ---------

          A. During the term of this Lease, during any extension thereof, and
during any


                                       17


<PAGE>

holdover period, Tenant shall at its cost and expense procure and keep in force
a policy of comprehensive public liability insurance, with limits of not less
than $1,000,000 for injury to any one person, $2,000,000 as to any one accident,
and $100,000 as to property damage, all on a per occurrence basis which policy
shall name Landlord and its managing agent as additional insureds. A certificate
of such insurance shall be delivered to Landlord prior to the Commencement Date
and shall provide that same may not be cancelled or lowered in amounts without
prior written notice of not less than thirty (30) days to Landlord and Landlords
mortgagee. Notwithstanding the foregoing, Tenant may insure the foregoing risks
under its blanket policy or elect to self-insure such risks as provided in
Paragraph 17E below. Any such liability insurance shall contain a contractual
liability endorsement covering Tenants indemnification obligations under this
Lease.

          B. During the term of this Lease and any extension thereof, Tenant, at
its sole cost and expense, shall obtain and continuously maintain in full force
and effect, policies of insurance covering the Improvements constructed,
installed or located on the Demised Premises naming the Landlord, as loss payee
as its interest may appear, against (a) loss or damage by fire; (b) loss or
damage from such other risks or hazards now or hereafter embraced by an
"Extended Coverage Endorsement," including, but not limited to, windstorm, hail,
explosion, vandalism, riot and civil commotion, damage from vehicles, smoke
damage, water damage and debris removal; (c) loss for flood if the Demised
Premises are in a designated flood or flood insurance area; (d) loss for damage
by earthquake if the Demised Premises are located in an earthquake-prone area;
(e) loss from so-called explosion, collapse and underground hazards; and (f)
loss or damage from such other risks or hazards of a similar or dissimilar
nature which are now or may hereafter be customarily insured against with
respect to improvements similar in construction, design, general location, use
and occupancy to the Improvements. At all times, such insurance coverage shall
be in an amount equal to 100% of the then "full replacement cost" of the
Improvements. "Full Replacement Cost" shall be interpreted to mean the cost of
replacing the improvements without deduction for depreciation or wear and tear,
and it shall include a reasonable sum for architectural, engineering, legal,
administrative and supervisory fees connected with the restoration or
replacement of the Improvements in the event of damage thereto or destruction
thereof. If a sprinkler system shall be located in the Improvements, sprinkler
leakage insurance shall be procured and continuously maintained by Tenant at
Tenant's sole cost and expense. Tenant shall cause to be inserted in the policy
of insurance required by this Paragraph 17B a so-called "waiver of subrogation"
clause as to Landlord and Landlord's insurer.

          C. During the term of this Lease and any extension thereof, Tenant
shall maintain Workman's Compensation Insurance in accordance with the laws of
the State of California.

          D. Tenant shall maintain insurance coverage (including loss of use and
business interruption coverage) upon Tenant's business and upon all personal
property of Tenant or the personal property of others kept, stored or maintained
on the Demised Premises against loss or damage by fire, windstorm or other
casualties or causes for such amount as Tenant may desire, and Tenant agrees
that such policies shall contain a waiver of subrogation clause as to Landlord
and Landlord's insurer.

          E. Tenant's right to self-insure with respect to liability insurance
is conditioned upon


                                       18



<PAGE>

Tenant or Tenant's guarantor maintaining a net worth of at least
$100,000,000.00. Tenant shall furnish Landlord written confirmation that Tenant
has elected to self-insure with respect to liability insurance (if that is the
case), and if so, that Tenants or Tenants guarantor's net worth is at least
$100,000,000.00 as evidenced by audited financial statements of Tenant or
Tenant's guarantor or an affidavit from Tenant's or Tenant's guarantor's chief
financial officer. If Tenant self-insures with respect to liability insurance,
then Tenant agrees to indemnify, defend, and hold Landlord harmless from and
against any loss, damage, costs, fees (including attorney's, fees), claims,
demands, actions, causes of action, judgments, suits and liability that was or
would have been covered by the insurance policy or policies replaced by
self-insurance and such self-insurance shall not affect the nonliability of
Landlord under Paragraph 17F as to any loss or damage caused by the perils
described therein. The indemnification contained in this Paragraph 17E is in
addition to, and not in lieu of, any covenants or obligations of Tenant
contained in the other Paragraphs of this Lease. If Tenant so elects to become a
self-insurer with respect to liability insurance, Tenant shall deliver to
Landlord notice in writing of the required coverages which it is self-insuring
setting forth the amount, limits, and scope of the self-insurance in respect to
each type of coverage self-insured. Tenant, at Landlord's request, shall provide
to Landlord's mortgagee or assignee a certificate satisfactory to such mortgagee
or assignee setting forth the self-insured coverages, if any, and stating that
all losses shall be payable to such mortgagee and/or assignee as its interests
may appear.

          Nothing in this Paragraph shall prevent Tenant from taking out
insurance of the kind and in the amount provided for under the preceding
Paragraphs of this Paragraph under a blanket insurance policy or policies
(certificates thereof reasonably satisfactory to Landlord shall be delivered to
Landlord) which may cover other properties owned or operated by Tenant as well
as the Demised Premises; provided, however, that any such policy of blanket
insurance of the kind provided for shall specify therein the amounts thereof
exclusively allocated to the Demised Premises or Tenant shall furnish Landlord
and the holder of any fee mortgage with a written statement from the insurers
under such policies specifying the amounts of the total insurance exclusively
allocated to the Demised Premises; and provided, further, however, that such
politics of blanket insurance shall, as respects the Demised Premises, contain
the various provisions required of such an insurance policy by the foregoing
provisions of this Paragraph 17.

          F. Tenant hereby releases Landlord (and Landlord's assignees,
employees, agents and servants) and waives any claims it may have against
Landlord from any liability for damage to or destruction of Tenant's trade
fixtures, personal property (including also property under the cam, custody, or
control of Tenant), machinery, equipment, furniture, fixtures and business
interests on the Demised Premises, except arising from Landlord's or Landlord's
assignees', employees', agents' or servants' negligence. This Paragraph shall
apply especially, but not exclusively, to damage or destruction caused by the
flooding of basements or other subsurface areas, or by refrigerators, sprinkling
devices, air conditioning apparatus, water, snow, frost steam, excessive heat or
cold, falling plaster, broken glass, sewage, gas, odors or noise, or the
bursting or leaking of pipes or plumbing fixtures, and shall apply equally,
whether any such damage results from the act or omission of other tenants or
occupants in the Demised Premises or any other persons, and whether such damage
be caused by or result from any of the aforesaid, or shall be caused by or
result from other, circumstances of a similar or dissimilar nature.

          G. Tenant shall require each of its contractors and tradespeople to
carry contractors


                                       19


<PAGE>

liability/completed operations insurance, in the amounts specified in Paragraph
17A above, from companies licensed to do business in the State of California.

          H. Upon expiration of the term of this Lease, the unearned premium
upon any insurance policies or certificates thereof lodged with Landlord by
Tenant shall be payable to Tenant, provided that Tenant shall not then be in
default in keeping, observing or performing the terms and conditions of this
Lease.

          18. Destruction and Restoration.
              ---------------------------

          A. Tenant covenants and agrees that in case of damage to or
destruction of the Improvements after the Commencement Date of the term of this
Lease, by fire or otherwise, Tenant, at its sole cost and expense, shall
promptly restore, repair, replace and rebuild the same as nearly as possible to
the condition that the same were in immediately prior to such damage or
destruction with such changes or alterations (made in conformity with Paragraph
8 hereof) as may be reasonably acceptable to Landlord or required by law. Tenant
shall forthwith give Landlord written notice of such damage or destruction upon
the occurrence thereof and specify in such notice, in reasonable detail, the
extent thereof. Such restoration, repairs, replacements, rebuilding, changes and
alterations, including the cost of temporary repairs for the protection of the
Demised Premises, or any portion thereof, pending completion thereof are
sometimes hereinafter referred to as the "Restoration." The Restoration shall be
carried on and completed in accordance with the provisions and conditions of
Paragraphs 8 and 18B hereof. If the net amount of the insurance proceeds (after
deduction of all costs, expenses and fees related to recovery of the insurance
proceeds) recovered by Landlord and held by Landlord and Tenant as co-trustees
is reasonably deemed insufficient by Landlord to complete the Restoration of
such improvements (exclusive of Tenant's personal property and trade fixtures;
which shall be restored, repaired or rebuilt out of Tenant's separate funds),
Tenant shall, upon request of Landlord, deposit with Landlord and Tenant, as
co-trustees, a cash deposit equal to the reasonable estimate of the amount
necessary to complete the Restoration of such improvements less the amount of
such insurance proceeds available.

          B. All insurance moneys recovered by Landlord held by Landlord and
Tenant as co-trustees on account of such damage or destruction, less Landlord's
reasonable out-of-pocket costs, if any, to Landlord of such recovery, shall be
applied to the payment of the costs of the Restoration and shall be paid out
from time to time as the Restoration progresses upon the written request of
Tenant, accompanied by a certificate of the architect or a qualified
professional engineer in charge of the Restoration stating that as of the date
of such certificate (a) the sum requested is justly due to the contractors,
subcontractors, materialmen, laborers, engineers, architects, or persons, firms
or corporations furnishing or supplying work, labor, services or materials for
such Restoration, or is justly required to reimburse Tenant for any expenditures
made by Tenant in connection with such Restoration, and when added to all sums
previously paid out by Landlord does not exceed the value of the Restoration
performed to the date of such certificate by all of said parties; (b) except for
the amount, if any, stated in such certificates to be due for work, labor,
services or materials, there is no outstanding indebtedness known to the person
signing such certificate, after due inquiry, which is then due for work, labor,
services or materials in connection with such Restoration, which, if unpaid,
might become the basis of a mechanic's lien or similar lien with respect to the
Restoration or a lien upon the

                                       20


<PAGE>

Demised Premises, or any portion thereof; and (c) the costs, as estimated by the
person signing such certificate, of the completion of the Restoration required
to be done subsequent to the date of such certificate in order to complete the
Restoration do not exceed the sum of the remaining insurance moneys, plus the
amount deposited by Tenant, if any, remaining in the hands of Landlord after
payment of the sum requested in such certificate.

          Tenant shall furnish Landlord within thirty (30) days after Tenant's
receipt of each progress payment with evidence reasonably satisfactory to
Landlord that Tenant has paid all bills in respect to any work, labor, services
or materials performed, furnished or supplied in connection with such
Restoration which was covered by the previous progress payment. Landlord shall
not be required to pay out or consent to any additional insurance moneys where
Tenant fails to supply satisfactory evidence of the payment of work, labor,
services or materials performed, furnished or supplied, as aforesaid. If the
insurance moneys in the hands of Landlord and Tenant as co-trustees, and such
other sums, if any, deposited with Landlord and Tenant as co-trustees pursuant
to this Paragraph 18, shall be insufficient to pay the entire costs of the
Restoration, Tenant agrees to pay any deficiency promptly upon demand so long as
Tenant has participated in the adjustment of the insurance proceeds; provided,
however, Landlord shall retain ultimate control over any final adjustment with
the property insurer, and provided further that notwithstanding that the
insurance moneys are insufficient to pay the cost of the Restoration, Tenant
shall continue to be liable for full payment of Base Rent, Additional Rent and
any other amounts due and payable hereunder. Upon completion of the Restoration
and payment in full thereof by Tenant, Landlord shall within a reasonable period
of time thereafter, turn over to Tenant all insurance moneys or other moneys
then remaining upon submission of proof reasonably satisfactory to Landlord that
the Restoration has been paid for in full and the damaged or destroyed Building
and other improvements repaired, restored or rebuilt as nearly as possible to
the condition they were in immediately prior to such damage or destruction, or
with such changes or alterations as may be made in conformity with Paragraphs 8
and 18A hereof.

          C. No destruction of or damage to the Demised Premises, or any portion
thereof, by fire, casualty or otherwise shall permit Tenant to surrender this
Lease or shall relieve Tenant from its liability to pay to Landlord the Base
Rent and Additional Rent payable under this Lease or from any of its other
obligations under this Lease, an ___tenant waives any rights now or hereafter
conferred upon Tenant by present or future law or otherwise to quit or surrender
this Lease or the Demised Premises, or any portion thereof, to Landlord or to
any suspension, diminution, abatement or reduction of rent on account of any
such damage or destruction.

          D. Landlord agrees, subject to the provisions of Paragraphs 8 and 18
hereof, to in all instances turn over and make available to Tenant all insurance
moneys contemplated by Paragraph 18B hereof.

          19. Condemnation.
              ------------

          A. If, during the term of this Lease, the entire Demised Premises
shall be taken as the result of the exercise of the power of eminent domain
(hereinafter referred to as the "Proceedings"), this Lease and all right, title
and interest of Tenant hereunder shall cease and come to an end on the date of
vesting of title pursuant to such Proceedings and Landlord shall be entitled to
and shall receive the total award made in such Proceedings; provided that Tenant
shall

                                       21



<PAGE>

have the right to state a claim separate from Landlord's claim against the
condemning authority for Tenant's moving costs and the loss of the bargain of
this Lease, to the extent that such a claim by Tenant does not otherwise reduce
Landlord's award.

          In any taking of the Demised Premises, or any portion thereof, whether
or not this Lease is terminated as in this Paragraph provided, Tenant shall not
be entitled to any portion of the award for the taking of the Demised Premises
or damage to the Improvements, except as otherwise provided for in Paragraph 19C
with respect to the restoration of the Improvements, or for the estate or
interest of Tenant therein, all such award, damages, consequential damages and
compensation being hereby assigned to Landlord, and Tenant hereby waives any
right it now has or may have under present or future law to receive any separate
award of damages for its interest in the Demised Premises, or any portion
thereof, or its interest in this Lease, except that Tenant shall have,
nevertheless, the limited right to prove in the Proceedings and to receive any
award which may be made for damages to or condemnation of Tenant's movable trade
fixtures and equipment, and for Tenant's relocation costs in connection
therewith.

          B. If, during the initial term of this Lease, or any extension or
renewal thereof, less than the entire Demised Premises, bid more than 15% of the
floor area of the Building, or more than 25% of the land area of the Demised
Premises, or more than 20% of the parking spaces, shall be taken in any such
Proceedings, this Lease shall, upon vesting of title in the Proceedings,
terminate as to the portion of the Demised Premises so taken, and Tenant may, at
its option, terminate this Lease as to the remainder of the Demised Premises.
Tenant shall not have the right to terminate this Lease pursuant to the
preceding sentence unless (a) the business of Tenant conducted in the portion of
the Demised Premises taken cannot reasonably be carried on with substantially
the same utility and efficiency in the remainder of the Demised Premises (or any
substitute space securable by Tenant pursuant to clause (b) hereof) and (b)
Tenant cannot construct or secure or Landlord cannot provide substantially
similar space to the space so taken, on the remainder of the Demised Premises,
or Landlord cannot provide replacement parking spaces on additional property
located in close proximity to the Demised Premises that are reasonably
acceptable to Tenant. Such termination as to the remainder of the Demised
Premises shall be effected by notice in writing given not more than 60 days
after the date of vesting of title in such Proceeding and shall specify a date
not more than 160 days after the giving of such notice as the date for such
termination. Upon the date specified in such notice, the term of this Lease, and
all right, title and interest of Tenant hereunder, shall cease and come to an
end. If this Lease is terminated as in this Paragraph 19B provided, Landlord
shall be entitled to and shall receive the total award made in such Proceedings,
Tenant hereby assigning any interest in such award, damages, consequential
damages and compensation to Landlord, and Tenant hereby waiving any right Tenant
has now or may have under present or future law to receive any separate award of
damages for its interest in the Demised Premises, or any portion thereof, or its
interest in this Lease except as otherwise provided in Paragraph 19A. The right
of Tenant to terminate this Lease, as in this Paragraph 19B provided, shall be
exercisable only upon condition that Tenant is not then in default in the
performance of any of the terms, covenants or conditions of this Lease on its
part to be performed, and such termination upon Tenant's part shall become
effective only upon compliance by Tenant with all such terms, covenants and
conditions to the date of such termination. In the event that Tenant elects not
to terminate this Lease as to the remainder of the Demised Premises, the rights
and obligations of Landlord and Tenant shall be governed by the provisions of
Paragraph 19C hereof.

                                       22



<PAGE>

          C. If 15%, or less, of the floor area of the Building, or 25%, or
less, of the land area of the Demised Premises or 20% or less, of the parking
spaces shall be taken in such proceedings, or if more than 15% of the floor area
of the Building or more than 25% of the land area of the Demised Premises or
more than 20% of the parking spaces is taken (but less than the entire Demised
Premises), and this Lease is not terminated as in Paragraph 19B hereof provided,
this Lease shall, upon vesting of title in the Proceedings, terminate as to the
parts so taken, and Tenant shall have no claim or interest in the award,
damages, consequential damages and compensation, or any part thereof except as
otherwise provided in Paragraph 19A. Landlord shall be entitled to and shall
receive the total award made in such Proceedings, Tenant hereby assigning any
interest in such award, damages, consequential damages and compensation to
Landlord, and Tenant hereby waiving any right Tenant, has now or may have under
present or future law to receive any separate award of damages for its interest
in the Demised Premises, or any portion thereof, or its interest in this Lease
except as otherwise provided in Paragraph 19A. The net amount of the award
(after deduction of all costs and expenses, including attorney's fees), shall be
held by Landlord as trustee and applied as hereinafter provided. Tenant, in such
case, covenants and agrees, at Tenant's sole cost and expense (subject, to
reimbursement to the extent hereinafter provided), promptly to restore that
portion of the Improvements on the Demised Premises not so taken to a complete
architectural and mechanical unit for the use and occupancy of Tenant as in this
Lease provided. In the event that the net amount of the award (after deduction
of all costs and expenses, including attorney's fees) that may be received by
Landlord and held by Landlord as trustee in any such Proceedings as a result of
such taking is insufficient to pay all costs of such restoration work, Tenant
shall deposit with Landlord as trustee such additional sum as may be required
upon the written request of Landlord so long as Tenant has participated in the
Proceedings or otherwise provide reasonably adequate assurances to Landlord that
Tenant has the financial resources to fund such additional sum; provided,
however, Landlord shall retain, ultimate control over any final settlement or
litigation with the condemning authority, and provided further that
notwithstanding that the net amount of the award may be insufficient to pay all
costs of the restoration work, Tenant shall continue to be liable for payment of
Base Rent, Additional Rent and any other amount due and payable hereunder, which
amounts shall not be abated except as provided in Paragraph 19E below. The
provisions and conditions in Paragraph 8 applicable to changes and alterations
shall apply to Tenant's obligations to restore that portion of the Improvements
to a complete architectural and mechanical unit. Landlord agrees in connection
with such restoration work to apply so much of the net amount of any award
(after deduction of all costs and expenses, including attorneys fees) that may
be received by Landlord and held by Landlord as trustee in any such Proceedings
as a result of such taking to the costs of such restoration work thereof and the
said net award as a result of such taking shall be paid out from time to time to
Tenant, or on behalf of Tenant, as such restoration work progresses upon the
written request of Tenant, which shall be accompanied by a certificate of the
architect or the registered professional engineer in charge of the restoration
work stating that (a) the sum requested is justly due to the contractors,
subcontractors, materialmen, laborers, engineers, architects or other persons,
firms or corporations furnishing or supplying work, labor, services or materials
for such restoration work or as is justly required to reimburse Tenant for
expenditures made by Tenant in connection with such restoration work, and when
added to all sums previously paid out by Landlord as trustee does not exceed the
value of the restoration work performed to the date of such certificate; and (b)
the net amount of any such award as a result of such taking remaining in the
hands of Landlord, together with the sums,

                                       23



<PAGE>

if any, deposited by Tenant with Landlord as trustee pursuant to the provisions
hereof, will be sufficient upon the completion of such restoration work to pay
for the same in full. If payment of the award as a result of such taking, as
aforesaid, shall not be received by Landlord in time to permit payments as the
restoration work progresses (except in the event of an appeal of the award by
Landlord), Tenant shall not be required to proceed with any restoration work
until payment of such award is received by Landlord; provided, however, delay in
payment of such amount shall not release Tenant of its obligation to pay Base
Rent, Additional Rent and other amounts due and payable hereunder during any
such delay and there shall be no abatement of Base Rent, Additional Rent or any
other amounts except as provided in Paragraph 19E below. If Landlord appeals an
award and payment of the award is delayed pending appeal Tenant shall,
nevertheless, perform and fully pay for such work without delay, and payment of
the amount to which Tenant would have been entitled had Landlord not appealed
the award (in an amount not to exceed the net award prior to such appeal) shall
be made by Landlord to Tenant as restoration progresses pursuant to this
Paragraph 19C, in which event Landlord shall be entitled to retain an amount
equal to the sum disbursed to Tenant pursuant to the preceding sentence out of
the net award as and when payment of such award is received by Landlord. Tenant
shall also furnish Landlord as trustee with each certificate hereinabove
referred to, together with evidence reasonably satisfactory to Landlord that
them are no unpaid bills in respect to any work, labor, services or materials
performed, furnished or supplied, or claimed to have been performed, furnished
or supplied, in connection with such restoration work (relating to prior
payments made by Landlord to Tenant), and that no liens have been filed against
the Demised Premises, or any portion thereof. Landlord as trustee shall not be
required to pay out any funds when there are unpaid bills for work, labor,
services or materials performed, furnished or supplied in connection with such
restoration work relating to prior payments made by Landlord to Tenant, or where
a lien for work, labor, services or materials performed, furnished or supplied
has been placed against the Demised Premises, or any portion thereof. Upon
completion of the restoration work and payment in full therefor by Tenant, and
upon submission of proof reasonably satisfactory to Landlord that the
restoration work has been paid for in full and that the Improvements have been
restored or rebuilt to a complete architectural and mechanical unit for the use
and occupancy of Tenant as provided in this Lease, Landlord as trustee shall pay
over to Tenant any portion of the cash deposit furnished by Tenant then
remaining; provided, however, any other amounts awarded in such Proceedings and
made available for restoration) which remain following restoration of the
Demised Premises shall be the property of Tenant and Landlord shall have no
claim thereto.

          D. In the event of any partial termination of this Lease as a result
of any such Proceedings, Tenant shall pay to Landlord all Base Rent and all
Additional Rent and other charges payable hereunder with respect to that portion
of the Demised Premises so taken in such Proceedings with respect to which this
Lease shall have terminated justly apportioned to the date of such termination.
From and after the date of vesting of title in such Proceedings, Tenant shall
continue to pay the Base Rent and Additional Rent and other charges payable
hereunder, as in this Lease provided, to be paid by Tenant, subject to
abatement, if any, as provided for in Paragraph 19E hereof.

          E. In the event of a partial taking of the Demised Premises under
Paragraph 19C hereof, or a partial taking of the Demised Premises under
Paragraph 19B hereof, followed by Tenant's election not to terminate this Lease,
the fixed Base Rent payable hereunder during the

                                       24



<PAGE>

period from and after the date of vesting of title in such Proceedings to the
termination of this Lease shall not be reduced unless Tenant shall have
completed the restoration work with its own funds in accordance with the
provisions of the Lease and Landlord shall have applied the net amount of any
award to reduce the indebtedness secured by any financing encumbering the
Demised Premises or otherwise to reduce the amount of Landlord's Development
Costs (as herein defined), in which event fixed Base Rent payable hereunder
shall be reduced to a sum equal to the product of the Base Rent provided for
herein multiplied by a fraction, the numerator of which shall be Landlord's
Development Costs less any amounts so paid to and applied by Landlord less
Tenant's $2,000,000 contribution, and the denominator of which shall be
Landlord's Development Costs less Tenant's $2,000,000 contribution without
regard to any amounts so paid to and applied by Landlord.

          F. Anything herein to the contrary notwithstanding, upon the
occurrence of any Proceedings which would otherwise result in a termination of
this Lease, Tenant shall, as a condition precedent to such termination so long
as Tenant has participated in such Proceedings, (provided, however, Landlord
shall retain ultimate control over any final settlement or litigation with the
condemning authority), pay to Landlord an amount, reasonably estimated by
Landlord, equal to the excess, if any, of the unamortized portion of Landlord's
Development Costs, less the $2,000,000 referred to below, over the net award to
be received by Landlord after deduction of all costs of the Proceedings. In
making the foregoing calculation, Landlord shall use an interest rate equal to
the interest rate associated with the project financing from time to time during
the term of this Lease. "Landlord's Development Costs" shall mean and include
any and all amounts incurred by Landlord in connection with the acquisition and
development of the Demised Premises, including, without limitation,
consideration paid for acquisition of the Demised Premises, costs for required
offsite improvements, including relocating electric lines underground, all
architectural, engineering, environmental, land planning and other consulting
fees, all title and survey expenses, any and all fees and expenses associated
with procuring construction and/or other financing for the project, any other
costs or expenses that would not have been incurred by Landlord had Landlord not
been involved in the acquisition of the Demised Premises, and all attorneys'
fees associated with any of the foregoing. A preliminary estimate of Landlord's
Development Costs (which includes Tenant's initial contribution of $2,000,000 as
deposited into escrow under Paragraph 3) is attached hereto and made a part
hereof as Exhibit G, provided, however, the parties agree and acknowledge that
the amounts and categories of costs and expenses set forth on Exhibit G
represent an estimate of such items only, and that Landlord anticipates changes
in, additions to and modifications of such items, including, without limitation,
changes, additions and modifications of such items as development of the project
and construction of the Demised Premises progresses including, without
limitation, changes, additions and modifications relating to actual design and
construction costs, and in securing construction and permanent financing for the
project from time to time. The parties agree to update the estimate provided for
in Exhibit G within sixty (60) days after the Commencement Date and attach the
updated Exhibit G initialed and dated by the parties in place of the Exhibit G
attached as of the date hereof.

          20. Default by Tenant. The occurrence of any one or more of the
              -----------------
following events shall constitute an "Event of Default" by Tenant:

          A. The failure by Tenant to make any payment of rental or any other
payment


                                       25



<PAGE>

required to be made by Tenant hereunder, and any interest for late payment
thereof, as and when due, where such failure shall continue for a period of five
(5) days after receipt by Tenant of a written notice thereof from Landlord.

          B. The failure by Tenant to observe or perform any of the covenants,
conditions or provisions of this Lease (other than the failure by Tenant
described in subparagraph E below) where such failure shall continue for a
period of thirty (30) days after receipt by Tenant of written notice thereof
from Landlord; provided, however, that if the nature of Tenant's default is such
that it cannot be cured solely by payment of money (and in the reasonable
judgment of Landlord said default is susceptible to cure) and that more than
thirty (30) days may be reasonably required for such cure, then Tenant shall not
be deemed to be in default if Tenant shall commence such cure within such thirty
(30) day period and shall thereafter diligently prosecute such cure to
completion.

          C.  (a) the making of any general arrangement or any assignment by
Tenant for the benefit of creditors;

              (b) the filing by or against Tenant of a petition to have Tenant
adjudged a bankrupt or a petition of reorganization or arrangement under any law
relating to bankruptcy (unless, in the case of a petition filed against Tenant,
the petition is dismissed within ninety (90) days of the date filed);

              (c) the appointment of a trustee or receiver to take possession of
substantially all of Tenant's assets; and

              (d) the attachment, execution or other judicial seizure of
substantially all of Tenant's assets.

          D. An assignment or subletting by Tenant in violation of Paragraph 14
hereof.

          E. The failure by Tenant in keeping, observing or performing any of
the terms contained in this Lease, other than those referred to in Subparagraphs
14 A, B, C and D above, and which exposes Landlord to criminal liability, and
such default shall continue after written notice thereof given ______ Landlord
to Tenant, and Tenant fails to proceed timely and promptly with all due
diligence and in good faith to cure the same and thereafter to prosecute the
curing of such default with all due diligence, it being intended that in
connection with a default which exposes Landlord to criminal liability that
Tenant shall proceed immediately to cure or correct such condition with
continuity and with all due diligence and in good faith.

          21. Landlord's Remedies. In the event of any Material Breach of this
              -------------------
Lease by Tenant, then Landlord, in addition to other rights or remedies it may
have, shall have the right to terminate this Lease, or without terminating this
Lease, terminate Tenant's right to possession of the Demised Premises, and in
either event Tenant shall immediately surrender possession of the Demised
Premises to Landlord and if Tenant fails to do so, Landlord may, without
prejudice to any other remedy it may have for possession or arrearage of
rentals, enter upon and take possession of the Demised Premises and expel or
remove Tenant and any other person who may be occupying the Demised Premises or
any part thereof, with or without legal proceedings, by force if necessary,
without being liable for prosecution or any claim or damage therefor. In such


                                       26


<PAGE>

event, Landlord shall be entitled to recover from Tenant all reasonable damages
incurred by Landlord by reason of Tenant's default, including without
limitation, the cost of recovering possession of the Demised Premises, expenses
of reletting including reasonable renovation and alteration of the Demised
Premises, reasonable attorneys', fees, real estate commissions, and any other
sum of money, late charges and damages caused by Tenant to Landlord. As used
herein, "Material Breach" shall mean any breach by Tenant in any of the terms
and conditions of this Lease which upon an Event of Default would have a
material and adverse impact of any kind upon Landlord and/or the Demised
Premises, as opposed to a technical breach by Tenant which is de minimis in
nature.

          If Tenant's right to possession of the Demised Premises is terminated
without termination of the Lease, Landlord shall be entitled to enforce all of
Landlord's rights and remedies under the Lease, including the right to recover
the rent as it becomes due hereunder. Should Landlord elect to relet the Demised
Premises or any part thereof, Landlord may do so for such term or terms and at
such rental or rentals and upon such other terms and conditions as Landlord may
deem appropriate. Rental and other amounts received by Landlord in connection
with such reletting shall be applied against the amounts due from Tenant
hereunder after deducting any expenses incurred by Landlord with respect to such
reletting as provided above. Tenant shall pay any deficiency to Landlord. Such
deficiency shall be calculated on a cumulative basis with all excess payments
received by Landlord from such reletting to be applied against future amounts
due from Tenant and any deficiencies to be paid monthly. No such reentry or
taking possession of the Demised Premises by Landlord shall be construed as an
election on its part to terminate this Lease, unless a written notice of such
intention be given to Tenant, in which event Tenant's obligations to Landlord
shall forthwith cease, or unless the termination thereof be decreed by a court
of competent jurisdiction.

          In the event Landlord terminates this Lease in accordance with this
Paragraph, then, Tenant shall be liable and shall pay to Landlord, the sum of
all rent and other payments owed to date to Landlord, all sums owed to date to
third parties (including without limitation, all Impositions) hereunder accrued
to the date of such termination, all reasonable amounts required to be spent by
Landlord to fulfill any of Tenant's obligations which Tenant did not fulfill
prior to termination by Landlord, plus, as damages, an amount equal to the
present value discounted at ten percent (10%) _________ (i) the total rental
payments hereunder _______ the remaining portion of the term of the Lease,
calculated as if such term expires on the date set forth in Paragraph 2, unless
Tenant has extended this Lease, in which case such calculation shall be as if
the term expires on the final day of the extension term then in effect, less
(ii) the fair market rental value of the Demised Premises for such remaining
period. Nothing herein contained shall limit or prejudice the right of Landlord
to prove for and obtain, as damages by reason of such expiration or termination,
an amount equal to the maximum allowed by any statute or rule of law in effect
at the time when, and governing the proceedings in which, such damages are to be
proved, whether or not such amount be greater, equal to or less than the amount
of the difference referred to above.

          Landlord shall have the obligation to mitigate its damages to the
extent required by state law.

          In addition to the aforesaid remedies, Landlord shall be entitled to
pursue any other


                                       27


<PAGE>

remedy now or hereafter available to Landlord at equity or under the laws or
judicial decisions of the state where the Demised Premises is located or by
statute or otherwise. All rights and remedies of Landlord herein enumerated
shall be cumulative, and the exercise or the commencement of the exercise by
Landlord of any one or more of such rights or remedies should not preclude the
simultaneous or later exercise by Landlord of any or all other rights or
remedies. Tenant shall pay, upon demand, all of Landlord's costs, including
reasonable attorneys' fees and court costs, incident to the enforcement of
Tenant's obligations hereunder. A receipt by Landlord of rent with knowledge of
the breach of any covenant hereof (other than breach of the obligation to pay
the portion of such rent paid) shall not be deemed a waiver of such breach, and
no waiver by Landlord of any provisions of this Lease shall be deemed to have
been made unless expressed in writing and signed by Landlord. Without limiting
the generality of the foregoing, no failure by Landlord to insist upon the
performance of any of the terms of this Lease or to exercise any right or remedy
consequent upon a breach thereof shall constitute a waiver of such breach or any
of the terms of this Lease, and no express waiver shall affect any default other
than the default specified in the express waiver and that only for the time and
to the extent therein stated. One or more waivers by Landlord shall not be
construed as a waiver of a subsequent breach of the same covenant, term or
condition. In addition to other remedies in this Lease provided, Landlord shall
be entitled to seek a restraint by injunction of the violation or attempted or
threatened violation of the covenants, conditions and provisions of this Lease.

          22. Default by Landlord. The following shall constitute a "Material
              -------------------
Breach" by Landlord:

          The failure by Landlord to observe or perform any of the covenants,
conditions or provisions of this Lease where such failure shall continue for a
period of thirty (30) days after receipt by Landlord of written notice thereof
from Tenant; provided, however, that if the nature of Landlord's default is such
that it cannot be cured solely by payment of money and that more than thirty
(30) days may be reasonably required for such cure, then Landlord shall not be
deemed to be in default if Landlord shall commence such cure within such thirty
(30) day period and shall thereafter diligently prosecute such cure to
completion.

          23. Tenant's Remedies. In the event of any Material Breach of this
              -----------------
Lease by Landlord, then Tenant in addition to other rights or remedies it may
have at law or in equity (subject to the terms of this Lease), at Tenant's sole
option may perform such obligations of Landlord provided that Tenant has
furnished to any party having a recorded mortgage, deed of trust, ground lease
or similar lien against the Demised Premises (for which Tenant has received
written notice) with written notice of such default and such party has failed to
cure the same within the limits prescribed herein for Landlord to cure such
default, and Tenant may invoice Landlord for the costs and expenses thereof,
which invoice Landlord shall promptly pay. Notwithstanding the foregoing,
despite such notice and expiration of such cure period, no rent or other
payments due from Tenant may be offset by Tenant, and Tenant shall have no right
to perform any obligation of Landlord unless such performance by Tenant is
necessary to prevent imminent injury or damage to persons or Tenant's property.

          24. Delivery of Executed Lease. Deleted by intent of parties.
              --------------------------

          25. Termination. Deleted by intent of parties.
              -----------


                                       28


<PAGE>

          26. Notices. All notices shall be sent by registered mail, return
              -------
receipt requested, or by recognized overnight courier providing proof of
delivery, to the following addresses:

To Landlord:                                To Tenant:

Sunnyvale Limited Partnership               First Data Merchant Services
Ridge Sunnyvale, Inc.,                      Corporation
c/o Ridge Capital Corporation               Attention:  David L. Schlapbach,
Attention: James G. Martell                             Director of Red Estate
257 East Main Street                                    and Counsel
Barrington, Illinois 60010                  5660 New Northside Drive
                                            Suite 1400
                                            Atlanta, Georgia 30328




With a copy to:                             With a copy to:
Gardner, Carton & Douglas                   First Data Merchant Services
Attention. Glenn W. Reed                    Corporation
321 North Clark Street                      Attention: Roger L Pierce, President
Suite 3400                                  700 Hansen Way
Chicago, Illinois 60610-4795                Palo Alto, CA 94303

          Any notice shall be deemed to have been given three (3) days after the
date deposited in the United States mail, or on the first business day after
sending when delivery by recognized overnight courier providing proof of
delivery, in the manner aforesaid.

          Either party, by written notice to the other, shall have the right to
change the addresses for notice(s) to be sent to such party, and to add or
substitute entities to which a copy of any notice shall be sent by the other
party

          27. Brokerage. Landlord and Tenant acknowledged that no real estate
              ---------
broker brought about this lease transaction. Landlord hereby indemnifies Tenant
against the claims of any party claiming by, through or under Landlord in
connection with this Lease transaction, and Tenant hereby indemnifies Landlord
against the claims of any party claiming by, through or under Tenant in
connection with this Lease transaction.

          28. Estoppel. Landlord and Tenant shall, at any time upon not less
              --------
than twenty (20) days prior written notice, execute and deliver to a prospective
new landlord, lender, or assignee or subtenant of Tenant, as the case may be, a
statement in writing (i) certifying that this Lease is unmodified and in full
force and effect (or if modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force and effect) and the
date to which the rent and other charges are paid in advance, if any, and (ii)
acknowledging that there are not, to the party's knowledge, any uncured defaults
on the part of the other party hereunder, or so specifying such defaults if any
are claimed, and (iii) other reasonable requests that relate to the Lease.

                                       29



<PAGE>

          29. Hazardous Substances.
              --------------------

          A. For purposes of this Paragraph 29, "Hazardous Substance" means:

                  (i) "Hazardous Substances" as defined by the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42
U.S.C.ss.9601 et. seq., as amended, and all regulations promulgated thereunder,
              --------
the Federal Clean Air Act, as amended (42 U.S.C.ss.7401 et. seq.) and the
                                                        --------
Federal Water Pollution Control Act ("FWPCA"), 33 U.S.C.ss.1317 et. seq. as
                                                                --------
amended and all regulations promulgated thereunder;

                  (ii) "Hazardous Waste" as defined by the Resource Conservation
and Recovery Act ("RCRA"), 42 U.S.C.ss.6602 et. seq. as amended and all
                                            --------
regulations promulgated thereunder;

                  (iii) Any pollutant or contaminant or hazardous, dangerous or
toxic chemicals, materials or substances within the meaning of any other
applicable federal, state or local law, regulation, ordinance or requirement
(including consent decrees and administrative orders) relating to or imposing
liability or standards of conduct concerning any hazardous, toxic or dangerous
waste, substance or material, all as amended or hereafter amended;

                  (iv) More than 100 gallons of crude oil which is liquid at
standard conditions of temperature and pressure (80 degrees Fahrenheit and 14.7
pounds per square inch absolute);

                  (v) Any radioactive material, including any source, special
nuclear or by-product material as defined in 42 U.S.C.ss.2011 et. seq. as
                                                              --------
amended or hereafter amended, and all regulations promulgated thereunder;

                  (vi) Friable asbestos or any asbestos which becomes friable
during the term of this Lease; and

                  (vii) Anything defined as a hazardous, toxic or radioactive
material, waste substance or the use, transportation or disposal of which is
regulated under applicable California laws or rules and regulations issued
pursuant thereof;

(all of the foregoing statutes, laws, ordinance, rules, regulations, and common
law theories being sometimes hereinafter collectively referred to as "Envlaws").

          B. Landlord and Tenant acknowledge the environmental condition of the
Land described in that certain Site Management Plan prepared by Geomatrix
Consultants dated September 5, 1996, a copy of which Landlord has provided to
Tenant. Prior to the Construction Completion Date, Landlord shall cause to be
performed all asbestos and soil removal and disposal or other remediation
provided for under and in compliance with Section 4.4.7 of the Sale Agreement,
as well as all additional environmental clean-up of Hazardous Substances
required by Section 4.4.7 of the Sale Agreement. Landlord shall indemnify,
defend and hold Tenant harmless from all damages, costs, losses, expenses
(including but not limited to

                                       30



<PAGE>

reasonable attorneys' fees and engineering fees) arising from any breach by
Landlord of the preceding covenant; provided however, the foregoing
indemnification shall terminate upon the expiration of one (1) year from the
Construction Completion Date. Notwithstanding the foregoing, in no event shall
Tenant have the right to terminate this Lease or have any right of sell off
arising out of any breach or claimed breach by Landlord in its obligations
hereunder; it being expressly acknowledged and agreed that the Base Rent and
Additional Rent, and all other charges and sums payable by Tenant hereunder,
shall commence at the times provided herein and shall continue to be payable as
provided under this Lease.

          C. Tenant shall not allow any Hazardous Substance to be brought on to
the Demised Premises and shall not conduct or authorize the generation,
transportation, storage, treatment and disposal at the Demised Premises, of any
Hazardous Substance other than in quantities incident to the conduct of Tenant's
Use and in compliance with Envlaws; provided, however, nothing herein contained
shall permit Tenant to allow any so-called "acutely hazardous,"
"ultra-hazardous," "imminently hazardous chemical substance or mixture" or
comparable Hazardous Substance to be located on or about the Demised Premises.

          D. If the presence, release, threat of release, placement on or in the
Demised Premises, or the generation, transportation, storage, treatment, or
disposal at the Demised Premises of any hazardous substances as a result of
Tenant's operations at the Demised Premises (i) gives rise to liability
(including, but not limited to, a responses action, remedial action, removal
action) under Envlaws, (ii) causes a significant public health effect, or (iii)
pollutes, threatens to pollute the environment, Tenant shall promptly take any
and all remedial and removal action necessary to clean up the Demised Premises
and mitigate exposure to liability arising from the hazardous substance, whether
or not required by law.

          E. Tenant shall indemnify, defend and hold Landlord harmless from all
damages, costs, losses, expenses (including, but not limited to, actual
attorneys' fees and engineering fees) (i) arising from or attributable to the
existence of any hazardous substances at the Demised Premises as a result of
Tenant's operations at the Demised Premises, and (ii) any breach by Tenant of
any of its covenants covered in this Paragraph 29.

          F. Upon request by Landlord during the term of this Lease, prior to
the exercise of any Extension Term, Tenant shall undertake and submit to
Landlord an environmental audit from an environmental consulting firm reasonably
acceptable to Landlord which audit shall evidence Tenant's compliance with this
Paragraph 29. Tenant shall bear the cost of such environmental audit unless such
audit discloses that Tenant has complied with the provisions of this Paragraph
29 in which event Landlord shall pay for such audit.

          G. Landlord or Tenant shall give the other prompt written notice upon
discovery of any Hazardous Substance at or adjacent to the Demised Premises.
Landlord and Tenant's obligations under this Paragraph 29 shall survive
termination of the Lease.

          30. Holdover. Should Tenant continue to occupy the Demised Premises
              --------
after expiration of the term or any renewal thereof and provided Landlord has
notified Tenant thirty (30) days prior to the expiration of the term or any
renewal term that Landlord is negotiating or has executed a lease with a third
party for the Demised Premises or any portion thereof, Tenant


                                       31


<PAGE>

shall be deemed to be occupying the Demised Premises without claim or right and
Tenant shall pay Landlord all costs arising out of loss or liability resulting
from delay by Tenant in so surrendering the Demised Premises as above provided
and shall pay a charge for each day of occupancy an amount equal to 150% the
Base Rent (on a per diem basis) then reserved hereunder. In the event Landlord
has failed to notify Tenant in writing within thirty (30) days prior to the
expiration of the term or any renewal term that Landlord is negotiating or has
executed a lease with a third party for the Demised Premises or any portion
thereof, Tenant shall be entitled to occupy the Demised Premises for a period of
sixty (60) days following expiration of the term or any renewal term on the same
terms and conditions as such term or renewal term (including Base Rental and
additional rental). Should Tenant continue to occupy the Demised Premises
following such sixty (60) day period, Tenant shall be deemed to be occupying the
Demised Premises without claim or right and Tenant shall pay Landlord as a full
measure of all loss or liability resulting from delay by Tenant in so
surrendering the Demised Premises as above provided a charge for each day of
occupancy an amount equal to 200% of the Base Rent and Additional Rent (on a per
diem basis) then reserved hereunder.

          31. Surrender.
              ---------

          A. Upon any termination or expiration of this Lease, Tenant shall
surrender the Demised Premises in the same condition as existed at the
Commencement Date, except for normal wear and tear and damage caused by the fire
or other casualty; provided, however, that nothing in this Paragraph 31 is
intended to change or diminish Tenant's obligations under any other part of this
Lease. Tenant shall remove the Alterations it is required to remove pursuant to
the terms of Paragraph 8 hereof. Any damage to the Demised Premises resulting
from the removal of such Alterations shall be repaired by Tenant at Tenant's
expense. If the Demised Premises be not surrendered as above set forth, Tenant
shall indemnify, defend and hold Landlord harmless against loss or liability
resulting from the delay by Tenant in so surrendering the Demised Premises,
including, without limitation any claim made by any succeeding occupant founded
on such delay.

          All property of Tenant not removed on or before the last day of the
term of this Lease (subject to Tenant's right to occupy the Demised Premises
following expiration of the term of this Lease as set forth in Paragraph 30
hereof) or within fifteen (15) days thereafter shall be deemed abandoned. Tenant
hereby appoints Landlord its agent to remove all property of Tenant from the
Demised Premises upon termination of this Lease and to cause its transportation
and storage for Tenant's benefit, all at the sole cost and risk of Tenant and
Landlord shall not be liable for damage, theft, and misappropriation or loss
thereof and Landlord shall not be liable in any manner in respect thereto.
Tenant shall pay all costs and expenses of such removal, transportation and
storage. Tenant shall reimburse Landlord upon demand for any expenses incurred
by Landlord with respect to removal or storage of abandoned property and with
respect to restoring said Demised Premises to good order, condition and repair.

          32. Liens. Landlord shall deliver the Demised Premises to Tenant free
              -----
of all mechanic's and materialmen's liens or bond over all such mechanic's and
materialmen's liens. Tenant has no authority, express or implied, to create or
place any lien or encumbrance of any kind or nature whatsoever upon, or in any
manner to bind the interest of Landlord or Tenant in the Demised Premises, or to
charge the rentals payable hereunder for any claim in favor of any

                                       32



<PAGE>

person dealing with Tenant, including those who furnish materials or perform
labor for any construction or repairs, and Tenant covenants and agrees that it
shall not mortgage, encumber or pledge this Lease or any interest therein. The
preceding sentence shall not be construed as prohibiting Tenant from making
Alterations as provided in Paragraph 8 above or from permitting any other
mechanics or materialmen's lienable work to be performed as long as such work is
not prohibited by this Lease. Tenant agrees to indemnify and hold Landlord
harmless from any lien filed against the Demised Premises on account of work
performed by or on behalf of Tenant and from any and all losses, costs, damages,
expenses, liabilities, suits, penalties, claims and damages (including
reasonable attorney fees) arising from or relating to such lien. After Tenant's
receipt of notice or actual knowledge of the placing of any lien or encumbrance
against the Demised Premises, Tenant shall immediately give Landlord written
notice thereof. Tenant shall within ten (10) days therefrom remove such lien by
payment or bond.

          If Tenant shall fail to discharge such mechanic's lien within such
period, then, in addition to any other right or remedy of Landlord, Landlord
may, but shall not be obligated to, discharge the same by paying to the claimant
the amount claimed to be due by procuring the discharge of such lien as to the
Demised Premises by deposit in the court having jurisdiction of such lien, a
cash sum sufficient to secure the discharge of the same, or by the deposit of a
bond or other security with such court sufficient in form, content and amount to
procure the discharge of such lien, or in such other manner as is now or may in
the future be provided by present or future law for the discharge of such lien
as a lien against the Demised Premises. Any amount paid by Landlord, or the
value of any deposit so made by Landlord, together with all costs, fees and
expenses in connection therewith (including reasonable attorneys' fees of
Landlord), together with interest thereon at the rate set forth in Paragraph 33
hereof, shall be repaid by Tenant to Landlord on demand by Landlord and if
unpaid may be treated as Additional Rent.

          All materialmen, contractors, artisans, mechanics, laborers and any
other person now or hereafter furnishing any labor, services, materials,
supplies or equipment to Tenant with respect to the Demised Premises, or any
portion thereof, are hereby charged with notice that they must look exclusively
to Tenant to obtain payment for the same. Notice is hereby given that Landlord
shall not be liable for any labor, services, materials, supplies, skill,
machinery, fixtures or equipment furnished or to be furnished to Tenant upon
credit, and that no mechanic's lien or other lien for any such labor, services,
materials, supplies, machinery, fixtures or equipment shall attach to or affect
the estate or interest of Landlord in and to the Demised Premises, or any
portion thereof.

          33. Interest; Late Charge. Base Rent payable pursuant to Paragraph 3
              ---------------------
hereof by Tenant to Landlord under this Lease, if not paid when due, and any
other charges payable by Tenant hereunder not paid when due, including any
charges, expenses, liabilities or fees in connection with a default by Tenant,
shall accrue interest at the rate of prime (as announced from time to time by
the First National Bank of Chicago) plus one percent (1%) per annum from the due
date until paid, said interest to be in addition to Base Rent and other charges
under this Lease and to be paid to Landlord by Tenant upon demand. In addition,
if any installment of Base Rent and other charges payable pursuant to this Lease
by Tenant to Landlord is not paid within five (5) days after receipt by Tenant
of a written notice thereof from Landlord, Tenant shall pay Landlord a late
charge in an amount equal to two percent (2%) of the amount then due to defray
the increased cost of collecting late payments.

                                       33



<PAGE>

          34. Inspections. Landlord, its agents or employees may, after
              -----------
providing Tenant with at least twenty-four (24) hours prior notice except in an
emergency situation, enter the Demised Premises during reasonable business hours
when accompanied by an authorized employee or agent of Tenant except in an
emergency situation, to (a) exhibit the Demised Premises to prospective
purchasers or lenders; (b) inspect the Demised Premises to see that Tenant is
complying with its obligations hereunder; and (c) exhibit the Demised Premises
during the last six (6) months of the term to prospective tenants; provided that
Landlord shall comply at all times with Tenant's reasonable security
requirements.

          35. Transfer of Landlord's Interest. Tenant acknowledges that Landlord
              -------------------------------
has the right to transfer its interest in the Demised Premises and in this Lease
at any time after the date which is eighteen (18) months after the Commencement
Date and subject to the provisions of Paragraph 52 hereof, and Tenant agrees
that in the event of any such transfer Landlord shall automatically be released
from all liability under this Lease except for any liabilities accruing prior to
the date of transfer for which Tenant has identified in an estoppel certificate
or by written notice to Landlord, and Tenant agrees to look solely to such
transferee for the performance of Landlord's obligations hereunder; provided,
however, any such transferee shall be deemed to have assumed the obligations of
Landlord hereunder subject to the conditions and limitations herein contained.
Tenant agrees to look solely to Landlord's interest in the Demised Premises for
the recovery of any judgment from Landlord, it being agreed that Landlord, or if
Landlord is a partnership, its partners whether general or limited, or if
Landlord is a corporation, its directors, officers or shareholders, or if
Landlord is a limited liability company, its members or managers, shall never be
personally liable for such judgment. Without limiting the generality of the
foregoing, Tenant agrees that Landlord may transfer its interest in this Lease
to any entity controlled by, controlling or under common control with Landlord,
that acquires the Demised Premises and from and after such transfer Landlord
shall be released from liability, as aforesaid.

          36. Indemnity.
              ---------

              (a) To the fullest extent allowed by law, Tenant shall at all
times indemnify, defend and hold Landlord harmless against and from any and all
claims by or on behalf of any person or persons, firm or firms, corporation or
corporations, arising from the conduct or management, or from any work or things
whatsoever done in or about the Demised Premises, and will further indemnify,
defend and hold Landlord harmless against and from any and all claims arising
during the term of this Lease, or arising from any breach or default on the part
of Tenant in the performance of any covenant or agreement on the part of Tenant
to be performed, pursuant to the terms of this Lease, or arising from, any act
or negligence of Tenant, its agents, servants, employees or licensees, or
arising from any accident, injury or damage whatsoever caused to any person,
firm or corporation occurring during the term of this Lease, in or about the
Demised Premises or upon the sidewalk and the land adjacent thereto, and from
and against all costs, attorneys' fees, expenses and liabilities incurred in or
about any such claim or action or proceeding brought thereon; and in case any
action or proceeding be brought against Landlord by reason of any such claim,
Tenant, upon notice from Landlord, covenants to defend such action or proceeding
by counsel reasonably satisfactory to Landlord. Tenant's obligations under this
Paragraph 36 shall be insured by contractual liability endorsement on Tenant's
policies of insurance required under the

                                       34



<PAGE>

provisions of Paragraph 17 hereof.

              (b) Landlord shall protect, indemnify and hold Tenant harmless
from and against any and all loss, claims, liability or costs (including court
costs and attorneys' fees) incurred by reason of: (a) any damage to any property
or any injury (including but not limited to death) to any person occurring in,
or on or about the Demised Premises or the Building to the extent that such
injury or damage shall be proximately caused by the Landlord's affirmative acts
of negligence or willful misconduct of Landlord or its agents, servants or
employees; provided, however, that such indemnification shall be limited to the
extent of the sum of: (i) amounts of insurance proceeds recovered by Landlord
under insurance policies carried by Landlord for such injury or damage, after
deductibles, or insurance proceeds that would have been received in the event
Landlord had not elected to self-insure, and (ii) the deductible amounts for
such claims under such insurance policies. The provisions of this Article shall
survive the termination of this Lease with respect to any claims or liability
occurring prior to such termination.

              (c) Notwithstanding the foregoing indemnification obligations,
Landlord and Tenant both hereby release the other and the other's officers,
directors, partners, employees and agents from any claim which the indemnified
party might have to the extent that the cost of any such claim is reimbursed by
insurance proceeds recovered by the releasing party, and both Landlord and
Tenant shall confirm that their insurance providers shall similarly waive all
such claims.

          37. Modification of Lease. The terms, covenants and conditions of this
              ---------------------
Lease may not be changed orally but only by an instrument in writing signed by
the party against whom enforcement of the change is sought. The failure of
either party hereto to insist in any one or more cases upon the strict
performance of any term, covenant or condition of this Lease to be performed or
observed by the other party hereto shall not constitute a waiver of
relinquishment for the future of any such term, covenant or condition.

          38. Memorandum of Lease. Neither party shall record this Lease or any
              -------------------
of the exhibits and/or riders attached hereto, but shall enter into a "short
form" or Memorandum of Lease in recordable form attached hereto as Exhibit F and
made a part hereof, which shall set forth the parties, the legal description of
the land, a description of the Demised Premises, the Commencement Date and
Expiration Date of the term of the Lease, and any options to renew, options to
purchase or rights of first refusal granted hereunder.

          39. Paragraph Captions. Paragraph captions herein are for Landlord's
              ------------------
and Tenant's convenience only, and neither limit nor amplify the provisions of
this Lease.

          40. Entire Agreement. This Lease represents the entire agreement
              ----------------
between Landlord and Tenant and supersedes all prior agreements, both written
and oral. The terms, covenants and conditions of this Lease shall be binding
upon and shall inure to the benefit of Landlord and Tenant and their respective
executors, administrators, heirs, distributees, legal representatives,
successors and assigns.

          41. Choice of Law and Interpretation. This Lease shall be governed by
              --------------------------------
the internal


                                       35


<PAGE>

law of the State in which the Demised Premises is situated, without considering
such state's choice of law rules. Should any provision of this Lease require
judicial interpretation, it is agreed that the court interpreting or construing
the same shall not apply a presumption that the terms of any such provision
shall be more strictly construed against one party or the other by reason of the
rule of construction that a document is to be construed most strictly against
the party who itself or through its agent prepared the same, it being agreed
that the agents of all parties hereto have participated in the preparation of
this Lease.

          42. Prevailing Party. If either party hereto files a lawsuit against
              ----------------
the other party relating to performance or non-performance under this Lease, and
the court has entered a judgment in favor of one party on one or more counts and
no judgment in favor of the other party on any counts, then the non-prevailing
party shall pay the prevailing party's reasonable attorneys' fees and costs in
connection with the lawsuit.

          43. Exhibits. Attached hereto and made a part hereof are the
              --------
following:

          Exhibit A         -        Legal Description
          Exhibit B         -        Site Plan
          Exhibit C         -        Plans
          Exhibit C-1       -        Construction Schedule
          Exhibit D         -        Schedule of Rents
          Exhibit E         -        Lease Term Agreement
          Exhibit F         -        Memorandum of Lease
          Exhibit G         -        Landlord's Development Costs
          Exhibit H         -        Permitted Exceptions
          Exhibit I         -        Escrow Agreement

          44. Guarantee. All obligations on the part of Tenant to be paid,
              ---------
performed and complied with are unconditionally guaranteed by First Data
Corporation (the "Guarantor") according to the provisions of the Guarantee
executed by Guarantor in a form prepared by Landlord.

          45. Independent Covenants. It is the express intent of Landlord and
              ---------------------
Tenant that (a) the obligations of Landlord and Tenant hereunder shall be
separate and independent covenants and agreements and that the Base Rent and
Additional Rent, and all other charges and sums payable by Tenant hereunder,
shall commence at the times provided herein and shall continue to be payable in
all events; (b) all costs or expenses of whatsoever character or kind, general
or special, ordinary or extraordinary, foreseen or unforeseen, and of every kind
and nature whatsoever that may be necessary or required in and about the Demised
Premises, or any portion thereof, and Tenant's possession or authorized use
thereof during the term of this Lease, shall be paid by Tenant and all
provisions of this Lease are to be interpreted and construed in light of the
intention expressed in this Paragraph 45; (c) the Base Rent specified in
Paragraph 3 shall be absolutely net to Landlord so that this Lease shall yield
net to Landlord the Base Rent specified in Paragraph 3 in each year during the
term of this Lease (unless extended or renewed at a different Base Rent); (d)
all Impositions, insurance premiums, utility expenses, repair and maintenance
expenses, and all other costs, fees, interest, charges, expenses, reimbursements
and obligations of every kind and nature whatsoever relating to the Demised
Premises, or any portion

                                       36


<PAGE>

thereof, which may arise or become due during the term of this Lease, or any
extension or renewal thereof, shall be paid or discharged by Tenant as
Additional Rent.

          46. Entry by Landlord. Subject to the provisions of Section 34 hereof,
              -----------------
Tenant agrees to permit Landlord or Landlord's mortgagee and authorized
representatives of Landlord or Landlord's mortgagee to enter upon the Demised
Premises at all reasonable times during ordinary business hours for the purpose
of inspecting the same and making any necessary repairs to comply with any laws,
ordinances, rules, regulations or requirements of any public body, or the Board
of Fire Underwriters, or any similar body; provided that Landlord shall comply
at all times with Tenant's reasonable security requirements. Nothing herein
contained shall imply any duty upon the part of Landlord to do any such work
which, under any provision of this Lease, Tenant may be required to perform and
the performance thereof by Landlord shall not constitute a waiver of Tenant's
default in failing to perform the same. Landlord may, during the progress of any
work, keep and store upon the Demised Premises all necessary materials, tools
and equipment. Landlord shall not in any event be liable for inconvenience,
annoyance, disturbance, loss of business or other damage to Tenant by reason of
making repairs or the performance of any work in or about the Demised Premises,
or on account of bringing material, supplies and equipment into, upon or through
the Demised Premises during the course thereof, and the obligations of Tenant
under this Lease shall not be thereby affected in any manner whatsoever;
provided, however, Landlord shall use all reasonable efforts to conduct any
entry into the Demised Premises so as to interfere with the business of Tenant
as little as reasonably practical under the circumstances.

          47. [Deleted by intent of parties.]
               ----------------------------

          48. Survival of Obligations. Except as otherwise provided herein to
              -----------------------
the contrary, all obligations of Tenant hereunder not fully performed as of the
expiration or earlier termination of the term of this Lease shall survive the
expiration or earlier termination of the term hereof for a period of one (1)
year.

          49. Lease Subject to Landlord's Acquisition of Demised Premises.
              -----------------------------------------------------------
Anything herein to the contrary notwithstanding, it is agreed and acknowledged
by the parties hereto that as of the date hereof, Landlord does not own the
Demised Premises. Therefore, anything herein to the contrary notwithstanding,
the rights, duties and obligations of Landlord and Tenant hereunder are
expressly subject to and contingent upon acquisition by Landlord of the Demised
Premises by December 31, 1997 ("Contingency Date"), upon terms and conditions
acceptable to Landlord, in its sole and absolute discretion, including, without
limitation, procuring project financing on terms and conditions acceptable to
Landlord. In the event Landlord has not acquired the Demised Premises by the
Contingency Date on terms and conditions acceptable to Landlord, as aforesaid,
Landlord shall notify Tenant, and either party may terminate this Lease at
anytime thereafter (but prior to the date Landlord acquires the Demised
Premises) by delivering written notice of such termination to the other party,
whereupon the parties shall be released and discharged from any and all
obligations and liabilities not theretofore accrued under this Lease; provided,
however, in the event the Lease is so terminated, Tenant shall pay to Landlord,
within ten (10) days from the date Landlord has submitted a written statement to
Tenant requesting such payment, all amounts incurred by Landlord in connection
with the proposed acquisition and development of the Land, including, without
limitation, any earnest money deposit, any costs for

                                       37


<PAGE>

required off-site improvements, including sewer and road improvements, all
architectural, engineering, environmental, land planning and other consulting
fees, all title and survey expenses, all costs associated with the proposed
subdivision of the Land, any and all fees and expenses associated with procuring
construction and/or other financing for the project, any other costs or expenses
that would not have been incurred by Landlord had Landlord not been involved in
the acquisition and proposed development of the Land and all attorneys, few
associated with any of the foregoing. Landlord agrees to use all reasonable
efforts to acquire the Demised Premises on terms and conditions acceptable to
Landlord, as aforesaid.

          50. Americans With Disabilities Act.
              -------------------------------

          A. In the event that any alteration or repair to the Demised Premises
is undertaken by Tenant with or without Landlord's consent, or is undertaken by
Landlord at Tenants request during the term of this Lease (including any renewal
or extension thereof), such alteration or repair (i) shall be designed and
constructed in full compliance with the Americans With Disabilities Act, as
amended from time to time, (the "Act") if such alteration or repair is
undertaken by Tenant, and (ii) shall be designed by Tenant in full compliance
with the Act if such alteration or repair is undertaken by Landlord at Tenant's
request, and the cost of any such design, alteration or repair to the Demised
Premises shall be borne by Tenant, including without limitation (a) the cost of
any such design, alteration, or repair required as a result of (i) Tenant or an
assignee or subtenant being deemed a "Public Accommodation" or the Demised
Premises being deemed a "Place of Public Accommodation" or (ii) such alteration
or repair being deemed to affect an "Area of Primary Function" (as such terms
are defined in the Act); and (b) the cost of the installation or implementation
of any "Auxiliary Aid" required under the Act as a result of the operation of
any business within the Demised Premises. In addition, Tenant shall be
responsible for all costs and expenses incurred or to be incurred in order to
cause the Demised Premises and the operation of any business within the Demised
Premises to comply with the Act, and, if Tenant fails to keep and maintain the
Demised Premises in compliance with the Act, Landlord shall have the right but
not the obligation, at Tenant's sole cost and expense, to enter the Demised
Premises and cause the Demised Premises to be put into compliance with the Act;
and Tenant shall indemnify, defend and hold Landlord harmless from and against
any and all costs, claim and liabilities, including without limitation,
attorneys' fees arising from or related to Tenant's failure to maintain and keep
the Demised Premises in compliance with the Act.

          B. In connection with its construction of the Landlord's Improvements
pursuant to Paragraph 4 hereof, Landlord represents and warrants that the
Landlord's Improvements to be constructed in accordance with the Plans will
comply in all material respects with all applicable laws, including without
limitation, the Act, and Landlord covenants that the Demised Premises delivered
to Tenant as of the Construction Completion Date shall comply in all material
respects with all applicable laws, including without limitation, the Act.
Landlord shall indemnify, defend and hold Tenant harmless from all damages,
costs, losses, expenses (including but not limited to reasonable attorneys'
fees) arising from any breach by Landlord of the preceding covenant; provided
however the foregoing indemnification shall terminate upon the expiration of one
(1) year from the Construction Completion Date. Notwithstanding the foregoing,
in no event shall Tenant have the right to terminate this Lease or have any
right of set-off arising out of any breach or claimed breach by Landlord in its
obligations hereunder, it being expressly acknowledged and agreed that the Base
Rent and Additional Rent, and all other charges and

                                       38


<PAGE>

sums payable by Tenant hereunder, shall commence at the times provided herein
and shall continue to be payable as provided herein.

          51. Reports by Tenant. Upon request by Landlord at any time after 135
              -----------------
days after the end of the applicable fiscal year of Tenant, Tenant shall deliver
to Landlord (within 15 days after receipt of written request) a copy of the
audited financial statement of any guarantor of Tenant's obligations under this
Lease. If such audited statements are not available, Tenant may provide such
statements certified by such guarantor's chief financial officer as being true
and correct, in accordance with generally accepted principals of accounting
consistently applied over the applicable periods. Said financial statements
shall only be required in connection with a proposed sale or mortgaging of the
Demised Premises and shall be held in confidence by Landlord and any such
proposed purchaser or lender or their respective successors or assigns.
Notwithstanding the foregoing, Tenant shall cause First Data Corporation to
submit annual audited financial statements to Landlord and Landlord's mortgagee
in the manner set forth herein if First Data Corporation ceases to be a publicly
traded company.

          52. Option to Purchase. Subject to the provisions hereinafter set
              ------------------
forth, and provided that Tenant is not then in default hereunder, Landlord
hereby grants to Tenant the option to purchase the Demised Premises upon the
following terms and conditions:

          A. Landlord shall notify Tenant thirty (30) days prior to the date
that it intends to make the Demised Premises available for sale to third
parties. Included with such notice shall be the proposed purchase price for the
Demised Premises, as well as any other relevant economic terms being offered by
Landlord. In no event shall Landlord have the right to convey the Demised
Premises or otherwise make the Demised Premises available for sale to third
parties until eighteen (18) months after the Commencement Date.

          B. If, at anytime after notice is delivered to Tenant as set forth
above, Landlord enters into a serious negotiation with a prospective purchaser
to purchase the Demised Premises, then Landlord shall notify Tenant in writing
of (i) the fact of such negotiation, (ii) the purchase price agreed to between
Landlord and such prospective purchaser, and (iii) the other relevant
agreed-upon economic terms upon which such purchaser would acquire the Demised
Premises, and Tenant must within ten (10) business days thereafter, by written
notice to Landlord, elect to exercise the option to purchase the Demised
Premises upon all of the same terms and conditions as are contained in
Landlord's notice to Tenant in which event the parties shall enter into a
definitive agreement incorporating said terms and conditions. If Tenant does not
elect to purchase, Landlord shall have the right to sell to a third party on the
same terms and conditions provided to Tenant or shall submit any modified terms
to Tenant in accordance with the above. In no event shall Tenant be afforded
more than three (3) opportunities to exercise its option hereunder, in
connection with more than three (3) different offers from three (3) different
third parties.

          C. If Tenant exercises its option to purchase hereunder, the closing
of such purchase shall occur on the date set forth in the definitive agreement
entered into between Landlord and Tenant. At the closing, Tenant shall pay the
purchase price via cash or wire transfer of immediately available funds to
Landlord, and Landlord shall deliver to Tenant a general warranty deed (or
equivalent) to the Demised Premises conveying good and marketable fee

                                       39


<PAGE>

simple title in Tenant to the Demised Premises, subject to no liens,
encumbrances or other exceptions to title other than the Permitted Exceptions
and taxes for the current year, and any exceptions to title that have been
caused by Tenant or that Tenant has accepted in writing (other than any
mortgages or other liens, which must be discharged by Landlord at or prior to
such closing). On the closing date, Landlord and Tenant shall also execute and
deliver such other documents and instruments as are customary in similar
transactions and/or reasonably necessary to implement the terms and conditions
of this Lease, and to allow Tenant to obtain an extended coverage ALTA owner's
title policy insuring Tenant's fee simple ownership of the Demised Premises in
accordance with the above.

          D. Landlord covenants and agrees that if any exceptions to title other
than the Permitted Exceptions shall be revealed by the deed or title policy,
Landlord will at its sole cost and expense clear the title of such exceptions as
soon as reasonably practical but, in any event, within six (6) months after the
intended closing date (unless Tenant shall in writing extend such period), and
the actual closing (including the payment of the purchase price) of such
purchase of the Demised Premises shall be delayed until the title thereto has
been cleared. Until such time as Tenant's purchase of the Demised Premises is
closed as hereinabove provided, Tenant shall continue to occupy and possess the
Demised Premises under the terms and conditions of this Lease. If for any reason
such purchase is not closed, this Lease shall continue in full force and effect
as if Tenant had not exercised the aforesaid option to purchase, and Tenant
shall be entitled to retroactively exercise any option for any Extension Term to
the extent the normal option election date occurred after Tenant exercised its
option to purchase the Demised Premises.

          E. Upon Tenant's notice to Landlord of the exercise of Tenant's option
to purchase, Landlord shall provide Tenant with copies of all surveys, title
insurance policies, title instruments and other such documents in Landlord's
possession pertaining to the Demised Premises. Tenant shall pay for the cost of
the title insurance policy, the cost to prepare any survey required by Tenant
and the cost of any escrow closing services, and any cost or expense in
connection with any endorsements to the title policy requested by Tenant.
Landlord shall be responsible for the cost of compliance with any subdivision,
lot split or similar regulations which are applicable to or in connection with
the conveyance of the Demised Premises to Tenant. All rents shall be pro-rated
between the parties as of the date of closing. Tenant shall pay the cost of any
documentary stamp taxes required for recording the deed, as well as any transfer
taxes. Any other matters at closing not specifically provided for herein shall
be handled and the cost hereof charged to one or the other or both of the
parties as shall be the ordinary custom and practice for the handling of such
matters or the apportioning of the cost hereof then prevalent in the City of
Sunnyvale, Santa Clara County, California.

          F. The option hereunder may only be exercised by Tenant or a
subsidiary, affiliate or related entity of Tenant. If neither Tenant or a
subsidiary, affiliate or related entity is then occupying all or a portion of
the Demised Premises, Tenant shall have no rights hereunder.

          53. No Third Party Beneficiaries. The obligations of Tenant set forth
              ----------------------------
hereunder (including, without limitation, the obligations set forth in Sections
5A, 7A, 11B and 50), are covenants from Tenant to Landlord only and do not
create any third party beneficiaries of such obligations.

                                       40


<PAGE>

          54. Counterparts. This Lease may be executed in counterparts, each of
              ------------
which shall be deemed an original but all of which together shall constitute but
one and the same instrument.

          55. Consents and Approvals. Landlord and Tenant agree that any
              ----------------------
consents or approvals to be provided by either party will not be unreasonably
withheld or delayed unless specifically provided otherwise herein.

          56. Limitation on Damages. In no event shall Landlord or Tenant be
              ---------------------
liable under any theory of tort, contract, strict liability or other legal or
equitable theory for any punitive, special, incidental, indirect or
consequential damages, each of which is hereby excluded by agreement of the
parties regardless of whether or not any party has been advised of the
possibility of such damages.

          57. Tenant's Property. All fixtures, equipment, improvements and
              -----------------
appurtenances attached to, or built into, the Demised Premises that are
installed by Tenant at Tenant's expense shall be Tenant's property until the
termination of this Lease. All of the foregoing items installed at Tenant's
expense as well as all paneling, partitions and business and trade fixtures and
communication and office equipment which are installed in the Demised Premises
by Tenant, and all furniture, furnishing and other articles of movable personal
property owned by Tenant and located in the Demised Premises or the Building
(all of which are hereinafter referred to as "Tenant's Property") shall belong
to Tenant, may be removed by Tenant at any time during the term hereof, and may
be removed by Tenant at the end of the term hereof or within fifteen (15) days
thereafter, whether as a result of the normal expiration of the term of this
Lease or of the early termination of this Lease pursuant to the terms hereof (as
a result of Tenant's default hereunder or otherwise). Tenant shall repair any
damage resulting from the removal of Tenant's Property and leave the Demised
Premises in a commercially reasonable condition. Any items of Tenant's Property
not so removed shall, if not required to be removed by Tenant pursuant to
Paragraph 8 hereof, is deemed abandoned and retained by Landlord as its property
thereafter.

          Landlord waives any landlord or other lien it may have on Tenant's
Property and shall not seek to enforce same, whether upon Tenant's default or
otherwise.

                                       41


<PAGE>

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

                                    LANDLORD:

                                    SUNNYVALE PARTNERS LIMITED
                                    PARTNERSHIP, an Illinois limited partnership


                                    By: Ridge Sunnyvale, Inc.

                                    Its:  General Partner

                                    By: /s/
                                        -----------------------------------

                                    Its: President
                                         ----------------------------------


                                    TENANT:

                                    FIRST DATA MERCHANT SERVICES
                                    CORPORATION, a Florida corporation


                                    By:/s/ David Schlapbach
                                       ------------------------------------

                                     Its: Assistant Secretary
                                          ---------------------------------



                                       42


<PAGE>

thence, South 9(0) 06' 48" East, 167.07 feet; thence along a tangent curve to
the right with a radius of 40.00 feet, through an angle of 99(0) 50' 37", an arc
length of 69.70 feet to a line parallel with and distant 60.00 feet. Northerly,
at right angles, from the centerline of Fremont Avenue (60.00 feet wide); thence
along last said parallel line, North 89(0) 16' 11" West, 115.00 feet; thence
South 76(0) 50' 32" West, 124.99 feet; thence South 0(0) 43' 49" West 30.00 feet
to said centerline; thence along last said line South 89(0) 16' 11" East 278.80
feet to the point of commencement.

                                       45


<PAGE>
                                   EXHIBIT B
                                   ---------
                                  THE PREMISES

<PAGE>


                                    [GRAPHIC]




                             Exhibit B Page 1 of 2

<PAGE>

                                   [GRAPHIC]





                             Exhibit B page 2 of 2

<PAGE>

                                   EXHIBIT C
                                   ---------

                              EXCLUDED PROVISIONS

1,2,3,4,6,7(B),8,9,15,16(E),17(E),22,23,44 and 52 of the Main Lease. Also,
Exhibits B,C,D,E,F,G and I of the Main Lease.