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                                                               EXHIBIT 10.1

                             LEASE BETWEEN
            SOBRATO INTERESTS III AND NETWORK EQUIPMENT TECHNOLOGIES
                           (OFFICE BUILDING 1)

Section                                                              Page #
Parties..............................................................  1
Premises.............................................................  1
Use..................................................................  1
PERMITTED USES.......................................................  1
USES PROHIBITED......................................................  1
ADVERTISEMENTS AND SIGNS.............................................  2
Term and Rental......................................................  2
BASE MONTHLY RENT....................................................  2
RENTAL ADJUSTMENT....................................................  2
LATE CHARGES.........................................................  3
SECURITY DEPOSIT.....................................................  3
Construction and Possession..........................................  4
BUILDING SHELL CONSTRUCTION..........................................  4
TENANT IMPROVEMENT PLANS.............................................  5
FINAL PRICING........................................................  5
CHANGE ORDERS........................................................  5
BUILDING SHELL COSTS.................................................  5
TENANT IMPROVEMENT COSTS.............................................  6
CONSTRUCTION.........................................................  6
GENERAL CONTRACTOR OVERHEAD & PROFIT.................................  6
TENANT DELAYS........................................................  6
INSURANCE............................................................  7
PUNCH LIST & WARRANTY................................................  7
OTHER WORK BY TENANT.................................................  7
Acceptance of Possession and Covenants to Surrender..................  7
DELIVERY AND ACCEPTANCE..............................................  7
CONDITION UPON SURRENDER.............................................  8
FAILURE TO SURRENDER.................................................  8
Alterations and Additions............................................  9
TENANT'S ALTERATIONS.................................................  9
EXEMPTED ALTERATIONS................................................. 10
FREE FROM LIENS...................................................... 10
COMPLIANCE WITH GOVERNMENTAL REGULATIONS............................. 10
Maintenance of Premises.............................................. 10
LANDLORD'S OBLIGATIONS............................................... 10
TENANT'S OBLIGATIONS................................................. 11
LANDLORD AND TENANT'S OBLIGATIONS REGARDING COMMON AREA COSTS........ 11
COMMON AREA COSTS.................................................... 11
TENANT'S ALLOCABLE SHARE............................................. 12
WAIVER OF LIABILITY.................................................. 12
Hazard Insurance..................................................... 13
TENANT'S USE......................................................... 13
LANDLORD'S INSURANCE................................................. 13
TENANT'S INSURANCE................................................... 13
WAIVER............................................................... 14
Taxes................................................................ 14
Utilities............................................................ 14
Toxic Waste and Environmental Damage................................. 14
TENANT'S RESPONSIBILITY.............................................. 15
TENANT'S INDEMNITY REGARDING HAZARDOUS MATERIALS..................... 15
ACTUAL RELEASE BY TENANT............................................. 15
ENVIRONMENTAL MONITORING............................................. 16

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Tenant's Default..................................................... 16
REMEDIES............................................................. 17
RIGHT TO RE-ENTER.................................................... 17
ABANDONMENT.......................................................... 17
NO TERMINATION....................................................... 18
NON-WAIVER........................................................... 18

PERFORMANCE BY LANDLORD.............................................. 18
Landlord's  Liability................................................ 18
LIMITATION ON LANDLORD'S LIABILITY................................... 18
LIMITATION ON TENANT'S RECOURSE...................................... 19
INDEMNIFICATION OF LANDLORD.......................................... 19
Destruction of Premises.............................................. 19
DESTRUCTION BY AN INSURED CASUALTY................................... 19
DESTRUCTION BY AN UNINSURED CASUALTY................................. 20
TENANT'S RIGHT TO CANCEL ADJACENT LEASES............................. 20
Condemnation......................................................... 20
Assignment or Sublease............................................... 21
CONSENT BY LANDLORD.................................................. 21
ASSIGNMENT OR SUBLETTING CONSIDERATION............................... 21
NO RELEASE........................................................... 22
REORGANIZATION OF TENANT............................................. 22
PERMITTED TRANSFERS.................................................. 22
EFFECT OF DEFAULT.................................................... 22
EFFECTS OF CONVEYANCE................................................ 23
SUCCESSORS AND ASSIGNS............................................... 23
Option to Extend the Lease Term...................................... 23
GRANT AND EXERCISE OF OPTION......................................... 23
DETERMINATION OF FAIR MARKET RENTAL.................................. 23
RESOLUTION OF A DISAGREEMENT OVER THE FAIR MARKET RENTAL............. 24
PERSONAL TO TENANT................................................... 24
Option to Lease, Option to Purchase.................................. 25
General Provisions................................................... 25
ATTORNEY'S FEES...................................................... 25
AUTHORITY OF PARTIES................................................. 25
BROKERS.............................................................. 25
CHOICE OF LAW........................................................ 25
DISPUTE RESOLUTION................................................... 25
ENTIRE AGREEMENT..................................................... 26
ENTRY BY LANDLORD.................................................... 26
ESTOPPEL CERTIFICATES................................................ 26
EXHIBITS............................................................. 27
INTEREST............................................................. 27
MODIFICATIONS REQUIRED BY LENDER..................................... 27
NO PRESUMPTION AGAINST DRAFTER....................................... 27
NOTICES.............................................................. 27
RENT................................................................. 27
REPRESENTATIONS...................................................... 27
RIGHTS AND REMEDIES.................................................. 27
SEVERABILITY......................................................... 28
SUBORDINATION........................................................ 28
SUBMISSION OF LEASE.................................................. 28
SURVIVAL OF INDEMNITIES.............................................. 28
TIME................................................................. 28
TRANSPORTATION DEMAND MANAGEMENT PROGRAMS............................ 28
WAIVER OF RIGHT TO JURY TRIAL........................................ 29
USE OF ROOF.......................................................... 29

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RECORDATION.......................................................... 29
EXHIBIT A - Project.................................................. 31
EXHIBIT B-2 - Shell Plans and Specifications......................... 32
EXHIBIT C - Building Shell Definition................................ 33
BUILDING STRUCTURE................................................... 33
SITEWORK............................................................. 33
PLUMBING............................................................. 34
ELECTRICAL........................................................... 34
FIRE SPRINKLER....................................................... 34
SITE AMENITIES....................................................... 34
EXHIBIT C - Building Shell Definition................................ 34
EXHIBIT D - Tenant Improvement Plans and Specifications.............. 35
EXHIBIT E - Option to Lease.......................................... 36
GRANT OF OPTION...................................................... 36
TERM OF OPTION....................................................... 36
EXERCISE OF OPTION................................................... 36
CONDITIONS PRECEDENT................................................. 36
LEASE OF THE OPTION BUILDING......................................... 36
CONSTRUCTION OF SHELL AND TENANT IMPROVEMENTS........................ 38
SUCCESSORS........................................................... 38
EXHIBIT D - Tenant Improvement Plans and Specifications.............. 39



                                   Page 3

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   1. PARTIES:    THIS LEASE, is entered into on this ____ day of April, 1997, 
between SOBRATO INTERESTS III, a California Limited Partnership, whose address 
is 10600 North De Anza Boulevard, Suite 200, Cupertino, CA  95014 and NETWORK 
EQUIPMENT TECHNOLOGIES, a Delaware Corporation, whose address is 800 Saginaw 
Drive, Redwood City, California,  94063, hereinafter called respectively 
Landlord and Tenant.

   2. PREMISES:    Landlord hereby leases to Tenant, and Tenant hires from 
Landlord those certain Premises with the appurtenances, situated in the City 
of Fremont, County of Alameda, State of California, consisting of a two-story 
office building of approximately 100,000 square feet ("Building 1")  and 350 
parking places which shall be available for Tenant's exclusive use but shall 
not be designated or segregated from the balance of the parking area, in a 
project initially consisting of 3 buildings totaling approximately 280,000 
square feet on an approximately 17.5-acre first phase portion of a larger 
33.5-acre site ("Project) as outlined in red on EXHIBIT "A".  In addition, 
Tenant shall have the non-exclusive right to use the common area ("Common 
Area") surrounding the Building and additional buildings constructed within 
the Project.  Unless expressly provided otherwise, the term Premises as used 
herein shall include the Tenant Improvements (defined in Section 5.B) 
constructed by Tenant pursuant to Section 5.B.  Tenant acknowledges 
Landlord's right to and hereby consents to construction of additional 
building(s) on adjacent land in the Project owned by Landlord, so long as 
such construction does not involve the removal of site amenities such as the 
volleyball court and outdoor seating or a reduction in size of the 
approximately 79,000 square foot amphitheatre area and water feature ("Quad") 
adjacent to the Building.

   Notwithstanding the provisions of this Section 2, Tenant shall be 
permitted to schedule with Landlord and reserve the Quad for its exclusive 
use from time to time for the purpose of conducting company meetings and 
events.

   3.USE:    

   A. PERMITTED USES:    Tenant shall use the Building only for the following 
purposes and shall not change the use of the Building without the prior 
written consent of Landlord:  Office, research and development, marketing, 
light manufacturing, storage and other incidental uses such as training 
rooms, cafeteria and health club. Tenant shall use only the

                                   Page 4

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number of parking spaces allocated to Tenant.  All trucks and delivery 
vehicles shall (i) be parked at the rear of the Building near the loading 
areas, (ii) loaded and unloaded in a manner which does not interfere with the 
businesses of other occupants of the Project, and (iii) permitted to remain 
on the Project only so long as is reasonable necessary to complete the 
loading and unloading.  Landlord makes no representation or warranty that any 
specific use of the Premises desired by Tenant is permitted pursuant to any 
Laws.

   B. USES PROHIBITED:    Tenant shall not commit or suffer to be committed 
on the Premises any waste, nuisance, or other act or thing which may 
unreasonably disturb the quiet enjoyment of any other tenant in or around the 
Premises, nor allow any sale by auction or any other use of the Premises for 
an unlawful purpose. Tenant shall not (i) damage or overload the electrical, 
mechanical or plumbing systems of the Premises, (ii) attach, hang or suspend 
anything from the ceiling, walls or columns of the building in excess of the 
load limits for which such items are designed or set any load on the floor in 
excess of the load limits for which the floor is designed, or (iii) generate 
dust, fumes or waste products which create a fire or health hazard or damage 
the Premises or in the soils surrounding the Building.  No materials, 
supplies, equipment, finished products or semi-finished products, raw 
materials or articles of any nature, or any waste materials, refuse, scrap or 
debris, shall be stored upon or permitted to remain on any portion of the 
Premises outside of the Building without Landlord's prior approval, which 
approval may be withheld in its sole discretion.  

   C. ADVERTISEMENTS AND SIGNS:    Tenant will not place or permit to be 
placed, in, upon or about the Premises (excluding the interior of the 
Building) any signs not approved by the city or other governing authority.  
Tenant will not place or permit to be placed upon the Premises any signs, 
advertisements or notices without the written consent of Landlord as to type, 
size, design, lettering, coloring and location, which consent will not be 
unreasonably withheld.  Any sign placed on the Premises shall be removed by 
Tenant, at its sole cost, prior to the Expiration Date or promptly following 
the earlier termination of the lease, and Tenant shall repair, at its sole 
cost, any damage or injury to the Premises caused thereby, and if

                                   Page 5

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not so removed, then Landlord may have same so removed at Tenant's expense.  
Landlord hereby approves the general size and location of the exterior signs 
as shown in green on Exhibit "B-1".

   4.TERM AND RENTAL:    

   A. BASE MONTHLY RENT:    The term ("Lease Term") shall be for one hundred 
forty-four (144) months, commencing on the Commencement Date, estimated to 
occur on April 1, 1998, but finally determined pursuant to Section 5.G, and 
ending one hundred forty-four (144) months thereafter ("Expiration Date").  
In addition to all other sums payable by Tenant under this Lease, Tenant 
shall pay as base monthly rent ("Base Monthly Rent") for the Premises an 
amount equal to the product of multiplying One Dollar and Twenty-Five Cents 
($1.25) by the Rentable Square Footage (as hereinafter defined) of the 
Building.  "Rentable Square Footage" is defined as the square footage of the 
Building when measured from outside exterior wall/glass to outside exterior 
wall/glass of each floor, including covered docks, covered entries, covered 
patios and covered balconies, but excluding roof overhangs.  The Rentable 
Square Footage shall be derived based on Exhibit "B-2" as defined below and 
attached hereto.  Base Monthly Rent shall be due in advance on or before the 
first day of each calendar month during the Lease Term.  All sums payable by 
Tenant under this Lease shall be paid to Landlord in lawful money of the 
United States of America, without offset or deduction, except as set forth 
herein, and without prior notice or demand, at the address specified in 
Section 1 of this Lease or at such place or places as may be designated by 
Landlord during the Lease Term.  Base Monthly Rent for any period less than a 
calendar month shall be a pro rata portion of the monthly installment.

   B. RENTAL ADJUSTMENT:  Beginning twenty four (24) months after the 
Commencement Date, and every twenty four (24) months thereafter (an 
"Adjustment Date"), the then-payable Base Monthly Rent shall be subject to 
adjustment based on the increase, if any, in the Consumer Price Index that 
has occurred during the twenty four (24)  months preceding the 
then-applicable Adjustment Date.  The basis for computing the adjustment 
shall be the U.S. Department of Labor, Bureau of Labor Statistic's Consumer 
Price Index for All Urban Consumers, All Items, 1982-84=100, for the San 
Francisco-Oakland-San Jose area ("Index").  The Index most recently published 
preceding the Commencement Date for the first Adjustment (or previous 
Adjustment Date, as applicable), shall be considered the "Base Index".  If 
the Index most recently published preceding the Adjustment Date ("Comparison 
Index") is greater than the Base Index, the then-payable Base Monthly Rent 
shall be increased by multiplying the then-payable Base Monthly Rent by a 
fraction, the numerator of which is the Comparison Index and the denominator 
of which is the Base Index. Notwithstanding

                                   Page 6

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any subsequent decrease in the Index, the increase in the CPI for any 
calendar year shall never be less than three percent (3%) nor more than eight 
percent (8%) per year compounded annually.  On adjustment of the Base Monthly 
Rent, Landlord shall notify Tenant by letter stating the new Base Monthly 
Rent.  Landlord's calculation of the Base Monthly Rent escalation shall be 
conclusive and binding unless Tenant objects to said calculation within sixty 
(60) days of Tenant's receipt from Landlord of such calculation.  Landlord's 
failure to adjust Base Monthly Rent on an Adjustment Date shall not prevent 
Landlord from retroactively adjusting Base Monthly Rent at any subsequent 
time during the Lease Term.  If the Index base year is changed so that it 
differs from 1982-84=100, the Index shall be converted in accordance with the 
conversion factor published by the United States Department of Labor, Bureau 
of Labor Statistics.  If the Index is changed, revised or discontinued for 
any reason, there shall be substituted in lieu thereof and the term "Consumer 
Price Index" shall thereafter refer to the most nearly comparable official 
price index of the United States Government in order to obtain substantially 
the same result as would have been obtained had the original Consumer Price 
Index been not been discontinued, revised or changed, which alternative index 
shall be selected by Landlord and shall be subject to Tenant's written 
approval.

   C. LATE CHARGES:    Tenant hereby acknowledges that late payment by Tenant 
to Landlord of Base Monthly Rent and other sums due hereunder will cause 
Landlord to incur costs not contemplated by this Lease, the exact amount of 
which is extremely difficult to ascertain.  Such costs include but are not 
limited to:  administrative, processing, accounting, and late charges which 
may be imposed on Landlord by the terms of any contract, revolving credit, 
mortgage, or trust deed covering the Premises.  Accordingly, if any 
installment of Base Monthly Rent or other sum due from Tenant shall not be 
received by Landlord or its designee within five (5) days after that Rent is 
due, Tenant shall pay to Landlord a late charge equal to five (5%) percent of 
such overdue amount, which late charge shall be due and payable on the same 
date that the overdue amount was due. The parties agree that such late charge 
represents a fair and reasonable estimate of the costs Landlord will incur by 
reason of late payment by Tenant, excluding interest and attorneys fees and 
costs.  If any rent remains delinquent for a period in excess of thirty (30) 
days then, in addition

                                   Page 7

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to such late charge, Tenant shall pay to Landlord interest on any rent that 
is not paid when due at the Agreed Interest Rate specified in Section 19.J 
and calculated from the date thirty (30) days following the date such amount 
became due until the date such rent is paid.  Acceptance by Landlord of such 
late charge shall not constitute a waiver of Tenant's default with respect to 
such overdue amount nor prevent Landlord from exercising any of the other 
rights and remedies granted hereunder.

Notwithstanding the foregoing, Tenant shall be granted one exception per 
calendar year when Base Monthly Rent may be received by Landlord up to ten 
(10) days after notice to Tenant that such Base Monthly Rent is past due 
before Tenant incurs the 5% late charge.

   D. SECURITY DEPOSIT:    Prior to the Lease Commencement Date, Tenant shall 
deposit with Landlord the sum of One Hundred Twenty Five Thousand and No/100 
Dollars ($125,000.00) ("Security "Deposit").  Landlord agrees that in lieu of 
a cash Security Deposit, Tenant may deposit a letter of credit in a form 
reasonably acceptable to Landlord.  Landlord shall be entitled to draw 
against the letter of credit at any time provided only that Landlord 
certifies to the issuer of the letter of credit that Tenant is in default 
under the Lease.  Tenant shall keep the letter of credit in effect during the 
entire Lease Term, as the same may be extended, plus a period of four (4) 
weeks after expiration of the Lease Term.  At least thirty (30) days prior to 
expiration of any letter of credit, the term thereof shall be renewed or 
extended for a period of at least one (1) year.  Tenant's failure to so renew 
or extend the letter of credit shall be a material default of this Lease by 
Tenant.   In the event Landlord draws against the letter of credit, Tenant 
shall replenish the existing letter of credit or cause a new letter of credit 
to be issued such that the aggregate amount of letters of credit available to 
Landlord at all times during the Lease Term is the amount of the Security 
Deposit originally required.

Landlord shall not be deemed a trustee of the Security Deposit, may use the 
Security Deposit in business, and shall not be required to segregate it from 
its general accounts. Tenant shall not be entitled to interest on the 
Security Deposit..  If Tenant defaults with respect to any provisions of the 
Lease, including but not limited to the provisions relating to payment of 
Base Monthly Rent or other charges, Landlord may, to the extent reasonably 
necessary to remedy Tenant's default, use any or all of the Security Deposit 
towards payment of the following:  (i) Base Monthly Rent or other charges in 
default; (ii) any other amount which Landlord may spend or become obligated 
to spend by reason of Tenant's default; and (iii) any other loss or damage 
which Landlord may suffer by reason of Tenant's default.  If any portion of 
the Security Deposit is so


                                   Page 8

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used or applied, Tenant shall, within ten (10) days after written demand from 
Landlord, deposit cash with Landlord in an amount sufficient to restore the 
Security Deposit to its full original amount, and shall pay to Landlord such 
other sums as necessary to reimburse Landlord for any sums paid by Landlord.  
If Tenant shall default more than three (3) times in any twelve (12) month 
period, irrespective of whether or not such default is cured, then the 
Security Deposit shall, within ten (10) days after demand by Landlord, be 
increased by Tenant to an amount equal to three (3) times the Base Monthly 
Rent.  Tenant waives the provisions of California Civil Code Section 1950.7, 
and all other provisions of law now in force or that become in force after 
the date of execution of this Lease, that provide that Landlord may claim 
from a security deposit only those sums reasonably necessary to remedy 
defaults in the payment of Rent, to repair damage caused by Tenant, or to 
clean the Premises.  Landlord and Tenant agree that Landlord may, in 
addition, claim those sums reasonably necessary to compensate Landlord for 
any other foreseeable or unforeseeable loss or damage caused by the act or 
omission of Tenant or Tenant's agents, employees, contractors and invitees 
("Tenant's Agents").  Tenant may not assign or encumber the Security Deposit 
without the consent of Landlord.  any attempt to do so shall be void and 
shall not be binding on Landlord.  If Tenant performs every provision of this 
Lease to be performed by Tenant, the Security Deposit shall be returned to 
Tenant within thirty (30) days after the Expiration Date and surrender of the 
Premises to Landlord, less any amount deducted in accordance with this 
Section, together with Landlord's written notice itemizing the amounts and 
purposes for such deduction. In the event of termination of Landlord's 
interest in this Lease, Landlord may deliver or credit the security Deposit 
to Landlord's successor in interest in the Premises and thereupon be relieved 
of further responsibility with respect to the Security Deposit.

   5. CONSTRUCTION AND POSSESSION:

   A. BUILDING SHELL CONSTRUCTION:  Landlord shall cause the shell of the 
Building ("Building Shell") to be constructed by independent contractors to 
be employed by and under the supervision of South Bay Construction ("General 
Contractor"), in general accordance with preliminary shell and site plans 
attached hereto as EXHIBIT "B-1" ("Preliminary Site

                                   Page 9

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Plan and Specifications").  Final Building Shell plans and guideline 
specifications shall be prepared by Arctec ("Architect") consistent with 
Exhibit "B-1" and approved by Landlord and Tenant for attachment by June 15, 
1997 as EXHIBIT "B-2"  ("Shell Plans and Specifications").  Landlord shall 
pay for all costs and expenses associated with the construction of the 
Building Shell.  The Building Shell shall include those items set forth in 
the attached EXHIBIT "C" ("Building Shell Definition").

   B. TENANT IMPROVEMENT PLANS:    Tenant, at Tenant's sole cost and expense, 
has hired Gensler & Associates ("Gensler") to prepare plans and outline 
specifications ("Tenant Improvement Plans and Specifications") which shall be 
attached as EXHIBIT "D" by August 29, 1997 with respect to the construction 
of improvements to the interior premises ("Tenant Improvements").  In 
addition, Gensler shall provide the Architect no later than April 21, 1997 
with the interior stair and elevator locations and any other information 
related to the Tenant Improvement Plans and Specifications that Tenant wishes 
to be incorporated into the Shell Plans and Specifications.  The Tenant 
Improvements shall consist of all items not included within the scope of the 
Building Shell Definition.  The Tenant Improvement Plans and Specifications 
shall be prepared in sufficient detail to allow General Contractor to 
construct the Tenant Improvements. The General Contractor shall contract 
directly with Tenant for construction of the Tenant Improvements and shall 
construct the Tenant Improvements in accordance with all Tenant Improvement 
Plans and Specifications.   Landlord shall provide Tenant a work allowance to 
be utilized by Tenant for the construction of Tenant Improvements ("Work 
Allowance") in an amount equal to the product of multiplying the Rentable 
Square Footage by Twenty-Five Dollars and Twenty-Five Cents ($25.25). The 
Work Allowance shall be paid by Landlord to Tenant as payments become due 
from Tenant to General Contractor.  The Tenant Improvements shall not be 
removed or altered by Tenant without the prior written consent of Landlord as 
provided in Section 7.  Tenant shall have the right to depreciate and claim 
and collect any investment tax credits in the Tenant Improvements during the 
initial Lease Term.  Upon expiration of the Lease Term or any earlier 
termination of the Lease, the Tenant Improvements shall become the property 
of Landlord and shall remain upon and be surrendered with the Premises, and 
title thereto shall automatically vest in Landlord without any payment 
therefore.

   C. PRICING:    Within ten (10) days after completion of the Tenant 
Improvements Plans and Specifications, General Contractor shall submit to 
Tenant competitive bids from at least three (3) subcontractors for each 
aspect of the work related to the Tenant improvements.  General Contractor 
must

                                   Page 10

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utilize the low bid in each case unless Tenant approves General Contractor's 
use of another subcontractor, and the cost of the Tenant Improvements shall 
be based upon construction expenses equal to the sum of the bid amounts as 
approved by Tenant.  Upon Tenant's written approval of the contract bids, 
which approval shall not be unreasonably withheld or delayed, Landlord and 
Tenant shall be deemed to have given their respective approvals of the final 
Tenant Improvement Plans and Specifications on which the cost estimate was 
made, and General Contractor shall proceed with the construction of the 
Tenant Improvements in accordance with the terms of Section 5.G below.  If 
Tenant does not specifically approve or disapprove the bids within seven (7) 
days, Tenant shall be deemed to have approved the bids.  

   D. CHANGE ORDERS:   Tenant shall have the right to order changes in the 
manner and type of construction of the Building Shell or the Tenant 
Improvements. Upon request and prior to Tenant's submitting any binding 
change order, General Contractor shall promptly provide Tenant with written 
statements of the cost to implement and the time delay and increased 
construction costs associated with any proposed change order, which 
statements shall be binding on Landlord.  If no time delay or increased 
construction cost amount is noted on the written statement, the parties agree 
that there shall be no adjustment to the construction cost or the 
Commencement Date associated with such change order.  If ordered by Tenant, 
General Contractor shall implement such change order and the cost of 
constructing the Tenant Improvements shall be paid by Tenant in accordance 
with the cost statement previously delivered by General Contractor to Tenant 
for any such change order.

   E. BUILDING SHELL COSTS:   Landlord shall pay all costs associated with 
the Building Shell.

   F. TENANT IMPROVEMENT COSTS:   The cost of Tenant Improvements shall 
consist of only the following to the extent actually incurred by General 
Contractor in connection with the construction of Tenant Improvements:  
construction costs, all permit fees, construction taxes or other costs 
imposed by governmental authorities related to the Tenant Improvements, and 
Landlord overhead as described in Section 5.H below.  During the course of 
construction of Tenant Improvements, General Contractor may deliver to Tenant 
not more than once each calendar month a

                                   Page 11

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written request for payment which shall include and be accompanied by General 
Contractor's certified statements setting forth the amount requested, 
certifying the percentage of completion of each item for which reimbursement 
is requested, and certifying that the progress payment requested is due to a 
subcontractor of General Contractor pursuant to a contract between General 
Contractor and the subcontractor. Tenant shall pay General Contractor, within 
fifteen (15) days after Tenant's receipt of the above items, the costs 
incurred by General Contractor in connection with Tenant Improvements 
installed in the Building in accordance with the Tenant Improvement Plans and 
Specifications, minus the retention set forth below.  Tenant shall be 
entitled to retain ten percent (10%) of the amount invoiced by General 
Contractor until the Tenant Improvements are Substantially Complete as 
defined in Section 5.G below.  Tenant shall pay the retained balance owing to 
General Contractor within fifteen (15) days following the date that the 
Tenant Improvements are Substantially Complete.  All costs for Tenant 
Improvements shall be fully documented to and verified by Tenant.

   G. CONSTRUCTION:    Landlord shall use its reasonable efforts to obtain a 
building permit from the City of Fremont as soon as possible after Tenant's 
approval of the Shell Plans and Specifications and to "Substantially 
Complete" construction of the Premises by April 1, 1998.  The Building Shell 
and Tenant Improvements shall be deemed substantially complete 
("Substantially Complete" or "Substantial Completion") when the Building 
Shell and Tenant Improvements have been substantially completed in accordance 
with the Shell Plans and Specifications and Tenant Improvement Plans and 
Specifications, and the issuance of a certificate of occupancy or its 
equivalent by the appropriate governmental authority for the Building Shell 
and Tenant Improvements, as well as the issuance of a certificate by the 
Architect certifying that the Building Shell has been substantially completed 
in accordance with the plans and the issuance of a certificate by Gensler 
certifying that the Tenant Improvements have been substantially completed in 
accordance with the plans.  Completion of the landscaping shall not be 
required to deem the Premises "Substantially Complete" if inclement weather 
prevents Landlord from finishing this portion of the work.  Any prevention, 
delay or stoppage due to strikes, lockouts, inclement weather, labor 
disputes, inability to obtain labor, materials, fuel or reasonable 
substitutes therefor, governmental restrictions, regulations, controls, 
action or inaction, civil commotion, fire or other act of God, and another 
causes beyond the reasonable control of Landlord (except financial inability) 
shall extend the dates contained in this Section 5.G by a period equal to the 
period of any said prevention, delay or stoppage.

                                   Page 12

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   H. GENERAL CONTRACTOR PROFIT:  As compensation to General Contractor for 
its services related to construction of the Building Shell and Tenant 
Improvements, General Contractor shall receive as profit a fee of 3% of the 
total construction costs incurred by General Contractor.  The General 
Contractor's fee for profit and overhead related to construction of the 
Building Shell shall be the same percentage rate as the fee charged by the 
General Contractor to Tenant for construction of the Tenant Improvements.

   I. TENANT DELAYS:    A "Tenant Delay" shall mean any delay in Substantial 
Completion of the Building as a result of any of the following: (i) Tenant's 
failure to complete or approve the Tenant Improvement Plans by the dates set 
forth in Section 5.B, (ii) Tenant's failure to approve the bids for 
construction by the dates set forth in Section 5.C, (iii) changes requested 
by Tenant to either the Shell Plans and Specifications or the Tenant 
Improvement Plans and Specifications which delay the progress of the work, 
(iv) Tenant's request for materials components, or finishes which are not 
available in a commercially reasonable time given the anticipated 
Commencement Date, (v) Tenant's failure to pay, when due, any amounts 
requested to be paid by Tenant pursuant hereto, (vi) Tenant's request for 
more than one (1) rebidding of the cost of all or a portion of the work, and 
(vii) any errors or omissions in the Tenant Improvement Plans provided by 
Gensler.  Notwithstanding anything to the contrary set forth in this Lease, 
and regardless of the actual date the Premises are Substantially Complete, 
the Commencement Date shall be deemed to be the date Commencement Date would 
have occurred if no Tenant Delay had occurred as reasonable determined by 
Landlord.  In addition, if a Tenant Delay results in an increase in the cost 
of the labor or materials, Tenant shall pay the cost of such increases.  

   J. INSURANCE: General Contractor shall procure (as a cost of the Building 
Shell) a "Broad Form" liability insurance policy in the amount of Three 
Million Dollars ($3,000,000.00).  Landlord shall also procure (as a cost of 
the Building Shell) builder's risk insurance for the full replacement cost of 
the Building Shell and Tenant Improvements while the Building and Tenant 
Improvements are under construction, up until the date that the fire 
insurance 

                                   Page 13

<PAGE>

policy described in Section 9 is in full force and effect.

   K. PUNCH LIST & WARRANTY:   After the Building Shell and Tenant 
Improvements are Substantially Complete, Landlord shall cause the General 
Contractor to immediately correct any construction defect or other "punch 
list" item which Tenant brings to General Contractor's attention.  All such 
work shall be performed so as to reasonably minimize the interruption to 
Tenant and its activities on the Premises.  General Contractor shall provide 
a standard contractor's warranty with respect to the Premises for one (1) 
year from the Commencement Date.  Such warranty shall exclude routine 
maintenance, damage caused by Tenant's negligence or misuse, and acts of God.

   L.   OTHER WORK BY TENANT:   All work not described in the Shell Plans and 
Specifications or Tenant Improvement Plans and Specifications, such as 
furniture, telephone equipment, telephone wiring and office equipment work, 
shall be furnished and installed by Tenant.  When the construction of the 
Tenant Improvements has proceeded to the point where Tenant's work of 
installing its fixtures and equipment in the Premises can be commenced, 
General Contractor shall notify Tenant and shall permit Tenant and its 
authorized representatives and contractors access to the Premises before the 
Commencement Date for the purpose of installing Tenant's trade fixtures and 
equipment.  Any such installation work by Tenant or its authorized 
representatives and contractor shall be undertaken upon the following 
conditions:  (i) if the entry into the Premises by Tenant or its 
representatives or contractors interferes with or delays General Contractor's 
work, Tenant shall cause the party responsible for such interference or delay 
to leave the Premises; and (ii) any contractor used by Tenant in connection 
with such entry and installation shall not interfere with General 
Contractor's work.

   6. ACCEPTANCE OF POSSESSION AND COVENANTS TO SURRENDER:    

   A. DELIVERY AND ACCEPTANCE:    On the Commencement Date, Landlord shall 
deliver and Tenant shall accept possession of the Premises and enter into 
occupancy of the Building on the Commencement Date.  Except as otherwise 
specifically provided herein, Tenant agrees to accept possession of the 
Premises in its then existing condition with the Building Shell and Tenant 
Improvements substantially complete, excepting only latent defects.  Tenant's 
taking possession of any part of the Premises shall be deemed to be an 
acceptance of any work of improvement done by Landlord in such part as 
complete and in accordance with the terms of this Lease except for "Punch 
List" type items of which Tenant has given Landlord written notice prior to 
the time Tenant takes possession.  At the time Landlord

                                   Page 14

<PAGE>

delivers possession of the Premises to Tenant, Landlord and Tenant shall 
together execute an acceptance agreement.  Landlord shall have no obligation 
to deliver possession, nor shall Tenant be entitled to take occupancy, of the 
Premises until such acceptance agreement has been executed, and Tenant's 
obligation to pay Base Monthly Rent and Additional Rent shall not be excused 
or delayed because of Tenant's failure execute such acceptance agreement.  
Within one hundred eighty (180) days after the Commencement Date, Tenant 
agrees to be in occupancy of at least fifty percent (50%) of the rentable 
square footage of the Premises.

   B. CONDITION UPON SURRENDER:    Tenant further agrees on Expiration Date 
or on the sooner termination of this Lease, to surrender the Premises to 
Landlord in good condition and repair, normal wear and tear excepted.  In 
this regard, "normal wear and tear" shall be construed to mean wear and tear 
caused to the Premises by the natural aging process which occurs in spite of 
prudent application of the best standards for maintenance, repair 
replacement, and janitorial practices, and does not include items of 
neglected or deferred maintenance.  In any event, Tenant shall cause the 
following to be done prior to the Expiration Date or sooner termination of 
this Lease: (i) all holes in interior walls shall be patched and painted so 
as to match the wall, (ii) all tiled floors shall be cleaned and waxed, (iii) 
all carpets shall be cleaned and shampooed, (iv) all broken, marred, stained 
or nonconforming acoustical ceiling tiles shall be replaced, (v) all cabling 
placed above the ceiling by Tenant shall be removed, (vi) all windows shall 
be washed; (vii) the HVAC system shall be serviced by a reputable and 
licensed service firm and left in good operating condition and repair as so 
certified by such firm, (viii) the plumbing and electrical systems and 
lighting shall be placed in good order and repair (including replacement of 
any burned out, discolored or broken light bulbs, ballasts, or lenses. On or 
before the Expiration Date or sooner termination of this Lease, Tenant shall 
remove all its personal property and trade fixtures from the Premises.  All 
property and fixtures not so removed shall be deemed as abandoned by Tenant.  
If Landlord requires pursuant to Section 7 below, Tenant shall, at Tenant's 
sole cost and expense, remove such Alterations as Landlord requires and shall 
repair and restore said Premises or such parts thereof before the Expiration 
Date.  Such repair and restoration shall include causing the Premises to be

                                   Page 15

<PAGE>

brought into compliance with all applicable building codes and laws in effect 
at the time of the removal to extent such compliance is necessitated by the 
repair and restoration work; provided however, that (i) Tenant shall not be 
required to pay for any  work related to bringing the foundation, exterior 
load bearing walls and roof structure of the Building into compliance with 
applicable building codes and laws then in effect; and (ii) Tenant shall not 
be required to pay for any  work which may be required to bring areas outside 
the Building into compliance with then-applicable building codes and laws. .  

   C. FAILURE TO SURRENDER:  If the Premises are not surrendered at the 
Expiration Date or sooner termination of this Lease in the condition required 
by this Section 6, Tenant shall be deemed in a holdover tenancy pursuant to 
this Section 7.C and Tenant shall indemnify, defend, and hold Landlord 
harmless against loss or liability resulting from delay by Tenant in so 
surrendering the Premises including, without limitation, any claims made by 
any succeeding tenant founded on such delay and costs incurred by Landlord in 
returning the Premises to the required condition, plus interest at the Agreed 
Interest Rate.  Any holding over after the termination or Expiration Date 
with Landlord's express written consent, shall be construed as month-to-month 
tenancy, terminable on thirty (30) days written notice from either party, and 
Tenant shall pay as Base Monthly Rent to Landlord a rate equal to one hundred 
twenty five percent (125%) of the Base Monthly Rent due in the month 
preceding the termination or Expiration Date, plus all other amounts payable 
by Tenant under this Lease.  Any holding over shall otherwise be on the terms 
and conditions herein specified, except those provisions relating to the 
Lease Term and any options to extend or renew, which provisions shall be of 
no further force and effect following the expiration of the applicable 
exercise period.  If Tenant remains in possession of the Premises after 
expiration or earlier termination of this Lease without Landlord's consent, 
Tenant's continued possession shall be on the basis of a tenancy at 
sufferance and Tenant shall pay as rent during the holdover period an amount 
equal to one hundred fifty percent (150%) of the Base Monthly Rent due in the 
month preceding the termination or Expiration Date, plus all other amounts 
payable by Tenant under this Lease.  This provision shall survive the 
termination or expiration of the Lease.

   7. ALTERATIONS AND ADDITIONS:     

   A. TENANT'S ALTERATIONS:    With the exception of Tenant Improvements 
installed as part of initial construction of the Premises, Tenant shall not 
make, or suffer to be made, any alteration or addition to the Premises 
("Alterations"), or any part thereof, without

                                   Page 16

<PAGE>

obtaining Landlord's prior written consent and delivering to Landlord the 
proposed architectural and structural plans for all such Alterations at least 
fifteen (15) days prior to the start of construction.  After receipt of 
Tenant's architectural and structural plans, Landlord shall have a period of 
ten (10) business days thereafter to grant its consent, which consent shall 
not be unreasonably withheld.  Landlord shall indicate to Tenant at the time 
of Tenant's request, whether or not Landlord will require Tenant to remove 
such Alterations at the Expiration Date.  Tenant shall, at Tenant's sole cost 
and expense, remove such Alterations as Landlord requires and shall repair 
and restore said Premises or such parts thereof before the Expiration Date, 
unless exempted pursuant to Section 7.B below.  Such repair and restoration 
shall include causing the Premises to be brought into compliance with all 
applicable building codes and laws in effect at the time of the removal to 
extent such compliance is necessitated by the repair and restoration work; 
provided, however, that (i) Tenant shall not be required to pay for any  work 
related to bringing the foundation, exterior load bearing walls and roof 
structure of the Building into compliance with applicable building codes and 
laws then in effect; and (ii) Tenant shall not be required to pay for any  
work which may be required to bring areas outside the Building into 
compliance with then-applicable building codes and laws.  If such Alterations 
affect the structure of the Building, Tenant additionally agrees to reimburse 
Landlord its reasonable out-of-pocket costs incurred in reviewing Tenant's 
plans.  After obtaining Landlord's consent, Tenant shall not proceed to make 
such Alterations until Tenant has obtained all required governmental 
approvals and permits, and provided Landlord reasonable security, in form 
reasonably approved by Landlord, to protect Landlord against mechanics' lien 
claims.  Tenant agrees to provide Landlord written notice of the anticipated 
and actual start-date of the work, and a complete set of half-size (15" X 
21") vellum as-built drawings.  All Alterations shall be constructed in 
compliance with applicable building codes and laws.  Any Alterations, except 
movable furniture and trade fixtures, shall become at once a part of the 
realty and belong to Landlord but shall nevertheless be subject to removal by 
Tenant as provided in Section 6 above.  Alterations which are not deemed as 
trade fixtures include heating, lighting, electrical systems, air 
conditioning, partitioning, carpeting, or any other installation


                                   Page 17

<PAGE>

which has become an integral part of the Premises.  All Alterations shall be 
maintained, replaced or repaired by Tenant at its sole cost and expense.  

Notwithstanding the foregoing, Tenant shall be entitled without obtaining 
Landlord's consent, to make Alterations which do not affect the structure of 
the Building or which do not cost more than Twenty Five Thousand Dollars 
($25,000.00) per Alteration nor an aggregate of Fifty Thousand Dollars 
($50,000.00) in any twelve (12) month period; provided, however, that Tenant 
shall still be required to deliver to Landlord the proposed architectural and 
structural plans for all such Alterations at least (15) days prior to the 
start of construction and comply with all other provisions of the preceding 
paragraph.

   B. EXEMPTED ALTERATIONS:    Notwithstanding the provisions of Section 7.A 
above, Landlord shall not have the right to require Tenant to remove any 
Alterations at the end of the term of the Lease unless:  (i) such Alterations 
were of a nature not typically found in manufacturing buildings; (ii) such 
Alterations create private offices smaller than 10'x12'; or (iii) such 
Alterations create hard wall partitioning that cover more than 35% of the 
interior square footage of the Premises or the perimeter window space of the 
Premises.
  
   C. FREE FROM LIENS:    Tenant shall keep the Premises free from all liens 
arising out of work performed, materials furnished, or obligations incurred 
by Tenant or claimed to have been performed for Tenant.  In the event Tenant 
fails to discharge any such lien within ten (10) days after receiving notice 
of the filing, Landlord shall be entitled to discharge the lien at Tenant's 
expense and all resulting costs incurred by Landlord, including attorney's 
fees shall be due from Tenant as additional rent.

   D. COMPLIANCE WITH GOVERNMENTAL REGULATIONS: The term Governmental 
Regulations shall include all federal, state, county, city or governmental 
agency laws, statutes, ordinances, standards, rules, requirements, or orders 
now in force or hereafter enacted, promulgated, or issued.  The term also 
includes government measures regulating or enforcing public access, 
occupational, health, or safety standards for employers, employees, 
landlords, or tenants.  Tenant shall continuously and without exception 
repair and maintain the Premises, including Tenant improvements, Alterations, 
fixtures, and furnishings, in an order and condition in compliance with all 
Governmental Regulations.  Tenant, at its sole expense, shall make all 
repairs, replacements, alterations, or improvements needed to comply with all 
Governmental Regulations to the extent that the Governmental Regulations 
relate to or are required by and Law because of (i) Tenant's particular use or


                                   Page 18

<PAGE>

change of use of the Premises, (ii) Tenant's application for any permit or 
governmental approval, or (iii) Tenant's construction or installation of any 
Alterations or Trade Fixtures.  Landlord, at Landlord's sole expense, shall 
promptly make all repairs, replacements, alterations, or improvements needed 
to comply with all Governmental Regulations to the extent not required by 
Tenant pursuant to the preceding sentence.  The judgment of any court of 
competent jurisdiction or the admission of Tenant in any action or proceeding 
against Tenant (whether Landlord be a party thereto or not) that Tenant has 
violated any such law, regulation or other requirement in its use of the 
Premises shall be conclusive of that fact as between Landlord and Tenant.

   8.MAINTENANCE OF PREMISES:

   A. LANDLORD'S OBLIGATIONS:    Landlord at its sole cost and expense, shall 
maintain in good condition, order, and repair, and replace as and when 
necessary, the foundation, exterior load bearing walls and roof structure of 
the Building Shell.  Landlord shall also, at Tenant's sole cost and expense 
through reimbursement as provided in this Section 8, clean, maintain, repair 
and replace when necessary the following parts of the Premises:  (i) all 
plumbing and sewage facilities, (ii) all heating ventilating and air 
conditioning facilities and equipment (excluding adjustments to interior 
zones after initial occupancy of the Premises and balancing of the 
equipment), (iii) all exterior windows, door entrances, plate glass and 
glazing systems including caulking, and skylights, (iv) all automatic fire 
extinguisher equipment, (v) the parking lot and all underground utility 
facilities servicing the Premises, (vi) all elevator equipment, (vii) the 
roof membrane system, and (viii) all waterscape, landscaping and shrubbery.  
With respect to items (ii), (vi) and (vii) above, Landlord shall provide 
Tenant, upon request from Tenant, a copy of a service contract between 
Landlord and a licensed service contractor providing for period maintenance 
of all such systems or equipment in conformance with the manufacturer's 
recommendations.  Landlord shall provide Tenant a copy of such preventive 
maintenance contracts and paid invoices for the recommended work if requested 
by Tenant.

   B. TENANT'S OBLIGATIONS:     Unless required by Landlord pursuant to 
Section 8.A above or unless such

                                   Page 19

<PAGE>

services are shared (in which event the provisions of Sections 8.C, 8.D and 
8.D shall apply as to such shared services), Tenant shall clean, maintain, 
repair and replace when necessary the Premises and every part thereof through 
regular inspections and servicing, including but not limited to: (i) all 
fixtures, interior walls, floors, carpets and ceilings, and (ii) all 
electrical facilities and equipment. All wall surfaces and floor tile are to 
be maintained in an as good a condition as when Tenant took possession free 
of holes, gouges, or defacements.

   C. LANDLORD AND TENANT'S OBLIGATIONS REGARDING COMMON AREA COSTS:    
Tenant agrees to reimburse Landlord for Tenant's Allocable Share (as defined 
in Section 8.E below) of the expenses resulting from Landlord's payment of 
Common Area Costs (as defined in Section 8.D below).  Tenant agrees to pay 
its Allocable Share of the Common Area Costs as additional rental within 
thirty (30) days of written invoice from Landlord.

   D. COMMON AREA COSTS:    For purposes of calculating Tenant's Allocable 
Share of Building and Project Costs, the term "Common Area Costs" is defined 
as all costs and expenses of the nature hereinafter described which are 
incurred by Landlord in connection with ownership and operation of the 
Project in which the Premises are located, together with such additional 
facilities as may be determined by Landlord to be reasonably desirable or 
necessary to the ownership and operation of the Building and/or Project.  All 
costs and expenses shall be determined in accordance with generally accepted 
accounting principles which shall be consistently applied (with accruals 
appropriate to Landlord's business), including but not limited to the 
following:  (i) common area utilities, including water, to the extent not 
separately metered; (ii) common area maintenance and service agreements for 
the Project and the equipment therein, including without limitation, 
maintenance of the sidewalks, landscaping, waterscape, roof membrane, parking 
areas, driveways, service areas, and the building exterior; (iii) insurance 
premiums and costs, including without limitation, the premiums and cost of 
fire, casualty and liability coverage and rental abatement and earthquake (if 
required pursuant to Section 9.B) insurance applicable to the Building or 
Project; (iv) repairs, replacements and general maintenance (excluding 
repairs and general maintenance paid by proceeds of insurance or by Tenant or 
other third parties, and repairs or alterations attributable solely to 
tenants of the Building or Project other than Tenant); (v) all real estate 
taxes and assessment installments or other impositions or charges which may 
be levied on the Building or Project, upon the occupancy of the Building or 
Project and including any substitute or additional charges which may be 
imposed during, or applicable to the Lease Term including real estate tax 
increases due to a sale, transfer or other

                                   Page 20

<PAGE>

change of ownership of the Building or Project, as such taxes are levied or 
appear on the City and County tax bills and assessment rolls; and (vi) fees 
for management services rendered by either Landlord or a third party manager 
engaged by Landlord (which may be a party affiliated with Landlord), except 
that the total amount charged for management services and included in the 
expenses to be reimbursed by Tenant shall not exceed the monthly rate of 5% 
of the Base Monthly Rent, which the parties acknowledge as a reasonable and 
fair market value for such services. Landlord shall have no obligation to 
provide guard services or other security measures for the benefit of the 
Project.  Tenant assumes all responsibility for the protection of Tenant and 
Tenant's Agents from acts of third parties; provided, however, that nothing 
contained herein shall prevent Landlord, at its sole option, from providing 
security measures for the Project.  This is a "Net" Lease, meaning that Base 
Monthly Rent is paid to Landlord absolutely net of all costs and expenses.  
The provision for payment of Common Area Costs by means of periodic payment 
of Tenant's Allocable Share of Building and/or Project Costs is intended to 
pass on to Tenant and reimburse Landlord for all costs of operating and 
managing the Building and/or Project.

   E. TENANT'S ALLOCABLE SHARE:    For purposes of prorating Common Area 
Costs which Tenant shall pay, Tenant's Allocable Share of Common Area Costs 
shall be computed by multiplying the total Common Area Costs by a fraction, 
the numerator of which is the Rentable Square Footage of the Building and the 
denominator of which is either the total Rentable Square Footage of the 
Building if the service is allocable only to the Building, or the total 
square footage of the Project if the service is allocable to the entire 
Project.  Tenant's obligation to share in Common Area Costs shall be adjusted 
to reflect the Lease Commencement and Expiration dates and is subject to 
recalculation in the event of expansion of the Building or Project.

   F. WAIVER OF LIABILITY:     Failure by Landlord to perform any defined 
services, if any, or any cessation thereof, when such failure is caused by 
accident, breakage, repairs, strikes, lockout or other labor disturbances or 
labor disputes of any character or by any other cause, similar or dissimilar, 
shall not render Landlord liable to Tenant in any respect, including damages 
to either person or property, nor be construed as an eviction of Tenant, nor 
cause an

                                   Page 21

<PAGE>

abatement of rent, nor relieve Tenant from fulfillment of any covenant or 
agreement hereof.  Should any equipment or machinery utilized in supplying 
the services listed herein break down or for any cause cease to function 
properly, upon receipt of written notice from Tenant of any deficiency or 
failure of any services, Landlord shall use reasonable diligence to repair 
the same promptly, but Tenant shall have no right to terminate this Lease and 
shall have no claim for rebate of rent or damages on account of any 
interruptions in service occasioned thereby or resulting therefrom.  Tenant 
waives the provisions of California Civil Code Sections 1941 and 1942 
concerning the Landlord's obligation of tenantability and Tenant's right to 
make repairs and deduct the cost of such repairs from the rent.  Landlord 
shall not be liable for a loss of or injury to person or property, however 
occurring, through or in connection with or incidental to furnishing, or its 
failure to furnish, any of the foregoing.

Notwithstanding the foregoing, in the event Landlord fails to perform in its 
obligation under Section 8.A above to maintain plumbing and sewage 
facilities, HVAC equipment, exterior windows, door entrances, plate glass and 
glazing systems, skylights, fire extinguisher equipment, the parking lot, 
underground utilities, elevator equipment, the roof membrane or landscaping 
related to the Premises, Tenant may, after providing Landlord thirty (30) 
days' written notice, undertake such maintenance at its own cost if Landlord 
has not commenced such maintenance and Landlord shall reimburse Tenant for 
its expenditure.  The provisions of this paragraph do not apply to items 
about which Landlord and Tenant may disagree as to the scope or necessity of 
work. 

   G. REVIEW:  Landlord shall maintain at all times during the term of this 
Lease, at the office of Landlord, accurate records with respect to Common 
Area Costs for the previous two-year period of the Lease, and shall retain 
such records and such other documents as are reasonably necessary to audit 
the Common Area Costs.  Upon two weeks prior notice from Tenant, Landlord 
shall make available for Tenant's inspection (or inspection performed by 
Tenant's accountant and/or consultants) at Landlord's office, during normal 
business hours, Landlord's records relating to the Common Area Costs for the 
most recent two years of the Lease.  If an audit, review or inspection by a 
Tenant or Tenant's accountant or consultant alleges an overbilling, Tenant 
may submit a claim for the overbilled amount to Landlord, detailing the 
nature of the overbilling, and Landlord shall have thirty (30) days to pay 
such amount or contest the claim by giving notice thereof to Tenant, 
detailing the nature of Landlord's contest of Tenant's claims.  If Landlord's 
statement is determined to be in error by 3% or more, Landlord shall 
reimburse Tenant within thirty (30) days

                                   Page 22

<PAGE>

following such determination for any overpayment of Common Area Costs, as 
well as the cost of Tenant's review of Landlord's books and records not to 
exceed $2,500.00 (including the cost of Tenant's accountant or consultant, 
neither of which cost may be included as Common Area Costs), together with 
interest on such amount, calculated at the Interest Rate, from the dates such 
amounts were initially paid by Tenant.

   H. RECOVERY:  Landlord shall not expend more than the reasonable and fair 
market value for any goods, services, labor or materials purchased or 
provided by Landlord in connection with the management, operation, 
maintenance and repair of the Building or the Common Area.

   9. HAZARD INSURANCE:    

   A. TENANT'S USE:    Tenant shall not use or permit the Premises, or any 
part thereof, to be used for any purpose other than that for which the 
Premises are hereby leased; and no use of the Premises shall be made or 
permitted, nor acts done, which will cause an increase in premiums or a 
cancellation of any insurance policy covering the Premises or any part 
thereof, nor shall Tenant sell or permit to be sold, kept, or used in or 
about the Premises, any article prohibited by the standard form of fire 
insurance policies.  Tenant shall, at its sole cost, comply with all 
requirements of any insurance company or organization necessary for the 
maintenance of reasonable fire and public liability insurance covering the 
Premises and appurtenances.  

   B. LANDLORD'S INSURANCE:    Landlord agrees to purchase and keep in force 
fire, extended coverage insurance in an amount equal to the replacement cost 
of the Building (not including any Tenant Improvements or Alterations paid 
for by Tenant from sources other than the Work Allowance) as determined by 
Landlord's insurance company's appraisers.  Tenant agrees to pay Landlord as 
additional rent, on demand, the full cost of said insurance as evidenced by 
insurance billings to Landlord, and in the event of damage covered by said 
insurance, the amount of any deductible under such policy.  Payment shall be 
due to Landlord within thirty (30) days after written invoice to Tenant.  If 
required by the holder of the first deed of trust on the property, such fire 
and property damage insurance may be endorsed to cover loss caused by such 
additional perils against which Landlord may elect to insure,

                                   Page 23

<PAGE>

including earthquake and/or flood, and shall contain reasonable deductibles 
which, in the case of earthquake and flood insurance may be up to 15% of the 
replacement value of the property.  Additionally Landlord may maintain a 
policy of (i) commercial general liability insurance insuring Landlord (and 
such others designated by Landlord) against liability for personal injury, 
bodily injury, death and damage to property occurring or resulting from an 
occurrence in, on or about the Premises or Project in an amount as Landlord 
determines is reasonably necessary for its protection, and (ii) rental lost 
insurance covering a twelve (12) month period.  It is understood and agreed 
that Tenant's obligation under this Section will be prorated to reflect the 
Lease Commencement and Expiration Dates.

Notwithstanding the above, Tenant shall have no obligation to pay premiums 
payable with respect to earthquake insurance covering the Premises, unless such 
coverage is  (i) required by the lender in whose favor a first deed of trust of 
the Premises has been granted, and (ii) is also generally required by 
institutional lenders on similar properties in Alameda County.  In such event, 
the amount of the earthquake insurance premium required to be paid by Tenant 
shall be limited to an amount equal to four (4) times the premium for casualty 
insurance for the Building.

   C. TENANT'S INSURANCE:    Tenant agrees, at its sole cost, to insure its 
personal property, Tenant Improvements (for which it has paid from sources 
other than the Work Allowance), and Alterations for their full replacement 
value (without depreciation) and to obtain worker's compensation and public 
liability and property damage insurance for occurrences within the Premises 
with a combined single limit of not less than Five Million Dollars 
($5,000,000.00).  Tenant's liability insurance shall be primary insurance 
containing a cross-liability endorsement, and shall provide coverage on an 
"occurrence" rather than on a "claims made" basis.  Tenant shall name 
Landlord and Landlord's lender as an additional insured and shall deliver a 
copy of the policies and renewal certificates to Landlord.  All such policies 
shall provide for thirty (30) days' prior written notice to Landlord of any 
cancellation, termination, or reduction in coverage.

   D. WAIVER:    Landlord and Tenant hereby waive all rights each may have 
against the other on account of any loss or damage sustained by Landlord or 
Tenant, as the case may be, or to the Premises or its contents, which may 
arise from any risk covered by their respective insurance policies (or which 
would have been covered had such insurance policies been maintained in 
accordance with this Lease) as set forth above.  The parties shall use their 
reasonable efforts to obtain from their respective insurance companies a 
waiver of any right of subrogation which said insurance company

                                   Page 24

<PAGE>

may have against Landlord or Tenant, as the case may be.

   10. TAXES:    Tenant shall be liable for and shall pay as additional 
rental, prior to delinquency, the following:  (i) all taxes and assessments 
levied against Tenant's personal property and trade or business fixtures; 
(ii) all real estate taxes and assessment installments or other impositions 
or charges which may be levied on the Premises or upon the occupancy of the 
Premises, including any substitute or additional charges which may be imposed 
applicable to the Lease Term; and (iii) real estate tax increases due to a 
sale, transfer or other change of ownership of the Premises as it appears on 
the City and County tax bills during the Lease Term.  Tenant's obligation 
under this Section shall be prorated to reflect the Lease Commencement and 
Expiration Dates.  If, at any time during the Lease Term a tax, excise on 
rents, business license tax or any other tax, however described, is levied or 
assessed against Landlord as a substitute or addition, in whole or in part, 
for taxes assessed or imposed on land or Building, Tenant shall pay and 
discharge its pro rata share of such tax or excise on rents or other tax 
before it becomes delinquent; except that this provision is not intended to 
cover net income taxes, inheritance, gift or estate tax imposed upon 
Landlord.  In the event that a tax is placed, levied, or assessed against 
Landlord and the taxing authority takes the position that Tenant cannot pay 
and discharge its pro rata share of such tax on behalf of Landlord, then at 
Landlord's sole election, Landlord may increase the Base Monthly Rent by the 
exact amount of such tax and Tenant shall pay such increase.  If by virtue of 
any application or proceeding brought by or on behalf of Landlord, there 
results a reduction in the assessed value of the Premises during the Lease 
Term, Tenant agrees to reimburse Landlord for all costs incurred by Landlord 
in connection with such application or proceeding.  Tenant at its cost shall 
have the right, at any time, to seek a reduction in the assessed valuation of 
the Premises or to contest any real property taxes that are to be paid by 
Tenant, provided Tenant does not withhold or delay its required payment to 
Landlord during such contention.  Landlord shall not be required to join in 
any such proceeding or contest unless the provisions of any law require that 
the proceeding or contest be brought by or in the name of the owner of the 
Premises. In such event, Landlord shall join in the proceeding or contest or 
permit it to

                                   Page 25

<PAGE>

be brought in Landlord's name, provided that Landlord is not required to bear 
any cost in connection therewith.

   11. UTILITIES:    Tenant shall pay directly to the providing utility all 
water, gas, electric, telephone, and other utilities supplied to the 
Premises.  Landlord shall not be liable for loss of or injury to person or 
property, however occurring, through or in connection with or incidental to 
furnishing or failure to furnish utilities to the Premises, and Tenant shall 
not be entitled to abatement or reduction of any portion of Base Monthly Rent 
or any other amount payable under this Lease.

   12. TOXIC WASTE AND ENVIRONMENTAL DAMAGE:    

   A. TENANT'S RESPONSIBILITY:    Without the prior written consent of 
Landlord, Tenant shall not bring, use, or permit upon the Premises, or 
generate, create, release, emit, or dispose (nor permit any of the same) from 
the Premises any chemicals, toxic or hazardous gaseous, liquid or solid 
materials or waste, including without limitation, material or substance 
having characteristics of ignitability, corrosivity, reactivity, or toxicity 
or substances or materials which are listed on any of the Environmental 
Protection Agency's lists of hazardous wastes or which are identified in 
Division 22 Title 26 of the California Code of Regulations as the same may be 
amended from time to time ("Hazardous Materials").  In order to obtain 
consent, Tenant shall deliver to Landlord its written proposal describing the 
toxic material to be brought onto the Premises, measures to be taken for 
storage and disposal thereof, safety measures to be employed to prevent 
pollution of the air, ground, surface and ground water.  Landlord's approval 
may be withheld in its reasonable judgment.  In the event Landlord consents 
to Tenant's use of Hazardous Materials on the Premises, Tenant represents and 
warrants that it will do the following:  (i) adhere to all reporting and 
inspection requirements imposed by Federal, State, County or Municipal laws, 
ordinances or regulations and will provide Landlord a copy of any such 
reports or agency inspections; (ii) obtain and provide Landlord copies of all 
necessary permits required for the use and handling Hazardous Materials on 
the Premises; (iii) enforce Hazardous Materials handling and disposal 
practices consistent with industry standards; (iv) surrender the Premises 
free from any Hazardous Materials arising from Tenant's bringing, using, 
permitting, generating, creating, releasing, emitting or disposing of 
Hazardous Materials; and (v) properly close the facility with regard to 
Hazardous Materials including the removal or decontamination of any process 
piping, mechanical ducting, storage tanks, containers, or trenches which have 
come into contact with Hazardous Materials and

                                   Page 26

<PAGE>

obtain a closure certificate from the local administering agency prior to the 
Expiration Date.

   B. TENANT'S INDEMNITY REGARDING HAZARDOUS MATERIALS:    Tenant shall, at 
its sole cost and expense,  comply with all laws pertaining to, and shall 
with counsel reasonably acceptable to Landlord, indemnify, defend and hold 
harmless Landlord and Landlord's shareholders, directors, officers, 
employees, partners, affiliates, and agents from, any claims, liabilities, 
costs or expenses incurred or suffered by Landlord arising from the bringing, 
using, permitting, generating, emitting or disposing of Hazardous Materials 
by Tenant through the surface soils of the Premises during the Lease Term or 
the violation of any environmental law, by Tenant or Tenant's Agents.  
Tenant's indemnification and hold harmless obligations include, without 
limitation, the following:  (i) claims, liability, costs or expenses 
resulting from or based upon administrative, judicial (civil or criminal) or 
other action, legal or equitable, brought by any private or public person 
under common law or under the Comprehensive Environmental Response, 
Compensation and Liability Act of 1980 ("CERCLA"), the Resource Conservation 
and Recovery Act of 1980 ("RCRA") or any other Federal, State, County or 
Municipal law, ordinance or regulation; (ii) claims, liabilities, costs or 
expenses pertaining to the identification, monitoring, cleanup, containment, 
or removal of Hazardous Materials from soils, riverbeds or aquifers including 
the provision of an alternative public drinking water source; (iii) all costs 
of defending such claims; (iv) Losses attributable to diminution in the value 
of the Premises or the Building; (v) Loss or restriction of use of rentable 
space in the Building; (vi) Adverse effect on the marketing of any space in 
the Building; and (All other liabilities, obligations, penalties, fines, 
claims, actions (including remedial or enforcement actions of any kind and 
administrative or judicial proceedings, orders or judgments), damages 
(including consequential and punitive damages), and costs (including 
attorney, consultant, and expert fees and expenses) resulting from the 
release or violation.  This indemnification shall survive the expiration or 
termination of this Lease.

   C. ACTUAL RELEASE BY TENANT:Tenant agrees to notify Landlord of any 
lawsuits or orders of which it becomes aware which relate to the remedying of 
or actual release of Hazardous Materials on or into the

                                   Page 27


<PAGE>

soils or ground water at or under the Premises.  Tenant shall also provide 
Landlord all notices required by Section 25359.7(b) of the Health and Safety 
Code and all other notices required by law to be given to Landlord in 
connection with Hazardous Materials.  Without limiting the foregoing, Tenant 
shall also deliver to Landlord, within twenty (20) days after receipt 
thereof, any written notices received from any governmental agency alleging a 
material violation of, or material failure to comply with, any federal, state 
or local laws, regulations, ordinances or orders, the violation of which of 
failure to comply with poses a foreseeable and material risk of contamination 
of the ground water or injury to humans (other than injury solely to Tenant, 
Tenant's Agents and employees within the Building).

In the event of any release on or into the Premises or into the soil or 
ground water under the Premises of any Hazardous Materials used, treated, 
stored or disposed of by Tenant, Tenant agrees to comply, at its sole cost, 
with all laws, regulations, ordinances and orders of any federal, state or 
local agency relating to the monitoring or remediation of such Hazardous 
Materials.  In the event of any such release of Hazardous Materials, Tenant 
agrees to meet and confer with Landlord and its Lender to attempt to 
eliminate and mitigate any financial exposure to such Lender and resultant 
exposure to Landlord under California Code of Civil Procedure Section 736(b) 
as a result of such release, and promptly to take reasonable monitoring, 
cleanup and remedial steps given, inter alia, the historical uses to which 
the Property has and continues to be used, the risks to public health posed 
by the release, the then available technology and the costs of remediation, 
cleanup and monitoring, consistent with acceptable customary practices for 
the type and severity of such contamination and all applicable laws.  Nothing 
in the preceding sentence shall eliminate, modify or reduce the obligation of 
Tenant under 12.B of this Lease to indemnify and hold Landlord harmless from 
any claims liabilities, costs or expenses incurred or suffered by Landlord.  
Tenant shall provide Landlord prompt written notice of Tenant's monitoring, 
cleanup and remedial steps.

In the absence of an order of any federal, state or local governmental or 
quasi-governmental agency relating to the cleanup, remediation or other 
response action required by applicable law, any dispute arising between 
Landlord and Tenant concerning Tenant's obligation to Landlord under this 
Section 12.C concerning the level, method, and manner of cleanup, remediation 
or response action required in connection with such a release of Hazardous 
Materials shall be resolved by mediation and/or arbitration pursuant to the 
provisions of Section 19.E of this Lease.

                                   Page 28

<PAGE>

   D. ENVIRONMENTAL MONITORING:     Landlord and its agents shall have the 
right to inspect, investigate, sample and monitor the Premises including any 
air, soil, water, ground water or other sampling or any other testing, 
digging, drilling or analysis to determine whether Tenant is complying with 
the terms of this Section 12.  If Landlord discovers that Tenant is not in 
compliance with the terms of this Section 12, any such costs incurred by 
Landlord, including attorneys' and consultants' fees, shall be due and 
payable by Tenant to Landlord within thirty (30) days following Landlord's 
written demand therefore.

   13. TENANT'S DEFAULT:    The occurrence of any of the following shall 
constitute a material default and breach of this Lease by Tenant:  (i) 
Tenant's failure to pay any rent due under this Lease within ten (10) days 
after written receipt of notice from Landlord that such rent is past due, 
(ii) the abandonment of the Premises by Tenant, as defined in California 
Civil Code Section 1951.3; (iii) Tenant's failure to observe and perform any 
other required provision of this Lease, where such failure continues for 
thirty (30) days after written notice from Landlord; (iv) Tenant's making of 
any general assignment for the benefit of creditors; (v) the filing by or 
against Tenant of a petition to have Tenant adjudged a bankrupt or of a 
petition for reorganization or arrangement under any law relating to 
bankruptcy (unless, in the case of a petition filed against Tenant, the same 
is dismissed after the filing); (vi) the appointment of a trustee or receiver 
to take possession of substantially all of Tenant's assets located at the 
Premises or of Tenant's interest in this Lease, where possession is not 
restored to Tenant within thirty (30) days; (vii) the attachment, execution 
or other judicial seizure of substantially all of Tenant's assets located at 
the Premises or of Tenant's interest in this Lease, where such seizure is not 
discharged within thirty (30) days; or (viii) any default by Tenant on other 
buildings leased by Tenant within the Project.

   A. REMEDIES:    In the event of any such default by Tenant, then in 
addition to other remedies available to Landlord at law or in equity, 
Landlord shall have the immediate option to terminate this Lease and all 
rights of Tenant hereunder by giving written notice of such intention to 
terminate.  In the event Landlord elects to so terminate this Lease, Landlord 
may recover from Tenant all the following:  (i) the worth at time

                                   Page 29

<PAGE>

of award of any unpaid rent which had been earned at the time of such 
termination; (ii) the worth at time of award of the amount by which the 
unpaid rent which would have been earned after termination until the time of 
award exceeds the amount of such rental loss for the same period that Tenant 
proves could have been reasonably avoided; (iii) the worth at time of award 
of the amount by which the unpaid rent for the balance of the Lease Term 
after the time of award exceeds the amount of such rental loss that Tenant 
proves could be reasonably avoided; (iv) any other amount necessary to 
compensate Landlord for all detriment proximately caused by Tenant's failure 
to perform its obligations under this Lease, or which in the ordinary course 
of things would be likely to result therefrom; including the following:  (x) 
expenses for repairing, altering or remodeling the Premises for purposes of 
reletting, (y) broker's fees, advertising costs or other expenses of 
reletting the Premises, and (z) costs of carrying the Premises such as taxes, 
insurance premiums, utilities and security precautions. and (v) at Landlord's 
election, such other amounts in addition to or in lieu of the foregoing as 
may be permitted by applicable California law.  The term "rent", as used 
herein, is defined as the minimum monthly installments of Base Monthly Rent 
and all other sums required to be paid by Tenant pursuant to this Lease, all 
such other sums being deemed as additional rent due hereunder.  As used in 
(i) and (ii) above, "worth at the time of award" shall be computed by 
allowing interest at a rate equal to the discount rate of the Federal Reserve 
Bank of San Francisco plus five (5%) percent per annum.  As used in (iii) 
above, "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 (1%) percent.  

   B. RIGHT TO RE-ENTER:     In the event of any such default by Tenant, 
Landlord shall have the right, after terminating this Lease, to re-enter the 
Premises and remove all persons and property.  Such property may be removed 
and stored in a public warehouse or elsewhere at the cost of and for the 
account of Tenant, and disposed of by Landlord in any manner permitted by law.

   C. ABANDONMENT:     If Landlord does not elect to terminate this Lease as 
provided in Section 13.A or 13.B above, then the provisions of California 
Civil Code Section 1951.4, (Landlord may continue the lease in effect after 
Tenant's breach and abandonment and recover rent as it becomes due if Tenant 
has a right to sublet and assign, subject only to reasonable limitations) as 
amended from time to time, shall apply and Landlord may from time to time, 
without terminating this Lease, either recover all rental as it becomes due 
or relet the Premises or any part thereof for such term or terms and at such 
rental or rentals and upon such other terms and conditions as Landlord in its 
sole

                                   Page 30

<PAGE>
 
discretion may deem advisable, with the right to make alterations and repairs 
to the Premises.  In the event that Landlord elects to so relet, rentals 
received by Landlord from such reletting shall be applied in the following 
order to:  (i) the payment of any indebtedness other than Base Monthly Rent 
due hereunder from Tenant to Landlord; (ii) the payment of any cost of such 
reletting; (iii) the payment of the cost of any alterations and repairs to 
the Premises; and (iv) the payment of Base Monthly Rent due and unpaid 
hereunder.  The residual rentals, if any, shall be held by Landlord and 
applied in payment of future Base Monthly Rent as the same may become due and 
payable hereunder.  Landlord shall have no obligation to relet the Premises 
following a default if Landlord has other available space within the Building 
or Project.  In the event the portion of rentals received from such reletting 
which is applied to the payment of rent hereunder during any month be less 
than the rent payable during that month by Tenant hereunder, then Tenant 
shall pay such deficiency to Landlord immediately upon demand.  Such 
deficiency shall be calculated and paid monthly.  Tenant shall also pay to 
Landlord, as soon as ascertained, any costs and expenses incurred by Landlord 
in such reletting or in making such alterations and repairs not covered by 
the rentals received from such reletting.

   D. NO TERMINATION:     Landlord's re-entry or taking possession of the 
Premises pursuant to 13.B or 13.C shall not be construed as an election to 
terminate this Lease unless written notice of such intention is given to 
Tenant or unless the termination is decreed by a court of competent 
jurisdiction. Notwithstanding any reletting without termination by Landlord 
because of any default by Tenant, Landlord may at any time after such 
reletting elect to terminate this Lease for any such default.

   E. NON-WAIVER:   Landlord may accept Tenant's payments without waiving any 
rights under this Lease, including rights under a previously served notice of 
default. No payment by Tenant or receipt by Landlord of a lesser amount than 
any installment of rent due shall be deemed as other than payment on account 
of the amount due.  If Landlord accepts partial payments after serving a 
notice of default, Landlord may nevertheless commence and pursue an action to 
enforce rights and remedies under the previously served notice of default 
without giving Tenant any further notice or demand.

                                   Page 31

<PAGE>

Furthermore, the Landlord's acceptance of Rent from the Tenant when the 
Tenant is holding over without express written consent does not convert 
Tenants Tenancy from a tenancy at sufferance to a month to month tenancy. No 
waiver of any provision of this Lease shall be implied by any failure of 
Landlord to enforce any remedy for the violation of that provision, even if 
that violation continues or is repeated.  Any waiver by Landlord of any 
provision of this Lease must be in writing.  Such waiver shall affect only 
the provision specified and only for the time and in the manner stated in the 
writing. No delay or omission in the exercise of any right or remedy by 
Landlord shall impair such right or remedy or be construed as a waiver 
thereof by Landlord.  No act or conduct of Landlord, including, without 
limitation, the acceptance of keys to the Premises, shall constitute 
acceptance of the surrender of the Premises by Tenant before the Expiration 
Date.  Only written notice from Landlord to Tenant of acceptance shall 
constitute such acceptance of surrender of the Premises.  Landlord's consent 
to or approval of any act by Tenant which requires Landlord's consent or 
approvals shall not be deemed to waive or render unnecessary Landlord's 
consent to or approval of any subsequent act by Tenant.

   F. PERFORMANCE BY LANDLORD:    If Tenant fails to perform any obligation 
required under this Lease or by law or governmental regulation, Landlord in 
its sole discretion may, without notice, without waiving any rights or 
remedies and without releasing Tenant from its obligations hereunder, perform 
such obligation, in which event Tenant shall pay Landlord as additional rent 
all sums paid by Landlord in connection with such substitute performance, 
including interest at the Agreed Interest Rate within ten (10) days of 
Landlord's written notice for such payment.

   14. LANDLORD'S  LIABILITY:    

   A. LIMITATION ON LANDLORD'S LIABILITY:    In the event of Landlord's 
failure to perform any of its covenants or agreements under this Lease, 
Tenant shall give Landlord written notice of such failure and shall give 
Landlord thirty (30) days to cure or commence to cure such failure prior to 
any claim for breach or resultant damages, provided, however, that if the 
nature of the default is such that it cannot reasonably be cured within the 
30-day period, Landlord shall not be deemed in default if it commences within 
such period to cure, and thereafter diligently prosecutes the same to 
completion.  In addition, upon any such failure by Landlord, Tenant shall 
give notice by registered or certified mail to any person or entity with a 
security interest in the Premises ("Mortgagee") that has provided Tenant with 
notice of its interest in the Premises, and shall provide Mortgagee a 
reasonable opportunity to cure such failure, including such time to obtain 
possession of the Premises by power of sale

                                   Page 32

<PAGE>

or judicial foreclosure, if such should prove necessary to effectuate a cure. 
Tenant agrees that each of the Mortgagees to whom this Lease has been 
assigned is an expressed third-party beneficiary hereof.  Tenant waives any 
right under California Civil Code Section 1950.7 or any other present or 
future law to the collection of any payment or deposit from Mortgagee or any 
purchaser at a foreclosure sale of Mortgagee's interest unless Mortgagee or 
such purchaser shall have actually received and not refunded the applicable 
payment or deposit.   Tenant Further waives any right to terminate this Lease 
and to vacate the Premises on Landlord's default under this Lease.  Tenant's 
sole remedy on Landlord's default is an action for damages or injunctive or 
declaratory relief, with the sole exception that if Landlord fails to perform 
in its obligation under Section 8.A to maintain plumbing and sewage 
facilities, HVAC equipment, exterior windows, door entrances, plate glass and 
glazing systems, skylights, fire extinguisher equipment, the parking lot, 
underground utilities, elevator equipment, the roof membrane or landscaping 
related to the Premises, Tenant may, after providing Landlord thirty (30) 
days' written notice, undertake such maintainence at its own cost if Landlord 
has not commenced such maintenance.  This exception does not apply to items 
about which Landlord and Tenant may disagree as to the scope or necessity of 
work.

   B. LIMITATION ON TENANT'S RECOURSE:    If Landlord is a corporation trust, 
partnership, joint venture, unincorporated association or other form of 
business entity: (i) the obligations of Landlord shall not constitute 
personal obligations of the officers, directors, trustees, partners, joint 
venturers, members, owners, stockholders, or other principals or 
representatives except to the extent of their interest in the Premises.  
Tenant shall have recourse only to the interest of Landlord in the Premises 
or for the satisfaction of the obligations of Landlord and shall not have 
recourse to any other assets of Landlord for the satisfaction of such 
obligations.

   C. INDEMNIFICATION OF LANDLORD:    As a material part of the consideration 
rendered to Landlord, Tenant hereby waives all claims against Landlord for 
damages to goods, wares and merchandise, and all other personal property in, 
upon or about said Premises and for injuries to persons in or about said 
Premises, from any cause arising at any time to the fullest extent 

                                   Page 33

<PAGE>

permitted by law, and Tenant shall indemnify and hold Landlord exempt and 
harmless from any damage or injury to any person, or to the goods, wares and 
merchandise and all other personal property of any person, arising from the 
use of the Premises, Building, and/or Project by Tenant and Tenant's Agents 
or from the failure of Tenant to keep the Premises in good condition and 
repair as herein provided, except to the extent due to the active negligence 
or willful misconduct of Landlord.  Further, in the event Landlord is made 
party to any litigation due to the acts or omission of Tenant and Tenant's 
Agents.  Tenant will indemnify, defend (with counsel reasonably acceptable to 
Landlord) and hold Landlord harmless from any such claim or liability 
including Landlord's costs and expenses and reasonable attorney's fees 
incurred in defending such claims.

   15. DESTRUCTION OF PREMISES:    

   A. DESTRUCTION BY AN INSURED CASUALTY: In the event of a destruction of 
the Premises during the Lease Term by a casualty for which Landlord has 
received insurance proceeds sufficient to repair the damage or destruction, 
Landlord shall repair the same to the extent of such proceeds.  Such 
destruction shall not annul or void this Lease; however, Tenant shall be 
entitled to a proportionate reduction of Base Monthly Rent while repairs are 
being made, such proportionate reduction to be based upon the extent to which 
the repairs interfere with Tenant's business in the Premises, as reasonably 
determined by Landlord.  If the repairs cannot be made in 180 days from the 
date of receipt of all governmental approvals necessary under the laws and 
regulations of State, Federal, County or Municipal authorities, as reasonably 
determined by Landlord, then Landlord or Tenant may terminate this Lease 
within fifteen (15) days of Landlord's determination of the foregoing.  
Notwithstanding the foregoing, either Landlord or Tenant shall have the 
option to terminate the Lease in the event of a total destruction of the 
Premises or in the event of a partial destruction occurs in the last year of 
the Lease Term and will take more than sixty (60) days to repair.  In no 
event shall Landlord be required to replace or restore Alterations, Tenant 
Improvements paid for by Tenant from sources other than the Work Allowance, 
Tenant's fixtures or personal property.  With respect to a destruction which 
Landlord is obligated to repair or may elect to repair under the terms of 
this Section, Tenant waives the provisions of Section 1932, and Section 1933, 
Subdivision 4, of the Civil Code of the State of California, and any other 
similarly enacted statute, and the provisions of this Section 15 shall govern 
in the case of such destruction.

   B. DESTRUCTION BY AN UNINSURED CASUALTY:    In the event of a total or 
partial destruction of the Premises during the Lease Term by a casualty for 
which

                                   Page 34

<PAGE>

Landlord has not received insurance proceeds sufficient to repair the damage 
or destruction, Landlord may elect to either (i) terminate this Lease by 
giving written notice to Tenant within fifteen (15) days after determining 
the replacement cost and furnishing reasonable evidence thereof to Tenant; or 
(ii) rebuild the Premises, provided the damage can be repaired within one 
hundred eighty (180) days from the date of receipt of all governmental 
approvals necessary under the laws and regulations of State, Federal, County 
or Municipal authorities, as reasonably determined by Landlord.  
Notwithstanding the foregoing, if the cost to repair the damage from an 
uninsured casualty is less than 5% of the then replacement cost of the 
Building (excluding Tenant Improvements), then Landlord shall repair the 
damage.  If Landlord contributes to payment for an uninsured loss, the 
contributed amount shall be amortized over the useful life of the 
improvements and such amortized amount shall be reimbursed by Tenant to 
Landlord as additional rent, together with interest at the prime rate of 
Union Bank plus two percent (2%).  If Landlord so elects to terminate this 
Lease, Tenant, within fifteen (15) days after receiving Landlord's notice to 
terminate, can elect to pay to Landlord at the time Tenant notifies Landlord 
of its election, the actual cost of restoration, in which case Landlord shall 
restore the Premises and this Lease shall not terminate.

   C. TENANT'S RIGHT TO CANCEL ADJACENT LEASES:    In the event the Lease is 
terminated pursuant to Section 15.A or 15.B above, Tenant shall have the 
right to simultaneously  terminate its leases for the other buildings within 
the first phase of the Project leased by Tenant. 

   16. CONDEMNATION:    If any part of the Premises shall be taken for any 
public or quasi-public use, under any statute or by right of eminent domain 
or private purchase in lieu thereof, and only a part thereof remains which is 
susceptible of occupation hereunder, this Lease shall, as to the part so 
taken, terminate as of the day before title vests in the condemnor or 
purchaser ("Vesting Date") and Base Monthly Rent payable hereunder shall be 
adjusted so that Tenant is required to pay for the remainder of the Lease 
Term only such portion of Base Monthly Rent as the value of the part 
remaining after such taking bears to the value of the entire Premises prior 
to such taking;  but in such event, Landlord shall have the

                                   Page 35

<PAGE>

option to terminate this Lease as of the Vesting Date.  If all of the 
Premises or such part thereof be taken so that there does not remain a 
portion susceptible for occupation hereunder, this Lease shall terminate on 
the Vesting Date.  If part or all of the Premises be taken, all compensation 
awarded upon such taking shall go to Landlord, and Tenant shall have no claim 
thereto; but Landlord shall cooperate with Tenant, without cost to Landlord, 
to recover compensation for damage to or taking of any Alterations, Tenant 
Improvements paid for by Tenant from sources other than the Work Allowance, 
or for Tenant's moving costs.  Tenant hereby waives the provisions of 
California Code of Civil Procedures Section 1265.130 and any other similarly 
enacted statue, and the provisions of this Section 16 shall govern in the 
case of such taking.

   17. ASSIGNMENT OR SUBLEASE:    

   A. CONSENT BY LANDLORD:    Except as specifically provided in this Section 
17, Tenant may not assign, sublet, hypothecate, or allow a third party to use 
the Premises without the express written consent of Landlord, which consent 
shall not be unreasonably withheld as defined below.  In the event Tenant 
desires to assign this Lease or any interest herein including, without 
limitation, a pledge, mortgage or other hypothecation, or sublet the Premises 
or any part thereof, Tenant shall deliver to Landlord (i) executed 
counterparts of any agreement and of all ancillary agreements with the 
proposed assignee/subtenant, (ii) current financial statements of the 
transferee covering the preceding three years, (iii) the nature of the 
proposed transferee's business to be carried on in the Premises, (v) all 
consideration to be given on account of the Transfer, and (vi) a current 
financial statement of Tenant.  Landlord may condition its approval of any 
Transfer to a certification from both Tenant and the proposed transferee of 
all consideration to be paid to Tenant in connection with such Transfer.  At 
Landlord's request, Tenant shall also provide additional information 
reasonably required by Landlord to determine whether it will consent to the 
proposed assignment or sublease.  Landlord shall have a ten (10) day period 
following receipt of all the foregoing within which to notify Tenant in 
writing that Landlord elects to: (i) permit Tenant to assign or sublet such 
space to the named assignee/subtenant on the terms and conditions set forth 
in the notice; or (ii) refuse consent.  If Landlord should fail to notify 
Tenant in writing of such election within the 10-day period, Landlord shall 
be deemed to have elected option (ii) above. Landlord's written consent to 
the proposed assignment or sublease shall not be unreasonably withheld, 
provided and upon the condition that: (i) the proposed assignee or subtenant 
is engaged in a business that is limited to the use expressly permitted under 
this Lease; (ii) the proposed assignee is a company with sufficient financial 
worth and management ability

                                   Page 36

<PAGE>

to undertake the financial obligation of this Lease and Landlord has been 
furnished with reasonable proof thereof; (iii) the proposed assignment or 
sublease is in form reasonably satisfactory to Landlord; and (iv) Tenant 
reimburses Landlord on demand for any costs that may be incurred by Landlord 
in connection with said assignment or sublease, including the costs of making 
investigations as to the acceptability of the proposed assignee or subtenant 
and legal costs incurred in connection with the granting of any requested 
consent, not to exceed $2,500.00; and (vi) Tenant shall not have advertised 
or publicized the availability of the Premises without prior notice to 
Landlord.  In the event all or any one of the foregoing conditions are not 
satisfied, Landlord shall be considered to have acted reasonably if it 
withholds its consent.

   B. ASSIGNMENT OR SUBLETTING CONSIDERATION:    Any rent or other economic 
consideration realized by Tenant under any sublease and assignment, in excess 
of the rent payable hereunder and reasonable subletting and assignment costs, 
shall be divided and paid fifty percent (50%) to Landlord and fifty percent 
(50%) to Tenant, after first deducting all direct costs incurred by Tenant in 
connection with such transaction.  Tenant's obligation to pay over Landlord's 
portion of the consideration constitutes an obligation for additional rent 
hereunder.  The above provisions relating to Landlord's right to terminate 
the Lease and relating to the allocation of bonus rent are independently 
negotiated terms of the Lease which constitute a material inducement for the 
Landlord to enter into the Lease, and are agreed by the parties to be 
commercially reasonable.  No assignment or subletting by Tenant shall relieve 
it of any obligation under this Lease.  Any assignment or subletting which 
conflicts with the provisions hereof shall be void.

   C. NO RELEASE:    Any assignment or sublease, including assignments or 
deemed assignments pursuant to Section 17.D below, shall be made only if and 
shall not be effective until the assignee or subtenant shall execute, 
acknowledge, and deliver to Landlord an agreement, in form and substance 
satisfactory to Landlord, whereby the assignee or subtenant shall assume all 
the obligations of this Lease on the part of Tenant to be performed or 
observed and shall be subject to all the covenants, agreements, terms, 
provisions and conditions in this Lease.  Notwithstanding any such sublease 
or assignment and the acceptance of rent by

                                   Page 37

<PAGE>

Landlord from any subtenant or assignee, Tenant and any guarantor shall 
remain fully liable for the payment of Base Monthly Rent and additional rent 
due, and to become due hereunder, for the performance of all the covenants, 
agreements, terms, provisions and conditions contained in this Lease on the 
part of Tenant to be performed and for all acts and omissions of any 
licensee, subtenant, assignee or any other person claiming under or through 
any subtenant or assignee that shall be in violation of any of the terms and 
conditions of this Lease, and any such violation shall be deemed a violation 
by Tenant.  Tenant shall indemnify, defend and hold Landlord harmless from 
and against all losses, liabilities, damages, costs and expenses (including 
reasonable attorney fees) resulting from any claims that may be made against 
Landlord by the proposed assignee or subtenant or by any real estate brokers 
or other persons claiming compensation in connection with the proposed 
assignment or sublease.

   D. REORGANIZATION OF TENANT:    If Tenant is a corporation, the following 
shall be deemed a voluntary assignment of Tenant's interest in this Lease: 
(i) any dissolution, merger, consolidation, or other reorganization of or 
affecting Tenant, whether or not Tenant is the surviving corporation, and 
(ii) if the capital stock of Tenant is not publicly traded, the sale or 
transfer to one person or entity (or to any group of related persons or 
entities) stock possessing more than 50% of the total combined voting power 
of all classes of Tenant's capital stock issued, outstanding and entitled to 
vote for the election of directors.  

   E. PERMITTED TRANSFERS:    Notwithstanding anything contained in this 
Section 17, so long as Tenant otherwise complies with the provisions of this 
Article, Tenant may enter into any of the following transfers (a "Permitted 
Transfer") without Landlord's prior consent, and Landlord shall not be 
entitled to receive any part of any subrent resulting therefrom that would 
otherwise be due.  Tenant may sublease all or part of the Premises or assign 
its interest in this Lease to (i) any corporation which controls, is 
controlled by, or is under common control with the original Tenant to this 
Lease by means of an ownership interest of more than 50%; (ii) a corporation 
which results from a merger, consolidation or other reorganization in which 
Tenant is not the surviving corporation, so long as such transaction is not 
entered into as a subterfuge by Tenant to be relieved of or otherwise 
diminish its obligations under this Lease; and (iii) a corporation which 
purchases or otherwise acquires all or substantially all of the assets of 
Tenant so long as such acquisition is not entered into as a subterfuge by 
Tenant to be relieved of or otherwise diminish its obligations under this 
Lease.  

   F. EFFECT OF DEFAULT:    In the event of Tenant's default, Tenant hereby 
assigns all rents due from any

                                   Page 38

<PAGE>

assignment or subletting to Landlord as security for performance of its 
obligations under this Lease, and Landlord may collect such rents as Tenant's 
Attorney-in-Fact, except that Tenant may collect such rents unless a default 
occurs as described in Section 13 above.  A Lease termination due to Tenant's 
default shall not automatically terminate an assignment or sublease then in 
existence; rather at Landlord's election, such assignment or sublease shall 
survive the Lease termination, the assignee or subtenant shall attorn to 
Landlord, and Landlord shall undertake the obligations of Tenant under the 
sublease or assignment; except that Landlord shall not be liable for prepaid 
rent, security deposits or other defaults of Tenant to the subtenant or 
assignee, or for any acts or omissions of Tenant and Tenant's Agents.

   G. CONVEYANCE BY LANDLORD:    As used in this Lease, the term "Landlord" 
is defined only as the owner for the time being of the Premises, so that in 
the event of any sale or other conveyance of the Premises or in the event of 
a master lease of the Premises, Landlord shall be entirely freed and relieved 
of all its covenants and obligations hereunder, and it shall be deemed and 
construed, without further agreement between the parties and the purchaser at 
any such sale or the master tenant of the Premises, that the purchaser or 
master tenant of the Premises has assumed and agreed to carry out any and all 
covenants and obligations of Landlord hereunder.  Such transferor shall 
transfer and deliver Tenant's security deposit to the purchaser at any such 
sale or the master tenant of the Premises, and thereupon the transferor shall 
be discharged from any further liability in reference thereto.

   F. SUCCESSORS AND ASSIGNS:    Subject to the provisions this Section 17, 
the covenants and conditions of this Lease shall apply to and bind the heirs, 
successors, executors, administrators and assigns of all parties hereto; and 
all parties hereto shall be jointly and severally liable hereunder.

   18. OPTION TO EXTEND THE LEASE TERM:

   A. GRANT AND EXERCISE OF OPTION:    Provided Tenant concurrently exercises 
its options to extend the lease terms on all other buildings leased by Tenant 
within the first phase portion of the Project, Landlord grants to Tenant, 
subject to the terms and conditions

                                   Page 39


<PAGE>

set forth in this Section 18.A, two (2) options (the "Options") to extend the 
Lease Term for an additional term (the "Option Term").  Each Option Term 
shall be for a period of sixty (60) months and shall be exercised, if at all, 
by written notice to Landlord no earlier than eighteen (18) months prior to 
the Expiration Date but no later than twelve (12) months prior to the 
Expiration Date.  If Tenant exercises the Option, all of the terms, covenants 
and conditions of this Lease except this Section shall apply during the 
Option Term as though the expiration date of the Option Term was the date 
originally set forth herein as the Expiration Date, provided that Base 
Monthly Rent for the Premises payable by Tenant during the Option Term shall 
be the greater of either the average of Base Monthly Rent paid during the 
previous term, or the then Fair Market Rental as hereinafter defined.  
Notwithstanding anything herein to the contrary, if Tenant is in monetary or 
material non-monetary default under any of the terms, covenants or conditions 
of this Lease either at the time Tenant exercises the Option or at any time 
thereafter prior to the commencement date of the Option Term, Landlord shall 
have, in addition to all of Landlord's other rights and remedies provided in 
this Lease, the right to terminate the Option upon notice to Tenant, in which 
event the expiration date of this Lease shall be and remain the Expiration 
Date.  As used herein, the term "Fair Market Rental" is defined as the rental 
and all other monetary payments, including any escalations and adjustments 
thereto (including without limitation Consumer Price Indexing) that Landlord 
could obtain during the Option Term from a third party desiring to lease the 
Premises, based upon the current use and other potential uses of the 
Premises, as determined by the rents then being obtained for new leases of 
space comparable in age and quality to the Premises in the locality of the 
Building.

   B. DETERMINATION OF FAIR MARKET RENTAL:    If Tenant exercises the Option, 
Landlord shall send Tenant a notice setting forth the Fair Market Rental for 
the Option Term within thirty (30) days following the Exercise Date.  If 
Tenant disputes Landlord's determination of Fair Market Rental for the Option 
Term, Tenant shall, within thirty (30) days after the date of Landlord's 
notice setting forth Fair Market Rental for the Option Term, send to Landlord 
a notice stating that Tenant either elects to terminate its exercise of the 
Option, in which event the Option shall lapse and this Lease shall terminate 
on the Expiration Date, or that Tenant disagrees with Landlord's 
determination of Fair Market Rental for the Option Term and elects to resolve 
the disagreement as provided in Section 18.C below. If Tenant does not send 
Landlord a notice as provided in the previous sentence, Landlord's 
determination of Fair Market Rental shall be the basis for determining the 
Base Monthly Rent payable by Tenant during the Option Term.  If Tenant elects 
to resolve

                                   Page 40

<PAGE>

the disagreement as provided in Section 18.C and such procedures are not 
concluded prior to the commencement date of the Option Term, Tenant shall pay 
to Landlord as Base Monthly Rent the Fair Market Rental as determined by 
Landlord in the manner provided above.  If the Fair Market Rental as finally 
determined pursuant to Section 18.C is greater than Landlord's determination, 
Tenant shall pay Landlord the difference between the amount paid by Tenant 
and the Fair Market Rental as so determined in Section 18.C within thirty 
(30) days after such determination.  If the Fair Market Rental as finally 
determined in Section 18.C is less than Landlord's determination, the 
difference between the amount paid by Tenant and the Fair Market Rental as so 
determined in Section 18.C shall be credited against the next installments of 
rent due from Tenant to Landlord hereunder.

   C. RESOLUTION OF A DISAGREEMENT OVER THE FAIR MARKET RENTAL:    Any 
disagreement regarding Fair Market Rental shall be resolved as follows:

   1. Within thirty (30) days after Tenant's response to Landlord's notice 
setting forth the Fair Market Rental, Landlord and Tenant shall meet at least 
two (2) times at a mutually agreeable time and place, in an attempt to 
resolve the disagreement.


   2. If within the 30-day period referred to above, Landlord and Tenant 
cannot reach agreement as to Fair Market Rental, each party shall select one 
appraiser to determine Fair Market Rental.  Each such appraiser shall arrive 
at a determination of Fair Market Rental and submit their conclusions to 
Landlord and Tenant within thirty (30) days after the expiration of the 
30-day consultation period described above.

   3. If only one appraisal is submitted within the requisite time period, it 
shall be deemed as Fair Market Rental.  If both appraisals are submitted 
within such time period and the two appraisals so submitted differ by less 
than ten percent (10%), the average of the two shall be deemed as Fair Market 
Rental.  If the two appraisals differ by more than 10%, the appraisers shall 
immediately select a third appraiser who shall, within thirty (30) days after 
his selection, make and submit to Landlord and Tenant a determination of Fair 
Market Rental.  This third appraisal will then be averaged with the closer of 
the two previous appraisals and the result shall be Fair Market Rental.

                                   Page 41

<PAGE>

   4. All appraisers specified pursuant to this Section shall be members of 
the American Institute of Real Estate Appraisers with not less than ten (10) 
years experience appraising office and industrial properties in the Santa 
Clara Valley.  Each party shall pay the cost of the appraiser selected by 
such party and one-half of the cost of the third appraiser.

   D. PERSONAL TO TENANT:    All Options provided to Tenant in this Lease are 
personal and granted to Network Equipment Technologies and any entity 
resulting from a permitted transfer as set forth in Section 17.E above and 
are not exercisable by any third party should Tenant assign or sublet all or 
a portion of its rights under this Lease, unless Landlord consents to permit 
exercise of any option by any assignee or subtenant, in Landlord's sole and 
absolute discretion.  In the event Tenant has multiple options to extend this 
Lease, a later option to extend the Lease cannot be exercised unless the 
prior option has been so exercised.

   19. OPTION TO LEASE :   Landlord has granted Tenant an option to lease 
addition buildings on the terms set forth in EXHIBIT "E".

   20. GENERAL PROVISIONS:

   A. ATTORNEY'S FEES:    In the event a suit or alternative form of dispute 
resolution is brought for the possession of the Premises, for the recovery of 
any sum due hereunder, to interpret the Lease, or because of the breach of 
any other covenant herein; then the losing party shall pay to the prevailing 
party reasonable attorney's fees including the expense of expert witnesses, 
depositions and court testimony as part of its costs which shall be deemed to 
have accrued on the commencement of such action.  The prevailing party shall 
also be entitled to recover all costs and expenses including reasonable 
attorney's fees incurred in enforcing any judgment or award against the other 
party.  The foregoing provision relating to post-judgment costs is severable 
from all other provisions of this Lease.

   B. AUTHORITY OF PARTIES:   Each party represents and warrants to the other 
party that it is duly formed and in good standing, and is duly authorized to 
execute and deliver this Lease on behalf of it, and that this Lease is 
binding upon the signing party in accordance with its terms.  At either 
party's request, the other party shall provide the requesting party with 
proof in a form acceptable to the requesting party, authorizing the execution 
of the Lease.

   C. BROKERS:    Tenant represents it has not utilized or contacted a real 
estate broker or finder with respect to this Lease other than Julien J. 

                                   Page 42

<PAGE>

Studley, Inc. and Tenant agrees to indemnify, defend and hold Landlord harmless 
against any claim, cost, liability or cause of action asserted by any other 
broker or finder claiming through Tenant.

   D. CHOICE OF LAW:    This Lease shall be governed by and construed in 
accordance with California law.   Venue shall be Alameda County.

   E. DISPUTE RESOLUTION:     Landlord and Tenant and any other party that 
may become a party to this Lease or be deemed a party to this Lease including 
any subtenants agree to and shall mediate any controversy, dispute, or claim 
of whatever nature arising out of, in connection with, or in relation to the 
interpretation, performance or breach of this Lease, including any claim 
based on contract, tort, or statute,, except for any claim by Landlord for 
unlawful detainer, or any action within the jurisdiction of the small claims 
court.  The mediation shall be held prior to any court action or arbitration. 
 The mediation shall be confidential and in accordance with California 
Evidence Code Section1152.5.  In the event the parties are not able to agree 
on a mediator within thirty days JAMS or another judicial and mediation 
service mutually acceptable to the parties shall appoint a mediator.  In the 
event the mediator determines that a second mediation session is necessary, 
it shall be conducted in accordance with this paragraph.  Should the 
prevailing party attempt an arbitration or a court action before attempting 
to mediate, THE PREVAILING PARTY SHALL NOT BE ENTITLED TO ATTORNEYS FEES THAT 
MIGHT OTHERWISE BE AVAILABLE TO THEM IN A COURT ACTION OR ARBITRATION, AND IN 
ADDITION THERETO, THE PARTY WHO IS DETERMINED BY THE ARBITRATOR TO HAVE 
RESISTED MEDIATION SHALL BE SANCTIONED BY THE ARBITRATOR OR JUDGE.  Except 
for any claim by Landlord for unlawful detainer or any claim within the 
Jurisdiction of the small claims court (which for such claims the parties 
agree shall be the sole court of competent jurisdiction), any controversy, 
dispute, or claim of whatever nature arising out of, in connection with, or 
in relation to the interpretation, performance or breach of this Lease, 
including any claim based on contract, tort, or statute, shall be resolved at 
the request of any party to this agreement through a two-step dispute 
resolution process administered by JAMS or another judicial and mediation 
service mutually acceptable to the parties involving first mediation, 
followed, if necessary, by final and binding arbitration administered by and 
in accordance with the

                                   Page 43

<PAGE>

then-existing rules and practice of the judicial and mediation service 
selected, and judgment upon any award rendered by the arbitrator(s) may be 
entered by any State or Federal Court having jurisdiction thereof.  The 
parties to the arbitration shall have those rights of discovery that the 
arbitrator(s) deem necessary (after application to the arbitrator(s)) to a 
full and fair hearing of the matter.  However, in no event shall the parties 
be entitled to propound interrogatories or requests for admissions during the 
arbitration process.  The arbitrator shall be a retired judge or a licensed 
California Attorney.  The venue for any such arbitration's or mediations 
shall be in Santa Clara County.

   F. ENTIRE AGREEMENT:    This Lease contains all of the agreements and 
conditions made between the parties hereto and may not be modified orally or 
in any other manner other than by written agreement signed by all parties 
hereto or their respective successors in interest.  This Lease supersedes and 
revokes all previous negotiations, letters of intent, lease proposals, 
brochures, agreements, representations, promises, warranties, and 
understandings, whether oral or in writing, between the parties or their 
respective representatives or any other person purporting to represent 
Landlord or Tenant.

   G. ENTRY BY LANDLORD:    Upon prior notice to Tenant and subject to 
Tenant's reasonable security regulations, Tenant shall permit Landlord and 
his agents to enter into and upon the Premises at all reasonable times, and 
without any rent abatement or reduction or any liability to Tenant for any 
loss of occupation or quiet enjoyment of the Premises thereby occasioned, for 
the following purposes:  (i) inspecting and maintaining the Premises; (ii) 
making repairs, alterations or additions to the Premises; (iii) erecting 
additional building(s) and improvements on the land where the Premises are 
situated or on adjacent land owned by Landlord; and (iv) performing any 
obligations of Landlord under the Lease including remediation of hazardous 
materials if determined to be the responsibility of Landlord.  Tenant shall 
permit Landlord and his agents, at any time within one hundred eighty (180) 
days prior to the Expiration Date (or at any time during the Lease if Tenant 
is in default hereunder), to place upon the Premises "For Lease" signs and 
exhibit the Premises to real estate brokers and prospective tenants at 
reasonable hours.

   H. ESTOPPEL CERTIFICATES:    At any time during the Lease Term, Landlord 
or Tenant shall, within ten (10) days following written notice from the other 
party, execute and deliver to the requesting party a written statement 
certifying, if true, the following:  (i) that this Lease is unmodified and in 
full force and effect (or, if modified, stating the nature of such 
modification); (ii) the date to which rent and other

                                   Page 44

<PAGE>

charges are paid in advance, if any; (iii) acknowledging that there are not, 
to such party's knowledge, any uncured defaults on either party's part 
hereunder (or specifying such defaults if they are claimed); and (iv) such 
other information as either party may reasonably request.  Any such statement 
may be conclusively relied upon by any prospective purchaser or encumbrancer 
of Landlord's interest in the Premises.  Landlord or Tenant's failure to 
deliver such statement within such time shall be conclusive upon such party 
that this Lease is in full force and effect without modification, except as 
may be represented by such party, and that there are no uncured defaults in 
such party's performance.  Tenant agrees to provide, within fifteen (15) days 
of Landlord's request, Tenant's most recent three (3) years of audited 
financial statements for Landlord's use in financing the Premises or 
Landlord's interest therein.

   I. EXHIBITS:    All exhibits referred to are attached to this Lease and 
incorporated by reference.

   J. INTEREST:    All rent due hereunder, if not paid when due, shall bear 
interest at the rate of the Reference Rate published by Bank of America, San 
Francisco Branch, plus two percent (2%) per annum from that date until paid 
in full ("Agreed Interest Rate").  This provision shall survive the 
expiration or sooner termination of the Lease.  Despite any other provision 
of this Lease, the total liability for interest payments shall not exceed the 
limits, if any, imposed by the usury laws of the State of California.  Any 
interest paid in excess of those limits shall be refunded to Tenant by 
application of the amount of excess interest paid against any sums 
outstanding in any order that Landlord requires.  If the amount of excess 
interest paid exceeds the sums outstanding, the portion exceeding those sums 
shall be refunded in cash to Tenant by Landlord.  To ascertain whether any 
interest payable exceeds the limits imposed, any non-principal 
payment(including late charges) shall be considered to the extent permitted 
by law to be an expense or a fee, premium, or penalty rather than interest.

   K. MODIFICATIONS REQUIRED BY LENDER:     If any Lender of Landlord 
requires a modification of this Lease that will not increase Tenant's cost or 
expense or materially or adversely change Tenant's rights and obligations, 
this Lease shall be so modified and Tenant

                                   Page 45

<PAGE>

shall execute whatever reasonable documents are required and deliver them to 
Landlord within ten (10) days after the request.

   L. NO PRESUMPTION AGAINST DRAFTER:    Landlord and Tenant understand, 
agree and acknowledge that this Lease has been freely negotiated by both 
parties; and that in any controversy, dispute, or contest over the meaning, 
interpretation, validity, or enforceability of this Lease or any of its terms 
or conditions, there shall be no inference, presumption, or conclusion drawn 
whatsoever against either party by virtue of that party having drafted this 
Lease or any portion thereof.

   M. NOTICES:    All notices, demands, requests, or consents required to be 
given under this Lease shall be sent in writing by U.S. certified mail, 
return receipt requested, or by personal delivery addressed to the party to 
be notified at the address for such party specified in Section 1 of this 
Lease, or to such other place as the party to be notified may from time to 
time designate by at least fifteen (15) days prior notice to the notifying 
party.  When this Lease requires service of a notice, that notice shall 
replace rather than supplement any equivalent or similar statutory notice, 
including any notices required by Code of Civil Procedure Section 1161 or any 
similar or successor statute.  when a statute requires service of a notice in 
a particular manner, service of that notice (or a similar notice required by 
this lease) shall replace and satisfy the statutory service-of-notice 
procedures, including those required by Code of Civil Procedure Section 1162 
or any similar or successor statute.

   N. RENT:    All monetary sums due from Tenant to Landlord under this 
Lease, including, without limitation those referred to as "additional rent", 
shall be deemed as rent.

   O. REPRESENTATIONS:    Tenant acknowledges that neither Landlord nor any 
of its employees or agents have made any agreements, representations, 
warranties or promises with respect to the Premises or with respect to 
present or future rents, expenses, operations, tenancies or any other matter. 
 Except as herein expressly set forth herein, Tenant relied on no statement 
of Landlord or its employees or agents for that purpose.

   P. RIGHTS AND REMEDIES:    All rights and remedies hereunder are 
cumulative and not alternative to the extent permitted by law, and are in 
addition to all other rights and remedies in law and in equity.

   Q. SEVERABILITY:    If any term or provision of this Lease is held 
unenforceable or invalid by a court of competent jurisdiction, the remainder 
of the Lease shall not be invalidated thereby but shall be

                                   Page 46

<PAGE>

enforceable in accordance with its terms, omitting the invalid or 
unenforceable term.

   R. SUBORDINATION:    This Lease is subject and subordinate to ground and 
underlying leases, mortgages and deeds of trust (collectively "Encumbrances") 
which may now affect the Premises, to any covenants, conditions or 
restrictions of record, and to all renewals, modifications, consolidations, 
replacements and extensions thereof; provided, however, if the holder or 
holders of any such Encumbrance ("Holder") require that this Lease be prior 
and superior thereto, within seven (7) days after written request of Landlord 
to Tenant, Tenant shall execute, have acknowledged and deliver all documents 
or instruments, in the form presented to Tenant, which Landlord or Holder 
deems necessary or desirable for such purposes.  Landlord shall have the 
right to cause this Lease to be and become and remain subject and subordinate 
to any and all Encumbrances which are now or may hereafter be executed 
covering the Premises or any renewals, modifications, consolidations, 
replacements or extensions thereof, for the full amount of all advances made 
or to be made thereunder and without regard to the time or character of such 
advances, together with interest thereon and subject to all the terms and 
provisions thereof; provided only, that in the event of termination of any 
such lease or upon the foreclosure of any such mortgage or deed of trust, 
Holder agrees to recognize Tenant's rights under this Lease as long as Tenant 
is not then in default and continues to pay Base Monthly Rent and additional 
rent and observes and performs all required provisions of this Lease. Within 
ten (10) days after Landlord's written request, Tenant shall execute any 
documents required by Landlord or the Holder to make this Lease subordinate 
to any lien of the Encumbrance.  If Tenant fails to do so, then in addition 
to such failure constituting a default by Tenant, it shall be deemed that 
this Lease is so subordinated to such Encumbrance. Notwithstanding anything 
to the contrary in this Section, Tenant hereby attorns and agrees to attorn 
to any entity purchasing or otherwise acquiring the Premises at any sale or 
other proceeding or pursuant to the exercise of any other rights, powers or 
remedies under such encumbrance.

Notwithstanding the foregoing, the subordination of this Lease shall be subject 
to Tenant's receipt of a


                                   Page 47

<PAGE>

Nondisturbance and Attornment Agreement in a 
commercially reasonable form.

   S. SUBMISSION OF LEASE:    Submission of this document for examination or 
signature by the parties does not constitute an option or offer to lease the 
Premises on the terms in this document or a reservation of the Premises in 
favor of Tenant.  This document is not effective as a lease or otherwise 
until executed and delivered by both Landlord and Tenant.

   T. SURVIVAL OF INDEMNITIES:  All indemnification, defense, and hold 
harmless obligations of Landlord and Tenant under this Lease shall survive 
the expiration or sooner termination of the Lease.

   U. TIME:    Time is of the essence hereunder.

   V. TRANSPORTATION DEMAND MANAGEMENT PROGRAMS:  Should a government agency 
or municipality require Landlord to institute TDM (Transportation Demand 
Management) facilities and/or program, Tenant agrees that the cost of TDM 
imposed facilities required on the Premises, including but not limited to 
employee showers, lockers, cafeteria, or lunchroom facilities, shall be paid 
by Tenant.  Further, any ongoing costs or expenses associated with a TDM 
program which are required for the Premises and not provided by Tenant, such 
as an on-site TDM coordinator, shall be provided by Landlord with such costs 
being included as additional rent and reimbursed to Landlord by Tenant within 
thirty (30) days after demand.

   W. WAIVER OF RIGHT TO JURY TRIAL:    Landlord and Tenant waive their 
respective rights to trial by jury of any contract or tort claim, 
counterclaim, cross-complaint, or cause of action in any action, proceeding, 
or hearing brought by either party against the other on any matter arising 
out of or in any way connected with this Lease, the relationship of Landlord 
and Tenant, or Tenant's use or occupancy of the Premises, including any claim 
of injury or damage or the enforcement of any remedy under any current or 
future law, statute, regulation, code, or ordinance.

   X. USE OF ROOF:    Tenant shall have the exclusive right to use the roof 
of the Building at no charge to place and maintain telecommunications 
antennas, microwave or satellite dishes and other communications equipment.  
Such use of the roof shall be subject to receipt of all required government 
approvals, at Tenant's sole cost.  The placements of any such antennas or 
satellite dishes or other communications equipment on the roofs, the 
modifications of the roof to accommodate such equipment, and the installation 
of any such equipment shall be subject to Landlord's reasonable prior 
approval of the plans and methods therefore.  Such use

                                   Page 48

<PAGE>

of the roof shall not restrict, impair or negate any warranty relating to the 
roofs and Tenant shall be responsible for any and all damage, leakage or 
extraordinary wear and tear to the roof occurring as a result of such use of 
the roofs.  Installation of such equipment shall be supervised by Landlord 
and performed in a first class workmanlike manner.  Prior to the Expiration 
Date, Tenant shall, at its sole cost and expense, remove all such roof 
equipment as Landlord desires and restore the roof to its condition as of the 
Commencement Date.  Such repair and restoration shall include causing the 
roof to be brought into compliance with all applicable building codes and 
laws in effect at the time of the removal to the extent such compliance is 
necessitated by removal of the roof equipment and restoration work on the 
roof. 

   Y. RECORDATION:    Within forty-five (45) days after the execution and 
delivery of this Lease by Landlord and Tenant, Landlord shall execute and 
notarize a short form Memorandum of Lease, in recordable form, and shall 
deliver the same to Tenant for Tenant's recording.  Within (45) days 
following the finalizing by Landlord of a new parcel map for the Project, 
Landlord and Tenant shall execute all necessary documents to eliminate the 
Short Form Memorandum of Lease and shall concurrently execute a new short 
form Memorandum of Lease for recordation on the parcel affected by this 
Lease.  At such time, Landlord and Tenant shall also execute a Memorandum of 
Lease for recordation on parcels affected by Tenant's Option to Lease 
pursuant to Exhibit "E" of this Lease.  Prior to the expiration or earlier 
termination of the Lease and/or Option to Lease, Tenant agrees to promptly 
execute all necessary documents to eliminate the Short Form Memorandum of 
Lease as an exception to title.

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

LANDLORD:  Sobrato Interests IIITENANT:Network Equip-
a California Limited Partnershipment Technologies
a Delaware Corporation

By:  _______/S/___________________By: ____________ /S/ ___________________ 

Its:  General PartnerIts:Sr. Vice President 
                                 & CFO


                                   Page 49

<PAGE>


EXHIBIT - OPTION TO LEASE

RECITALS:

   A. As part of the consideration for Tenant entering into the Lease, 
Landlord is willing to grant to Tenant an option to lease a maximum of two 
(2) buildings to be constructed on two adjacent parcels of land, 
approximately 5.3 and 4.5 acres respectively, owned by Landlord and shown on 
SCHEDULE 1 ("Option Properties).  Such buildings currently do not exist, but 
Landlord is willing, subject to the conditions set forth herein, to construct 
such buildings if Tenant exercises such option to lease, all pursuant to the 
terms and conditions set forth below. Such buildings and property is herein 
referred to as the "Option Buildings".

   B. The parties now wish to document the terms of such option to lease the 
Option Buildings.

NOW, THEREFORE, in consideration of the execution of the Lease by both parties, 
and in consideration of the mutual covenants set forth below, the parties agree 
as follows:

   1. GRANT OF OPTION.    Landlord hereby grants to Tenant an option to lease 
the Option Buildings (the "Option") subject to the terms and conditions set 
forth in this Agreement.

   2. TERM OF OPTION.    Tenant shall be entitled, subject to paragraph 3 
below, to exercise the Option at any time during the period commencing on the 
execution date of the Lease and ending on June 1, 1999.  Such period shall 
herein be referred to as the "Option Period". 

   3. EXERCISE OF OPTION.    Tenant shall exercise the Option only by 
delivery of written notice to Landlord within the Option Period of such 
exercise ("Exercise Date").  Tenant shall be entitled to exercise the Option 
only if at the time of such exercise Tenant is not in default under the terms 
of the Lease.  In the event the Lease has been terminated for any reason, 
this Option shall automatically terminate.  At the time Tenant exercises the 
Option, Tenant must notify Landlord of the amount of building square footage 
it desires to lease pursuant to the Option.  

                                   Page 50

<PAGE>

   4. CONDITIONS PRECEDENT.    Landlord's obligation to construct the Option 
Buildings are expressly conditioned upon Landlord's ability to within one 
hundred twenty (120) days of the Exercise Date to (i)  secure a commitment by 
an institutional lender to make a fixed rate non-recourse non-participating 
loan to Landlord in a minimum amount equal to eighty-five percent (85%) of 
Total Project Costs (as defined below), and (ii) obtain all permits and 
governmental approvals necessary for the construction of the Option 
Buildings. 

   5. LEASE OF THE OPTION BUILDING.    Within thirty (30) days after Tenant's 
exercise of the Option, Landlord and Tenant shall enter into a written lease 
of the Option Buildings (the "Option Building Lease").  The Option Building 
Lease shall be on the same terms as the Lease, except as follows:

   (a) The Premises shall be Option Buildings.  References in the Lease 
format shall be changed in the Option Building Lease to refer to Option 
Building.

   (b) Landlord shall provide 3.5 parking spaces per 1,000 square feet of 
leasable space within the Option Buildings. 

   (c) The term shall commence upon the date of Substantial Completion (as 
the term is defined in the Lease) of the Building Shell and Tenant Improvements 
for the Option Building ("Commencement Date"), and end on the twelfth (12th) 
anniversary thereof, with options to extend pursuant to the Lease.   

   (d) Rent  shall be payable beginning on the Commencement Date.  Base 
Monthly Rent shall be equal to one hundred thirty percent (130%) of (i) the 
product of the (i) Total Project Costs as defined below and (ii) the best 
non-participating twelve (12) year fixed rate permanent loan constant 
available prior to the start of construction of the Option Building.  In no 
event shall the amortization period of the loan exceed twenty (20) years.  In 
the event that actual project costs have not been determined by the 
Commencement Date, the rent shall be based on Landlord's reasonable estimate 
of Project Costs until such time as actual Project Costs are available.  

Total Project Costs shall be equal to the sum of (i) the Fair Market 
Value of the Property, at the time Tenant exercises the Option determined by 
appraisal as provided in the Lease, (ii)  payments by Landlord for labor and 
materials to contractors performing construction work in connection with the 
Option Buildings, (iii)  fees for building permits, licenses, inspection, 
utility connections or extensions, and any other fees imposed by governmental 
entities, (iv)  fees of engineers, architects, consultants and others providing 
professional services in connection with the


                                   Page 51

<PAGE>

construction of the Option Buildings, (v)  construction loan interest paid by 
Landlord including interest on Landlord's equity with respect to the 
construction of the Option Buildings, calculated at the reference rate 
charged by Union Bank plus one percent (1%), (vi)  loan fees payable for the 
construction and/or permanent loan for the Option Buildings (vii)  real 
property taxes and assessments levied against the Property during the period 
the Option Buildings is  constructed, (viii)  liability and builders risk 
insurance premiums and completion bond premiums paid by Landlord with respect 
to the construction of the Option Buildings, (ix)  real estate leasing 
commissions or fees payable by Landlord with respect to the Option Buildings 
in the event Tenant retains a broker;  and (x)  a sum equal to seven percent 
(7%) of the Total Project Cost, for Landlord's construction and development 
services including onsite and offsite supervision and management services 
provided by Landlord.

The Base Monthly Rent shall then be increased  on the same basis as 
provided in Section 4.B of the Lease.

   (e) The security deposit (in the form of a letter of credit) shall be 
equal to the Base Monthly Rent amount for the Option Buildings for the first 
month of the term.

   (f) The Work Allowance shall be modified to (i) reflect a Work Allowance 
of Twenty Five Dollars ($25.00) times the number of leasable square feet of 
space in the Option Buildings, and (ii) require Tenant's submission to 
Landlord of its Tenant Improvement Plans as set forth below in this Agreement.

   (g) The Lease shall be amended (i) to extend the original Lease Term so as 
to be co-terminus with the original term of Option Building Lease; and (ii) 
to provide that a default under Lease shall be deemed a default under the 
Option Building Lease; and that a default under the Option Building Lease 
shall be deemed a default under the Lease.  The rent for the Premises under 
the Lease during the extended term shall be at Fair Market Value (as the term 
is therein defined) but not less than the rent paid in the preceding period  

   6. CONSTRUCTION OF SHELL AND TENANT IMPROVEMENTS.

   (a) Within sixty (60) days after Tenant's exercise of the Option, Landlord 
shall deliver to Tenant plans

                                   Page 52

<PAGE>

and specifications for construction of the shell of Option Buildings 
(together called the "Shell Plans").  The Shell Plans shall contemplate 
construction of two buildings of 100,000 leasable square feet each.  
"Leasable Square Feet" shall include all square footage within the Option 
Buildings when measured from outside exterior wall/glass to outside exterior 
wall/glass of each floor, including docks, entries, patios and balconies 
covered by a structural roof, but excluding roof overhangs.  The Shell Plans 
shall contemplate construction of a Building Shell of a design and size 
similar to the Building Shell of the Premises.

   (b) Within ninety (90) days after Tenant's receipt of the Shell Plans, 
Tenant shall submit to Landlord, for Landlord's approval, Tenant Improvement 
Plans respecting Tenant Improvements that Tenant desires Landlord to 
construct in the Option Buildings.  General Contractor shall commence 
construction of Option Buildings as soon as reasonably possible after removal 
of the conditions precedent outlined in Section 4 of this Exhibit, and 
continue diligently to construct the same until completion thereof in 
accordance with the Shell Plans.  All costs of construction of the Building 
Shell of Option Buildings shall be borne solely by Landlord.  The costs 
included within the Building Shell construction shall be as set forth in 
EXHIBIT "C" of the Lease.  All costs of Tenant Improvements in excess of the 
Work Allowance shall be borne solely by Tenant.

   7. SUCCESSORS.    The Option provided Tenant in this Exhibit is personal 
and granted to Network Equipment Technologies and is not exercisable by any 
third party should Tenant assign or sublet all or a portion of its rights 
under this Lease, unless Landlord consents to permit exercise of any option 
by any assignee or subtenant, in Landlord's sole discretion.  Except as 
previously provided, the terms and provisions hereof shall be binding upon 
and inure to the benefit of the successors and assigns of the parties hereto. 
 In no event, however, shall any lender be obligated to perform the terms 
this Option in the event of a foreclosure of Landlord's interest in the 
Premises or the Property.  

                                   Page 53


<PAGE>

                                 LEASE BETWEEN
               SOBRATO INTERESTS III AND NETWORK EQUIPMENT TECHNOLOGIES
                              (OFFICE BUILDING 2)

Section                                                               Page # 
-------                                                               ------

Parties..............................................................     1 
Premises.............................................................     1 
Use..................................................................     1 
PERMITTED USES.......................................................     1 
USES PROHIBITED......................................................     1 
ADVERTISEMENTS AND SIGNS.............................................     2 
Term and Rental......................................................     2 
BASE MONTHLY RENT....................................................     2 
RENTAL ADJUSTMENT....................................................     2 
LATE CHARGES.........................................................     3 
SECURITY DEPOSIT.....................................................     3 
Construction and Possession..........................................     4 
BUILDING SHELL CONSTRUCTION..........................................     4 
TENANT IMPROVEMENT PLANS.............................................     5 
FINAL PRICING........................................................     5 
CHANGE ORDERS........................................................     5 
BUILDING SHELL COSTS.................................................     5 
TENANT IMPROVEMENT COSTS.............................................     6 
CONSTRUCTION.........................................................     6 
GENERAL CONTRACTOR OVERHEAD & PROFIT.................................     6 
TENANT DELAYS........................................................     6 
INSURANCE............................................................     7 
PUNCH LIST & WARRANTY................................................     7 
OTHER WORK BY TENANT.................................................     7 
Acceptance of Possession and Covenants to Surrender..................     7 
DELIVERY AND ACCEPTANCE..............................................     7 
CONDITION UPON SURRENDER.............................................     8 
FAILURE TO SURRENDER.................................................     8 
Alterations and Additions............................................     9 
TENANT'S ALTERATIONS.................................................     9 
EXEMPTED ALTERATIONS.................................................    10 
FREE FROM LIENS......................................................    10 
COMPLIANCE WITH GOVERNMENTAL REGULATIONS.............................    10 
Maintenance of Premises..............................................    10 
LANDLORD'S OBLIGATIONS...............................................    10 
TENANT'S OBLIGATIONS.................................................    11 
LANDLORD AND TENANT'S OBLIGATIONS REGARDING COMMON AREA COSTS........    11 
COMMON AREA COSTS....................................................    11 
TENANT'S ALLOCABLE SHARE.............................................    12 
WAIVER OF LIABILITY..................................................    12 
Hazard Insurance.....................................................    13 
TENANT'S USE.........................................................    13 
LANDLORD'S INSURANCE.................................................    13 
TENANT'S INSURANCE...................................................    13 
WAIVER...............................................................    14 
Taxes................................................................    14 
Utilities............................................................    14 
Toxic Waste and Environmental Damage.................................    14 
TENANT'S RESPONSIBILITY..............................................    15 
TENANT'S INDEMNITY REGARDING HAZARDOUS MATERIALS.....................    15 
ACTUAL RELEASE BY TENANT.............................................    15 
ENVIRONMENTAL MONITORING.............................................    16

                                     Page 1

<PAGE>

Tenant's Default.....................................................    16 
REMEDIES.............................................................    17 
RIGHT TO RE-ENTER....................................................    17 
ABANDONMENT..........................................................    17 
NO TERMINATION.......................................................    18 
NON-WAIVER...........................................................    18

PERFORMANCE BY LANDLORD..............................................    18 
Landlord's  Liability................................................    18 
LIMITATION ON LANDLORD'S LIABILITY...................................    18 
LIMITATION ON TENANT'S RECOURSE......................................    19 
INDEMNIFICATION OF LANDLORD..........................................    19 
Destruction of Premises..............................................    19 
DESTRUCTION BY AN INSURED CASUALTY...................................    19 
DESTRUCTION BY AN UNINSURED CASUALTY.................................    20 
TENANT'S RIGHT TO CANCEL ADJACENT LEASES.............................    20 
Condemnation.........................................................    20 
Assignment or Sublease...............................................    21 
CONSENT BY LANDLORD..................................................    21 
ASSIGNMENT OR SUBLETTING CONSIDERATION...............................    21 
NO RELEASE...........................................................    22 
REORGANIZATION OF TENANT.............................................    22 
PERMITTED TRANSFERS..................................................    22 
EFFECT OF DEFAULT....................................................    22 
EFFECTS OF CONVEYANCE................................................    23 
SUCCESSORS AND ASSIGNS...............................................    23 
Option to Extend the Lease Term......................................    23 
GRANT AND EXERCISE OF OPTION.........................................    23 
DETERMINATION OF FAIR MARKET RENTAL..................................    23 
RESOLUTION OF A DISAGREEMENT OVER THE FAIR MARKET RENTAL.............    24 
PERSONAL TO TENANT...................................................    24 
Option to Lease, Option to Purchase..................................    25 
General Provisions...................................................    25 
ATTORNEY'S FEES......................................................    25 
AUTHORITY OF PARTIES.................................................    25 
BROKERS..............................................................    25 
CHOICE OF LAW........................................................    25 
DISPUTE RESOLUTION...................................................    25 
ENTIRE AGREEMENT.....................................................    26 
ENTRY BY LANDLORD....................................................    26 
ESTOPPEL CERTIFICATES................................................    26 
EXHIBITS.............................................................    27 
INTEREST.............................................................    27 
MODIFICATIONS REQUIRED BY LENDER.....................................    27 
NO PRESUMPTION AGAINST DRAFTER.......................................    27 
NOTICES..............................................................    27 
RENT.................................................................    27 
REPRESENTATIONS......................................................    27 
RIGHTS AND REMEDIES..................................................    27 
SEVERABILITY.........................................................    28 
SUBORDINATION........................................................    28 
SUBMISSION OF LEASE..................................................    28 
SURVIVAL OF INDEMNITIES..............................................    28 
TIME.................................................................    28 
TRANSPORTATION DEMAND MANAGEMENT PROGRAMS............................    28 
WAIVER OF RIGHT TO JURY TRIAL........................................    29 
USE OF ROOF..........................................................    29

                                     Page 2

<PAGE>

RECORDATION..........................................................    29 
EXHIBIT A - Project..................................................    31 
EXHIBIT B-2 - Shell Plans and Specifications.........................    32 
EXHIBIT C - Building Shell Definition................................    33 
BUILDING STRUCTURE...................................................    33 
SITEWORK.............................................................    33 
PLUMBING.............................................................    34 
ELECTRICAL...........................................................    34 
FIRE SPRINKLER.......................................................    34 
SITE AMENITIES.......................................................    34 
EXHIBIT C - Building Shell Definition................................    34 
EXHIBIT D - Tenant Improvement Plans and Specifications..............    35 
EXHIBIT E - Option to Lease..........................................    36

GRANT OF OPTION......................................................    36 
TERM OF OPTION.......................................................    36 
EXERCISE OF OPTION...................................................    36 
CONDITIONS PRECEDENT.................................................    36 
LEASE OF THE OPTION BUILDING.........................................    36 
CONSTRUCTION OF SHELL AND TENANT IMPROVEMENTS........................    38 
SUCCESSORS...........................................................    38 
EXHIBIT D - Tenant Improvement Plans and Specifications..............    39

                                     Page 3

<PAGE>

    1.  PARTIES:    THIS LEASE, is entered into on this ____ day of April, 
1997, between SOBRATO INTERESTS III, a California Limited Partnership, whose 
address is 10600 North De Anza Boulevard, Suite 200, Cupertino, CA  95014 and 
NETWORK EQUIPMENT TECHNOLOGIES, a Delaware Corporation, whose address is 800 
Saginaw Drive, Redwood City, California,  94063, hereinafter called 
respectively Landlord and Tenant.

    2.  PREMISES:    Landlord hereby leases to Tenant, and Tenant hires from 
Landlord those certain Premises with the appurtenances, situated in the City 
of Fremont, County of Alameda, State of California, consisting of a two-story 
office building of approximately 100,000 square feet ("Building 1", as 
highlighted in red on Exhibit "B-1)  and 350 parking places which shall be 
available for Tenant's exclusive use but shall not be designated or 
segregated from the balance of the parking area, in a project initially 
consisting of 3 buildings totaling approximately 280,000 square feet on an 
approximately 17.5-acre first phase portion of a larger 33.5-acre site 
("Project) as outlined in red on EXHIBIT "A".  In addition, Tenant shall have 
the non-exclusive right to use the common area ("Common Area") surrounding 
the Building and additional buildings constructed within the Project.  Unless 
expressly provided otherwise, the term Premises as used herein shall include 
the Tenant Improvements (defined in Section 5.B) constructed by Tenant 
pursuant to Section 5.B.  Tenant acknowledges Landlord's right to and hereby 
consents to construction of additional building(s) on adjacent land in the 
Project owned by Landlord, so long as such construction does not involve the 
removal of site amenities such as the volleyball court and outdoor seating or 
a reduction in size of the approximately 79,000 square foot amphitheatre area 
and water feature ("Quad") adjacent to the Building.

Notwithstanding the provisions of this Section 2, Tenant shall be permitted 
to schedule with Landlord and reserve the Quad for its exclusive use from 
time to time for the purpose of conducting company meetings and events.

    3.  USE:    

      A.  PERMITTED USES:    Tenant shall use the Building only for the 
following purposes and shall not change the use of the Building without the 
prior written consent of Landlord:  Office, research and development, 
marketing, light manufacturing, storage and other incidental uses such as 
training rooms, cafeteria and health club. Tenant shall use only the

                                     Page 4

<PAGE>

number of parking spaces allocated to Tenant.  All trucks and delivery 
vehicles shall (i) be parked at the rear of the Building near the loading 
areas, (ii) loaded and unloaded in a manner which does not interfere with the 
businesses of other occupants of the Project, and (iii) permitted to remain 
on the Project only so long as is reasonable necessary to complete the 
loading and unloading.  Landlord makes no representation or warranty that any 
specific use of the Premises desired by Tenant is permitted pursuant to any 
Laws.

      B.  USES PROHIBITED:    Tenant shall not commit or suffer to be 
committed on the Premises any waste, nuisance, or other act or thing which 
may unreasonably disturb the quiet enjoyment of any other tenant in or around 
the Premises, nor allow any sale by auction or any other use of the Premises 
for an unlawful purpose. Tenant shall not (i) damage or overload the 
electrical, mechanical or plumbing systems of the Premises, (ii) attach, hang 
or suspend anything from the ceiling, walls or columns of the building in 
excess of the load limits for which such items are designed or set any load 
on the floor in excess of the load limits for which the floor is designed, or 
(iii) generate dust, fumes or waste products which create a fire or health 
hazard or damage the Premises or in the soils surrounding the Building.  No 
materials, supplies, equipment, finished products or semi-finished products, 
raw materials or articles of any nature, or any waste materials, refuse, 
scrap or debris, shall be stored upon or permitted to remain on any portion 
of the Premises outside of the Building without Landlord's prior approval, 
which approval may be withheld in its sole discretion.  

      C.  ADVERTISEMENTS AND SIGNS:    Tenant will not place or permit to be 
placed, in, upon or about the Premises (excluding the interior of the 
Building) any signs not approved by the city or other governing authority.  
Tenant will not place or permit to be placed upon the Premises any signs, 
advertisements or notices without the written consent of Landlord as to type, 
size, design, lettering, coloring and location, which consent will not be 
unreasonably withheld.  Any sign placed on the Premises shall be removed by 
Tenant, at its sole cost, prior to the Expiration Date or promptly following 
the earlier termination of the lease, and Tenant shall repair, at its sole 
cost, any damage or injury to the Premises caused thereby, and if

                                     Page 5

<PAGE>

not so removed, then Landlord may have same so removed at Tenant's expense.  
Landlord hereby approves the general size and location of the exterior signs 
as shown in green on Exhibit "B-1".

    4.  TERM AND RENTAL:    

      A.  BASE MONTHLY RENT:    The term ("Lease Term") shall be for one 
hundred forty-four (144) months, commencing on the Commencement Date, 
estimated to occur on April 1, 1998, but finally determined pursuant to 
Section 5.G, and ending one hundred forty-four (144) months thereafter 
("Expiration Date").  In addition to all other sums payable by Tenant under 
this Lease, Tenant shall pay as base monthly rent ("Base Monthly Rent") for 
the Premises an amount equal to the product of multiplying One Dollar and 
Twenty-Five Cents ($1.25) by the Rentable Square Footage (as hereinafter 
defined) of the Building.  "Rentable Square Footage" is defined as the square 
footage of the Building when measured from outside exterior wall/glass to 
outside exterior wall/glass of each floor, including covered docks, covered 
entries, covered patios and covered balconies, but excluding roof overhangs.  
The Rentable Square Footage shall be derived based on Exhibit "B-2" as 
defined below and attached hereto.  Base Monthly Rent shall be due in advance 
on or before the first day of each calendar month during the Lease Term.  All 
sums payable by Tenant under this Lease shall be paid to Landlord in lawful 
money of the United States of America, without offset or deduction, except as 
set forth herein, and without prior notice or demand, at the address 
specified in Section 1 of this Lease or at such place or places as may be 
designated by Landlord during the Lease Term.  Base Monthly Rent for any 
period less than a calendar month shall be a pro rata portion of the monthly 
installment.       B.  RENTAL ADJUSTMENT:  Beginning twenty four (24) months 
after the Commencement Date, and every twenty four (24) months thereafter (an 
"Adjustment Date"), the then-payable Base Monthly Rent shall be subject to 
adjustment based on the increase, if any, in the Consumer Price Index that 
has occurred during the twenty four (24)  months preceding the 
then-applicable Adjustment Date.  The basis for computing the adjustment 
shall be the U.S. Department of Labor, Bureau of Labor Statistic's Consumer 
Price Index for All Urban Consumers, All Items, 1982-84=100, for the San 
Francisco-Oakland-San Jose area ("Index").  The Index most recently published 
preceding the Commencement Date for the first Adjustment (or previous 
Adjustment Date, as applicable), shall be considered the "Base Index".  If 
the Index most recently published preceding the Adjustment Date ("Comparison 
Index") is greater than the Base Index, the then-payable Base Monthly Rent 
shall be increased by multiplying the then-payable Base Monthly Rent by a 
fraction, the numerator of which is the Comparison Index and the denominator 
of which is the Base Index. Notwithstanding

                                     Page 6

<PAGE>

any subsequent decrease in the Index, the increase in the CPI for any 
calendar year shall never be less than three percent (3%) nor more than eight 
percent (8%) per year compounded annually.  On adjustment of the Base Monthly 
Rent, Landlord shall notify Tenant by letter stating the new Base Monthly 
Rent.  Landlord's calculation of the Base Monthly Rent escalation shall be 
conclusive and binding unless Tenant objects to said calculation within sixty 
(60) days of Tenant's receipt from Landlord of such calculation.  Landlord's 
failure to adjust Base Monthly Rent on an Adjustment Date shall not prevent 
Landlord from retroactively adjusting Base Monthly Rent at any subsequent 
time during the Lease Term.  If the Index base year is changed so that it 
differs from 1982-84=100, the Index shall be converted in accordance with the 
conversion factor published by the United States Department of Labor, Bureau 
of Labor Statistics.  If the Index is changed, revised or discontinued for 
any reason, there shall be substituted in lieu thereof and the term "Consumer 
Price Index" shall thereafter refer to the most nearly comparable official 
price index of the United States Government in order to obtain substantially 
the same result as would have been obtained had the original Consumer Price 
Index been not been discontinued, revised or changed, which alternative index 
shall be selected by Landlord and shall be subject to Tenant's written 
approval.

      C.  LATE CHARGES:    Tenant hereby acknowledges that late payment by 
Tenant to Landlord of Base Monthly Rent and other sums due hereunder will 
cause Landlord to incur costs not contemplated by this Lease, the exact 
amount of which is extremely difficult to ascertain.  Such costs include but 
are not limited to:  administrative, processing, accounting, and late charges 
which may be imposed on Landlord by the terms of any contract, revolving 
credit, mortgage, or trust deed covering the Premises.  Accordingly, if any 
installment of Base Monthly Rent or other sum due from Tenant shall not be 
received by Landlord or its designee within five (5) days after that Rent is 
due, Tenant shall pay to Landlord a late charge equal to five (5%) percent of 
such overdue amount, which late charge shall be due and payable on the same 
date that the overdue amount was due. The parties agree that such late charge 
represents a fair and reasonable estimate of the costs Landlord will incur by 
reason of late payment by Tenant, excluding interest and attorneys fees and 
costs.  If any rent remains delinquent for a period in excess of thirty (30) 
days then, in addition

                                     Page 7

<PAGE>

to such late charge, Tenant shall pay to Landlord interest on any rent that 
is not paid when due at the Agreed Interest Rate specified in Section 19.J 
and calculated from the date thirty (30) days following the date such amount 
became due until the date such rent is paid.  Acceptance by Landlord of such 
late charge shall not constitute a waiver of Tenant's default with respect to 
such overdue amount nor prevent Landlord from exercising any of the other 
rights and remedies granted hereunder.

Notwithstanding the foregoing, Tenant shall be granted one exception per 
calendar year when Base Monthly Rent may be received by Landlord up to ten 
(10) days after notice to Tenant that such Base Monthly Rent is past due 
before Tenant incurs the 5% late charge.

      D.  SECURITY DEPOSIT:    Prior to the Lease Commencement Date, Tenant 
shall deposit with Landlord the sum of One Hundred Twenty Five Thousand and 
No/100 Dollars ($125,000.00) ("Security "Deposit").  Landlord agrees that in 
lieu of a cash Security Deposit, Tenant may deposit a letter of credit in a 
form reasonably acceptable to Landlord.  Landlord shall be entitled to draw 
against the letter of credit at any time provided only that Landlord 
certifies to the issuer of the letter of credit that Tenant is in default 
under the Lease.  Tenant shall keep the letter of credit in effect during the 
entire Lease Term, as the same may be extended, plus a period of four (4) 
weeks after expiration of the Lease Term.  At least thirty (30) days prior to 
expiration of any letter of credit, the term thereof shall be renewed or 
extended for a period of at least one (1) year.  Tenant's failure to so renew 
or extend the letter of credit shall be a material default of this Lease by 
Tenant.   In the event Landlord draws against the letter of credit, Tenant 
shall replenish the existing letter of credit or cause a new letter of credit 
to be issued such that the aggregate amount of letters of credit available to 
Landlord at all times during the Lease Term is the amount of the Security 
Deposit originally required.

Landlord shall not be deemed a trustee of the Security Deposit, may use the 
Security Deposit in business, and shall not be required to segregate it from 
its general accounts. Tenant shall not be entitled to interest on the 
Security Deposit..  If Tenant defaults with respect to any provisions of the 
Lease, including but not limited to the provisions relating to payment of 
Base Monthly Rent or other charges, Landlord may, to the extent reasonably 
necessary to remedy Tenant's default, use any or all of the Security Deposit 
towards payment of the following:  (i) Base Monthly Rent or other charges in 
default; (ii) any other amount which Landlord may spend or become obligated 
to spend by reason of Tenant's default; and (iii) any other loss or damage 
which Landlord may suffer by reason of Tenant's default.  If any portion of 
the Security Deposit is so 

                                     Page 8

<PAGE>

used or applied, Tenant shall, within ten (10) days after written demand from 
Landlord, deposit cash with Landlord in an amount sufficient to restore the 
Security Deposit to its full original amount, and shall pay to Landlord such 
other sums as necessary to reimburse Landlord for any sums paid by Landlord.  
If Tenant shall default more than three (3) times in any twelve (12) month 
period, irrespective of whether or not such default is cured, then the 
Security Deposit shall, within ten (10) days after demand by Landlord, be 
increased by Tenant to an amount equal to three (3) times the Base Monthly 
Rent.  Tenant waives the provisions of California Civil Code Section 1950.7, 
and all other provisions of law now in force or that become in force after 
the date of execution of this Lease, that provide that Landlord may claim 
from a security deposit only those sums reasonably necessary to remedy 
defaults in the payment of Rent, to repair damage caused by Tenant, or to 
clean the Premises.  Landlord and Tenant agree that Landlord may, in 
addition, claim those sums reasonably necessary to compensate Landlord for 
any other foreseeable or unforeseeable loss or damage caused by the act or 
omission of Tenant or Tenant's agents, employees, contractors and invitees 
("Tenant's Agents").  Tenant may not assign or encumber the Security Deposit 
without the consent of Landlord.  any attempt to do so shall be void and 
shall not be binding on Landlord.  If Tenant performs every provision of this 
Lease to be performed by Tenant, the Security Deposit shall be returned to 
Tenant within thirty (30) days after the Expiration Date and surrender of the 
Premises to Landlord, less any amount deducted in accordance with this 
Section, together with Landlord's written notice itemizing the amounts and 
purposes for such deduction. In the event of termination of Landlord's 
interest in this Lease, Landlord may deliver or credit the security Deposit 
to Landlord's successor in interest in the Premises and thereupon be relieved 
of further responsibility with respect to the Security Deposit.

    5.  CONSTRUCTION AND POSSESSION:

      A.  BUILDING SHELL CONSTRUCTION:  Landlord shall cause the shell of the 
Building ("Building Shell") to be constructed by independent contractors to 
be employed by and under the supervision of South Bay Construction ("General 
Contractor"), in general accordance with preliminary shell and site plans 
attached hereto as EXHIBIT "B-1" ("Preliminary Site

                                     Page 9

<PAGE>

Plan and Specifications").  Final Building Shell plans and guideline 
specifications shall be prepared by Arctec ("Architect") consistent with 
Exhibit "B-1" and approved by Landlord and Tenant for attachment by June 15, 
1997 as EXHIBIT "B-2"  ("Shell Plans and Specifications").  Landlord shall 
pay for all costs and expenses associated with the construction of the 
Building Shell.  The Building Shell shall include those items set forth in 
the attached EXHIBIT "C" ("Building Shell Definition").

      B.  TENANT IMPROVEMENT PLANS:    Tenant, at Tenant's sole cost and 
expense, has hired Gensler & Associates ("Gensler") to prepare plans and 
outline specifications ("Tenant Improvement Plans and Specifications") which 
shall be attached as EXHIBIT "D" by August 29, 1997 with respect to the 
construction of improvements to the interior premises ("Tenant 
Improvements").  In addition, Gensler shall provide the Architect no later 
than April 21, 1997 with the interior stair and elevator locations and any 
other information related to the Tenant Improvement Plans and Specifications 
that Tenant wishes to be incorporated into the Shell Plans and 
Specifications.  The Tenant Improvements shall consist of all items not 
included within the scope of the Building Shell Definition.  The Tenant 
Improvement Plans and Specifications shall be prepared in sufficient detail 
to allow General Contractor to construct the Tenant Improvements. The General 
Contractor shall contract directly with Tenant for construction of the Tenant 
Improvements and shall construct the Tenant Improvements in accordance with 
all Tenant Improvement Plans and Specifications.   Landlord shall provide 
Tenant a work allowance to be utilized by Tenant for the construction of 
Tenant Improvements ("Work Allowance") in an amount equal to the product of 
multiplying the Rentable Square Footage by Twenty-Five Dollars and 
Twenty-Five Cents ($25.25). The Work Allowance shall be paid by Landlord to 
Tenant as payments become due from Tenant to General Contractor.  The Tenant 
Improvements shall not be removed or altered by Tenant without the prior 
written consent of Landlord as provided in Section 7.  Tenant shall have the 
right to depreciate and claim and collect any investment tax credits in the 
Tenant Improvements during the initial Lease Term.  Upon expiration of the 
Lease Term or any earlier termination of the Lease, the Tenant Improvements 
shall become the property of Landlord and shall remain upon and be 
surrendered with the Premises, and title thereto shall automatically vest in 
Landlord without any payment therefore.

      C.  PRICING:    Within ten (10) days after completion of the Tenant 
Improvements Plans and Specifications, General Contractor shall submit to 
Tenant competitive bids from at least three (3) subcontractors for each 
aspect of the work related to the Tenant improvements.  General Contractor 
must

                                     Page 10

<PAGE>

utilize the low bid in each case unless Tenant approves General Contractor's 
use of another subcontractor, and the cost of the Tenant Improvements shall 
be based upon construction expenses equal to the sum of the bid amounts as 
approved by Tenant.  Upon Tenant's written approval of the contract bids, 
which approval shall not be unreasonably withheld or delayed, Landlord and 
Tenant shall be deemed to have given their respective approvals of the final 
Tenant Improvement Plans and Specifications on which the cost estimate was 
made, and General Contractor shall proceed with the construction of the 
Tenant Improvements in accordance with the terms of Section 5.G below.  If 
Tenant does not specifically approve or disapprove the bids within seven (7) 
days, Tenant shall be deemed to have approved the bids.  

      D.  CHANGE ORDERS:   Tenant shall have the right to order changes in 
the manner and type of construction of the Building Shell or the Tenant 
Improvements. Upon request and prior to Tenant's submitting any binding 
change order, General Contractor shall promptly provide Tenant with written 
statements of the cost to implement and the time delay and increased 
construction costs associated with any proposed change order, which 
statements shall be binding on Landlord.  If no time delay or increased 
construction cost amount is noted on the written statement, the parties agree 
that there shall be no adjustment to the construction cost or the 
Commencement Date associated with such change order.  If ordered by Tenant, 
General Contractor shall implement such change order and the cost of 
constructing the Tenant Improvements shall be paid by Tenant in accordance 
with the cost statement previously delivered by General Contractor to Tenant 
for any such change order.

      E.   BUILDING SHELL COSTS:   Landlord shall pay all costs associated 
with the Building Shell.

      F.   TENANT IMPROVEMENT COSTS:   The cost of Tenant Improvements shall 
consist of only the following to the extent actually incurred by General 
Contractor in connection with the construction of Tenant Improvements:  
construction costs, all permit fees, construction taxes or other costs 
imposed by governmental authorities related to the Tenant Improvements, and 
Landlord overhead as described in Section 5.H below.  During the course of 
construction of Tenant Improvements, General Contractor may deliver to Tenant 
not more than once each calendar month a

                                     Page 11

<PAGE>

written request for payment which shall include and be accompanied by General 
Contractor's certified statements setting forth the amount requested, 
certifying the percentage of completion of each item for which reimbursement 
is requested, and certifying that the progress payment requested is due to a 
subcontractor of General Contractor pursuant to a contract between General 
Contractor and the subcontractor. Tenant shall pay General Contractor, within 
fifteen (15) days after Tenant's receipt of the above items, the costs 
incurred by General Contractor in connection with Tenant Improvements 
installed in the Building in accordance with the Tenant Improvement Plans and 
Specifications, minus the retention set forth below.  Tenant shall be 
entitled to retain ten percent (10%) of the amount invoiced by General 
Contractor until the Tenant Improvements are Substantially Complete as 
defined in Section 5.G below.  Tenant shall pay the retained balance owing to 
General Contractor within fifteen (15) days following the date that the 
Tenant Improvements are Substantially Complete.  All costs for Tenant 
Improvements shall be fully documented to and verified by Tenant.

      G.   CONSTRUCTION:    Landlord shall use its reasonable efforts to 
obtain a building permit from the City of Fremont as soon as possible after 
Tenant's approval of the Shell Plans and Specifications and to "Substantially 
Complete" construction of the Premises by April 1, 1998.  The Building Shell 
and Tenant Improvements shall be deemed substantially complete 
("Substantially Complete" or "Substantial Completion") when the Building 
Shell and Tenant Improvements have been substantially completed in accordance 
with the Shell Plans and Specifications and Tenant Improvement Plans and 
Specifications, and the issuance of a certificate of occupancy or its 
equivalent by the appropriate governmental authority for the Building Shell 
and Tenant Improvements, as well as the issuance of a certificate by the 
Architect certifying that the Building Shell has been substantially completed 
in accordance with the plans and the issuance of a certificate by Gensler 
certifying that the Tenant Improvements have been substantially completed in 
accordance with the plans.  Completion of the landscaping shall not be 
required to deem the Premises "Substantially Complete" if inclement weather 
prevents Landlord from finishing this portion of the work.  Any prevention, 
delay or stoppage due to strikes, lockouts, inclement weather, labor 
disputes, inability to obtain labor, materials, fuel or reasonable 
substitutes therefor, governmental restrictions, regulations, controls, 
action or inaction, civil commotion, fire or other act of God, and another 
causes beyond the reasonable control of Landlord (except financial inability) 
shall extend the dates contained in this Section 5.G by a period equal to the 
period of any said prevention, delay or stoppage.

                                     Page 12

<PAGE>

      H.   GENERAL CONTRACTOR PROFIT:  As compensation to General Contractor 
for its services related to construction of the Building Shell and Tenant 
Improvements, General Contractor shall receive as profit a fee of 3% of the 
total construction costs incurred by General Contractor.  The General 
Contractor's fee for profit and overhead related to construction of the 
Building Shell shall be the same percentage rate as the fee charged by the 
General Contractor to Tenant for construction of the Tenant Improvements.

      I.  TENANT DELAYS:    A "Tenant Delay" shall mean any delay in 
Substantial Completion of the Building as a result of any of the following: 
(i) Tenant's failure to complete or approve the Tenant Improvement Plans by 
the dates set forth in Section 5.B, (ii) Tenant's failure to approve the bids 
for construction by the dates set forth in Section 5.C, (iii) changes 
requested by Tenant to either the Shell Plans and Specifications or the 
Tenant Improvement Plans and Specifications which delay the progress of the 
work, (iv) Tenant's request for materials components, or finishes which are 
not available in a commercially reasonable time given the anticipated 
Commencement Date, (v) Tenant's failure to pay, when due, any amounts 
requested to be paid by Tenant pursuant hereto, (vi) Tenant's request for 
more than one (1) rebidding of the cost of all or a portion of the work, and 
(vii) any errors or omissions in the Tenant Improvement Plans provided by 
Gensler.  Notwithstanding anything to the contrary set forth in this Lease, 
and regardless of the actual date the Premises are Substantially Complete, 
the Commencement Date shall be deemed to be the date Commencement Date would 
have occurred if no Tenant Delay had occurred as reasonable determined by 
Landlord.  In addition, if a Tenant Delay results in an increase in the cost 
of the labor or materials, Tenant shall pay the cost of such increases.  

      J.   INSURANCE: General Contractor shall procure (as a cost of the 
Building Shell) a "Broad Form" liability insurance policy in the amount of 
Three Million Dollars ($3,000,000.00).  Landlord shall also procure (as a 
cost of the Building Shell) builder's risk insurance for the full replacement 
cost of the Building Shell and Tenant Improvements while the Building and 
Tenant Improvements are under construction, up until the date that the fire 
insurance 

                                     Page 13

<PAGE>

policy described in Section 9 is in full force and effect.

      K.   PUNCH LIST & WARRANTY:   After the Building Shell and Tenant 
Improvements are Substantially Complete, Landlord shall cause the General 
Contractor to immediately correct any construction defect or other "punch 
list" item which Tenant brings to General Contractor's attention.  All such 
work shall be performed so as to reasonably minimize the interruption to 
Tenant and its activities on the Premises.  General Contractor shall provide 
a standard contractor's warranty with respect to the Premises for one (1) 
year from the Commencement Date.  Such warranty shall exclude routine 
maintenance, damage caused by Tenant's negligence or misuse, and acts of God.

      L.   OTHER WORK BY TENANT:   All work not described in the Shell Plans 
and Specifications or Tenant Improvement Plans and Specifications, such as 
furniture, telephone equipment, telephone wiring and office equipment work, 
shall be furnished and installed by Tenant.  When the construction of the 
Tenant Improvements has proceeded to the point where Tenant's work of 
installing its fixtures and equipment in the Premises can be commenced, 
General Contractor shall notify Tenant and shall permit Tenant and its 
authorized representatives and contractors access to the Premises before the 
Commencement Date for the purpose of installing Tenant's trade fixtures and 
equipment.  Any such installation work by Tenant or its authorized 
representatives and contractor shall be undertaken upon the following 
conditions:  (i) if the entry into the Premises by Tenant or its 
representatives or contractors interferes with or delays General Contractor's 
work, Tenant shall cause the party responsible for such interference or delay 
to leave the Premises; and (ii) any contractor used by Tenant in connection 
with such entry and installation shall not interfere with General 
Contractor's work.

    6.  ACCEPTANCE OF POSSESSION AND COVENANTS TO SURRENDER:    

    A.  DELIVERY AND ACCEPTANCE:    On the Commencement Date, Landlord shall 
deliver and Tenant shall accept possession of the Premises and enter into 
occupancy of the Building on the Commencement Date.  Except as otherwise 
specifically provided herein, Tenant agrees to accept possession of the 
Premises in its then existing condition with the Building Shell and Tenant 
Improvements substantially complete, excepting only latent defects.  Tenant's 
taking possession of any part of the Premises shall be deemed to be an 
acceptance of any work of improvement done by Landlord in such part as 
complete and in accordance with the terms of this Lease except for "Punch 
List" type items of which Tenant has given Landlord written notice prior to 
the time Tenant takes possession.  At the time Landlord

                                     Page 14

<PAGE>

delivers possession of the Premises to Tenant, Landlord and Tenant shall 
together execute an acceptance agreement.  Landlord shall have no obligation 
to deliver possession, nor shall Tenant be entitled to take occupancy, of the 
Premises until such acceptance agreement has been executed, and Tenant's 
obligation to pay Base Monthly Rent and Additional Rent shall not be excused 
or delayed because of Tenant's failure execute such acceptance agreement.  
Within one hundred eighty (180) days after the Commencement Date, Tenant 
agrees to be in occupancy of at least fifty percent (50%) of the rentable 
square footage of the Premises.

      B.  CONDITION UPON SURRENDER:    Tenant further agrees on Expiration 
Date or on the sooner termination of this Lease, to surrender the Premises to 
Landlord in good condition and repair, normal wear and tear excepted.  In 
this regard, "normal wear and tear" shall be construed to mean wear and tear 
caused to the Premises by the natural aging process which occurs in spite of 
prudent application of the best standards for maintenance, repair 
replacement, and janitorial practices, and does not include items of 
neglected or deferred maintenance.  In any event, Tenant shall cause the 
following to be done prior to the Expiration Date or sooner termination of 
this Lease: (i) all holes in interior walls shall be patched and painted so 
as to match the wall, (ii) all tiled floors shall be cleaned and waxed, (iii) 
all carpets shall be cleaned and shampooed, (iv) all broken, marred, stained 
or nonconforming acoustical ceiling tiles shall be replaced, (v) all cabling 
placed above the ceiling by Tenant shall be removed, (vi) all windows shall 
be washed; (vii) the HVAC system shall be serviced by a reputable and 
licensed service firm and left in good operating condition and repair as so 
certified by such firm, (viii) the plumbing and electrical systems and 
lighting shall be placed in good order and repair (including replacement of 
any burned out, discolored or broken light bulbs, ballasts, or lenses. On or 
before the Expiration Date or sooner termination of this Lease, Tenant shall 
remove all its personal property and trade fixtures from the Premises.  All 
property and fixtures not so removed shall be deemed as abandoned by Tenant.  
If Landlord requires pursuant to Section 7 below, Tenant shall, at Tenant's 
sole cost and expense, remove such Alterations as Landlord requires and shall 
repair and restore said Premises or such parts thereof before the Expiration 
Date.  Such repair and restoration shall include causing the Premises to be

                                     Page 15

<PAGE>

brought into compliance with all applicable building codes and laws in effect 
at the time of the removal to extent such compliance is necessitated by the 
repair and restoration work; provided however, that (i) Tenant shall not be 
required to pay for any  work related to bringing the foundation, exterior 
load bearing walls and roof structure of the Building into compliance with 
applicable building codes and laws then in effect; and (ii) Tenant shall not 
be required to pay for any  work which may be required to bring areas outside 
the Building into compliance with then-applicable building codes and laws. .  

      C.  FAILURE TO SURRENDER:  If the Premises are not surrendered at the 
Expiration Date or sooner termination of this Lease in the condition required 
by this Section 6, Tenant shall be deemed in a holdover tenancy pursuant to 
this Section 7.C and Tenant shall indemnify, defend, and hold Landlord 
harmless against loss or liability resulting from delay by Tenant in so 
surrendering the Premises including, without limitation, any claims made by 
any succeeding tenant founded on such delay and costs incurred by Landlord in 
returning the Premises to the required condition, plus interest at the Agreed 
Interest Rate.  Any holding over after the termination or Expiration Date 
with Landlord's express written consent, shall be construed as month-to-month 
tenancy, terminable on thirty (30) days written notice from either party, and 
Tenant shall pay as Base Monthly Rent to Landlord a rate equal to one hundred 
twenty five percent (125%) of the Base Monthly Rent due in the month 
preceding the termination or Expiration Date, plus all other amounts payable 
by Tenant under this Lease.  Any holding over shall otherwise be on the terms 
and conditions herein specified, except those provisions relating to the 
Lease Term and any options to extend or renew, which provisions shall be of 
no further force and effect following the expiration of the applicable 
exercise period.  If Tenant remains in possession of the Premises after 
expiration or earlier termination of this Lease without Landlord's consent, 
Tenant's continued possession shall be on the basis of a tenancy at 
sufferance and Tenant shall pay as rent during the holdover period an amount 
equal to one hundred fifty percent (150%) of the Base Monthly Rent due in the 
month preceding the termination or Expiration Date, plus all other amounts 
payable by Tenant under this Lease.  This provision shall survive the 
termination or expiration of the Lease.

    7.  ALTERATIONS AND ADDITIONS:     

      A.  TENANT'S ALTERATIONS:    With the exception of Tenant Improvements 
installed as part of initial construction of the Premises, Tenant shall not 
make, or suffer to be made, any alteration or addition to the Premises 
("Alterations"), or any part thereof, without

                                     Page 16

<PAGE>

obtaining Landlord's prior written consent and delivering to Landlord the 
proposed architectural and structural plans for all such Alterations at least 
fifteen (15) days prior to the start of construction.  After receipt of 
Tenant's architectural and structural plans, Landlord shall have a period of 
ten (10) business days thereafter to grant its consent, which consent shall 
not be unreasonably withheld.  Landlord shall indicate to Tenant at the time 
of Tenant's request, whether or not Landlord will require Tenant to remove 
such Alterations at the Expiration Date.  Tenant shall, at Tenant's sole cost 
and expense, remove such Alterations as Landlord requires and shall repair 
and restore said Premises or such parts thereof before the Expiration Date, 
unless exempted pursuant to Section 7.B below.  Such repair and restoration 
shall include causing the Premises to be brought into compliance with all 
applicable building codes and laws in effect at the time of the removal to 
extent such compliance is necessitated by the repair and restoration work; 
provided, however, that (i) Tenant shall not be required to pay for any  work 
related to bringing the foundation, exterior load bearing walls and roof 
structure of the Building into compliance with applicable building codes and 
laws then in effect; and (ii) Tenant shall not be required to pay for any  
work which may be required to bring areas outside the Building into 
compliance with then-applicable building codes and laws.  If such Alterations 
affect the structure of the Building, Tenant additionally agrees to reimburse 
Landlord its reasonable out-of-pocket costs incurred in reviewing Tenant's 
plans.  After obtaining Landlord's consent, Tenant shall not proceed to make 
such Alterations until Tenant has obtained all required governmental 
approvals and permits, and provided Landlord reasonable security, in form 
reasonably approved by Landlord, to protect Landlord against mechanics' lien 
claims.  Tenant agrees to provide Landlord written notice of the anticipated 
and actual start-date of the work, and a complete set of half-size (15" X 
21") vellum as-built drawings.  All Alterations shall be constructed in 
compliance with applicable building codes and laws.  Any Alterations, except 
movable furniture and trade fixtures, shall become at once a part of the 
realty and belong to Landlord but shall nevertheless be subject to removal by 
Tenant as provided in Section 6 above.  Alterations which are not deemed as 
trade fixtures include heating, lighting, electrical systems, air 
conditioning, partitioning, carpeting, or any other installation

                                     Page 17

<PAGE>

which has become an integral part of the Premises.  All Alterations shall be 
maintained, replaced or repaired by Tenant at its sole cost and expense.  

Notwithstanding the foregoing, Tenant shall be entitled without obtaining 
Landlord's consent, to make Alterations which do not affect the structure of 
the Building or which do not cost more than Twenty Five Thousand Dollars 
($25,000.00) per Alteration nor an aggregate of Fifty Thousand Dollars 
($50,000.00) in any twelve (12) month period; provided, however, that Tenant 
shall still be required to deliver to Landlord the proposed architectural and 
structural plans for all such Alterations at least (15) days prior to the 
start of construction and comply with all other provisions of the preceding 
paragraph.

       B.  EXEMPTED ALTERATIONS:    Notwithstanding the provisions of Section 
7.A above, Landlord shall not have the right to require Tenant to remove any 
Alterations at the end of the term of the Lease unless:  (i) such Alterations 
were of a nature not typically found in manufacturing buildings; (ii) such 
Alterations create private offices smaller than 10'x12'; or (iii) such 
Alterations create hard wall partitioning that cover more than 35% of the 
interior square footage of the Premises or the perimeter window space of the 
Premises.         C.  FREE FROM LIENS:    Tenant shall keep the Premises free 
from all liens arising out of work performed, materials furnished, or 
obligations incurred by Tenant or claimed to have been performed for Tenant.  
In the event Tenant fails to discharge any such lien within ten (10) days 
after receiving notice of the filing, Landlord shall be entitled to discharge 
the lien at Tenant's expense and all resulting costs incurred by Landlord, 
including attorney's fees shall be due from Tenant as additional rent.

      D.  COMPLIANCE WITH GOVERNMENTAL REGULATIONS: The term Governmental 
Regulations shall include all federal, state, county, city or governmental 
agency laws, statutes, ordinances, standards, rules, requirements, or orders 
now in force or hereafter enacted, promulgated, or issued.  The term also 
includes government measures regulating or enforcing public access, 
occupational, health, or safety standards for employers, employees, 
landlords, or tenants.  Tenant shall continuously and without exception 
repair and maintain the Premises, including Tenant improvements, Alterations, 
fixtures, and furnishings, in an order and condition in compliance with all 
Governmental Regulations.  Tenant, at its sole expense, shall make all 
repairs, replacements, alterations, or improvements needed to comply with all 
Governmental Regulations to the extent that the Governmental Regulations 
relate to or are required by and Law because of (i) Tenant's particular use or

                                     Page 18

<PAGE>

change of use of the Premises, (ii) Tenant's application for any permit or 
governmental approval, or (iii) Tenant's construction or installation of any 
Alterations or Trade Fixtures.  Landlord, at Landlord's sole expense, shall 
promptly make all repairs, replacements, alterations, or improvements needed 
to comply with all Governmental Regulations to the extent not required by 
Tenant pursuant to the preceding sentence.  The judgment of any court of 
competent jurisdiction or the admission of Tenant in any action or proceeding 
against Tenant (whether Landlord be a party thereto or not) that Tenant has 
violated any such law, regulation or other requirement in its use of the 
Premises shall be conclusive of that fact as between Landlord and Tenant.

    8.  MAINTENANCE OF PREMISES:

      A.  LANDLORD'S OBLIGATIONS:    Landlord at its sole cost and expense, 
shall maintain in good condition, order, and repair, and replace as and when 
necessary, the foundation, exterior load bearing walls and roof structure of 
the Building Shell.  Landlord shall also, at Tenant's sole cost and expense 
through reimbursement as provided in this Section 8, clean, maintain, repair 
and replace when necessary the following parts of the Premises:  (i) all 
plumbing and sewage facilities, (ii) all heating ventilating and air 
conditioning facilities and equipment (excluding adjustments to interior 
zones after initial occupancy of the Premises and balancing of the 
equipment), (iii) all exterior windows, door entrances, plate glass and 
glazing systems including caulking, and skylights, (iv) all automatic fire 
extinguisher equipment, (v) the parking lot and all underground utility 
facilities servicing the Premises, (vi) all elevator equipment, (vii) the 
roof membrane system, and (viii) all waterscape, landscaping and shrubbery.  
With respect to items (ii), (vi) and (vii) above, Landlord shall provide 
Tenant, upon request from Tenant, a copy of a service contract between 
Landlord and a licensed service contractor providing for period maintenance 
of all such systems or equipment in conformance with the manufacturer's 
recommendations.  Landlord shall provide Tenant a copy of such preventive 
maintenance contracts and paid invoices for the recommended work if requested 
by Tenant.

      B.  TENANT'S OBLIGATIONS:     Unless required by Landlord pursuant to 
Section 8.A above or unless such

                                     Page 19

<PAGE>

services are shared (in which event the provisions of Sections 8.C, 8.D and 
8.D shall apply as to such shared services), Tenant shall clean, maintain, 
repair and replace when necessary the Premises and every part thereof through 
regular inspections and servicing, including but not limited to: (i) all 
fixtures, interior walls, floors, carpets and ceilings, and (ii) all 
electrical facilities and equipment. All wall surfaces and floor tile are to 
be maintained in an as good a condition as when Tenant took possession free 
of holes, gouges, or defacements.

      C.  LANDLORD AND TENANT'S OBLIGATIONS REGARDING COMMON AREA COSTS:    
Tenant agrees to reimburse Landlord for Tenant's Allocable Share (as defined 
in Section 8.E below) of the expenses resulting from Landlord's payment of 
Common Area Costs (as defined in Section 8.D below).  Tenant agrees to pay 
its Allocable Share of the Common Area Costs as additional rental within 
thirty (30) days of written invoice from Landlord.

      D.  COMMON AREA COSTS:    For purposes of calculating Tenant's 
Allocable Share of Building and Project Costs, the term "Common Area Costs" 
is defined as all costs and expenses of the nature hereinafter described 
which are incurred by Landlord in connection with ownership and operation of 
the Project in which the Premises are located, together with such additional 
facilities as may be determined by Landlord to be reasonably desirable or 
necessary to the ownership and operation of the Building and/or Project.  All 
costs and expenses shall be determined in accordance with generally accepted 
accounting principles which shall be consistently applied (with accruals 
appropriate to Landlord's business), including but not limited to the 
following:  (i) common area utilities, including water, to the extent not 
separately metered; (ii) common area maintenance and service agreements for 
the Project and the equipment therein, including without limitation, 
maintenance of the sidewalks, landscaping, waterscape, roof membrane, parking 
areas, driveways, service areas, and the building exterior; (iii) insurance 
premiums and costs, including without limitation, the premiums and cost of 
fire, casualty and liability coverage and rental abatement and earthquake (if 
required pursuant to Section 9.B) insurance applicable to the Building or 
Project; (iv) repairs, replacements and general maintenance (excluding 
repairs and general maintenance paid by proceeds of insurance or by Tenant or 
other third parties, and repairs or alterations attributable solely to 
tenants of the Building or Project other than Tenant); (v) all real estate 
taxes and assessment installments or other impositions or charges which may 
be levied on the Building or Project, upon the occupancy of the Building or 
Project and including any substitute or additional charges which may be 
imposed during, or applicable to the Lease Term including real estate tax 
increases due to a sale, transfer or other

                                     Page 20

<PAGE>

change of ownership of the Building or Project, as such taxes are levied or 
appear on the City and County tax bills and assessment rolls; and (vi) fees 
for management services rendered by either Landlord or a third party manager 
engaged by Landlord (which may be a party affiliated with Landlord), except 
that the total amount charged for management services and included in the 
expenses to be reimbursed by Tenant shall not exceed the monthly rate of 5% 
of the Base Monthly Rent, which the parties acknowledge as a reasonable and 
fair market value for such services. Landlord shall have no obligation to 
provide guard services or other security measures for the benefit of the 
Project.  Tenant assumes all responsibility for the protection of Tenant and 
Tenant's Agents from acts of third parties; provided, however, that nothing 
contained herein shall prevent Landlord, at its sole option, from providing 
security measures for the Project.  This is a "Net" Lease, meaning that Base 
Monthly Rent is paid to Landlord absolutely net of all costs and expenses.  
The provision for payment of Common Area Costs by means of periodic payment 
of Tenant's Allocable Share of Building and/or Project Costs is intended to 
pass on to Tenant and reimburse Landlord for all costs of operating and 
managing the Building and/or Project.

      E.  TENANT'S ALLOCABLE SHARE:    For purposes of prorating Common Area 
Costs which Tenant shall pay, Tenant's Allocable Share of Common Area Costs 
shall be computed by multiplying the total Common Area Costs by a fraction, 
the numerator of which is the Rentable Square Footage of the Building and the 
denominator of which is either the total Rentable Square Footage of the 
Building if the service is allocable only to the Building, or the total 
square footage of the Project if the service is allocable to the entire 
Project.  Tenant's obligation to share in Common Area Costs shall be adjusted 
to reflect the Lease Commencement and Expiration dates and is subject to 
recalculation in the event of expansion of the Building or Project.

      F.  WAIVER OF LIABILITY:     Failure by Landlord to perform any defined 
services, if any, or any cessation thereof, when such failure is caused by 
accident, breakage, repairs, strikes, lockout or other labor disturbances or 
labor disputes of any character or by any other cause, similar or dissimilar, 
shall not render Landlord liable to Tenant in any respect, including damages 
to either person or property, nor be construed as an eviction of Tenant, nor 
cause an

                                     Page 21

<PAGE>

abatement of rent, nor relieve Tenant from fulfillment of any covenant or 
agreement hereof.  Should any equipment or machinery utilized in supplying 
the services listed herein break down or for any cause cease to function 
properly, upon receipt of written notice from Tenant of any deficiency or 
failure of any services, Landlord shall use reasonable diligence to repair 
the same promptly, but Tenant shall have no right to terminate this Lease and 
shall have no claim for rebate of rent or damages on account of any 
interruptions in service occasioned thereby or resulting therefrom.  Tenant 
waives the provisions of California Civil Code Sections 1941 and 1942 
concerning the Landlord's obligation of tenantability and Tenant's right to 
make repairs and deduct the cost of such repairs from the rent.  Landlord 
shall not be liable for a loss of or injury to person or property, however 
occurring, through or in connection with or incidental to furnishing, or its 
failure to furnish, any of the foregoing.

Notwithstanding the foregoing, in the event Landlord fails to perform in its 
obligation under Section 8.A above to maintain plumbing and sewage 
facilities, HVAC equipment, exterior windows, door entrances, plate glass and 
glazing systems, skylights, fire extinguisher equipment, the parking lot, 
underground utilities, elevator equipment, the roof membrane or landscaping 
related to the Premises, Tenant may, after providing Landlord thirty (30) 
days' written notice, undertake such maintenance at its own cost if Landlord 
has not commenced such maintenance and Landlord shall reimburse Tenant for 
its expenditure.  The provisions of this paragraph do not apply to items 
about which Landlord and Tenant may disagree as to the scope or necessity of 
work. 

      G.  REVIEW:  Landlord shall maintain at all times during the term of 
this Lease, at the office of Landlord, accurate records with respect to 
Common Area Costs for the previous two-year period of the Lease, and shall 
retain such records and such other documents as are reasonably necessary to 
audit the Common Area Costs.  Upon two weeks prior notice from Tenant, 
Landlord shall make available for Tenant's inspection (or inspection 
performed by Tenant's accountant and/or consultants) at Landlord's office, 
during normal business hours, Landlord's records relating to the Common Area 
Costs for the most recent two years of the Lease.  If an audit, review or 
inspection by a Tenant or Tenant's accountant or consultant alleges an 
overbilling, Tenant may submit a claim for the overbilled amount to Landlord, 
detailing the nature of the overbilling, and Landlord shall have thirty (30) 
days to pay such amount or contest the claim by giving notice thereof to 
Tenant, detailing the nature of Landlord's contest of Tenant's claims.  If 
Landlord's statement is determined to be in error by 3% or more, Landlord 
shall reimburse Tenant within thirty (30) days

                                     Page 22

<PAGE>

following such determination for any overpayment of Common Area Costs, as 
well as the cost of Tenant's review of Landlord's books and records not to 
exceed $2,500.00 (including the cost of Tenant's accountant or consultant, 
neither of which cost may be included as Common Area Costs), together with 
interest on such amount, calculated at the Interest Rate, from the dates such 
amounts were initially paid by Tenant.

      H.  RECOVERY:  Landlord shall not expend more than the reasonable and 
fair market value for any goods, services, labor or materials purchased or 
provided by Landlord in connection with the management, operation, 
maintenance and repair of the Building or the Common Area.

    9.  HAZARD INSURANCE:    

      A.  TENANT'S USE:    Tenant shall not use or permit the Premises, or 
any part thereof, to be used for any purpose other than that for which the 
Premises are hereby leased; and no use of the Premises shall be made or 
permitted, nor acts done, which will cause an increase in premiums or a 
cancellation of any insurance policy covering the Premises or any part 
thereof, nor shall Tenant sell or permit to be sold, kept, or used in or 
about the Premises, any article prohibited by the standard form of fire 
insurance policies.  Tenant shall, at its sole cost, comply with all 
requirements of any insurance company or organization necessary for the 
maintenance of reasonable fire and public liability insurance covering the 
Premises and appurtenances.  

      B.  LANDLORD'S INSURANCE:    Landlord agrees to purchase and keep in 
force fire, extended coverage insurance in an amount equal to the replacement 
cost of the Building (not including any Tenant Improvements or Alterations 
paid for by Tenant from sources other than the Work Allowance) as determined 
by Landlord's insurance company's appraisers.  Tenant agrees to pay Landlord 
as additional rent, on demand, the full cost of said insurance as evidenced 
by insurance billings to Landlord, and in the event of damage covered by said 
insurance, the amount of any deductible under such policy.  Payment shall be 
due to Landlord within thirty (30) days after written invoice to Tenant.  If 
required by the holder of the first deed of trust on the property, such fire 
and property damage insurance may be endorsed to cover loss caused by such 
additional perils against which Landlord may elect to insure,

                                     Page 23

<PAGE>

including earthquake and/or flood, and shall contain reasonable deductibles 
which, in the case of earthquake and flood insurance may be up to 15% of the 
replacement value of the property.  Additionally Landlord may maintain a 
policy of (i) commercial general liability insurance insuring Landlord (and 
such others designated by Landlord) against liability for personal injury, 
bodily injury, death and damage to property occurring or resulting from an 
occurrence in, on or about the Premises or Project in an amount as Landlord 
determines is reasonably necessary for its protection, and (ii) rental lost 
insurance covering a twelve (12) month period.  It is understood and agreed 
that Tenant's obligation under this Section will be prorated to reflect the 
Lease Commencement and Expiration Dates.

Notwithstanding the above, Tenant shall have no obligation to pay premiums 
payable with respect to earthquake insurance covering the Premises, unless 
such coverage is  (i) required by the lender in whose favor a first deed of 
trust of the Premises has been granted, and (ii) is also generally required 
by institutional lenders on similar properties in Alameda County.  In such 
event, the amount of the earthquake insurance premium required to be paid by 
Tenant shall be limited to an amount equal to four (4) times the premium for 
casualty insurance for the Building.

      C.  TENANT'S INSURANCE:    Tenant agrees, at its sole cost, to insure 
its personal property, Tenant Improvements (for which it has paid from 
sources other than the Work Allowance), and Alterations for their full 
replacement value (without depreciation) and to obtain worker's compensation 
and public liability and property damage insurance for occurrences within the 
Premises with a combined single limit of not less than Five Million Dollars 
($5,000,000.00).  Tenant's liability insurance shall be primary insurance 
containing a cross-liability endorsement, and shall provide coverage on an 
"occurrence" rather than on a "claims made" basis.  Tenant shall name 
Landlord and Landlord's lender as an additional insured and shall deliver a 
copy of the policies and renewal certificates to Landlord.  All such policies 
shall provide for thirty (30) days' prior written notice to Landlord of any 
cancellation, termination, or reduction in coverage.

      D.  WAIVER:    Landlord and Tenant hereby waive all rights each may 
have against the other on account of any loss or damage sustained by Landlord 
or Tenant, as the case may be, or to the Premises or its contents, which may 
arise from any risk covered by their respective insurance policies (or which 
would have been covered had such insurance policies been maintained in 
accordance with this Lease) as set forth above.  The parties shall use their 
reasonable efforts to obtain from their respective insurance companies a 
waiver of any right of subrogation which said insurance company

                                     Page 24

<PAGE>

may have against Landlord or Tenant, as the case may be.

    10.  TAXES:    Tenant shall be liable for and shall pay as additional 
rental, prior to delinquency, the following:  (i) all taxes and assessments 
levied against Tenant's personal property and trade or business fixtures; 
(ii) all real estate taxes and assessment installments or other impositions 
or charges which may be levied on the Premises or upon the occupancy of the 
Premises, including any substitute or additional charges which may be imposed 
applicable to the Lease Term; and (iii) real estate tax increases due to a 
sale, transfer or other change of ownership of the Premises as it appears on 
the City and County tax bills during the Lease Term.  Tenant's obligation 
under this Section shall be prorated to reflect the Lease Commencement and 
Expiration Dates.  If, at any time during the Lease Term a tax, excise on 
rents, business license tax or any other tax, however described, is levied or 
assessed against Landlord as a substitute or addition, in whole or in part, 
for taxes assessed or imposed on land or Building, Tenant shall pay and 
discharge its pro rata share of such tax or excise on rents or other tax 
before it becomes delinquent; except that this provision is not intended to 
cover net income taxes, inheritance, gift or estate tax imposed upon 
Landlord.  In the event that a tax is placed, levied, or assessed against 
Landlord and the taxing authority takes the position that Tenant cannot pay 
and discharge its pro rata share of such tax on behalf of Landlord, then at 
Landlord's sole election, Landlord may increase the Base Monthly Rent by the 
exact amount of such tax and Tenant shall pay such increase.  If by virtue of 
any application or proceeding brought by or on behalf of Landlord, there 
results a reduction in the assessed value of the Premises during the Lease 
Term, Tenant agrees to reimburse Landlord for all costs incurred by Landlord 
in connection with such application or proceeding.  Tenant at its cost shall 
have the right, at any time, to seek a reduction in the assessed valuation of 
the Premises or to contest any real property taxes that are to be paid by 
Tenant, provided Tenant does not withhold or delay its required payment to 
Landlord during such contention.  Landlord shall not be required to join in 
any such proceeding or contest unless the provisions of any law require that 
the proceeding or contest be brought by or in the name of the owner of the 
Premises. In such event, Landlord shall join in the proceeding or contest or 
permit it to 

                                     Page 25

<PAGE>

be brought in Landlord's name, provided that Landlord is not required to bear 
any cost in connection therewith.

    11.  UTILITIES:    Tenant shall pay directly to the providing utility all 
water, gas, electric, telephone, and other utilities supplied to the 
Premises.  Landlord shall not be liable for loss of or injury to person or 
property, however occurring, through or in connection with or incidental to 
furnishing or failure to furnish utilities to the Premises, and Tenant shall 
not be entitled to abatement or reduction of any portion of Base Monthly Rent 
or any other amount payable under this Lease.

    12.  TOXIC WASTE AND ENVIRONMENTAL DAMAGE:

      A.  TENANT'S RESPONSIBILITY:    Without the prior written consent of 
Landlord, Tenant shall not bring, use, or permit upon the Premises, or 
generate, create, release, emit, or dispose (nor permit any of the same) from 
the Premises any chemicals, toxic or hazardous gaseous, liquid or solid 
materials or waste, including without limitation, material or substance 
having characteristics of ignitability, corrosivity, reactivity, or toxicity 
or substances or materials which are listed on any of the Environmental 
Protection Agency's lists of hazardous wastes or which are identified in 
Division 22 Title 26 of the California Code of Regulations as the same may be 
amended from time to time ("Hazardous Materials").  In order to obtain 
consent, Tenant shall deliver to Landlord its written proposal describing the 
toxic material to be brought onto the Premises, measures to be taken for 
storage and disposal thereof, safety measures to be employed to prevent 
pollution of the air, ground, surface and ground water.  Landlord's approval 
may be withheld in its reasonable judgment.  In the event Landlord consents 
to Tenant's use of Hazardous Materials on the Premises, Tenant represents and 
warrants that it will do the following:  (i) adhere to all reporting and 
inspection requirements imposed by Federal, State, County or Municipal laws, 
ordinances or regulations and will provide Landlord a copy of any such 
reports or agency inspections; (ii) obtain and provide Landlord copies of all 
necessary permits required for the use and handling Hazardous Materials on 
the Premises; (iii) enforce Hazardous Materials handling and disposal 
practices consistent with industry standards; (iv) surrender the Premises 
free from any Hazardous Materials arising from Tenant's bringing, using, 
permitting, generating, creating, releasing, emitting or disposing of 
Hazardous Materials; and (v) properly close the facility with regard to 
Hazardous Materials including the removal or decontamination of any process 
piping, mechanical ducting, storage tanks, containers, or trenches which have 
come into contact with Hazardous Materials and

                                     Page 26

<PAGE>

obtain a closure certificate from the local administering agency prior to the 
Expiration Date.

      B.  TENANT'S INDEMNITY REGARDING HAZARDOUS MATERIALS:    Tenant shall, 
at its sole cost and expense,  comply with all laws pertaining to, and shall 
with counsel reasonably acceptable to Landlord, indemnify, defend and hold 
harmless Landlord and Landlord's shareholders, directors, officers, 
employees, partners, affiliates, and agents from, any claims, liabilities, 
costs or expenses incurred or suffered by Landlord arising from the bringing, 
using, permitting, generating, emitting or disposing of Hazardous Materials 
by Tenant through the surface soils of the Premises during the Lease Term or 
the violation of any environmental law, by Tenant or Tenant's Agents.  
Tenant's indemnification and hold harmless obligations include, without 
limitation, the following:  (i) claims, liability, costs or expenses 
resulting from or based upon administrative, judicial (civil or criminal) or 
other action, legal or equitable, brought by any private or public person 
under common law or under the Comprehensive Environmental Response, 
Compensation and Liability Act of 1980 ("CERCLA"), the Resource Conservation 
and Recovery Act of 1980 ("RCRA") or any other Federal, State, County or 
Municipal law, ordinance or regulation; (ii) claims, liabilities, costs or 
expenses pertaining to the identification, monitoring, cleanup, containment, 
or removal of Hazardous Materials from soils, riverbeds or aquifers including 
the provision of an alternative public drinking water source; (iii) all costs 
of defending such claims; (iv) Losses attributable to diminution in the value 
of the Premises or the Building; (v) Loss or restriction of use of rentable 
space in the Building; (vi) Adverse effect on the marketing of any space in 
the Building; and (All other liabilities, obligations, penalties, fines, 
claims, actions (including remedial or enforcement actions of any kind and 
administrative or judicial proceedings, orders or judgments), damages 
(including consequential and punitive damages), and costs (including 
attorney, consultant, and expert fees and expenses) resulting from the 
release or violation.  This indemnification shall survive the expiration or 
termination of this Lease.

      C.  ACTUAL RELEASE BY TENANT:    Tenant agrees to notify Landlord of 
any lawsuits or orders of which it becomes aware which relate to the 
remedying of or actual release of Hazardous Materials on or into the

                                     Page 27


<PAGE>

soils or ground water at or under the Premises.  Tenant shall also provide 
Landlord all notices required by Section 25359.7(b) of the Health and Safety 
Code and all other notices required by law to be given to Landlord in 
connection with Hazardous Materials.  Without limiting the foregoing, Tenant 
shall also deliver to Landlord, within twenty (20) days after receipt 
thereof, any written notices received from any governmental agency alleging a 
material violation of, or material failure to comply with, any federal, state 
or local laws, regulations, ordinances or orders, the violation of which of 
failure to comply with poses a foreseeable and material risk of contamination 
of the ground water or injury to humans (other than injury solely to Tenant, 
Tenant's Agents and employees within the Building).

    In the event of any release on or into the Premises or into the soil or 
ground water under the Premises of any Hazardous Materials used, treated, 
stored or disposed of by Tenant, Tenant agrees to comply, at its sole cost, 
with all laws, regulations, ordinances and orders of any federal, state or 
local agency relating to the monitoring or remediation of such Hazardous 
Materials.  In the event of any such release of Hazardous Materials, Tenant 
agrees to meet and confer with Landlord and its Lender to attempt to 
eliminate and mitigate any financial exposure to such Lender and resultant 
exposure to Landlord under California Code of Civil Procedure Section 736(b) 
as a result of such release, and promptly to take reasonable monitoring, 
cleanup and remedial steps given, inter alia, the historical uses to which 
the Property has and continues to be used, the risks to public health posed 
by the release, the then available technology and the costs of remediation, 
cleanup and monitoring, consistent with acceptable customary practices for 
the type and severity of such contamination and all applicable laws.  Nothing 
in the preceding sentence shall eliminate, modify or reduce the obligation of 
Tenant under 12.B of this Lease to indemnify and hold Landlord harmless from 
any claims liabilities, costs or expenses incurred or suffered by Landlord.  
Tenant shall provide Landlord prompt written notice of Tenant's monitoring, 
cleanup and remedial steps.

      In the absence of an order of any federal, state or local governmental 
or quasi-governmental agency relating to the cleanup, remediation or other 
response action required by applicable law, any dispute arising between 
Landlord and Tenant concerning Tenant's obligation to Landlord under this 
Section 12.C concerning the level, method, and manner of cleanup, remediation 
or response action required in connection with such a release of Hazardous 
Materials shall be resolved by mediation and/or arbitration pursuant to the 
provisions of Section 19.E of this Lease.

                                     Page 28

<PAGE>

      D.  ENVIRONMENTAL MONITORING:     Landlord and its agents shall have 
the right to inspect, investigate, sample and monitor the Premises including 
any air, soil, water, ground water or other sampling or any other testing, 
digging, drilling or analysis to determine whether Tenant is complying with 
the terms of this Section 12.  If Landlord discovers that Tenant is not in 
compliance with the terms of this Section 12, any such costs incurred by 
Landlord, including attorneys' and consultants' fees, shall be due and 
payable by Tenant to Landlord within thirty (30) days following Landlord's 
written demand therefore.

    13.  TENANT'S DEFAULT:    The occurrence of any of the following shall 
constitute a material default and breach of this Lease by Tenant:  (i) 
Tenant's failure to pay any rent due under this Lease within ten (10) days 
after written receipt of notice from Landlord that such rent is past due, 
(ii) the abandonment of the Premises by Tenant, as defined in California 
Civil Code Section 1951.3; (iii) Tenant's failure to observe and perform any 
other required provision of this Lease, where such failure continues for 
thirty (30) days after written notice from Landlord; (iv) Tenant's making of 
any general assignment for the benefit of creditors; (v) the filing by or 
against Tenant of a petition to have Tenant adjudged a bankrupt or of a 
petition for reorganization or arrangement under any law relating to 
bankruptcy (unless, in the case of a petition filed against Tenant, the same 
is dismissed after the filing); (vi) the appointment of a trustee or receiver 
to take possession of substantially all of Tenant's assets located at the 
Premises or of Tenant's interest in this Lease, where possession is not 
restored to Tenant within thirty (30) days; (vii) the attachment, execution 
or other judicial seizure of substantially all of Tenant's assets located at 
the Premises or of Tenant's interest in this Lease, where such seizure is not 
discharged within thirty (30) days; or (viii) any default by Tenant on other 
buildings leased by Tenant within the Project.

      A.  REMEDIES:    In the event of any such default by Tenant, then in 
addition to other remedies available to Landlord at law or in equity, 
Landlord shall have the immediate option to terminate this Lease and all 
rights of Tenant hereunder by giving written notice of such intention to 
terminate.  In the event Landlord elects to so terminate this Lease, Landlord 
may recover from Tenant all the following:  (i) the worth at time

                                     Page 29

<PAGE>

of award of any unpaid rent which had been earned at the time of such 
termination; (ii) the worth at time of award of the amount by which the 
unpaid rent which would have been earned after termination until the time of 
award exceeds the amount of such rental loss for the same period that Tenant 
proves could have been reasonably avoided; (iii) the worth at time of award 
of the amount by which the unpaid rent for the balance of the Lease Term 
after the time of award exceeds the amount of such rental loss that Tenant 
proves could be reasonably avoided; (iv) any other amount necessary to 
compensate Landlord for all detriment proximately caused by Tenant's failure 
to perform its obligations under this Lease, or which in the ordinary course 
of things would be likely to result therefrom; including the following:  (x) 
expenses for repairing, altering or remodeling the Premises for purposes of 
reletting, (y) broker's fees, advertising costs or other expenses of 
reletting the Premises, and (z) costs of carrying the Premises such as taxes, 
insurance premiums, utilities and security precautions. and (v) at Landlord's 
election, such other amounts in addition to or in lieu of the foregoing as 
may be permitted by applicable California law.  The term "rent", as used 
herein, is defined as the minimum monthly installments of Base Monthly Rent 
and all other sums required to be paid by Tenant pursuant to this Lease, all 
such other sums being deemed as additional rent due hereunder.  As used in 
(i) and (ii) above, "worth at the time of award" shall be computed by 
allowing interest at a rate equal to the discount rate of the Federal Reserve 
Bank of San Francisco plus five (5%) percent per annum.  As used in (iii) 
above, "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 (1%) percent.  

      B.  RIGHT TO RE-ENTER:     In the event of any such default by Tenant, 
Landlord shall have the right, after terminating this Lease, to re-enter the 
Premises and remove all persons and property.  Such property may be removed 
and stored in a public warehouse or elsewhere at the cost of and for the 
account of Tenant, and disposed of by Landlord in any manner permitted by law.

      C.  ABANDONMENT:     If Landlord does not elect to terminate this Lease 
as provided in Section 13.A or 13.B above, then the provisions of California 
Civil Code Section 1951.4, (Landlord may continue the lease in effect after 
Tenant's breach and abandonment and recover rent as it becomes due if Tenant 
has a right to sublet and assign, subject only to reasonable limitations) as 
amended from time to time, shall apply and Landlord may from time to time, 
without terminating this Lease, either recover all rental as it becomes due 
or relet the Premises or any part thereof for such term or terms and at such 
rental or rentals and upon such other terms and conditions as Landlord in its 
sole 

                                     Page 30

<PAGE>

discretion may deem advisable, with the right to make alterations and repairs 
to the Premises.  In the event that Landlord elects to so relet, rentals 
received by Landlord from such reletting shall be applied in the following 
order to:  (i) the payment of any indebtedness other than Base Monthly Rent 
due hereunder from Tenant to Landlord; (ii) the payment of any cost of such 
reletting; (iii) the payment of the cost of any alterations and repairs to 
the Premises; and (iv) the payment of Base Monthly Rent due and unpaid 
hereunder.  The residual rentals, if any, shall be held by Landlord and 
applied in payment of future Base Monthly Rent as the same may become due and 
payable hereunder.  Landlord shall have no obligation to relet the Premises 
following a default if Landlord has other available space within the Building 
or Project.  In the event the portion of rentals received from such reletting 
which is applied to the payment of rent hereunder during any month be less 
than the rent payable during that month by Tenant hereunder, then Tenant 
shall pay such deficiency to Landlord immediately upon demand.  Such 
deficiency shall be calculated and paid monthly.  Tenant shall also pay to 
Landlord, as soon as ascertained, any costs and expenses incurred by Landlord 
in such reletting or in making such alterations and repairs not covered by 
the rentals received from such reletting.

      D.  NO TERMINATION:     Landlord's re-entry or taking possession of the 
Premises pursuant to 13.B or 13.C shall not be construed as an election to 
terminate this Lease unless written notice of such intention is given to 
Tenant or unless the termination is decreed by a court of competent 
jurisdiction. Notwithstanding any reletting without termination by Landlord 
because of any default by Tenant, Landlord may at any time after such 
reletting elect to terminate this Lease for any such default.

      E.  NON-WAIVER:   Landlord may accept Tenant's payments without waiving 
any rights under this Lease, including rights under a previously served 
notice of default. No payment by Tenant or receipt by Landlord of a lesser 
amount than any installment of rent due shall be deemed as other than payment 
on account of the amount due.  If Landlord accepts partial payments after 
serving a notice of default, Landlord may nevertheless commence and pursue an 
action to enforce rights and remedies under the previously served notice of 
default without giving Tenant any further notice or demand.

                                     Page 31

<PAGE>

Furthermore, the Landlord's acceptance of Rent from the Tenant when the 
Tenant is holding over without express written consent does not convert 
Tenants Tenancy from a tenancy at sufferance to a month to month tenancy. No 
waiver of any provision of this Lease shall be implied by any failure of 
Landlord to enforce any remedy for the violation of that provision, even if 
that violation continues or is repeated.  Any waiver by Landlord of any 
provision of this Lease must be in writing.  Such waiver shall affect only 
the provision specified and only for the time and in the manner stated in the 
writing. No delay or omission in the exercise of any right or remedy by 
Landlord shall impair such right or remedy or be construed as a waiver 
thereof by Landlord.  No act or conduct of Landlord, including, without 
limitation, the acceptance of keys to the Premises, shall constitute 
acceptance of the surrender of the Premises by Tenant before the Expiration 
Date.  Only written notice from Landlord to Tenant of acceptance shall 
constitute such acceptance of surrender of the Premises.  Landlord's consent 
to or approval of any act by Tenant which requires Landlord's consent or 
approvals shall not be deemed to waive or render unnecessary Landlord's 
consent to or approval of any subsequent act by Tenant.

      F.  PERFORMANCE BY LANDLORD:    If Tenant fails to perform any 
obligation required under this Lease or by law or governmental regulation, 
Landlord in its sole discretion may, without notice, without waiving any 
rights or remedies and without releasing Tenant from its obligations 
hereunder, perform such obligation, in which event Tenant shall pay Landlord 
as additional rent all sums paid by Landlord in connection with such 
substitute performance, including interest at the Agreed Interest Rate within 
ten (10) days of Landlord's written notice for such payment.

    14.  LANDLORD'S  LIABILITY:    

      A.  LIMITATION ON LANDLORD'S LIABILITY:    In the event of Landlord's 
failure to perform any of its covenants or agreements under this Lease, 
Tenant shall give Landlord written notice of such failure and shall give 
Landlord thirty (30) days to cure or commence to cure such failure prior to 
any claim for breach or resultant damages, provided, however, that if the 
nature of the default is such that it cannot reasonably be cured within the 
30-day period, Landlord shall not be deemed in default if it commences within 
such period to cure, and thereafter diligently prosecutes the same to 
completion.  In addition, upon any such failure by Landlord, Tenant shall 
give notice by registered or certified mail to any person or entity with a 
security interest in the Premises ("Mortgagee") that has provided Tenant with 
notice of its interest in the Premises, and shall provide Mortgagee a 
reasonable opportunity to cure such failure, including such time to obtain 
possession of the Premises by power of sale

                                     Page 32

<PAGE>

or judicial foreclosure, if such should prove necessary to effectuate a cure. 
 Tenant agrees that each of the Mortgagees to whom this Lease has been 
assigned is an expressed third-party beneficiary hereof.  Tenant waives any 
right under California Civil Code Section 1950.7 or any other present or 
future law to the collection of any payment or deposit from Mortgagee or any 
purchaser at a foreclosure sale of Mortgagee's interest unless Mortgagee or 
such purchaser shall have actually received and not refunded the applicable 
payment or deposit.   Tenant Further waives any right to terminate this Lease 
and to vacate the Premises on Landlord's default under this Lease.  Tenant's 
sole remedy on Landlord's default is an action for damages or injunctive or 
declaratory relief, with the sole exception that if Landlord fails to perform 
in its obligation under Section 8.A to maintain plumbing and sewage 
facilities, HVAC equipment, exterior windows, door entrances, plate glass and 
glazing systems, skylights, fire extinguisher equipment, the parking lot, 
underground utilities, elevator equipment, the roof membrane or landscaping 
related to the Premises, Tenant may, after providing Landlord thirty (30) 
days' written notice, undertake such maintainence at its own cost if Landlord 
has not commenced such maintenance.  This exception does not apply to items 
about which Landlord and Tenant may disagree as to the scope or necessity of 
work.

      B.  LIMITATION ON TENANT'S RECOURSE:    If Landlord is a corporation 
trust, partnership, joint venture, unincorporated association or other form 
of business entity: (i) the obligations of Landlord shall not constitute 
personal obligations of the officers, directors, trustees, partners, joint 
venturers, members, owners, stockholders, or other principals or 
representatives except to the extent of their interest in the Premises.  
Tenant shall have recourse only to the interest of Landlord in the Premises 
or for the satisfaction of the obligations of Landlord and shall not have 
recourse to any other assets of Landlord for the satisfaction of such 
obligations.

      C.  INDEMNIFICATION OF LANDLORD:    As a material part of the 
consideration rendered to Landlord, Tenant hereby waives all claims against 
Landlord for damages to goods, wares and merchandise, and all other personal 
property in, upon or about said Premises and for injuries to persons in or 
about said Premises, from any cause arising at any time to the fullest extent 

                                     Page 33

<PAGE>

permitted by law, and Tenant shall indemnify and hold Landlord exempt and 
harmless from any damage or injury to any person, or to the goods, wares and 
merchandise and all other personal property of any person, arising from the 
use of the Premises, Building, and/or Project by Tenant and Tenant's Agents 
or from the failure of Tenant to keep the Premises in good condition and 
repair as herein provided, except to the extent due to the active negligence 
or willful misconduct of Landlord.  Further, in the event Landlord is made 
party to any litigation due to the acts or omission of Tenant and Tenant's 
Agents.  Tenant will indemnify, defend (with counsel reasonably acceptable to 
Landlord) and hold Landlord harmless from any such claim or liability 
including Landlord's costs and expenses and reasonable attorney's fees 
incurred in defending such claims.

    15.  DESTRUCTION OF PREMISES:    

      A.  DESTRUCTION BY AN INSURED CASUALTY: In the event of a destruction 
of the Premises during the Lease Term by a casualty for which Landlord has 
received insurance proceeds sufficient to repair the damage or destruction, 
Landlord shall repair the same to the extent of such proceeds.  Such 
destruction shall not annul or void this Lease; however, Tenant shall be 
entitled to a proportionate reduction of Base Monthly Rent while repairs are 
being made, such proportionate reduction to be based upon the extent to which 
the repairs interfere with Tenant's business in the Premises, as reasonably 
determined by Landlord.  If the repairs cannot be made in 180 days from the 
date of receipt of all governmental approvals necessary under the laws and 
regulations of State, Federal, County or Municipal authorities, as reasonably 
determined by Landlord, then Landlord or Tenant may terminate this Lease 
within fifteen (15) days of Landlord's determination of the foregoing.  
Notwithstanding the foregoing, either Landlord or Tenant shall have the 
option to terminate the Lease in the event of a total destruction of the 
Premises or in the event of a partial destruction occurs in the last year of 
the Lease Term and will take more than sixty (60) days to repair.  In no 
event shall Landlord be required to replace or restore Alterations, Tenant 
Improvements paid for by Tenant from sources other than the Work Allowance, 
Tenant's fixtures or personal property.  With respect to a destruction which 
Landlord is obligated to repair or may elect to repair under the terms of 
this Section, Tenant waives the provisions of Section 1932, and Section 1933, 
Subdivision 4, of the Civil Code of the State of California, and any other 
similarly enacted statute, and the provisions of this Section 15 shall govern 
in the case of such destruction.

      B.  DESTRUCTION BY AN UNINSURED CASUALTY:    In the event of a total or 
partial destruction of the Premises during the Lease Term by a casualty for 
which

                                     Page 34

<PAGE>

Landlord has not received insurance proceeds sufficient to repair the damage 
or destruction, Landlord may elect to either (i) terminate this Lease by 
giving written notice to Tenant within fifteen (15) days after determining 
the replacement cost and furnishing reasonable evidence thereof to Tenant; or 
(ii) rebuild the Premises, provided the damage can be repaired within one 
hundred eighty (180) days from the date of receipt of all governmental 
approvals necessary under the laws and regulations of State, Federal, County 
or Municipal authorities, as reasonably determined by Landlord.  
Notwithstanding the foregoing, if the cost to repair the damage from an 
uninsured casualty is less than 5% of the then replacement cost of the 
Building (excluding Tenant Improvements), then Landlord shall repair the 
damage.  If Landlord contributes to payment for an uninsured loss, the 
contributed amount shall be amortized over the useful life of the 
improvements and such amortized amount shall be reimbursed by Tenant to 
Landlord as additional rent, together with interest at the prime rate of 
Union Bank plus two percent (2%).  If Landlord so elects to terminate this 
Lease, Tenant, within fifteen (15) days after receiving Landlord's notice to 
terminate, can elect to pay to Landlord at the time Tenant notifies Landlord 
of its election, the actual cost of restoration, in which case Landlord shall 
restore the Premises and this Lease shall not terminate.

      C.  TENANT'S RIGHT TO CANCEL ADJACENT LEASES:    In the event the Lease 
is terminated pursuant to Section 15.A or 15.B above, Tenant shall have the 
right to simultaneously  terminate its leases for the other buildings within 
the first phase of the Project leased by Tenant. 

    16.  CONDEMNATION:    If any part of the Premises shall be taken for any 
public or quasi-public use, under any statute or by right of eminent domain 
or private purchase in lieu thereof, and only a part thereof remains which is 
susceptible of occupation hereunder, this Lease shall, as to the part so 
taken, terminate as of the day before title vests in the condemnor or 
purchaser ("Vesting Date") and Base Monthly Rent payable hereunder shall be 
adjusted so that Tenant is required to pay for the remainder of the Lease 
Term only such portion of Base Monthly Rent as the value of the part 
remaining after such taking bears to the value of the entire Premises prior 
to such taking;  but in such event, Landlord shall have the

                                     Page 35

<PAGE>

option to terminate this Lease as of the Vesting Date.  If all of the 
Premises or such part thereof be taken so that there does not remain a 
portion susceptible for occupation hereunder, this Lease shall terminate on 
the Vesting Date.  If part or all of the Premises be taken, all compensation 
awarded upon such taking shall go to Landlord, and Tenant shall have no claim 
thereto; but Landlord shall cooperate with Tenant, without cost to Landlord, 
to recover compensation for damage to or taking of any Alterations, Tenant 
Improvements paid for by Tenant from sources other than the Work Allowance, 
or for Tenant's moving costs.  Tenant hereby waives the provisions of 
California Code of Civil Procedures Section 1265.130 and any other similarly 
enacted statue, and the provisions of this Section 16 shall govern in the 
case of such taking.

    17.  ASSIGNMENT OR SUBLEASE:    

      A.  CONSENT BY LANDLORD:    Except as specifically provided in this 
Section 17, Tenant may not assign, sublet, hypothecate, or allow a third 
party to use the Premises without the express written consent of Landlord, 
which consent shall not be unreasonably withheld as defined below.  In the 
event Tenant desires to assign this Lease or any interest herein including, 
without limitation, a pledge, mortgage or other hypothecation, or sublet the 
Premises or any part thereof, Tenant shall deliver to Landlord (i) executed 
counterparts of any agreement and of all ancillary agreements with the 
proposed assignee/subtenant, (ii) current financial statements of the 
transferee covering the preceding three years, (iii) the nature of the 
proposed transferee's business to be carried on in the Premises, (v) all 
consideration to be given on account of the Transfer, and (vi) a current 
financial statement of Tenant.  Landlord may condition its approval of any 
Transfer to a certification from both Tenant and the proposed transferee of 
all consideration to be paid to Tenant in connection with such Transfer.  At 
Landlord's request, Tenant shall also provide additional information 
reasonably required by Landlord to determine whether it will consent to the 
proposed assignment or sublease.  Landlord shall have a ten (10) day period 
following receipt of all the foregoing within which to notify Tenant in 
writing that Landlord elects to: (i) permit Tenant to assign or sublet such 
space to the named assignee/subtenant on the terms and conditions set forth 
in the notice; or (ii) refuse consent.  If Landlord should fail to notify 
Tenant in writing of such election within the 10-day period, Landlord shall 
be deemed to have elected option (ii) above. Landlord's written consent to 
the proposed assignment or sublease shall not be unreasonably withheld, 
provided and upon the condition that: (i) the proposed assignee or subtenant 
is engaged in a business that is limited to the use expressly permitted under 
this Lease; (ii) the proposed assignee is a company with sufficient financial 
worth and management ability

                                     Page 36

<PAGE>

to undertake the financial obligation of this Lease and Landlord has been 
furnished with reasonable proof thereof; (iii) the proposed assignment or 
sublease is in form reasonably satisfactory to Landlord; and (iv) Tenant 
reimburses Landlord on demand for any costs that may be incurred by Landlord 
in connection with said assignment or sublease, including the costs of making 
investigations as to the acceptability of the proposed assignee or subtenant 
and legal costs incurred in connection with the granting of any requested 
consent, not to exceed $2,500.00; and (vi) Tenant shall not have advertised 
or publicized the availability of the Premises without prior notice to 
Landlord.  In the event all or any one of the foregoing conditions are not 
satisfied, Landlord shall be considered to have acted reasonably if it 
withholds its consent.

      B.  ASSIGNMENT OR SUBLETTING CONSIDERATION:    Any rent or other 
economic consideration realized by Tenant under any sublease and assignment, 
in excess of the rent payable hereunder and reasonable subletting and 
assignment costs, shall be divided and paid fifty percent (50%) to Landlord 
and fifty percent (50%) to Tenant, after first deducting all direct costs 
incurred by Tenant in connection with such transaction.  Tenant's obligation 
to pay over Landlord's portion of the consideration constitutes an obligation 
for additional rent hereunder.  The above provisions relating to Landlord's 
right to terminate the Lease and relating to the allocation of bonus rent are 
independently negotiated terms of the Lease which constitute a material 
inducement for the Landlord to enter into the Lease, and are agreed by the 
parties to be commercially reasonable.  No assignment or subletting by Tenant 
shall relieve it of any obligation under this Lease.  Any assignment or 
subletting which conflicts with the provisions hereof shall be void.

      C.  NO RELEASE:    Any assignment or sublease, including assignments or 
deemed assignments pursuant to Section 17.D below, shall be made only if and 
shall not be effective until the assignee or subtenant shall execute, 
acknowledge, and deliver to Landlord an agreement, in form and substance 
satisfactory to Landlord, whereby the assignee or subtenant shall assume all 
the obligations of this Lease on the part of Tenant to be performed or 
observed and shall be subject to all the covenants, agreements, terms, 
provisions and conditions in this Lease.  Notwithstanding any such sublease 
or assignment and the acceptance of rent by

                                     Page 37

<PAGE>

Landlord from any subtenant or assignee, Tenant and any guarantor shall 
remain fully liable for the payment of Base Monthly Rent and additional rent 
due, and to become due hereunder, for the performance of all the covenants, 
agreements, terms, provisions and conditions contained in this Lease on the 
part of Tenant to be performed and for all acts and omissions of any 
licensee, subtenant, assignee or any other person claiming under or through 
any subtenant or assignee that shall be in violation of any of the terms and 
conditions of this Lease, and any such violation shall be deemed a violation 
by Tenant.  Tenant shall indemnify, defend and hold Landlord harmless from 
and against all losses, liabilities, damages, costs and expenses (including 
reasonable attorney fees) resulting from any claims that may be made against 
Landlord by the proposed assignee or subtenant or by any real estate brokers 
or other persons claiming compensation in connection with the proposed 
assignment or sublease.

      D.  REORGANIZATION OF TENANT:    If Tenant is a corporation, the 
following shall be deemed a voluntary assignment of Tenant's interest in this 
Lease: (i) any dissolution, merger, consolidation, or other reorganization of 
or affecting Tenant, whether or not Tenant is the surviving corporation, and 
(ii) if the capital stock of Tenant is not publicly traded, the sale or 
transfer to one person or entity (or to any group of related persons or 
entities) stock possessing more than 50% of the total combined voting power 
of all classes of Tenant's capital stock issued, outstanding and entitled to 
vote for the election of directors.  

      E.  PERMITTED TRANSFERS:    Notwithstanding anything contained in this 
Section 17, so long as Tenant otherwise complies with the provisions of this 
Article, Tenant may enter into any of the following transfers (a "Permitted 
Transfer") without Landlord's prior consent, and Landlord shall not be 
entitled to receive any part of any subrent resulting therefrom that would 
otherwise be due.  Tenant may sublease all or part of the Premises or assign 
its interest in this Lease to (i) any corporation which controls, is 
controlled by, or is under common control with the original Tenant to this 
Lease by means of an ownership interest of more than 50%; (ii) a corporation 
which results from a merger, consolidation or other reorganization in which 
Tenant is not the surviving corporation, so long as such transaction is not 
entered into as a subterfuge by Tenant to be relieved of or otherwise 
diminish its obligations under this Lease; and (iii) a corporation which 
purchases or otherwise acquires all or substantially all of the assets of 
Tenant so long as such acquisition is not entered into as a subterfuge by 
Tenant to be relieved of or otherwise diminish its obligations under this 
Lease.  

      F.  EFFECT OF DEFAULT:    In the event of Tenant's default, Tenant 
hereby assigns all rents due from any

                                     Page 38

<PAGE>

assignment or subletting to Landlord as security for performance of its 
obligations under this Lease, and Landlord may collect such rents as Tenant's 
Attorney-in-Fact, except that Tenant may collect such rents unless a default 
occurs as described in Section 13 above.  A Lease termination due to Tenant's 
default shall not automatically terminate an assignment or sublease then in 
existence; rather at Landlord's election, such assignment or sublease shall 
survive the Lease termination, the assignee or subtenant shall attorn to 
Landlord, and Landlord shall undertake the obligations of Tenant under the 
sublease or assignment; except that Landlord shall not be liable for prepaid 
rent, security deposits or other defaults of Tenant to the subtenant or 
assignee, or for any acts or omissions of Tenant and Tenant's Agents.

      G.  CONVEYANCE BY LANDLORD:    As used in this Lease, the term 
"Landlord" is defined only as the owner for the time being of the Premises, 
so that in the event of any sale or other conveyance of the Premises or in 
the event of a master lease of the Premises, Landlord shall be entirely freed 
and relieved of all its covenants and obligations hereunder, and it shall be 
deemed and construed, without further agreement between the parties and the 
purchaser at any such sale or the master tenant of the Premises, that the 
purchaser or master tenant of the Premises has assumed and agreed to carry 
out any and all covenants and obligations of Landlord hereunder.  Such 
transferor shall transfer and deliver Tenant's security deposit to the 
purchaser at any such sale or the master tenant of the Premises, and 
thereupon the transferor shall be discharged from any further liability in 
reference thereto.

      F.  SUCCESSORS AND ASSIGNS:    Subject to the provisions this Section 
17, the covenants and conditions of this Lease shall apply to and bind the 
heirs, successors, executors, administrators and assigns of all parties 
hereto; and all parties hereto shall be jointly and severally liable 
hereunder.

    18.  OPTION TO EXTEND THE LEASE TERM:

      A.  GRANT AND EXERCISE OF OPTION:    Provided Tenant concurrently 
exercises its options to extend the lease terms on all other buildings leased 
by Tenant within the first phase portion of the Project, Landlord grants to 
Tenant, subject to the terms and conditions

                                     Page 39

<PAGE>

set forth in this Section 18.A, two (2) options (the "Options") to extend the 
Lease Term for an additional term (the "Option Term").  Each Option Term 
shall be for a period of sixty (60) months and shall be exercised, if at all, 
by written notice to Landlord no earlier than eighteen (18) months prior to 
the Expiration Date but no later than twelve (12) months prior to the 
Expiration Date.  If Tenant exercises the Option, all of the terms, covenants 
and conditions of this Lease except this Section shall apply during the 
Option Term as though the expiration date of the Option Term was the date 
originally set forth herein as the Expiration Date, provided that Base 
Monthly Rent for the Premises payable by Tenant during the Option Term shall 
be the greater of either the average of Base Monthly Rent paid during the 
previous term, or the then Fair Market Rental as hereinafter defined.  
Notwithstanding anything herein to the contrary, if Tenant is in monetary or 
material non-monetary default under any of the terms, covenants or conditions 
of this Lease either at the time Tenant exercises the Option or at any time 
thereafter prior to the commencement date of the Option Term, Landlord shall 
have, in addition to all of Landlord's other rights and remedies provided in 
this Lease, the right to terminate the Option upon notice to Tenant, in which 
event the expiration date of this Lease shall be and remain the Expiration 
Date.  As used herein, the term "Fair Market Rental" is defined as the rental 
and all other monetary payments, including any escalations and adjustments 
thereto (including without limitation Consumer Price Indexing) that Landlord 
could obtain during the Option Term from a third party desiring to lease the 
Premises, based upon the current use and other potential uses of the 
Premises, as determined by the rents then being obtained for new leases of 
space comparable in age and quality to the Premises in the locality of the 
Building.

      B.  DETERMINATION OF FAIR MARKET RENTAL:    If Tenant exercises the 
Option, Landlord shall send Tenant a notice setting forth the Fair Market 
Rental for the Option Term within thirty (30) days following the Exercise 
Date.  If Tenant disputes Landlord's determination of Fair Market Rental for 
the Option Term, Tenant shall, within thirty (30) days after the date of 
Landlord's notice setting forth Fair Market Rental for the Option Term, send 
to Landlord a notice stating that Tenant either elects to terminate its 
exercise of the Option, in which event the Option shall lapse and this Lease 
shall terminate on the Expiration Date, or that Tenant disagrees with 
Landlord's determination of Fair Market Rental for the Option Term and elects 
to resolve the disagreement as provided in Section 18.C below. If Tenant does 
not send Landlord a notice as provided in the previous sentence, Landlord's 
determination of Fair Market Rental shall be the basis for determining the 
Base Monthly Rent payable by Tenant during the Option Term.  If Tenant elects 
to resolve

                                     Page 40

<PAGE>

the disagreement as provided in Section 18.C and such procedures are not 
concluded prior to the commencement date of the Option Term, Tenant shall pay 
to Landlord as Base Monthly Rent the Fair Market Rental as determined by 
Landlord in the manner provided above.  If the Fair Market Rental as finally 
determined pursuant to Section 18.C is greater than Landlord's determination, 
Tenant shall pay Landlord the difference between the amount paid by Tenant 
and the Fair Market Rental as so determined in Section 18.C within thirty 
(30) days after such determination.  If the Fair Market Rental as finally 
determined in Section 18.C is less than Landlord's determination, the 
difference between the amount paid by Tenant and the Fair Market Rental as so 
determined in Section 18.C shall be credited against the next installments of 
rent due from Tenant to Landlord hereunder.

      C.   RESOLUTION OF A DISAGREEMENT OVER THE FAIR MARKET RENTAL:    Any 
disagreement regarding Fair Market Rental shall be resolved as follows:

        1.  Within thirty (30) days after Tenant's response to Landlord's 
notice setting forth the Fair Market Rental, Landlord and Tenant shall meet 
at least two (2) times at a mutually agreeable time and place, in an attempt 
to resolve the disagreement.

        2.    If within the 30-day period referred to above, Landlord and 
Tenant cannot reach agreement as to Fair Market Rental, each party shall 
select one appraiser to determine Fair Market Rental.  Each such appraiser 
shall arrive at a determination of Fair Market Rental and submit their 
conclusions to Landlord and Tenant within thirty (30) days after the 
expiration of the 30-day consultation period described above.

      3.  If only one appraisal is submitted within the requisite time 
period, it shall be deemed as Fair Market Rental.  If both appraisals are 
submitted within such time period and the two appraisals so submitted differ 
by less than ten percent (10%), the average of the two shall be deemed as 
Fair Market Rental.  If the two appraisals differ by more than 10%, the 
appraisers shall immediately select a third appraiser who shall, within 
thirty (30) days after his selection, make and submit to Landlord and Tenant 
a determination of Fair Market Rental.  This third appraisal will then be 
averaged with the closer of the two previous appraisals and the result shall 
be Fair Market Rental.

                                     Page 41

<PAGE>

        4.  All appraisers specified pursuant to this Section shall be 
members of the American Institute of Real Estate Appraisers with not less 
than ten (10) years experience appraising office and industrial properties in 
the Santa Clara Valley.  Each party shall pay the cost of the appraiser 
selected by such party and one-half of the cost of the third appraiser.

      D.  PERSONAL TO TENANT:    All Options provided to Tenant in this Lease 
are personal and granted to Network Equipment Technologies and any entity 
resulting from a permitted transfer as set forth in Section 17.E above and 
are not exercisable by any third party should Tenant assign or sublet all or 
a portion of its rights under this Lease, unless Landlord consents to permit 
exercise of any option by any assignee or subtenant, in Landlord's sole and 
absolute discretion.  In the event Tenant has multiple options to extend this 
Lease, a later option to extend the Lease cannot be exercised unless the 
prior option has been so exercised.

    19.  OPTION TO LEASE :   Landlord has granted Tenant an option to lease 
addition buildings on the terms set forth in EXHIBIT "E".

    20.  GENERAL PROVISIONS:

      A.  ATTORNEY'S FEES:    In the event a suit or alternative form of 
dispute resolution is brought for the possession of the Premises, for the 
recovery of any sum due hereunder, to interpret the Lease, or because of the 
breach of any other covenant herein; then the losing party shall pay to the 
prevailing party reasonable attorney's fees including the expense of expert 
witnesses, depositions and court testimony as part of its costs which shall 
be deemed to have accrued on the commencement of such action.  The prevailing 
party shall also be entitled to recover all costs and expenses including 
reasonable attorney's fees incurred in enforcing any judgment or award 
against the other party.  The foregoing provision relating to post-judgment 
costs is severable from all other provisions of this Lease.

      B.  AUTHORITY OF PARTIES:   Each party represents and warrants to the 
other party that it is duly formed and in good standing, and is duly 
authorized to execute and deliver this Lease on behalf of it, and that this 
Lease is binding upon the signing party in accordance with its terms.  At 
either party's request, the other party shall provide the requesting party 
with proof in a form acceptable to the requesting party, authorizing the 
execution of the Lease.

      C.  BROKERS:    Tenant represents it has not utilized or contacted a 
real estate broker or finder with respect to this Lease other than Julien J. 


                                     Page 42
<PAGE>

Studley, Inc. and Tenant agrees to indemnify, defend and hold Landlord 
harmless against any claim, cost, liability or cause of action asserted by 
any other broker or finder claiming through Tenant.

      D.  CHOICE OF LAW:    This Lease shall be governed by and construed in 
accordance with California law.   Venue shall be Alameda County.

      E.  DISPUTE RESOLUTION:     Landlord and Tenant and any other party 
that may become a party to this Lease or be deemed a party to this Lease 
including any subtenants agree to and shall mediate any controversy, dispute, 
or claim of whatever nature arising out of, in connection with, or in 
relation to the interpretation, performance or breach of this Lease, 
including any claim based on contract, tort, or statute,, except for any 
claim by Landlord for unlawful detainer, or any action within the 
jurisdiction of the small claims court.  The mediation shall be held prior to 
any court action or arbitration.  The mediation shall be confidential and in 
accordance with California Evidence Code Section1152.5.  In the event the 
parties are not able to agree on a mediator within thirty days JAMS or 
another judicial and mediation service mutually acceptable to the parties 
shall appoint a mediator.  In the event the mediator determines that a second 
mediation session is necessary, it shall be conducted in accordance with this 
paragraph.  Should the prevailing party attempt an arbitration or a court 
action before attempting to mediate, THE PREVAILING PARTY SHALL NOT BE 
ENTITLED TO ATTORNEYS FEES THAT MIGHT OTHERWISE BE AVAILABLE TO THEM IN A 
COURT ACTION OR ARBITRATION, AND IN ADDITION THERETO, THE PARTY WHO IS 
DETERMINED BY THE ARBITRATOR TO HAVE RESISTED MEDIATION SHALL BE SANCTIONED 
BY THE ARBITRATOR OR JUDGE.  Except for any claim by Landlord for unlawful 
detainer or any claim within the Jurisdiction of the small claims court 
(which for such claims the parties agree shall be the sole court of competent 
jurisdiction), any controversy, dispute, or claim of whatever nature arising 
out of, in connection with, or in relation to the interpretation, performance 
or breach of this Lease, including any claim based on contract, tort, or 
statute, shall be resolved at the request of any party to this agreement 
through a two-step dispute resolution process administered by JAMS or another 
judicial and mediation service mutually acceptable to the parties involving 
first mediation, followed, if necessary, by final and binding arbitration 
administered by and in accordance with the

                                     Page 43

<PAGE>

then-existing rules and practice of the judicial and mediation service 
selected, and judgment upon any award rendered by the arbitrator(s) may be 
entered by any State or Federal Court having jurisdiction thereof.  The 
parties to the arbitration shall have those rights of discovery that the 
arbitrator(s) deem necessary (after application to the arbitrator(s)) to a 
full and fair hearing of the matter.  However, in no event shall the parties 
be entitled to propound interrogatories or requests for admissions during the 
arbitration process.  The arbitrator shall be a retired judge or a licensed 
California Attorney.  The venue for any such arbitration's or mediations 
shall be in Santa Clara County.

      F.  ENTIRE AGREEMENT:    This Lease contains all of the agreements and 
conditions made between the parties hereto and may not be modified orally or 
in any other manner other than by written agreement signed by all parties 
hereto or their respective successors in interest.  This Lease supersedes and 
revokes all previous negotiations, letters of intent, lease proposals, 
brochures, agreements, representations, promises, warranties, and 
understandings, whether oral or in writing, between the parties or their 
respective representatives or any other person purporting to represent 
Landlord or Tenant.

      G.  ENTRY BY LANDLORD:    Upon prior notice to Tenant and subject to 
Tenant's reasonable security regulations, Tenant shall permit Landlord and 
his agents to enter into and upon the Premises at all reasonable times, and 
without any rent abatement or reduction or any liability to Tenant for any 
loss of occupation or quiet enjoyment of the Premises thereby occasioned, for 
the following purposes:  (i) inspecting and maintaining the Premises; (ii) 
making repairs, alterations or additions to the Premises; (iii) erecting 
additional building(s) and improvements on the land where the Premises are 
situated or on adjacent land owned by Landlord; and (iv) performing any 
obligations of Landlord under the Lease including remediation of hazardous 
materials if determined to be the responsibility of Landlord.  Tenant shall 
permit Landlord and his agents, at any time within one hundred eighty (180) 
days prior to the Expiration Date (or at any time during the Lease if Tenant 
is in default hereunder), to place upon the Premises "For Lease" signs and 
exhibit the Premises to real estate brokers and prospective tenants at 
reasonable hours.

      H.  ESTOPPEL CERTIFICATES:    At any time during the Lease Term, 
Landlord or Tenant shall, within ten (10) days following written notice from 
the other party, execute and deliver to the requesting party a written 
statement certifying, if true, the following:  (i) that this Lease is 
unmodified and in full force and effect (or, if modified, stating the nature 
of such modification); (ii) the date to which rent and other

                                     Page 44

<PAGE>

charges are paid in advance, if any; (iii) acknowledging that there are not, 
to such party's knowledge, any uncured defaults on either party's part 
hereunder (or specifying such defaults if they are claimed); and (iv) such 
other information as either party may reasonably request.  Any such statement 
may be conclusively relied upon by any prospective purchaser or encumbrancer 
of Landlord's interest in the Premises.  Landlord or Tenant's failure to 
deliver such statement within such time shall be conclusive upon such party 
that this Lease is in full force and effect without modification, except as 
may be represented by such party, and that there are no uncured defaults in 
such party's performance.  Tenant agrees to provide, within fifteen (15) days 
of Landlord's request, Tenant's most recent three (3) years of audited 
financial statements for Landlord's use in financing the Premises or 
Landlord's interest therein.

      I.  EXHIBITS:    All exhibits referred to are attached to this Lease 
and incorporated by reference.

      J.  INTEREST:    All rent due hereunder, if not paid when due, shall 
bear interest at the rate of the Reference Rate published by Bank of America, 
San Francisco Branch, plus two percent (2%) per annum from that date until 
paid in full ("Agreed Interest Rate").  This provision shall survive the 
expiration or sooner termination of the Lease.  Despite any other provision 
of this Lease, the total liability for interest payments shall not exceed the 
limits, if any, imposed by the usury laws of the State of California.  Any 
interest paid in excess of those limits shall be refunded to Tenant by 
application of the amount of excess interest paid against any sums 
outstanding in any order that Landlord requires.  If the amount of excess 
interest paid exceeds the sums outstanding, the portion exceeding those sums 
shall be refunded in cash to Tenant by Landlord.  To ascertain whether any 
interest payable exceeds the limits imposed, any non-principal 
payment(including late charges) shall be considered to the extent permitted 
by law to be an expense or a fee, premium, or penalty rather than interest.

      K.  MODIFICATIONS REQUIRED BY LENDER:     If any Lender of Landlord 
requires a modification of this Lease that will not increase Tenant's cost or 
expense or materially or adversely change Tenant's rights and obligations, 
this Lease shall be so modified and Tenant

                                     Page 45

<PAGE>

shall execute whatever reasonable documents are required and deliver them to 
Landlord within ten (10) days after the request.

      L.  NO PRESUMPTION AGAINST DRAFTER:    Landlord and Tenant understand, 
agree and acknowledge that this Lease has been freely negotiated by both 
parties; and that in any controversy, dispute, or contest over the meaning, 
interpretation, validity, or enforceability of this Lease or any of its terms 
or conditions, there shall be no inference, presumption, or conclusion drawn 
whatsoever against either party by virtue of that party having drafted this 
Lease or any portion thereof.

      M.  NOTICES:    All notices, demands, requests, or consents required to 
be given under this Lease shall be sent in writing by U.S. certified mail, 
return receipt requested, or by personal delivery addressed to the party to 
be notified at the address for such party specified in Section 1 of this 
Lease, or to such other place as the party to be notified may from time to 
time designate by at least fifteen (15) days prior notice to the notifying 
party.  When this Lease requires service of a notice, that notice shall 
replace rather than supplement any equivalent or similar statutory notice, 
including any notices required by Code of Civil Procedure Section 1161 or any 
similar or successor statute.  when a statute requires service of a notice in 
a particular manner, service of that notice (or a similar notice required by 
this lease) shall replace and satisfy the statutory service-of-notice 
procedures, including those required by Code of Civil Procedure Section 1162 
or any similar or successor statute.

      N.  RENT:    All monetary sums due from Tenant to Landlord under this 
Lease, including, without limitation those referred to as "additional rent", 
shall be deemed as rent.

      O.  REPRESENTATIONS:    Tenant acknowledges that neither Landlord nor 
any of its employees or agents have made any agreements, representations, 
warranties or promises with respect to the Premises or with respect to 
present or future rents, expenses, operations, tenancies or any other matter. 
 Except as herein expressly set forth herein, Tenant relied on no statement 
of Landlord or its employees or agents for that purpose.

      P.  RIGHTS AND REMEDIES:    All rights and remedies hereunder are 
cumulative and not alternative to the extent permitted by law, and are in 
addition to all other rights and remedies in law and in equity.

      Q.  SEVERABILITY:    If any term or provision of this Lease is held 
unenforceable or invalid by a court of competent jurisdiction, the remainder 
of the Lease shall not be

                                     Page 46

<PAGE>

invalidated thereby but shall be enforceable in accordance with its terms, 
omitting the invalid or unenforceable term.

      R.  SUBORDINATION:    This Lease is subject and subordinate to ground 
and underlying leases, mortgages and deeds of trust (collectively 
"Encumbrances") which may now affect the Premises, to any covenants, 
conditions or restrictions of record, and to all renewals, modifications, 
consolidations, replacements and extensions thereof; provided, however, if 
the holder or holders of any such Encumbrance ("Holder") require that this 
Lease be prior and superior thereto, within seven (7) days after written 
request of Landlord to Tenant, Tenant shall execute, have acknowledged and 
deliver all documents or instruments, in the form presented to Tenant, which 
Landlord or Holder deems necessary or desirable for such purposes.  Landlord 
shall have the right to cause this Lease to be and become and remain subject 
and subordinate to any and all Encumbrances which are now or may hereafter be 
executed covering the Premises or any renewals, modifications, 
consolidations, replacements or extensions thereof, for the full amount of 
all advances made or to be made thereunder and without regard to the time or 
character of such advances, together with interest thereon and subject to all 
the terms and provisions thereof; provided only, that in the event of 
termination of any such lease or upon the foreclosure of any such mortgage or 
deed of trust, Holder agrees to recognize Tenant's rights under this Lease as 
long as Tenant is not then in default and continues to pay Base Monthly Rent 
and additional rent and observes and performs all required provisions of this 
Lease. Within ten (10) days after Landlord's written request, Tenant shall 
execute any documents required by Landlord or the Holder to make this Lease 
subordinate to any lien of the Encumbrance.  If Tenant fails to do so, then 
in addition to such failure constituting a default by Tenant, it shall be 
deemed that this Lease is so subordinated to such Encumbrance. 
Notwithstanding anything to the contrary in this Section, Tenant hereby 
attorns and agrees to attorn to any entity purchasing or otherwise acquiring 
the Premises at any sale or other proceeding or pursuant to the exercise of 
any other rights, powers or remedies under such encumbrance.

Notwithstanding the foregoing, the subordination of this Lease shall be 
subject to Tenant's receipt of a

                                     Page 47

<PAGE>

Nondisturbance and Attornment Agreement in a commercially reasonable form.

      S.  SUBMISSION OF LEASE:    Submission of this document for examination 
or signature by the parties does not constitute an option or offer to lease 
the Premises on the terms in this document or a reservation of the Premises 
in favor of Tenant.  This document is not effective as a lease or otherwise 
until executed and delivered by both Landlord and Tenant.

      T.  SURVIVAL OF INDEMNITIES:  All indemnification, defense, and hold 
harmless obligations of Landlord and Tenant under this Lease shall survive 
the expiration or sooner termination of the Lease.

      U.  TIME:    Time is of the essence hereunder.

      V.  TRANSPORTATION DEMAND MANAGEMENT PROGRAMS:  Should a government 
agency or municipality require Landlord to institute TDM (Transportation 
Demand Management) facilities and/or program, Tenant agrees that the cost of 
TDM imposed facilities required on the Premises, including but not limited to 
employee showers, lockers, cafeteria, or lunchroom facilities, shall be paid 
by Tenant.  Further, any ongoing costs or expenses associated with a TDM 
program which are required for the Premises and not provided by Tenant, such 
as an on-site TDM coordinator, shall be provided by Landlord with such costs 
being included as additional rent and reimbursed to Landlord by Tenant within 
thirty (30) days after demand.

      W.  WAIVER OF RIGHT TO JURY TRIAL:    Landlord and Tenant waive their 
respective rights to trial by jury of any contract or tort claim, 
counterclaim, cross-complaint, or cause of action in any action, proceeding, 
or hearing brought by either party against the other on any matter arising 
out of or in any way connected with this Lease, the relationship of Landlord 
and Tenant, or Tenant's use or occupancy of the Premises, including any claim 
of injury or damage or the enforcement of any remedy under any current or 
future law, statute, regulation, code, or ordinance.

      X.  USE OF ROOF:    Tenant shall have the exclusive right to use the 
roof of the Building at no charge to place and maintain telecommunications 
antennas, microwave or satellite dishes and other communications equipment.  
Such use of the roof shall be subject to receipt of all required government 
approvals, at Tenant's sole cost.  The placements of any such antennas or 
satellite dishes or other communications equipment on the roofs, the 
modifications of the roof to accommodate such equipment, and the installation 
of any such equipment shall be subject to Landlord's reasonable prior 
approval of the plans and methods therefore.  Such use

                                     Page 48

<PAGE>

of the roof shall not restrict, impair or negate any warranty relating to the 
roofs and Tenant shall be responsible for any and all damage, leakage or 
extraordinary wear and tear to the roof occurring as a result of such use of 
the roofs.  Installation of such equipment shall be supervised by Landlord 
and performed in a first class workmanlike manner.  Prior to the Expiration 
Date, Tenant shall, at its sole cost and expense, remove all such roof 
equipment as Landlord desires and restore the roof to its condition as of the 
Commencement Date.  Such repair and restoration shall include causing the 
roof to be brought into compliance with all applicable building codes and 
laws in effect at the time of the removal to the extent such compliance is 
necessitated by removal of the roof equipment and restoration work on the 
roof. 

Y. RECORDATION:    Within forty-five (45) days after the execution and 
delivery of this Lease by Landlord and Tenant, Landlord shall execute and 
notarize a short form Memorandum of Lease, in recordable form, and shall 
deliver the same to Tenant for Tenant's recording.  Within (45) days 
following the finalizing by Landlord of a new parcel map for the Project, 
Landlord and Tenant shall execute all necessary documents to eliminate the 
Short Form Memorandum of Lease and shall concurrently execute a new short 
form Memorandum of Lease for recordation on the parcel affected by this 
Lease.  At such time, Landlord and Tenant shall also execute a Memorandum of 
Lease for recordation on parcels affected by Tenant's Option to Lease 
pursuant to Exhibit "E" of this Lease.  Prior to the expiration or earlier 
termination of the Lease and/or Option to Lease, Tenant agrees to promptly 
execute all necessary documents to eliminate the Short Form Memorandum of 
Lease as an exception to title.

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

LANDLORD:  Sobrato Interests III              TENANT:  Network Equip-
a California Limited Partnership              ment Technologies
                                              a Delaware Corporation

By: /s/                                        By: /s/
-----------------------------                  ---------------------------
Its:  General Partner                          Its:  Sr. Vice President & CFO

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<PAGE>

                           EXHIBIT  - OPTION TO LEASE

                                    RECITALS:

   A.  As part of the consideration for Tenant entering into the Lease, 
Landlord is willing to grant to Tenant an option to lease a maximum of two 
(2) buildings to be constructed on two adjacent parcels of land, 
approximately 5.3 and 4.5 acres respectively, owned by Landlord and shown on 
SCHEDULE 1 ("Option Properties).  Such buildings currently do not exist, but 
Landlord is willing, subject to the conditions set forth herein, to construct 
such buildings if Tenant exercises such option to lease, all pursuant to the 
terms and conditions set forth below. Such buildings and property is herein 
referred to as the "Option Buildings".

    B.  The parties now wish to document the terms of such option to lease 
the Option Buildings.

NOW, THEREFORE, in consideration of the execution of the Lease by both 
parties, and in consideration of the mutual covenants set forth below, the 
parties agree as follows:

    1.  GRANT OF OPTION.    Landlord hereby grants to Tenant an option to 
lease the Option Buildings (the "Option") subject to the terms and conditions 
set forth in this Agreement.

    2.  TERM OF OPTION.    Tenant shall be entitled, subject to paragraph 3 
below, to exercise the Option at any time during the period commencing on the 
execution date of the Lease and ending on June 1, 1999.  Such period shall 
herein be referred to as the "Option Period". 

    3.  EXERCISE OF OPTION.    Tenant shall exercise the Option only by 
delivery of written notice to Landlord within the Option Period of such 
exercise ("Exercise Date").  Tenant shall be entitled to exercise the Option 
only if at the time of such exercise Tenant is not in default under the terms 
of the Lease.  In the event the Lease has been terminated for any reason, 
this Option shall automatically terminate.  At the time Tenant exercises the 
Option, Tenant must notify Landlord of the amount of building square footage 
it desires to lease pursuant to the Option.  

<PAGE>

    4.  CONDITIONS PRECEDENT.    Landlord's obligation to construct the 
Option Buildings are expressly conditioned upon Landlord's ability to within 
one hundred twenty (120) days of the Exercise Date to (i)  secure a 
commitment by an institutional lender to make a fixed rate non-recourse 
non-participating loan to Landlord in a minimum amount equal to eighty-five 
percent (85%) of Total Project Costs (as defined below), and (ii) obtain all 
permits and governmental approvals necessary for the construction of the 
Option Buildings. 

    5.  LEASE OF THE OPTION BUILDING.    Within thirty (30) days after 
Tenant's exercise of the Option, Landlord and Tenant shall enter into a 
written lease of the Option Buildings (the "Option Building Lease").  The 
Option Building Lease shall be on the same terms as the Lease, except as 
follows:

        (a)  The Premises shall be Option Buildings.  References in the Lease 
format shall be changed in the Option Building Lease to refer to Option 
Building.

        (b)  Landlord shall provide 3.5 parking spaces per 1,000 square feet 
of leasable space within the Option Buildings. 

        (c)  The term shall commence upon the date of Substantial Completion 
(as the term is defined in the Lease) of the Building Shell and Tenant 
Improvements for the Option Building ("Commencement Date"), and end on the 
twelfth (12th) anniversary thereof, with options to extend pursuant to the 
Lease.   

        (d)  Rent  shall be payable beginning on the Commencement Date.  Base 
Monthly Rent shall be equal to one hundred thirty percent (130%) of (i) the 
product of the (i) Total Project Costs as defined below and (ii) the best 
non-participating twelve (12) year fixed rate permanent loan constant 
available prior to the start of construction of the Option Building.  In no 
event shall the amortization period of the loan exceed twenty (20) years.  In 
the event that actual project costs have not been determined by the 
Commencement Date, the rent shall be based on Landlord's reasonable estimate 
of Project Costs until such time as actual Project Costs are available.  

        Total Project Costs shall be equal to the sum of (i) the Fair Market 
Value of the Property, at the time Tenant exercises the Option determined by 
appraisal as provided in the Lease, (ii)  payments by Landlord for labor and 
materials to contractors performing construction work in connection with the 
Option Buildings, (iii)  fees for building permits, licenses, inspection, 
utility connections or extensions, and any other fees imposed by governmental 
entities, (iv)  fees of engineers, architects, consultants and others 
providing professional services in connection with the

<PAGE>

construction of the Option Buildings, (v)  construction loan interest paid by 
Landlord including interest on Landlord's equity with respect to the 
construction of the Option Buildings, calculated at the reference rate 
charged by Union Bank plus one percent (1%), (vi)  loan fees payable for the 
construction and/or permanent loan for the Option Buildings (vii)  real 
property taxes and assessments levied against the Property during the period 
the Option Buildings is  constructed, (viii)  liability and builders risk 
insurance premiums and completion bond premiums paid by Landlord with respect 
to the construction of the Option Buildings, (ix)  real estate leasing 
commissions or fees payable by Landlord with respect to the Option Buildings 
in the event Tenant retains a broker;  and (x)  a sum equal to seven percent 
(7%) of the Total Project Cost, for Landlord's construction and development 
services including onsite and offsite supervision and management services 
provided by Landlord.

        The Base Monthly Rent shall then be increased  on the same basis as 
provided in Section 4.B of the Lease.

        (e)  The security deposit (in the form of a letter of credit) shall 
be equal to the Base Monthly Rent amount for the Option Buildings for the 
first month of the term.

        (f)  The Work Allowance shall be modified to (i) reflect a Work 
Allowance of Twenty Five Dollars ($25.00) times the number of leasable square 
feet of space in the Option Buildings, and (ii) require Tenant's submission 
to Landlord of its Tenant Improvement Plans as set forth below in this 
Agreement.

        (g)  The Lease shall be amended (i) to extend the original Lease Term 
so as to be co-terminus with the original term of Option Building Lease; and 
(ii) to provide that a default under Lease shall be deemed a default under 
the Option Building Lease; and that a default under the Option Building Lease 
shall be deemed a default under the Lease.  The rent for the Premises under 
the Lease during the extended term shall be at Fair Market Value (as the term 
is therein defined) but not less than the rent paid in the preceding period  

    6.  CONSTRUCTION OF SHELL AND TENANT IMPROVEMENTS.

        (a)  Within sixty (60) days after Tenant's exercise of the Option, 
Landlord shall deliver to Tenant plans

<PAGE>

and specifications for construction of the shell of Option Buildings 
(together called the "Shell Plans").  The Shell Plans shall contemplate 
construction of two buildings of 100,000 leasable square feet each.  
"Leasable Square Feet" shall include all square footage within the Option 
Buildings when measured from outside exterior wall/glass to outside exterior 
wall/glass of each floor, including docks, entries, patios and balconies 
covered by a structural roof, but excluding roof overhangs.  The Shell Plans 
shall contemplate construction of a Building Shell of a design and size 
similar to the Building Shell of the Premises.

        (b)  Within ninety (90) days after Tenant's receipt of the Shell 
Plans, Tenant shall submit to Landlord, for Landlord's approval, Tenant 
Improvement Plans respecting Tenant Improvements that Tenant desires Landlord 
to construct in the Option Buildings.  General Contractor shall commence 
construction of Option Buildings as soon as reasonably possible after removal 
of the conditions precedent outlined in Section 4 of this Exhibit, and 
continue diligently to construct the same until completion thereof in 
accordance with the Shell Plans.  All costs of construction of the Building 
Shell of Option Buildings shall be borne solely by Landlord.  The costs 
included within the Building Shell construction shall be as set forth in 
EXHIBIT "C" of the Lease.  All costs of Tenant Improvements in excess of the 
Work Allowance shall be borne solely by Tenant.

    7.  SUCCESSORS.    The Option provided Tenant in this Exhibit is personal 
and granted to Network Equipment Technologies and is not exercisable by any 
third party should Tenant assign or sublet all or a portion of its rights 
under this Lease, unless Landlord consents to permit exercise of any option 
by any assignee or subtenant, in Landlord's sole discretion.  Except as 
previously provided, the terms and provisions hereof shall be binding upon 
and inure to the benefit of the successors and assigns of the parties hereto. 
In no event, however, shall any lender be obligated to perform the terms this 
Option in the event of a foreclosure of Landlord's interest in the Premises 
or the Property.