Exhibit 10.43

                       Third Amendment to Lease Agreement


This Third  Amendment to Lease  Agreement (the  "Amendment") is made and entered
into as of January 8, 1998,  by and  between  AEtna Life  Insurance  Company,  a
Connecticut  corporation  ("Landlord"),  and  Premisys  Communications,  Inc., a
Delaware corporation ("Tenant"), with reference to the following facts.

                                    Recitals

A.    Landlord  and  Premisys  Communications   Holdings,   Inc.,  a  California
      corporation  have entered into that certain  Lease  Agreement  dated as of
      October 4, 1993, and that certain First  Amendment  dated November 4, 1994
      and that  certain  Second  Amendment  dated  August 9, 1996  (hereinafter,
      collectively the "Lease") for the leasing of certain  premises  consisting
      of  approximately  43,851  rentable  square feet located at 48664  Milmont
      Drive,  Fremont,  California  (the  "Original  Premises") as such Original
      Premises are more fully described in the Lease.

B.    Premisys Communications  Holdings, Inc. assigned its interest in the Lease
      to Tenant.

C.    Landlord  and  Tenant now wish to amend the Lease to  provide  for,  among
      other things, the addition of certain space to the Original Premises,  all
      upon and  subject to each of the terms,  conditions,  and  provisions  set
      forth herein.

NOW,  THEREFORE,  in  consideration  of the  foregoing  and for  other  good and
valuable   consideration,   the  receipt  and   adequacy  of  which  are  hereby
acknowledged, Landlord and Tenant agree as follows:

      1.  Recitals:  Landlord and Tenant agree that the above  recitals are true
and correct and are hereby incorporated herein as though set forth in full.

      2.  Premises:

               2.1 Addition of Additional  Premises Subject to the provisions of
      Section  2.3 below,  commencing  on April 1, 1998,  (the "AP  Commencement
      Date"):  there  shall be  added to the  Original  Premises  those  certain
      premises  consisting of approximately  24,590 rentable square feet located
      at 48668 Milmont Drive, Fremont,  California (the "Additional  Premises"),
      which  Additional  Premises are depicted on the site plan attached  hereto
      and made a part hereof as Exhibit A.

               2.2 Early  Occupancy of Additional  Premises On or about March 1,
      1998, (the "Early  Occupancy  Commencement  Date"),  Landlord shall permit
      Tenant  to  enter  and  occupy  the  Additional  Premises  prior to the AP
      Commencement Date, for purposes of installing the Tenant  Improvements (as
      such term is defined in Exhibit B hereto).  In no event may Tenant conduct
      its  business or  operations  from the  Additional  Premises  until the AP
      Commencement  Date. Such limited  purpose  occupancy by Tenant shall be at
      Tenant's  sole risk and shall also be subject to all of the  provisions of
      this Lease other than the  requirement to pay Rent (other than any Utility
      Expenses incurred during the time period Tenant is constructing the Tenant
      Improvements),  including,  but not limited to, the  requirement to obtain
      the  insurance   required   pursuant  to  the  Lease  (including   without
      limitation,  the

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<PAGE>

      provisions to Exhibit B hereto) and to deliver  insurance  certificates as
      required herein,  and to pay for all Utilities and Utility Expenses to the
      extent incurred  during the time period Tenant is constructing  the Tenant
      Improvements. In addition to the foregoing and the provisions of Exhibit B
      hereto  regarding such early  occupancy,  Landlord shall have the right to
      impose such  additional  conditions  on  Tenant's  early entry as Landlord
      shall deem reasonably  appropriate.  If, at any time, Tenant is in default
      of any term,  condition  or  provision  of the Lease,  any such  waiver by
      Landlord of Tenant's  requirement to pay rental payments shall be null and
      void and Tenant shall  immediately  pay to Landlord all rental payments so
      waived by Landlord.

           2.3 Delivery of the Additional  Premises  Tenant hereby  acknowledges
      that the  Additional  Premises  are  presently  being  occupied  by Target
      Therapeutics,   Inc.  a  Delaware  corporation  (the  "Existing  Tenant").
      Landlord's  delivery to Tenant of possession of the Additional Premises on
      the Early  Occupancy  Commencement  Date is  contingent  upon the Existing
      Tenant  vacating  the  Additional  Premises  and  surrendering  possession
      thereof to Landlord by February 28, 1998.

            2.4 Notwithstanding  anything to the contrary contained herein or in
      the Lease,  Landlord shall neither be subject to any liability,  nor shall
      the  validity  of the Lease be affected if Landlord is not able to deliver
      to Tenant  possession of the  Additional  Premises by the Early  Occupancy
      Commencement Date. Provided,  however,  Tenant's obligation to pay Rent on
      the  Additional  Premises  shall  commence  on the date which is one month
      following the Early  Occupancy  Commencement  Date. In the event the Early
      Occupancy  Commencement  Date is other than the date  specified in Section
      2.2 above,  Landlord and Tenant shall  execute a written  amendment to the
      Lease,  wherein  the parties  shall  specify  the actual  Early  Occupancy
      Commencement  Date  and the AP  Commencement  Date  and the  date on which
      Tenant is to commence paying Rent.

          2.5 For  purposes  of the  Lease,  from and after the AP  Commencement
      Date, the "Premises" as defined in the Basic Lease Information and Section
      2 of the Lease  shall  mean and  refer to the  aggregate  of the  Original
      Premises and the  Additional  Premises  consisting of a combined  total of
      approximately  68,441  rentable  square  feet  located  at 48664 and 48668
      Milmont Drive,  Fremont,  California.  Accordingly,  from and after the AP
      Commencement  Date,  all  references in this Amendment and in the Lease to
      the term "Premises" shall mean and refer to the Original  Premises and the
      Additional Premises. Landlord and Tenant hereby agree that for purposes of
      the Lease,  from and after the AP  Commencement  Date, the rentable square
      footage area of the  Premises  shall be  conclusively  deemed to be 68,441
      rentable  square  feet.  In addition to the  foregoing,  it is the parties
      express  intention  that  the  balance  of the Term of the  Lease  for the
      Original  Premises and the  Additional  Premises be  coterminous  with the
      Expiration Date of the initial Term as specified in the Lease and that any
      option or renewal term  described in the Lease shall be applicable to both
      the Premises and the Additional Premises.
<TABLE>

      3. Base Rent: The Basic Lease  Information  and Section 4 of the Lease are
      hereby  modified to provide that from and after the AP  Commencement  Date
      the monthly Base Rent payable by Tenant to Landlord,  in  accordance  with
      the provisions of Section 4 of the Lease shall be as follows:
<CAPTION>
                                    Original Premises         Additional Premises        Aggregate amount of
      Period                        monthly Base Rent         monthly Base Rent          monthly Base Rent
      ------                        -----------------         -----------------          -----------------
<S>                                 <C>                       <C>                       <C>       
      4/1/98 - 3/31/99              $28,503.15                $23,852.30                $52,355.45
      4/1/99 - 5/31/99              $28,503.15                $24,590.00                $53,093.15
      6/1/99 - 3/31/00              $35,519.31                $24,590.00                $60,109.31

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<PAGE>

      4/1/00 - 5/31/00              $35,519.31                $25,327.70                $60,847.01
      6/1/00 - 3/31/01              $36,834.84                $25,327.70                $62,162.54
      4/1/01 - 5/31/01              $36,834.84                $26,065.40                $62,900.24
      6/1/01 - 3/31/02              $38,369.63                $26,065.40                $64,435.03
      4/1/02 - 5/31/02              $38,369.63                $26,803.10                $65,172.73
      6/1/02 - 3/31/03              $39,904.41                $26,803.10                $66,707.51
      4/1/03 - 5/31/03              $39,904.41                $27,540.80                $67,445.21
      6/1/03 - 3/31/04              $41,439.20                $27,540.80                $68,980.00
      4/1/04 - 10/31/04             $41,439.20                $28,278.50                $69,717.70
</TABLE>

      In  addition  to the  monthly  Base Rent set  forth  above,  Tenant  shall
      continue  to pay  $964.83  per month as the  amortized  amount  for Excess
      Tenant Improvements Costs for the Original Premises.

      4.  Condition of the  Additional  Premises:  Subject to the  provisions of
      Section 2 above, on the Early Occupancy  Commencement Date, Landlord shall
      deliver  to  Tenant  possession  of the  Additional  Premises  in its then
      existing condition and state of repair, "AS IS", without any obligation of
      Landlord  to  remodel,  improve or alter the  Additional  Premises,  or to
      perform any other  construction or work of improvement upon the Additional
      Premises provided, however, Landlord shall deliver the Additional Premises
      on the AP  Commencement  Date with the HVAC,  mechanical,  and  electrical
      systems  (the  "Systems"),  and the roof in good  condition  and  state of
      repair. Tenant shall have up until the date which is sixty (60) days after
      the AP  Commencement  Date to report any  repairs  required to the Systems
      and/or the roof to Landlord,  and Landlord  shall make all such repairs as
      soon  as  practicable.  Tenant  acknowledges  that no  representations  or
      warranties of any kind,  express or implied,  respecting  the condition of
      the  Additional  Premises,  have  been  made by  Landlord  or any agent of
      Landlord to Tenant,  except as expressly set forth herein.  Tenant further
      acknowledges   that  neither  Landlord  nor  any  of  Landlord's   agents,
      representatives  or  employees  have  made any  representations  as to the
      suitability  or  fitness of the  Additional  Premises  for the  conduct of
      Tenant's business,  including without  limitation,  any storage incidental
      thereto,  or for  any  other  purpose.  Any  exception  to  the  foregoing
      provisions  must be made  by  express  written  agreement  signed  by both
      parties.

      5. Tenant  Improvements  by Tenant:  Tenant  shall  install and  construct
      Tenant  Improvements  (as such term is  defined  in  Exhibit B hereto)  in
      accordance with the terms,  conditions,  criteria and provisions set forth
      in Exhibit B.  Landlord  and Tenant  hereby agree to and shall be bound by
      the terms, conditions and provisions of Exhibit B.

      6. Security  Deposit:  Concurrent  with its  execution of this  Amendment,
      Tenant  shall  deliver to Landlord  the sum of Twenty  eight  thousand two
      hundred seventy eight and 50/100 ($28,278.50 (the "AP Security  Deposit").
      The AP Security Deposit shall be added to the Security  Deposit  presently
      being held by  Landlord  under the Lease in the amount of  26,000.00  (the
      "Original  Security  Deposit").  The  aggregate  amount of the AP Security
      Deposit and the Original  Security  Deposit is $54,278.50.  From and after
      the AP Commencement Date, the term "Security Deposit" shall mean and refer
      to the  aggregate  of the AP Security  Deposit and the  Original  Security
      Deposit in the amount of  $54,278.50.  The AP  Security  Deposit  shall be
      subject to, and the use and application  thereof governed by, Section 6 of
      the Lease.

       7. Tenant's Share of Additional Rent As of the AP Commencement  Date, the
       Lease shall be modified to provide that Tenant's Share of Additional Rent
       (as  defined in the Basic Lease  Information  and Section 4 of the Lease)
       shall be increased to 100% of the Building.

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<PAGE>

       8. Unreserved  Parking Spaces:  As of the AP  Commencement  Date,  Tenant
       shall have the license to use 274 undesignated  and nonexclusive  parking
       spaces.

       9.  Insurance:  Tenant shall deliver to Landlord,  upon execution of this
       Amendment,  a certificate  of insurance  evidencing  that the  Additional
       Premises are included within and covered by Tenant's  insurance  policies
       required to be carried by Tenant pursuant to the Lease.

       10.  Expansion:  The parties  hereby agree that  Addendum 3 of the Lease,
       entitled "Expansion" shall be deleted and of no further force or effect.

       11. Right of First  Refusal:  The parties hereby agree that Addendum 2 of
       the Lease,  entitled  "Right of First Refusal" shall be deleted and of no
       further force or effect.

       12.   Right of First Negotiation:

             12.1  Grant  of  Right  of  First   Negotiation.   Subject  to  the
             provisions,  limitations  and  conditions set forth in this Section
             12,  Tenant shall have a one time first right to negotiate  ("Right
             of  First  Negotiation")  with  Landlord  for  the  leasing  of the
             premises located in the building  adjacent to the Premises commonly
             known  as  48630-48634  Milmont  Drive,  Fremont,  California  (the
             "Expansion Space"), as depicted on Exhibit A attached hereto.

             12.2 Right of First Negotiation  Notice.  Subject to the conditions
             set forth in  Section  12.3  below,  and upon the  Expansion  Space
             becoming  available  for lease,  Landlord  will offer the Expansion
             Space to Tenant in  writing  stating  all  material  terms on which
             Landlord  proposes  to lease  such  Expansion  Space to Tenant  and
             Tenant  shall have five (5)  business  days after  delivery of such
             notice  to  notify  Landlord  in  writing  ("Election  Notice")  of
             Tenant's  acceptance of  Landlord's  offer to lease the entirety of
             the Expansion Space upon the terms specified in Landlord's  notice.
             If Tenant  fails to notify  Landlord  if its  election to lease the
             Expansion  Space  within the time  specified  herein,  or if Tenant
             attempts  to  modify  any  of  the  material  terms   specified  in
             Landlord's  notice,  it shall be deemed that (i) Tenant has elected
             not to lease the  Expansion  Space;  (ii)  Landlord may  thereafter
             enter  into a lease  agreement  with a third  party;  and (iii) all
             rights under this Right of First  Negotiation  shall  automatically
             terminate and be and be of no further force or effect. Upon receipt
             of the  Election  Notice from  Tenant,  Landlord  and Tenant  shall
             immediately execute, at Landlord's sole option, either the standard
             lease  agreement  then in use by Landlord,  or an Amendment to this
             Lease.  Time is of the essence  with respect to each and every time
             period described herein. Tenant shall have no other first rights of
             negotiation or expansion rights under the Lease unless Landlord and
             Tenant otherwise agree in writing.

             12.3 Limitations On, and Conditions To, Right of First Negotiation.
             This Right of First  Negotiation  is personal to Tenant and may not
             be assigned, voluntarily or involuntarily, separate from or as part
             of the Lease,  and shall be  subject to the rights of the  existing
             tenant(s) currently occupying the Expansion Space pursuant to their
             existing  lease(s),  as such  lease(s) may be modified,  amended or
             extended.  At  Landlord's  option,  all rights of Tenant under this
             Right of First  Negotiation  shall  terminate and be of no force or
             effect  if any of the  following  individual  events  occur  or any
             combination  thereof  occur:  (1) Tenant has been in 

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<PAGE>

             default at any time during the initial term of the Lease beyond any
             applicable  notice and cure periods,  or is currently in default of
             any  provision  of the Lease;  and/or (2) Tenant has  assigned  its
             rights and obligations under all or part of the Lease or Tenant has
             subleased  all  or  part  of  the  Premises;  and/or  (3)  Tenant's
             financial  condition  is  unacceptable  to Landlord at the time the
             Right of First  Negotiation  is  delivered  to  Tenant;  and/or (4)
             Tenant  has  failed  to  properly  exercise  this  Right  of  First
             Negotiation  in a  timely  manner  in  strict  accordance  with the
             provisions  of this Section 12;  and/or (5) the initial term of the
             Lease has expired;  and/or (6) Tenant no longer has  possession  of
             all or any part of the  Premises  under the Lease,  or if the Lease
             has been terminated earlier, pursuant to the terms of the Lease.

       13.  Brokers:  Tenant  warrants that it has had no dealings with any real
       estate  broker  or  agent in  connection  with  the  negotiation  of this
       Amendment,  other than Bishop Hawk.  If Tenant has dealt with any person,
       real estate broker or agent with respect to this Amendment,  Tenant shall
       be solely  responsible  for the  payment of any fee due to said person or
       firm,  and Tenant  shall  indemnify,  defend and hold  Landlord  free and
       harmless against any claims,  judgments,  damages,  costs,  expenses, and
       liabilities with respect thereto, including attorneys' fees and costs.

       14.  Effect  of  Amendment:  Except  as  modified  herein,  the terms and
       conditions  of the Lease shall  remain  unmodified  and  continue in full
       force and  effect.  In the event of any  conflict  between  the terms and
       conditions of the Lease and this  Amendment,  the terms and conditions of
       this Amendment shall prevail.

       15.  Definitions:  Unless otherwise defined in this Amendment,  all terms
       not defined in this  Amendment  shall have the meanings  assigned to such
       terms in the Lease.

       16. Authority: Subject to the assignment and subletting provisions of the
       Lease,  this Amendment  shall be binding upon and inure to the benefit of
       the  parties  hereto,  their  respective  heirs,  legal  representatives,
       successors and assigns.  Each party hereto and the persons  signing below
       warrant  that  the  person  signing  below  on  such  party's  behalf  is
       authorized  to do so  and  to  bind  such  party  to the  terms  of  this
       Amendment.

       17.  Incorporation:  The terms  and  provisions  of the Lease are  hereby
       incorporated in this Amendment.

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<PAGE>

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

       TENANT:

       Premisys Communications, Inc.,
       a Delaware corporation

       By:             /S/ Riley R. Willcox
                    -----------------------

       Its:          Senior Vice President, Chief Financial Officer
                    -----------------------------------------------

       Date:          January 15, 1998
                    ------------------

       LANDLORD:

       AEtna Life Insurance Company,
       a Connecticut corporation

       By:        Allegis Realty Investors LLC,
                  Its investment advisor

         By:       /S/ Julia Viskanta
                  -------------------
                  Julia Viskanta
                  Vice President

         Date:       January 27, 1998
                  -------------------

                                       6
<PAGE>

                       Third Amendment to Lease Agreement
                                    Exhibit B
                               Tenant Improvements

          This exhibit, entitled "Tenant Improvements",  is and shall constitute
       Exhibit B to that certain Third Amendment to Lease Agreement, dated as of
       December 11, 1997 (the "Amendment"),  by and between AEtna Life Insurance
       Company,   a   Connecticut   corporation    ("Landlord")   and   Premisys
       Communications,  Inc., a Delaware corporation  ("Tenant").  The terms and
       conditions of this Exhibit B are hereby  incorporated into and are made a
       part of the Lease. Any capitalized  terms used herein,  and not otherwise
       defined  herein  shall have the  meanings  ascribed  to such terms in the
       Amendment.

          1. Tenant To Construct Tenant Improvements.  Subject to the provisions
       below,  Tenant  shall be solely  responsible  for the  design,  planning,
       construction and completion of the interior tenant improvements  ("Tenant
       Improvements")  to the Additional  Premises in accordance  with the terms
       and conditions of this Exhibit B.

          2. Definition. "Tenant Improvements" as used in the Amendment and this
       Exhibit B shall  include  only those  improvements  within  the  interior
       portions of the Additional Premises which are depicted on the Final Plans
       and  Specifications  (hereafter  defined in Paragraph 3 (b)) or described
       here in below. "Tenant Improvements" shall expressly not include Tenant's
       personal  property,  trade  fixtures,  furnishings,  equipment or similar
       items.

               The Tenant Improvements may include:

               a. Partitioning, doors, floor coverings, finishes, ceilings, wall
       coverings and painting, millwork and similar items.

               b. Electrical wiring,  lighting  fixtures,  outlets and switches,
       and other electrical work.

               c. Duct work, terminal boxes,  defusers and accessories  required
       for the  completion  of the  heating,  ventilation  and air  conditioning
       systems serving the Additional Premises,  including the cost of meter and
       key control for after-hour air conditioning.

               d. All fire and life safety  control  systems such as fire walls,
       sprinklers,  halon, fire alarms, including piping, wiring and accessories
       installed within the Building and serving the Additional Premises.

               e. All plumbing, fixtures, pipes, and accessories to be installed
       within the Building and serving the Additional Premises.

          3.   Tenant Improvements Plans.

               a. Preliminary Plans and  Specifications.  Tenant shall retain an
       architect   ("Architect")   and/or   engineer   ("Engineer")  to  prepare
       preliminary    working    architectural   and   engineering   plans   and
       specifications  ("Preliminary Plans and  Specifications")  for the Tenant
       Improvements.  The  Preliminary  Plans  and  Specifications  shall  be in
       sufficient detail to show locations,  types and requirements for all heat
       loads, people loads, floor loads, power and plumbing, regular and special
       HVAC needs, telephone  communications,  telephone and electrical outlets,
       lighting,  lighting  fixtures  and  related  power,  and  electrical  and
       telephone switches.  Landlord shall approve or disapprove the Preliminary
       Plans and  Specifications  within five (5) business  days after  Landlord
       receives the Preliminary  Plans and  Specifications,  and if disapproved,
       Landlord shall return the Preliminary

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<PAGE>

       Plans  and  Specifications  to  Tenant,  who  shall  make  all  necessary
       revisions.  This procedure shall be repeated until Landlord  approves the
       Preliminary  Plans and  Specifications.  Landlord shall not  unreasonably
       withhold its approval of the Preliminary  Plans and  Specifications.  The
       approved  Preliminary  Plans and  Specifications,  as modified,  shall be
       deemed the "Final Preliminary Plans and Specifications".

               b.  Final  Preliminary  Plans  and   Specifications.   After  the
       Preliminary  Plans and  Specifications  are  approved by Landlord and are
       deemed to be the Final Preliminary Plans and Specifications, Tenant shall
       cause the  Architect  and/or the  Engineer to prepare  the final  working
       architectural and engineering plans and specifications  ("Final Plans and
       Specifications")  for the Tenant  Improvements.  Upon  preparation of the
       Final Plans and  Specifications  Tenant shall deliver the Final Plans and
       Specifications  to Landlord.  Landlord  shall approve or  disapprove  the
       Final  Plans and  Specifications  within  five (5)  business  days  after
       Landlord receives the Final Plans and Specifications and, if disapproved,
       Landlord  shall return the Final Plans and  Specifications  to Tenant who
       shall make all  necessary  revisions.  This  procedure  shall be repeated
       until  Landlord  approves  the Final Plans and  Specifications.  Landlord
       shall not  unreasonably  withhold  its  approval  of the Final  Plans and
       Specifications. The approved Final Plans and Specifications, as modified,
       shall be deemed the "Construction Documents".

               c.  Miscellaneous.  All deliveries of the  Preliminary  Plans and
       Specifications, the Final Preliminary Plans and Specifications, the Final
       Plans  and  Specifications,  and  the  Construction  Documents  shall  be
       delivered by messenger service, by personal hand delivery or by overnight
       parcel  service.  While Landlord has the right to approve the Preliminary
       Plans and Specifications, the Final Preliminary Plans and Specifications,
       the  Final  Plans and  Specifications,  and the  Construction  Documents,
       Landlord's  interest in doing so is to protect the  Additional  Premises,
       the Building and Landlord's interest therein.  Accordingly,  Tenant shall
       not  rely  upon  Landlord's  approvals  and  Landlord  shall  not  be the
       guarantor of, nor  responsible  for, the  correctness  or accuracy of the
       Preliminary  Plans and  Specifications,  the Final  Preliminary Plans and
       Specifications,  the Final Plans and Specifications, and the Construction
       Documents,  or the compliance  thereof with applicable laws, and Landlord
       shall  incur  no  liability  of any  kind  by  reason  of  granting  such
       approvals.

               d.  Building  Standard  Work  The  Construction  Documents  shall
       provide that the Tenant  Improvements  to be  constructed  in  accordance
       therewith  must be at least equal,  in quality,  to  Landlord's  building
       standard  materials,  quantities and  procedures  then in use by Landlord
       ("Building Standards") attached hereto as Exhibit B-2, or shall match the
       existing materials installed within the Additional Premises.

       4. Permits.  Tenant  at  its  sole  cost  and  expense  shall obtain  all
       governmental  approvals of the Construction  Documents to the full extent
       necessary  for  the  issuance  of  a  building   permit  for  the  Tenant
       Improvements based upon such Construction  Documents.  Tenant at its sole
       cost and  expense  shall also cause to be  obtained  all other  necessary
       approvals and permits from all governmental  agencies having jurisdiction
       or  authority  for  the  construction  and  installation  of  the  Tenant
       Improvements  in  accordance  with the approved  Construction  Documents.
       Landlord shall cooperate with Tenant at no cost or expense to Landlord in
       the obtaining of such approvals and permits.  Tenant at its sole cost and
       expense  shall   undertake  all  steps   necessary  to  ensure  that  the
       construction  of  the  Tenant  Improvements  is  accomplished  in  strict
       compliance with all statutes,  laws,  ordinances,  rules, and regulations
       applicable  to  the  construction  of the  Tenant  Improvements  and  the
       requirements   and  standards  of  any  insurance   underwriting   board,
       inspection bureau or insurance  carrier insuring the Additional  Premises
       and/or the Building.

          5.   Construction.

                                       2
<PAGE>

               a.  Tenant  shall be  solely  responsible  for the  construction,
       installation and completion of the Tenant Improvements in accordance with
       the Construction Documents approved by Landlord and is solely responsible
       for the  payment of all  amounts  when  payable in  connection  therewith
       without any cost or expense to Landlord, except for Landlord's obligation
       to contribute  the Tenant  Improvement  Allowance in accordance  with the
       provisions of Section 6 below.  Once undertaken,  Tenant shall diligently
       proceed with the construction,  installation and completion of the Tenant
       Improvements in accordance with the Construction  Documents.  No material
       changes shall be made to the Construction  Documents approved by Landlord
       without  Landlord's  prior  written  consent,  which consent shall not be
       unreasonably withheld or delayed.

               b. Tenant at its sole cost and expense (subject to the provisions
       of Section 6 below) shall employ a reputable  licensed and bonded general
       contractor   ("Contractor")  to  construct  the  Tenant  Improvements  in
       accordance with the Construction  Documents.  The Contractor  selected by
       Tenant  shall be subject  to the  written  approval  of  Landlord,  which
       approval shall not be unreasonably  withheld or delayed. The construction
       contract between Tenant and the Contractor shall be subject to Landlord's
       prior  written  approval.  Proof  that  the  Contractor  is  licensed  in
       California, is bonded as required under California law, and has insurance
       coverage typically carried by a reputable general contractor in the State
       of  California  shall be  provided  to  Landlord  at the time that Tenant
       requests  approval of the Contractor  from Landlord.  Tenant shall ensure
       that  all  subcontractors   hired  by  the  Contractor  are  licensed  in
       California   and  have   insurance   typically   carried   by   reputable
       subcontractors in the State of California.

               c. Prior to the commencement of the construction and installation
       of the Tenant  Improvements,  Tenant shall  provide the  following to the
       Landlord,   all  of  which   shall  be  to  the   Landlord's   reasonable
       satisfaction:

                   i.  An   estimated   completion   schedule   for  the  Tenant
       Improvements.

                   ii.  Copies  of  all  required  approvals  and  permits  from
       governmental   agencies   having   jurisdiction  or  authority  over  the
       construction and installation of the Tenant Improvements.

                   iii Evidence of Tenant's procurement of insurance required to
       be obtained  pursuant to the provisions of the Amendment and this Exhibit
       B

               d.  Landlord  shall at all times  have the right to  inspect  the
Tenant  Improvements and Tenant shall immediately cease work upon written notice
from the Landlord if the Tenant Improvements are not substantially in compliance
with the  Construction  Documents  approved by the Landlord.  If Landlord  gives
notice  of faulty  construction  or any other  deviation  from the  Construction
Documents,  Tenant shall cause Contractor to make corrections promptly. However,
neither the privilege  herein granted to Landlord to make such  inspection,  nor
the making of such  inspections  by Landlord,  shall  operate as a waiver of any
rights of Landlord to require good and workmanlike construction and improvements
constructed in accordance with the Construction Documents.

               e. Subject to Landlord  complying with its obligations in Section
6 below,  Tenant  shall pay and  discharge  promptly  and  fully,  by payment or
appropriate bond satisfactory to Landlord in form and substance,  all claims for
labor done and  materials and services  furnished in connection  with the Tenant
Improvements.  Tenant  Improvements  shall not be commenced  until five (5) days
after Landlord has received notice from Tenant stating the date the construction
of the Tenant  Improvements  is to commence so that Landlord can post and record
any appropriate Notice of Non-responsibility.

               f. Tenant shall maintain  during the  construction  of the Tenant
Improvements,  at its sole cost and expense,  builders'  risk  insurance for the
amount  of  the  completed  value  of the  Tenant  Improvements  on an  all-risk
non-reporting form covering all improvements under construction, including

                                       3
<PAGE>

building materials, and other insurance in amounts and against such risks as the
Landlord shall reasonably require in connection with the Tenant Improvements.

               g. No materials,  equipment of fixtures  shall be delivered to or
installed  upon the  Additional  Premises  pursuant  to any  agreement  by which
another  party has a  security  interest  or right to remove or  repossess  such
items, without the prior written consent of Landlord.

               h. Upon completion of the Tenant Improvements, Tenant shall
deliver to  Landlord  the  following,  all of which  shall be to the  Landlord's
reasonable satisfaction:

                       i. Any certificates  required for occupancy,  including a
permanent and complete Certificate of Occupancy issued by the City of Fremont or
a final signed-off building permit or its equivalent.

                       ii. A Certificate  of Completion  signed by the Architect
who prepared the Construction Documents approved by the Landlord.

                       iii. A cost  breakdown  itemizing  all  expenses  for the
Tenant  Improvements,  together with invoices and receipts for the same or other
evidence of payment.

                       iv. Final and  unconditional  mechanic's lien waivers for
all the Tenant Improvements.

                       v. A true and  complete  copy of all  as-built  plans and
drawings for the Tenant Improvements.

    6.    Tenant Improvement Allowance.

          a.  Subject to Tenant's compliance with the provisions of this Exhibit
              B, Landlord shall provide an allowance in the amount of thirty six
              thousand eight hundred eighty five and 00/100 dollars ($36,885.00)
              ($1.50 per square foot of the Additional  Premises),  (the "Tenant
              Improvement Allowance"). The Tenant Improvement Allowance shall be
              the maximum  contribution by Landlord for the Tenant  Improvements
              and shall be used to  design,  construct  and  install  the Tenant
              Improvements  and  for  no  other  purpose.  Except  as  otherwise
              expressly  provided  herein,  Landlord shall have no obligation to
              disburse the Tenant  Improvement  Allowance or any portion thereof
              unless and until the Tenant  Improvements have been completed in a
              lien-free and good and  workmanlike  manner and in accordance with
              all statues,  laws,  ordinances,  rules and regulations applicable
              thereto,  Tenant has made the deliveries  required under Paragraph
              5(h.)  above,  and the Lien Period (as  hereinafter  defined)  has
              expired and Landlord has been  reasonably  able to confirm that no
              mechanics'  or  materialsmens'  liens have been filed  against the
              Property  during such Lien Period.  As used herein,  "Lien Period"
              means   the   period   during   which  the   Contractor   and  any
              subcontractors, labor suppliers and materialmen providing services
              or materials for the Tenant  Improvements  may file a lien against
              the Property of otherwise enforce lien rights.

          b.  Notwithstanding the foregoing to the contrary,  Landlord shall not
be obligated to disburse any portion of the Tenant  Improvement  Allowance while
Tenant is in Default of this Lease.

          c. Should the total cost of the Tenant  Improvements  be less than the
Tenant  Improvement  Allowance,   the  Tenant  Improvement  Allowance  shall  be
automatically reduced to the amount equal to said actual cost.

    7. Excess  Tenant  Improvement Costs.  The term "Excess  Tenant  Improvement
Costs" as used herein shall mean and refer to the sum equal to the  aggregate of
the  amount by which the  actual  Tenant 

                                       4
<PAGE>

Improvement costs exceed the Tenant Improvement Allowance.  Tenant shall pay for
any and all Excess Tenant Improvement Costs; provided,  however, that Tenant may
elect to have an amount of up to $36,885.00  of such Excess Tenant  Improvements
Costs  amortized  over eighty (80) months of the Lease term at the interest rate
of twelve percent (12%) per annum,  and the monthly Base Rent otherwise  payable
by Tenant  during the  remainder  of the Term of the Lease shall be increased by
the monthly amount resulting from such amortization.

    8.  Condition  Precedent.  Landlord  shall have no  obligation to approve or
review any plans or take any other actions required by Landlord pursuant to this
Exhibit B if at the time Tenant  requests such approval,  review or action or at
any time thereafter Tenant is in Default of this Lease.

    9.  Landlord's  Consents.  If Landlord  does not respond to  any request for
consent  under  this  Exhibit A within  the  period  set forth for such  consent
herein, then such consent shall be deemed given.



                                       5
<PAGE>

                                   Exhibit B-2
                               Building Standards


Office Area

DEMISING PARTITION AND CORRIDOR WALLS:

         Note:  One hr. rated walls where required based on occupancy group.

A. 6" 20-gage  metal  studs at 24" O.C.  (or as  required  by code based on roof
height) framed full height from finish floor to surface above.

B. One (1) LAYER 5/8" drywall Type AX both sides of wall, fire taped only.

INTERIOR PARTITIONS:

A. 3 5/8" 25 gage  metal  studs at 24" O.C.  to  bottom  of T-Bar  ceiling  grid
approximately 9' 0" high.

B. One (1) layer 5/8" drywall both sides of wall, smooth ready for paint.

C. 3 5/8" metal studs including all lateral bracing as required by code.

PERIMETER DRYWALL (AT OFFICE AREAS):

A. 3 5/8" metal studs @ 24" O.C. to 12'0" above finished floor.  (or as required
by Title-24 for full height envelope then use demising wall spec.)

B. One (1) layer 5/8" Type AX drywall taped smooth and ready for paint.


COLUMN FURRING:

A. Furring channel all sides of 2 1/2" metal studs per details.

B. One (1) layer 5/8" drywall taped smooth and ready for paint.

C. Columns within walls shall be furred-out.


ACOUSTICAL CEILINGS:

   Note:  Gyp. Bd. ceiling at all restrooms Typ.

A. 2' X 4' standard white T-Bar grid system as manufactured by Chicago  Metallic
of equal.

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<PAGE>

B. 2' X 4' X 5/8" white,  no-directional  acoustical  tile to be regular  second
look as manufactured by Armstrong or equal.


PAINTING:

A.  Sheetrock  walls  within  office to receive two (2) coats of interior  latex
paint as manufactured  by Kelly Moore or equal.  Some portions of second coat to
be single accent color.

B. Semigloss paint all restrooms and lunch rooms.

WINDOW COVERING:

A. 1" aluminum  mini-blinds as manufactured by Levelor,  Bali or equal, color to
be selected by L.P.C. (brushed aluminum or white).

B. Blinds to be sized to fit window module.

VCT:

A. VCT to be 1/8" x 12" x 12" as  manufactured  by Armstrong  -Excelon Series or
equal.

B. Slabs shall be water proofed per manufacturer recommendations, at sheet vinyl
or VCT areas.

LIGHT FIXTURES:

A. 2' X 4'  T-bar  lay in  3-tube  energy  efficient  fixture  with  cool  white
fluorescent  tubes with  parabolic  lens as  manufactured  by Lithonia or equal.
(Approximately 50 F.C.)

LIGHT SWITCHES

A. Switching as required by Title 24.

B. Switch assembly to be Levinton or equal, color - White

ELECTRICAL OUTLET

A. 110V duplex outlet in demising or interior  partitions  only, as manufactured
by Leviton or equal, color to be White.

B. Maximum eight (8) outlets per circuit,  spacing to meet code or minimum 2 per
office,  conference  room,  reception and 2 dedicated over cabinet at lunch room
junction boxes above ceiling for large open area with furniture partitions.

C. Transformers to be a minimum of 20% or over required capacity.

D.  Contractors to inspect  electric room and to include all necessary  metering
cost.

E. No aluminum wiring is acceptable.

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<PAGE>

TELEPHONE/DATA OUTLET:

A. One(1)  single outlet box in wall with pullwire from outlet box to area above
T-bar ceiling per office.

B. Cover plate for phone outlets by telephone/data vendors.

FIRE SPRINKLERS:

As required by fire codes.

TOPSET BASE:

A. 4" rubber base as manufactured by Burke or equal, standard colors only.

B. 4" rubber base at VCT areas.

TOILET AREAS:

Wet walls to  receive  Duraboard  or Wonder  Board and  ceramic  tile up to 48".
Floors to receive ceramic tile with self coved base as required by code.

CARPET:

Note any of the following carpets are acceptable

Designweave:  Alumni 28 oz.,  Windswept Classic 30 oz. or Stratton Design Series
III 30 oz, Structure II 28 oz.

WOOD DOORS:

Shall  be  3'0"  x  9'0" x 1  3/4"  (unless  otherwise  specified)  solid  core,
prefinished harmony (rotary N. birch).

DOOR FRAMES:

Shall be ACI or equal,  3 3/4@ or 4 7/8@  throat,  brushed,  standard  aluminum,
snap-on trim.

HARDWARE:

1 1/2 pr. butts F179 Stanley, Latchset D10S Rhodes Schlage, Lockset D53PD Rhodes
Schlage,  Dome Type  floor  stop  Gylnn  Johnson  FB13,  Closer  4110LCN  (where
required) brushed chrome.

INSULATION:

By Title 24 insulation.

                                       8
<PAGE>

PLUMBING:

A. Shall comply with all local codes and handicapped code requirements. Fixtures
shall be either American Standard,  Kohler or Norris. All toilet accessories and
grab bars shall be Bobrick or equal and approved by owner.

B.  Plumbing bid shall include 5 gallon  minimum hot water heater,  or insta hot
with mixer valve including all connections.


TOILET PARTITIONS:

Shall be as manufactured by Fiat, global or equal if approved by owner. Color to
be white or gray.

HVAC:

HVAC units per specifications.

Five (5) year warranty  provided on all HVAC compressor  units. All penetrations
including curbs and sleepers to be hot moped to LPC standard.

WAREHOUSE AREAS:

Floor - seal concrete with water base clear acrylic sealer. Fire Extinguishers -
2A 10 BC surface mount by code x by S.F.

400 W metal halide lighting at warehouse minimum 5-7 foot candles.

Note: All high pile storage requirements are excluded for standard building T.I.

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