Building Lease Agreements between WHTS Freedom Circle Partners LLC, Landlord
and PMC-Sierra, Inc., Tenant, with amendment dated April 7, 2000 and addition
dated July 20, 2000.


                                      LEASE

                      WHTS FREEDOM CIRCLE PARTNERS, L.L.C.,

                      a Delaware limited liability company,

                                    Landlord

                                       and

                               PMC - SIERRA, INC.,

                             a Delaware corporation,

                                     Tenant

                                       for

                                Mission Towers I

                            3975 Freedom Circle Drive

                             Santa Clara, California

                               February ____, 2000


<PAGE>

                                TABLE OF CONTENTS

                                                                          Page

ARTICLE 1 BASIC LEASE PROVISIONS...........................................

ARTICLE 2 PREMISES, TERM, RENT.............................................

ARTICLE 3 USE AND OCCUPANCY................................................

ARTICLE 4 CONDITION OF THE PREMISES........................................

ARTICLE 5 ALTERATIONS......................................................

ARTICLE 6 REPAIRS..........................................................

ARTICLE 7 INCREASES IN TAXES AND OPERATING EXPENSES........................

ARTICLE 8 REQUIREMENTS OF LAW..............................................

ARTICLE 9 SUBORDINATION....................................................

ARTICLE 10 SERVICES........................................................

ARTICLE 11 INSURANCE; PROPERTY LOSS OR DAMAGE..............................

ARTICLE 12 EMINENT DOMAIN..................................................

ARTICLE 13 ASSIGNMENT AND SUBLETTING.......................................

ARTICLE 14 ACCESS TO PREMISES..............................................

ARTICLE 15 DEFAULT.........................................................

ARTICLE 16 LANDLORD'S RIGHT TO CURE; FEES AND EXPENSES.....................

ARTICLE 17 NO REPRESENTATIONS BY LANDLORD; LANDLORD'S APPROVAL.............

ARTICLE 18 END OF TERM.....................................................

ARTICLE 19 QUIET ENJOYMENT.................................................

ARTICLE 20 NO SURRENDER; NO WAIVER.........................................

ARTICLE 21 WAIVER OF TRIAL BY JURY; COUNTERCLAIM...........................

ARTICLE 22 NOTICES.........................................................

ARTICLE 23 RULES AND REGULATIONS...........................................

ARTICLE 24 BROKER..........................................................

ARTICLE 25 INDEMNITY.......................................................

ARTICLE 26 MISCELLANEOUS...................................................

ARTICLE 27 SECURITY DEPOSIT................................................

ARTICLE 28 PARKING.........................................................

ARTICLE 29 RENEWAL TERM....................................................

ARTICLE 30 ROOF SPACE AND SATELLITE ANTENNA................................

ARTICLE 31 GENERATOR.......................................................

ARTICLE 32 SIGNAGE.........................................................
<PAGE>


                              Schedule of Exhibits

Exhibit A-1       Floor Plan of the First Floor

Exhibit A-2       Floor Plan of the Second Floor

Exhibit A-3       Floor Plan of the Third Floor

Exhibit A-4       Floor Plan of the Fourth Floor

Exhibit A-5       Floor Plan of the Fifth Floor

Exhibit B         Definitions

Exhibit C         Work Letter

Exhibit D         Design Standards

Exhibit E         Cleaning Specifications

Exhibit F         Rules and Regulations

Exhibit G         Development Specifications

Exhibit H         Base Building Work

Exhibit I         Form of Letter of Credit


<PAGE>

                                      LEASE

                  THIS  LEASE  is  made as of the  ____  day of  February,  2000
("Effective Date"), between WHTS freedom circle towers, l.l.c.  ("Landlord"),  a
Delaware  limited  liability  company,  and pmc -  sierra,  inc.  ("Tenant"),  a
Delaware corporation.

                  Landlord and Tenant hereby agree as follows:

                                    ARTICLE 1

                             BASIC LEASE PROVISIONS

PREMISES            The entire first, second,  third, fourth and fifth floors of
                    the Building,  as more  particularly  shown on Exhibits A-1,
                    A-2, A-3, A-4 and A-5.

BUILDING            The building, fixtures, equipment and other improvements and
                    appurtenances now located or hereafter  erected,  located or
                    placed upon the land known as Mission Towers I, 3975 Freedom
                    Circle Drive, Santa Clara, California.

BUILDING            TWO The building, fixtures, equipment and other improvements
                    and appurtenances now located or hereafter erected,  located
                    or placed  upon the land  known as Mission  Towers II,  3985
                    Freedom Circle Drive, Santa Clara, California.

PROJECT             The Building,  Building Two and the Garage together with all
                    related Common Areas.

GARAGE              The parking  structure,  fixtures and other improvements and
                    appurtenances now located or hereafter  erected,  located or
                    placed upon the land known as Mission Towers I, 3975 Freedom
                    Circle Drive, Santa Clara, California.

REAL PROPERTY       The  Building,  together with the plot of land upon which it
                    stands.

SCHEDULED
DELIVERY DATE       July 1, 2000.

SCHEDULED
COMMENCEMENT DATE   October 1, 2000.

COMMENCEMENT DATE   The later to occur of (a) the Scheduled  Commencement  Date,
                    and  (b)  the  90th  calendar  day  following  the  date  of
                    Landlord's  tender of  possession  of the Premises  with the
                    Base Building Work Substantially Complete.

RENT COMMENCEMENT
DATE                The Commencement Date.

EXPIRATION DATE     The date  which is the  last day of the  month in which  the
                    10th  anniversary of the  Commencement  Date occurs,  or the
                    last day of any  renewal or  extended  term,  if the Term of
                    this  Lease is  extended  in  accordance  with  any  express
                    provision hereof.
<PAGE>

TERM                The period commencing on the Commencement Date and ending on
                    the Expiration Date.

PERMITTED USES      Offices for the transaction of Tenant's  business in keeping
                    with  Comparable  Buildings,  including  the operation of an
                    electronic  verification  lab  within  the  Premises  and  a
                    shipping and receiving area adjacent to the Building loading
                    dock.

TENANT'S
PROPORTIONATE
SHARE               38.6926%

AREA OF BUILDING    282,084 rentable square feet (253,901 usable square feet).

AREA OF PREMISES    Floor 1:  12,763 rentable square feet
                              (11,488 usable square feet).
                    Floor 2:  21,813 rentable square feet
                              (19,634 usable square feet).
                    Floor 3:  24,856 rentable square feet
                              (22,373 usable square feet).
                    Floor 4:  24,856 rentable square feet
                              (22,373 usable square feet).
                    Floor 5:  24,856 rentable square feet
                              (22,373 usable square feet)
                    Total:    109,146 rentable square feet
                              (98,241 usable square feet).

FIXED RENT          Period        Per Annum        Per Month
                    ------        ---------        ---------
                    Year 1        $3,777,465.60    $314,788.80
                    Year 2        $3,909,676.92    $325,806.41
                    Year 3        $4,046,515.68    $337,209.64
                    Year 4        $4,188,143.52    $349,011.96
                    Year 5        $4,334,728.68    $361,227.39
                    Year 6        $4,486,444.08    $373,870.34
                    Year 7        $4,643,469.72    $386,955.81
                    Year 8        $4,805,991.12    $400,499.26
                    Year 9        $4,974,200.88    $414,516.74
                    Year 10       $5,148,297.84    $429,024.82

ADDITIONAL          RENT All sums other  than  Fixed  Rent  payable by Tenant to
                    Landlord under this Lease,  including  Tenant's Tax Payment,
                    Tenant's Operating Payment, late charges, overtime or excess
                    service  charges,  damages,  and  interest  and other  costs
                    related  to   Tenant's   failure  to  perform   any  of  its
                    obligations under this Lease.


RENT                Fixed Rent and Additional Rent, collectively.

INTEREST            RATE The lesser of (i) 4% per annum  above the  then-current
                    Base Rate, and (ii) the maximum rate permitted by applicable
                    law.

SECURITY DEPOSIT    $2,500,000,  subject to reduction in accordance with Section
                    27.5.

<PAGE>

TENANT'S ADDRESS
FOR NOTICES                  Until Tenant commences business operations
                             from the Premises:

                             PMC - Sierra, Inc.
                             8555 Baxter Place, Suite 105
                             Burnaby, British Columbia V5A4V7
                             Canada
                             Attn:  Geraldine Jones

                             Thereafter:

                             PMC - Sierra, Inc.
                             3975 Freedom Circle Drive
                             Santa Clara, California  95054
                             Attn:  Vice President - Administration

LANDLORD'S ADDRESS
FOR NOTICES                  WHTS Freedom Circle Partners, L.L.C.
                             c/o Tishman Speyer Properties, L.P.
                             444 Castro Street
                             Mountain View, California  94041
                             Attn:  Property Manager

                             Copies to:


                             WHTS Freedom Circle Partners, L.L.C.
                             c/o Tishman Speyer Properties, L.P.
                             520 Madison Avenue
                             New York, New York  10022
                             Attn:  Chief Financial Officer

                             and:

                             Tishman Speyer Properties, L.P.
                             520 Madison Avenue
                             New York, New York  10022
                             Attn:  General Counsel

                             and:

                             Goldman, Sachs & Co.
                             100 Crescent Court, Suite 1000
                             Dallas, Texas  75201
                             Attention:  Mr. Paul Milosevich

                             and:

                             Whitehall Street Real Estate Limited Partnership IX
                             c/o Goldman, Sachs & Co.
                             85 Broad Street
                             New York, New York  10004
                             Attention:  Mr. Steven M. Feldman

TENANT'S BROKER              Colliers International.

LANDLORD'S BROKER            Cornish & Carey Commercial

LANDLORD'S AGENT             Tishman Speyer  Properties,  L.P. or any other
                             person designated at any time and from
                             time to time by Landlord as Landlord's Agent.

Landlord's contribution      $3,274,380.00.

All  capitalized  terms used in this Lease  without  definition  are  defined in
Exhibit B.


<PAGE>

                                    ARTICLE 2

                              PREMISES, TERM, RENT

         Lease of Premises.  Subject to the terms of this Lease, Landlord leases
to Tenant  and  Tenant  leases  from  Landlord  the  Premises  for the Term.  In
addition,  Landlord grants to Tenant the right to use, on a non-exclusive  basis
and in common with other tenants, the Common Areas.

         Rentable Area.  Subject to adjustment as herein provided,  the rentable
square  footage of the Premises and the Building are agreed to be the numbers of
square feet respectively  specified in the Basic Lease Information.  The "usable
area" of the  Premises  and  Building  has been  calculated  and  determined  in
accordance  with  the  "Standard  Method  for  Measuring  Floor  Area in  Office
Buildings,"  ANSI/BOMA  Z65.1-1996,  as  published  by the  Building  Owners and
Managers  Association  International (the "BOMA Standard").  The rentable square
footage of the  Building  and the Premises are  determined  by  multiplying  the
usable area of the Premises and Building by 111.10% (the "Load  Factor"),  which
Load Factor is agreed to by Landlord and Tenant. If Tenant wishes to verify that
the usable area of the Premises and the Building (as  determined  in  accordance
with BOMA  Standards) are as set forth in the Basic Lease  Information,  then at
any time prior to the Commencement  Date Tenant shall have the right to cause an
independent  architect  or space  planner to verify  Landlord's  square  footage
numbers, which determination shall be subject to Landlord's reasonable approval.
If the final  rentable  square  footage  of the  Premises  as so  determined  is
different  then as set forth in the Basic  Lease  Information,  the Fixed  Rent,
Tenant's Proportionate Share and Landlord's  Contribution shall be appropriately
adjusted.

         Commencement  Date.  Upon the Effective  Date, the terms and provisions
hereof shall be fully binding on Landlord and Tenant prior to the  occurrence of
the Commencement Date. The Term of this Lease shall commence on the Commencement
Date.  Unless sooner  terminated or extended as hereinafter  provided,  the Term
shall end on the Expiration Date. If Landlord does not tender  possession of the
Premises  to Tenant on or before the  Scheduled  Delivery  Date,  for any reason
whatsoever,  Landlord  shall not be liable  for any damage  thereby,  this Lease
shall not be void or voidable thereby, and the Term shall not commence until the
90th calendar day after Landlord tenders possession of the Premises to Tenant in
the  condition  required  by Article 4. No failure to tender  possession  of the
Premises to Tenant on or before the  Scheduled  Delivery  Date shall  affect any
other obligations of Tenant hereunder; provided, however, that if Landlord fails
to tender  possession of the Premises to Tenant on or before  September 1, 2000,
then,  except to the extent caused by Unavoidable  Delays,  Tenant shall receive
for each day of delay  thereafter  with respect to the Premises a credit against
Fixed  Rent in an amount  equal to  $8,000.00  per day.  Landlord  shall use its
commercially   reasonable  efforts  to  cause  the  Base  Building  Work  to  be
Substantially  Complete on or before the  Commencement  Date.  The Base Building
Work shall be deemed to be "Substantially Complete" upon the date by which there
remains no  incomplete  or defective  item of the Base  Building Work that would
materially  adversely  affect  Tenant's  intended  use of the  Premises and that
Landlord has obtained (or as of the  Commencement  Date will have  obtained) all
necessary  permits and approvals from  Governmental  Authorities with respect to
the Base Building Work required for the legal  occupancy of the Premises for the
Permitted  Use  (subject  to  Substantial  Completion  by Tenant of the  Initial
Installations).  Once the Commencement  Date is determined,  Landlord and Tenant
shall execute an agreement  stating the  Commencement  Date and Expiration Date,
but the failure to do so will not affect the determination of such dates.

         Payment  of Rent.  Tenant  shall  pay to  Landlord,  without  notice or
demand,   and  without  any  set-off,   counterclaim,   abatement  or  deduction
whatsoever,  except as may be expressly set forth in this Lease, in lawful money
of the United  States by wire  transfer  of funds or by check  drawn upon a bank
approved by Landlord, (i) Fixed Rent in equal monthly installments,  in advance,
on the  first  day of  each  month  during  the  Term,  commencing  on the  Rent
Commencement  Date, and (ii) Additional Rent, at the times and in the manner set
forth in this Lease.

         First  Month's  Rent.  Tenant shall pay one month's Fixed Rent upon the
execution of this Lease ("Advance  Rent").  If the Rent  Commencement Date is on
the first day of a month,  the Advance Rent shall be credited  towards the first
month's Fixed Rent payment.  If the Rent  Commencement Date is not the first day
of a month,  then on the Rent  Commencement Date Tenant shall pay Fixed Rent for
the period from the Rent  Commencement  Date through the last day of such month,
and the  Advance  Rent  shall  be  credited  towards  Fixed  Rent  for the  next
succeeding calendar month.
<PAGE>

                                    ARTICLE 3

                                USE AND OCCUPANCY

                  Tenant  shall use and occupy the  Premises  for the  Permitted
Uses and for no other purpose.  Tenant shall not use or occupy or permit the use
or occupancy of any part of the Premises in a manner  constituting  a Prohibited
Use. If Tenant uses the Premises for a purpose  constituting  a Prohibited  Use,
violating  any  Requirement,  or causing the  Building to be in violation of any
Requirement, then Tenant shall promptly discontinue such use upon notice of such
violation.  Tenant, at its expense,  shall procure and at all times maintain and
comply with the terms and  conditions  of all licenses and permits  required for
the lawful conduct of the Permitted Uses in the Premises.

                                    ARTICLE 4

                            CONDITION OF THE PREMISES

                  As of the Effective Date, Landlord is causing  construction of
the core and shell of the Building and Garage.  Attached hereto as Exhibit G and
incorporated  herein by reference  is a list of the drawings and  specifications
for the design and construction of the Building  (collectively  the "Development
Specifications").  The  Development  Specifications  have  previously  been made
available  to Tenant for its  review.  Landlord,  at its sole cost and  expense,
shall complete construction of the Building:  (a) in substantial accordance with
the  Development  Specifications;  and (b) in a good  workmanlike  manner,  to a
general  standard  of  construction  equal  to or  greater  than  that of  other
Comparable  Buildings.  At the time of  Landlord's  tender of  possession of the
Premises,  those  portions  of the  Base  Building  Work,  as more  particularly
described on Exhibit H, which are  necessary to be completed for the orderly and
effective  construction  of the  Initial  Installations  shall be  Substantially
Complete.  Subject to the foregoing,  Tenant shall: (a) accept possession of the
Premises  in  its  then  "As-Is"  condition,   and  (b)  except  for  Landlord's
Contribution,  Landlord  has no  obligation  to  perform  any work,  supply  any
materials,  incur any expense or make any alterations or improvements to prepare
the  Premises  for  Tenant's  occupancy.  Tenant's  occupancy of any part of the
Premises  shall be conclusive  evidence,  as against  Tenant,  that Landlord has
Substantially  Completed the Base Building Work, Tenant has accepted  possession
of the Premises in its then current  condition  and at the time such  possession
was  taken,  the  Premises  and the  Building  were in a good  and  satisfactory
condition  as  required  by this Lease  except  for  latent  defects in the Base
Building  Work not visually  discoverable  by Tenant upon a reasonably  diligent
inspection  and subject to the  completion by Landlord of any "punch list" items
or similar  corrective  work;  provided,  however,  that Landlord  shall have no
obligation to correct  latent defects not reported to Landlord in writing within
12 months of the acceptance of the Premises by Tenant.  Landlord,  at Landlord's
sole  cost and  expense  and not as a  deduction  or offset  from the  amount of
Landlord's  Contribution or as part of Operating Expenses,  shall be responsible
for  ensuring  that,  as of  the  Commencement  Date,  the  Base  Building  Work
(including the roof and all Building  Systems) is in good working  condition and
repair,  free  from  any  known  code  violations  and in  compliance  with  all
Requirements.  In  addition,  in  accordance  with the terms and  provisions  of
Section 6.1 below,  Landlord  shall be  responsible  for the  correction  of any
latent or patent defects in the Landlord Repair Areas (as  hereinafter  defined)
at any time during  this Term of the Lease or any  extension  thereof.  Landlord
agrees to  exercise  commercially  reasonable  efforts  to  enforce  any and all
construction,  design and materials warranties obtained by Landlord with respect
to the Base  Building  Work  ("Construction  Warranties").  No provision of this
Article 4 shall diminish Landlord's obligations under Section 6.1 below.
<PAGE>

                                    ARTICLE 5

                                   ALTERATIONS

         Tenant's  Alterations.  (a)  Tenant  shall  not make  any  alterations,
additions  or other  physical  changes in or about the  Premises  (collectively,
"Alterations")  other  than  decorative  Alterations  such  as  painting,   wall
coverings and floor coverings (collectively,  "Decorative Alterations"), without
Landlord's  prior consent,  which consent shall not be unreasonably  withheld so
long as such Alterations (i) are  non-structural  and do not affect any Building
Systems,  (ii) affect only the  Premises and are not visible from outside of the
Premises,  (iii) do not  affect  the  certificate  of  occupancy  issued for the
Building  or  the   Premises,   and  (iv)  do  not   violate  any   Requirement.
Notwithstanding the foregoing, Tenant may perform Alterations without Landlord's
prior  approval,  if the cost to perform  such work does not exceed  $10,000 and
provided the same (i) are non-structural and do not affect any Building Systems,
(ii) affect only the Premises and are not visible from outside of the  Premises,
(iii) do not affect the certificate of occupancy  issued for the Building or the
Premises, and (iv) do not violate any Requirement.

                  Plans and  Specifications.  Prior to making  any  Alterations,
Tenant, at its expense, shall (i) submit to Landlord for its approval,  detailed
plans and  specifications  ("Plans")  of each  proposed  Alteration  (other than
Decorative  Alterations),  and with  respect  to any  Alteration  affecting  any
Building System,  evidence that the Alteration has been designed by, or reviewed
and  approved by,  Landlord's  designated  engineer  for the  affected  Building
System,  (ii) obtain all permits,  approvals  and  certificates  required by any
Governmental Authorities,  (iii) furnish to Landlord duplicate original policies
or certificates of worker's compensation (covering all persons to be employed by
Tenant,  and Tenant's  contractors  and  subcontractors  in connection with such
Alteration)  and  commercial  general  liability   (including   property  damage
coverage) insurance and Builder's Risk coverage (as described in Article 11) all
in such form,  with such  companies,  for such  periods  and in such  amounts as
Landlord may reasonably  require,  naming Landlord,  Landlord's Agent any Lessor
and  any  Mortgagee  as  additional  insureds,  and  (iv)  with  respect  to any
Alterations  individually  costing  at  least  $500,000,   furnish  to  Landlord
reasonably  satisfactory  evidence of Tenant's  ability to complete and to fully
pay for such Alterations  (other than the Initial  Installations  and Decorative
Alterations).  Tenant shall give Landlord not less than 5 Business  Days' notice
prior to  performing  any  Decorative  Alteration,  which notice shall contain a
description of such Decorative Alteration.

                  Governmental Approvals.  Tenant, at its expense, shall, as and
when required,  promptly  obtain  certificates  of partial and final approval of
such  Alterations  required  by any  Governmental  Authority  and shall  furnish
Landlord  with  copies  thereof,   together  with  "as-built"   Plans  for  such
Alterations  prepared on an AutoCAD Computer Assisted Drafting and Design System
(or  such  other  system  or  medium  as  Landlord  may  accept),  using  naming
conventions  issued by the American  Institute of Architects  in June,  1990 (or
such other naming  conventions  as Landlord  may accept) and  magnetic  computer
media of such record  drawings and  specifications  translated  in DFX format or
another format acceptable to Landlord.

         Manner and Quality of Alterations.  All Alterations  shall be performed
(a) in a good and workmanlike manner and free from defects, (b) substantially in
accordance with the Plans, and by contractors  approved by Landlord,  and (c) in
compliance with all  Requirements,  the terms of this Lease and all construction
procedures  and  regulations  then  prescribed  by Landlord.  All  materials and
equipment  shall  be of first  quality  and at  least  equal  to the  applicable
standards for the Building then  established by Landlord,  and no such materials
or  equipment  (other than  Tenant's  Property)  shall be subject to any lien or
other encumbrance.

         Removal  of  Tenant's  Property.  Tenant's  Property  shall  remain the
property  of Tenant  and Tenant may remove the same at any time on or before the
Expiration  Date.  On or prior to the  Expiration  Date,  Tenant  shall,  unless
otherwise  directed by  Landlord,  at  Tenant's  expense,  remove any  Specialty
Alteration  and close up any slab  penetrations  in the  Premises.  Tenant shall
repair and restore, in a good and workmanlike manner, any damage to the Premises
or the  Building  caused by Tenant's  removal of any  Specialty  Alterations  or
Tenant's Property or by the closing of any slab  penetrations,  and upon default
thereof,  Tenant shall  reimburse  Landlord,  on demand,  for Landlord's cost of
repairing and restoring such damage.  Any Above Building Standard  Installations
(as  hereinafter  defined) or Tenant's  Property not so removed  shall be deemed
abandoned  and Landlord  may remove and dispose of same,  and repair and restore
any damage  caused  thereby,  at  Tenant's  cost and without  accountability  to
Tenant.  Tenant shall not be required to remove any of the Initial Installations
or any  subsequent  Alterations  unless,  in either  case,  the same  constitute
Specialty  Alterations which Landlord advises Tenant must be removed at the time
consent  thereto was granted.  Concurrently  with the issuance of its consent to
the performance of the Initial  Installations  or of any  Alterations,  Landlord
will notify Tenant  whether any such component of the Initial  Installations  or
any such  Alterations,  or any material  component thereof  (including,  without
limitation,  any oversized or exposed conduit) not expressly included within the
definition of Specialty Alterations is considered by Landlord to be such.
<PAGE>

         Mechanic's Liens.  Tenant, at its expense,  shall discharge any lien or
charge  filed  against  the Real  Property in  connection  with any work done or
claimed to have been done by or on behalf of, or materials  furnished or claimed
to have been  furnished to,  Tenant,  within 10 days after  Tenant's  receipt of
notice  thereof by  payment,  filing the bond  required by law or  otherwise  in
accordance with law.

         Labor Relations.  Tenant shall not employ, or permit the employment of,
any contractor,  mechanic or laborer, or permit any materials to be delivered to
or used in the  Building,  if, in Landlord's  sole  judgment,  such  employment,
delivery or use will  interfere  or cause any conflict  with other  contractors,
mechanics or laborers engaged in the  construction,  maintenance or operation of
the Building by Landlord,  Tenant or others.  If such  interference  or conflict
occurs, upon Landlord's request,  Tenant shall cause all contractors,  mechanics
or  laborers  causing  such  interference  or  conflict  to leave  the  Building
immediately.

         Tenant's Costs. Tenant shall pay promptly to Landlord, upon demand, all
out-of-pocket  costs actually  incurred by Landlord in connection  with Tenant's
Alterations,  including costs incurred in connection with (a) Landlord's  review
of the  Alterations  (including  review of requests for approval  thereof) which
costs reimbursable by Tenant shall not exceed $1,500 per request for consent and
(b)  the  provision  of  Building   personnel  during  the  performance  of  any
Alteration,   to  operate   elevators  or  otherwise  to   facilitate   Tenant's
Alterations.  In addition,  if Tenant's  Alterations cost more than $100,000.00,
Tenant shall pay to Landlord,  upon demand, an  administrative  fee in an amount
equal to 1% of the total cost of such Alterations.

         Tenant's  Equipment.  Tenant shall provide  notice to Landlord prior to
moving any heavy machinery,  heavy equipment,  freight, bulky matter or fixtures
(collectively,  "Equipment")  into  or out  of the  Building  and  shall  pay to
Landlord any costs  actually  incurred by Landlord in connection  therewith.  If
such  Equipment  requires  special  handling,  Tenant  agrees (a) to employ only
persons  holding  all  necessary  licenses  to perform  such work,  (b) all work
performed in connection therewith shall comply with all applicable  Requirements
and (c) such work shall be done only during hours designated by Landlord.

         Legal Compliance.  The approval of Plans, or consent by Landlord to the
making of any Alterations,  does not constitute  Landlord's  representation that
such Plans or Alterations  comply with any  Requirements.  Landlord shall not be
liable to Tenant or any other party in connection  with  Landlord's  approval of
any Plans, or Landlord's consent to Tenant's performing any Alterations.  If any
Alterations  made by or on  behalf  of  Tenant,  require  Landlord  to make  any
alterations or  improvements to any part of the Building in order to comply with
any  Requirements,  Tenant shall pay all costs and expenses incurred by Landlord
in connection with such alterations or improvements.

         Floor  Load.  Tenant  shall  not  place a load  upon  any  floor of the
Premises that exceeds 100 pounds per square foot "live load" on the ground floor
and 80 pounds per square foot "live load" on the upper floors. Landlord reserves
the right to reasonably  designate  the position of all  Equipment  which Tenant
wishes to place within the Premises,  and to place reasonable limitations on the
weight thereof consistent with the floor loads described above.


<PAGE>

                                    ARTICLE 6

                                     REPAIRS

         Landlord's  Repair and  Maintenance.  Landlord shall operate,  maintain
and, except as provided in Section 6.2 hereof,  make all necessary repairs (both
structural and nonstructural) to the structural portions of the Building and the
Premises  (including  without  limitation,  the roof,  foundation,  floor  slab,
exterior walls and load bearing walls), (ii) the Building Systems, and (iii) the
Common Areas, in conformance with standards  applicable to Comparable  Buildings
(collectively, the "Landlord Repair Areas").

         Tenant's Repair and Maintenance.  Tenant shall promptly, at its expense
and in compliance with Article 5, make all nonstructural repairs to the Premises
and the fixtures,  equipment  and/or and  appurtenances  therein  (collectively,
"Building Fixtures") as and when needed to preserve the Premises in good working
order  and  condition,  except  for  reasonable  wear and tear and  damage  from
condemnation or casualty.  All damage to the Building or to any portion thereof,
or to any Building Fixtures requiring  structural or nonstructural repair caused
by or resulting from any act,  omission,  neglect or improper  conduct of or the
moving of Tenant's  Property or Equipment into, within or out of the Premises by
a Tenant  Party,  shall be repaired at  Tenant's  expense by (i) Tenant,  if the
required  repairs  are  nonstructural  in nature and do not affect any  Building
System,  or (ii)  Landlord,  if the required  repairs are  structural in nature,
involve  replacement of exterior window glass or affect any Building System. All
Tenant repairs shall be of good quality utilizing new construction materials. If
Tenant fails after 10 days' notice (or such shorter period as may be required in
an emergency)  to proceed with due diligence to make any repairs  required to be
made by  Tenant,  Landlord  may make such  repairs  and all  costs and  expenses
incurred by Landlord on account  thereof,  plus interest thereon at the Interest
Rate,  shall be paid by  Tenant  within 10 days  after  delivery  of an  invoice
therefor.

         Interruptions  Due to Repairs.  Landlord reserves the right to make all
changes, alterations,  additions,  improvements,  repairs or replacements to the
Real  Property,  including  the  Building  Systems  (collectively,  "Restorative
Work"),  as Landlord  deems  necessary or  desirable,  provided that in no event
shall the level of any Building  service  decrease in any material  respect from
the level  required of Landlord  in this Lease as a result  thereof  (other than
temporary  changes in the level of such services  during the  performance of any
such  Restorative  Work).  Landlord  shall use  reasonable  efforts to  minimize
interference  with  Tenant's  use  and  occupancy  of the  Premises  during  the
performance  of such  Restorative  Work.  There  shall be no Rent  abatement  or
allowance to Tenant for a diminution of rental value,  no actual or constructive
eviction of Tenant,  in whole or in part,  no relief from any of Tenant's  other
obligations under this Lease, and no liability on the part of Landlord by reason
of inconvenience,  annoyance or injury to business arising from Landlord, Tenant
or others  performing,  or failing to perform,  any Restorative  Work.  Landlord
shall use its  commercially  reasonable  efforts to restore any  interruption of
access,  use or services as soon as  reasonably  possible.  Notwithstanding  any
contrary  provision  of this Lease,  if Tenant is  prevented  from using for the
conduct of its business,  and does not use for the conduct of its business,  the
Premises or any material portion thereof,  for 15 consecutive Business Days (the
"Eligibility Period") as a result of (i) any construction,  repair,  maintenance
or  alteration  performed  by  Landlord  after  the  Commencement  Date  and not
necessitated  by the  negligence or willful  misconduct of any Tenant Party,  or
(ii)  the  failure  in  any  material  respect  of  Landlord  or its  agents  or
contractors  to  provide  to the  Premises  any of the  utilities  and  services
required to be provided  under this Lease  (including  Article 10 below) and not
caused by the negligence or willful  misconduct of any Tenant Party or otherwise
due to the  occurrence  of a  casualty  or  condemnation,  (iii) any  failure to
provide  access to the  Premises  and not  caused by the  negligence  or willful
misconduct of any Tenant Party or otherwise due to the  occurrence of a casualty
or condemnation,  or (iv) because of the presence of Hazardous  Materials in, on
or around the Building,  the Premises or the Real Property which were not caused
or introduced by any Tenant Party and which Hazardous  Materials pose a material
and significant  health risk to occupants of the Premises,  then, in any and all
such events,  Tenant's  obligation to pay Fixed Rent, Tenant's Operating Payment
and  Tenant's Tax Payment  shall be abated or reduced,  as the case may be, from
and after the first (1st) day following the last day of the  Eligibility  Period
and continuing for such time that Tenant continues to be so prevented from using
for the  conduct  of its  business,  and does not so use for the  conduct of its
business, the Premises or a material portion thereof, in the proportion that the
rentable  square feet of the portion of the  Premises  that Tenant is  prevented
from using,  and does not so use, bears to the total rentable square feet of the
Premises.
<PAGE>

                                    ARTICLE 7

                    INCREASES IN TAXES AND OPERATING EXPENSES

          Definitions.  For the purposes of this Article 7, the following  terms
shall have the meanings set forth below:

                  "Assessed  Valuation" shall mean the amount for which the Real
Property is  assessed  by the County  Assessor of Santa Clara for the purpose of
imposition of Taxes.

                  "Comparison  Year"  shall  mean any  calendar  year all or any
portion of which occurs during the Term.

                  "Operating Expenses" shall mean the aggregate of all costs and
expenses,  without duplication,  paid or incurred by or on behalf of Landlord in
connection  with the ownership,  operation,  repair and  maintenance of the Real
Property, including capital improvements only if such capital improvement either
(i) is  reasonably  intended to result in a reduction in Operating  Expenses (as
for  example,  a  labor-saving  improvement)  provided,  the amount  included in
Operating  Expenses in any  Comparison  Year shall not exceed an amount equal to
the savings reasonably anticipated to result from the installation and operation
of  such  improvement,  and/or  (ii)  is  made  during  any  Comparison  Year in
compliance with Requirements. Such capital improvements shall be amortized (with
interest at the Base Rate) on a straight-line basis over the useful life of such
capital  improvement  as Landlord  shall  reasonably  determine,  and the amount
included  in  Operating  Expenses in any  Comparison  Year shall be equal to the
annual  amortized  amount.  Operating  Expenses  shall not include any  Excluded
Expenses.  If during  all or part of any  Comparison  Year,  Landlord  shall not
furnish  any  particular  item(s)  of work or  service  (which  would  otherwise
constitute  an Operating  Expense) to any leasable  portions of the Building for
any reason but  continues  to furnish or provide  such work or  services  to the
Premises,  then, for purposes of computing  Operating  Expenses for such period,
the amount included in Operating  Expenses for such period shall be increased by
an amount  equal to the costs  and  expenses  that  would  have been  reasonably
incurred by Landlord  during such period if Landlord had furnished  such item(s)
of work or service to such portion of the Building. In determining the amount of
Operating  Expenses for any  Comparison  Year,  if less than 95% of the Building
rentable  area is  occupied  by tenants at any time  during any such  Comparison
Year,  Operating  Expenses shall be determined for such Comparison Year to be an
amount  equal to the like  expenses  which  would  normally  be  expected  to be
incurred had such occupancy been 95% throughout such Comparison Year.

                  Tenant  understands and  acknowledges  that, from time to time
during  the Term,  the  Building  may be  operated  by  Landlord  as part of the
Project,  comprising  the Building,  the Garage and Common Areas adjacent to the
Building  and  Building  Two.  For  purposes of this Article 7, the Building and
Building Two are sometimes  hereinafter  jointly  referred to as the  "Project."
Landlord shall have the right, from time to time during the Term, to operate the
Project in an integrated  fashion,  and to include within Operating Expenses and
Real Property Taxes a reasonable  allocation of the amount of Operating Expenses
and Real  Property  Taxes  paid or  incurred  by  Landlord  with  respect to the
Project.  During  such  periods  of  time  as  Landlord  so  elects,   "Tenant's
Proportionate  Share"  shall mean the  product of (a) the  rentable  area of the
Premises,  and (b) a fraction, the numerator of which is one and the denominator
of which is the rentable area of the Project.  In addition,  during such periods
of time as Landlord  does not elect to  determine  Operating  Expenses  and Real
Property Taxes on a Project-wide basis, Operating Expenses and Real Estate Taxes
for the  Building  shall  include  a  reasonable  allocation  of such  costs and
expenses as Landlord may incur in the maintenance, operation, administration and
repair of the Garage and the Common Areas servicing the Project.

                  "Statement"  shall mean a reasonably  detailed  statement  (by
major  categories of expenditures)  containing the amount of Operating  Expenses
and Taxes for any Comparison Year and the amount of Tenant's  Operating  Payment
and Tax  Payment  for any such  Comparison  Year,  including  a  summary  of the
calculations used to arrive at such amounts.
<PAGE>

                  "Taxes"  shall mean (i) all real  estate  taxes,  assessments,
sewer and  water  rents,  rates  and  charges  and  other  governmental  levies,
impositions  or charges,  whether  general,  special,  ordinary,  extraordinary,
foreseen or unforeseen, which may be assessed, levied or imposed upon all or any
part  of  the  Real  Property,  and  (ii)  all  expenses  (including  reasonable
attorneys'  fees and  disbursements  and  experts'  and other  witnesses'  fees)
incurred in  contesting  any of the  foregoing or the Assessed  Valuation of the
Real  Property.  Taxes shall not include (x) interest or  penalties  incurred by
Landlord as a result of  Landlord's  late payment of Taxes,  or (y) franchise or
net income taxes imposed upon Landlord. If Landlord elects to pay any assessment
in annual installments, then (i) such assessment shall be deemed to have been so
divided and to be payable in the maximum  number of  installments  permitted  by
law, and (ii) there shall be deemed  included in Taxes for each  Comparison Year
the  installments  of such  assessment  becoming  payable during such Comparison
Year,  together  with  interest  payable to the  taxing  authority  during  such
Comparison Year on such installments and on all installments thereafter becoming
due as provided by law, all as if such assessment had been so divided. If at any
time the methods of taxation  prevailing on the Effective  Date shall be altered
so that in lieu of or as an  addition  to the whole or any part of Taxes,  there
shall be assessed, levied or imposed (1) a tax, assessment,  levy, imposition or
charge based on the income or rents  received from the Real Property  whether or
not wholly or partially as a capital levy or otherwise,  (2) a tax,  assessment,
levy,  imposition or charge measured by or based in whole or in part upon all or
any part of the Real  Property  and  imposed  upon  Landlord,  (3) a license fee
measured  by the rents,  or (4) any other  tax,  assessment,  levy,  imposition,
charge or  license  fee  however  described  or  imposed,  then all such  taxes,
assessments, levies, impositions, charges or license fees or the part thereof so
measured or based shall be deemed to be Taxes.

         Tenant's  Tax  Payment.  (a)  Tenant  shall  pay to  Landlord  Tenant's
Proportionate  Share of the Taxes payable for any Comparison Year ("Tenant's Tax
Payment"). On or about the start of each Comparison Year, Landlord shall furnish
to Tenant a Statement  of the Taxes.  Tenant  shall pay  Tenant's Tax Payment to
Landlord,  in monthly  installments,  on the first day of each month during each
Comparison  Year,  an amount  equal to 1/12 of Tenant's Tax Payment due for each
Comparison  Year.  If there is any increase or decrease in Taxes payable for any
Comparison Year,  whether levied during or after such Comparison Year,  Landlord
may furnish a revised  Statement for such Comparison Year,  Tenant's Tax Payment
for such  Comparison  Year shall be adjusted and,  within 10 Business Days after
delivery of such  revised  Statement  (a) with  respect to any increase in Taxes
payable for such Comparison Year, Tenant shall pay such increase in Tenant's Tax
Payment to Landlord,  or (b) with  respect to any decrease in Taxes  payable for
such  Comparison  Year,  Landlord  shall  credit such  decrease in Tenant's  Tax
Payment against the next installment of Rent payable by Tenant.

                   Only  Landlord  may  institute   proceedings  to  reduce  the
Assessed  Valuation of the Real Property and the filings of any such  proceeding
by Tenant without  Landlord's  consent shall constitute an Event of Default.  If
Landlord  receives a refund of Taxes for any  Comparison  Year,  Landlord  shall
credit against  subsequent  payments of Rent due  hereunder,  an amount equal to
Tenant's  Proportionate  Share of the refund,  net of any  expenses  incurred by
Landlord in achieving  such refund,  which amount shall not exceed  Tenant's Tax
Payment paid for such Comparison  Year.  Landlord shall not be obligated to file
any application or institute any proceeding  seeking a reduction in Taxes or the
Assessed Valuation.

                   Tenant shall be responsible  for any applicable  occupancy or
rent tax now in effect or hereafter enacted and, if payable by Landlord,  Tenant
shall promptly pay such amounts to Landlord, upon Landlord's demand.

         Tenant's Operating  Payment.  (a) Tenant shall pay to Landlord Tenant's
Proportionate  Share of the Operating  Expenses  payable for any Comparison Year
("Tenant's Operating Payment"). For each Comparison Year, Landlord shall furnish
to Tenant a statement setting forth Landlord's  reasonable  estimate of Tenant's
Operating Payment for such Comparison Year (the "Estimate"). Tenant shall pay to
Landlord  on the 1st day of each month  during  such  Comparison  Year an amount
equal to 1/12 of  Landlord's  estimate  of Tenant's  Operating  Payment for such
Comparison  Year.  If Landlord  furnishes  an  Estimate  for a  Comparison  Year
subsequent to the commencement  thereof, then (a) until the 1st day of the month
following  the month in which the Estimate is furnished to Tenant,  Tenant shall
pay to Landlord on the 1st day of each month an amount  equal to the monthly sum
payable by Tenant to  Landlord  under this  Section 7.3 during the last month of
the preceding  Comparison  Year, (b) promptly after the Estimate is furnished to
Tenant or  together  therewith,  Landlord  shall give  notice to Tenant  stating
whether the installments of Tenant's  Operating Payment previously made for such
Comparison Year were greater or less than the installments of Tenant's Operating
Payment to be made for such Comparison Year in accordance with the Estimate, and
(i) if there shall be a deficiency,  Tenant shall pay the amount  thereof within
10  Business  Days after  demand  therefor,  or (ii) if there shall have been an
overpayment,  Landlord  shall  credit  the  amount  thereof  against  subsequent
payments of Rent due  hereunder,  and (c) on the 1st day of the month  following
the month in which the Estimate is  furnished  to Tenant,  and on the 1st day of
each month thereafter  throughout the remainder of such Comparison Year,  Tenant
shall pay to Landlord  an amount  equal to 1/12 of  Tenant's  Operating  Payment
shown on the Estimate.
<PAGE>

                    On or before May 1st of each Comparison Year, Landlord shall
furnish to Tenant a Statement for the immediately  preceding Comparison Year. If
the Statement  shows that the sums paid by Tenant under Section 7.3(a)  exceeded
the actual  amount of  Tenant's  Operating  Payment  for such  Comparison  Year,
Landlord shall credit the amount of such excess against  subsequent  payments of
Rent due hereunder.  If the Statement shows that the sums so paid by Tenant were
less than Tenant's  Operating Payment for such Comparison Year, Tenant shall pay
the amount of such  deficiency  within 10  Business  Days after  delivery of the
Statement to Tenant.

         Non-Waiver; Disputes. (a) Landlord's failure to render any Statement on
a  timely  basis  with  respect  to any  Comparison  Year  shall  not  prejudice
Landlord's  right  to  thereafter  render  a  Statement  with  respect  to  such
Comparison Year or any subsequent  Comparison Year, nor shall the rendering of a
Statement prejudice  Landlord's right to thereafter render a corrected Statement
for that Comparison Year.

                   Each Statement sent to Tenant shall be  conclusively  binding
upon Tenant  unless Tenant (i) pays to Landlord when due the amount set forth in
such Statement,  without  prejudice to Tenant's right to dispute such Statement,
and (ii) within 90 days after such Statement is sent, sends a notice to Landlord
objecting to such Statement and specifying the reasons  therefor.  Tenant agrees
that Tenant will not employ,  in  connection  with any dispute under this Lease,
any person who is to be  compensated  in whole or in part, on a contingency  fee
basis. If the parties are unable to resolve any dispute as to the correctness of
such Statement  within 30 days following such notice of objection,  either party
may refer the issues  raised to one of the "Big Five"  public  accounting  firms
selected by Landlord and  reasonably  acceptable to Tenant,  and the decision of
such  accountants  shall be  conclusively  binding upon Landlord and Tenant.  In
connection  therewith,  Tenant and such accountants shall execute and deliver to
Landlord  a  confidentiality   agreement,   in  form  and  substance  reasonably
satisfactory  to Landlord,  whereby  such  parties  agree not to disclose to any
third party any of the  information  obtained in  connection  with such  review.
Tenant shall pay the fees and expenses  relating to such procedure,  unless such
accountants  determine that Landlord overstated  Operating Expenses by more than
5% for such  Comparison  Year,  in which case  Landlord  shall pay such fees and
expenses.

         Final Year of Term. If the Expiration  Date occurs on a date other than
December 31st, any Additional  Rent under this Article 7 for the Comparison Year
in which such  Expiration  Date occurs shall be  apportioned on the basis of the
number of days in the period from January 1st to the Expiration  Date.  Upon the
expiration or earlier  termination of this Lease, any Additional Rent under this
Article 7 shall be paid or reimbursed as appropriate  (unless Tenant then has an
outstanding  payable  to  Landlord)  within  30  days  after  submission  of the
Statement.

         Net Lease.  This Lease is designed as a "net lease," and the provisions
in this Lease for payment by Tenant of its share of Operating Expenses and Taxes
are  intended  to  pass  on  to  Tenant  and  reimburse  Landlord  for  Tenant's
Proportionate  Share of all costs and expenses  incurred in connection  with the
management,  operation,  maintenance  or repair of the Real  Property  except as
otherwise expressly herein provided.
<PAGE>

                                    ARTICLE 8

                               REQUIREMENTS OF LAW

         Section 8.1       Compliance with Requirements.

                  Tenant's Compliance. Tenant, at its expense, shall comply with
all Requirements applicable to the Premises and with the terms and provisions of
the CC&R's  applicable to Tenant;  provided,  however,  that Tenant shall not be
obligated to comply with any Requirements  requiring any structural  alterations
to the Building unless the application of such Requirements  arises from (i) the
specific  manner and nature of Tenant's  use or occupancy  of the  Premises,  as
distinct from general office use, (ii)  Alterations  made by Tenant,  or (iii) a
breach  by  Tenant  of any  provisions  of  this  Lease.  Any  such  repairs  or
alterations  shall be made at Tenant's  expense by Tenant (1) in compliance with
Article 5 if such repairs or alterations are nonstructural and do not affect any
Building  System,  or (2)  by  Landlord  if  such  repairs  or  alterations  are
structural or affect any Building  System.  If Tenant  obtains  knowledge of any
failure to comply with any Requirements applicable to the Premises, Tenant shall
give Landlord prompt notice thereof.

                  Hazardous Materials.  Tenant shall not cause or permit (i) any
Hazardous  Materials to be brought into the Building or Garage, (ii) the storage
or use of Hazardous  Materials in any manner not permitted by any  Requirements,
or (iii) the escape, disposal or release of any Hazardous Materials within or in
the  vicinity of the Real  Property.  Nothing  herein shall be deemed to prevent
Tenant's use of any Hazardous Materials  customarily used in the ordinary course
of office work, provided such use is in accordance with all Requirements. Tenant
shall be  responsible,  at its expense,  for all matters  directly or indirectly
based on, or arising or resulting  from the  presence of Hazardous  Materials on
the Real Property  which is caused or permitted by a Tenant Party.  Tenant shall
provide to Landlord copies of all communications received by Tenant with respect
to any Requirements  relating to Hazardous Materials,  and/or any claims made in
connection   therewith.   Landlord  or  its  agents  may  perform  environmental
inspections of the Premises at any time. Under no circumstances  shall Tenant be
liable to  Landlord  for any  losses,  costs,  claims,  liabilities  and damages
(including attorneys' and consultants' fees) of every type and nature,  directly
or  indirectly  arising out of or in  connection  with any  Hazardous  Materials
present  at any time on or about  the Land,  or the  soils,  air,  improvements,
groundwater  or surface  water  thereof,  or the  violation of any  Requirements
relating to any such Hazardous  Materials,  except to the extent that any of the
foregoing  actually results from the release or emission of Hazardous  Materials
by any Tenant Party.

                  Landlord's Compliance. Landlord shall comply with (or cause to
be complied with) all Requirements  applicable to the Building which are not the
obligation of Tenant, to the extent that non-compliance  would materially impair
Tenant's use and occupancy of the Premises for the Permitted Uses.

                  Landlord's  Insurance.  Tenant  shall not cause or permit  any
action or  condition  that would (i)  invalidate  or  conflict  with  Landlord's
insurance policies, (ii) violate applicable rules, regulations and guidelines of
the Fire Department,  Fire Insurance Rating  Organization or any other authority
having  jurisdiction over the Building,  (iii) cause an increase in the premiums
of fire  insurance for the Building over that payable with respect to Comparable
Buildings,  or (iv) result in Landlord's insurance companies' refusing to insure
the Building or any property  therein in amounts and against risks as reasonably
determined  by  Landlord.  If fire  insurance  premiums  increase as a result of
Tenant's failure to comply with the provisions of this Section 8.1, Tenant shall
promptly cure such failure and shall  reimburse  Landlord for the increased fire
insurance premiums paid by Landlord as a result of such failure by Tenant.

         Fire and Life Safety. If the Fire Insurance Rating  Organization or any
Governmental  Authority or any of Landlord's insurers requires or recommends any
modifications and/or alterations be made or any additional equipment be supplied
in connection  with the sprinkler  system or fire alarm and  life-safety  system
serving the Building by reason of (i) the specific manner and nature of Tenant's
use of the Premises,  as distinct from general office use, (ii) Alterations made
by Tenant, or (iii) a breach by Tenant of any provisions of this Lease, Landlord
(to the extent  outside  of the  Premises)  or Tenant (to the extent  within the
Premises)  shall make such  modifications  and/or  Alterations,  and supply such
additional equipment, in either case at Tenant's expense.
<PAGE>

                                    ARTICLE 9

                                  SUBORDINATION

         Subordination and Attornment. (a) This Lease is subject and subordinate
to all  Mortgages and Superior  Leases,  and, at the request of any Mortgagee or
Lessor,  Tenant shall  attorn to such  Mortgagee or Lessor,  its  successors  in
interest or any purchaser in a foreclosure sale.

                   If a Lessor or  Mortgagee or any other person or entity shall
succeed to the rights of Landlord under this Lease,  whether through  possession
or  foreclosure  action  or the  delivery  of a new  lease or deed,  then at the
request of the successor  landlord and upon such  successor  landlord's  written
agreement to accept Tenant's attornment and to recognize Tenant's interest under
this  Lease,  Tenant  shall be deemed to have  attorned to and  recognized  such
successor  landlord as Landlord under this Lease. The provisions of this Section
9.1 are self-operative and require no further instruments to give effect hereto;
provided, however, that Tenant shall promptly execute and deliver any instrument
that  such  successor  landlord  may  reasonably  request  (i)  evidencing  such
attornment, (ii) setting forth the terms and conditions of Tenant's tenancy, and
(iii)  containing  such other  terms and  conditions  as may be required by such
Mortgagee  or Lessor,  provided  such terms and  conditions  do not increase the
Rent,  materially  increase  Tenant's  obligations  or materially  and adversely
affect Tenant's  rights under this Lease.  Upon such attornment this Lease shall
continue  in full  force and effect as a direct  lease  between  such  successor
landlord and Tenant upon all of the terms, conditions and covenants set forth in
this Lease except that such successor landlord shall not be

                    (i) liable for any act or omission  of  Landlord  (except to
                    the extent  such act or omission  continues  beyond the date
                    when such successor landlord succeeds to Landlord's interest
                    and Tenant gives notice of such act or omission);


                    (ii) subject to any defense, claim, counterclaim, set-off or
                    offsets which Tenant may have against Landlord;


                    (iii) bound by any  prepayment of more than one month's Rent
                    to any prior landlord;


                    (iv) bound by any  obligation  to make any payment to Tenant
                    which  was  required  to be  made  prior  to the  time  such
                    successor landlord succeeded to Landlord's interest;

                    (v) bound by any  obligation  to perform any work or to make
                    improvements  to the  Premises  except for (x)  repairs  and
                    maintenance  required  to be made  by  Landlord  under  this
                    Lease, and (y) repairs to the Premises as a result of damage
                    by fire or other casualty or a partial condemnation pursuant
                    to the provisions of this Lease, but only to the extent that
                    such repairs can reasonably be made from the net proceeds of
                    any insurance or condemnation awards, respectively, actually
                    made available to such successor landlord;

                    (vi) bound by any modification, amendment or renewal of this
                    Lease made without successor landlord's consent;

                    (vii) liable for the  repayment  of any security  deposit or
                    surrender  of any  letter of  credit,  unless and until such
                    security  deposit  actually is paid or such letter of credit
                    is actually delivered to such successor landlord; or

                    (viii)  liable  for  the  payment  of  any  unfunded  tenant
                    improvement  allowance,  refurbishment  allowance or similar
                    obligation.

                   Tenant  shall from time to time  within 10  Business  Days of
request from Landlord  execute and deliver any documents or instruments that may
be  reasonably   required  by  any   Mortgagee  or  Lessor  to  effectuate   any
subordination.

         Mortgage or Superior Lease Defaults.  Any Mortgagee may elect that this
Lease shall have priority over the Mortgage and, upon  notification to Tenant by
such Mortgagee,  this Lease shall be deemed to have priority over such Mortgage,
regardless of the date of this Lease.  In  connection  with any financing of the
Real  Property,  Tenant shall consent to any  reasonable  modifications  of this
Lease requested by any lending  institution,  provided such modifications do not
increase  the Rent,  materially  increase the  obligations,  or  materially  and
adversely affect the rights, of Tenant under this Lease.
<PAGE>

         Tenant's  Termination  Right. As long as any Superior Lease or Mortgage
exists,  Tenant shall not seek to  terminate  this Lease by reason of any act or
omission of  Landlord  until (a) Tenant  shall have given  notice of such act or
omission to all Lessors and/or  Mortgagees,  and (b) a reasonable period of time
shall  have  elapsed  following  the  giving of notice of such  default  and the
expiration  of any  applicable  notice  or  grace  periods  (unless  such act or
omission is not capable of being remedied  within a reasonable  period of time),
during which period such Lessors and/or Mortgagees shall have the right, but not
the obligation, to remedy such act or omission and thereafter diligently proceed
to so remedy such act or obligation. If any Lessor or Mortgagee elects to remedy
such act or omission of Landlord,  Tenant shall not seek to terminate this Lease
so long as such Lessor or Mortgagee is proceeding with  reasonable  diligence to
effect such remedy.

         Provisions.  The  provisions  of this  Article 9 shall (a) inure to the
benefit of  Landlord,  any future  owner of the  Building or the Real  Property,
Lessor or  Mortgagee  and any  sublessor  thereof and (b) apply  notwithstanding
that, as a matter of law, this Lease may terminate  upon the  termination of any
such Superior Lease or Mortgage.

         Non-Disturbance Agreements.  Landlord hereby agrees to use commercially
reasonable  efforts to obtain for Tenant a  subordination,  non-disturbance  and
attornment  agreement  from all Mortgagees and Lessors from time to time, in the
standard form customarily  employed by such Mortgagee and/or Lessor (which shall
be  commercially  reasonable) and (i) shall provide that this Lease shall not be
terminated so long as Tenant is not in default under this Lease,  and (ii) shall
recognize  Tenant's rights under this Lease (an "SNDA"),  provided that Landlord
shall have no  liability  to Tenant in the event that it is unable to obtain any
such  SNDA.  Tenant  shall  reimburse  Landlord,  within  10 days  after  demand
therefor,  for Landlord's  out-of-pocket costs,  including reasonable attorney's
fees and  disbursements,  incurred in connection  with such efforts  except with
respect to the SNDA from Guaranty Federal Bank which shall be at Landlord's sole
cost.  Landlord  represents that, as of the Effective Date hereof,  there are no
existing  Superior  Leases and the only existing  Mortgagee is Guaranty  Federal
Bank. If Landlord  fails to deliver to Tenant a SNDA from Guaranty  Federal Bank
within 45 days after the  execution  and  delivery of this Lease by Landlord and
Tenant, Tenant shall have the right, to be exercised,  if at all, within 10 days
following the expiration of such 45-day period, to terminate this Lease.

                                   ARTICLE 10

                                    SERVICES

         Electricity. Subject to any Requirements or any public utility rules or
regulations  governing  energy  consumption,  Landlord shall make or cause to be
made,  customary  arrangements  with utility  companies  and/or  public  service
companies  to furnish  electric  current to the  Premises  for  Tenant's  use in
accordance with the Design Standards.  If Landlord reasonably  determines by the
use of an electrical consumption survey or by other reasonable means that Tenant
is using electric current (including overhead fluorescent fixtures) in excess of
 .60 kilowatt hours per square foot of usable area in the Premises per month,  as
determined on an annualized  basis ("Excess  Electrical  Usage"),  then Landlord
shall have the right to charge Tenant an amount equal to  Landlord's  reasonable
estimate of Tenant's Excess  Electrical  Usage, and shall have the further right
to install an electric  current meter,  sub-meter or check meter in the Premises
(a "Meter") to measure the amount of electric  current consumed in the Premises.
The cost of such Meter special conduits,  wiring and panels needed in connection
therewith and the installation,  maintenance and repair thereof shall be paid by
Tenant. Tenant shall pay to Landlord,  from time to time, but no more frequently
than monthly,  for its Excess  Electrical Usage at the Premises.  The rate to be
paid by Tenant for  submetered  electricity  shall not exceed the amount paid by
Landlord  to the  supplier  of such  service,  together  with any taxes or other
charges in connection  therewith.  If Tenant so requests,  Tenant shall have the
right to  install,  at its sole cost and  expense,  meters on each  floor of the
Premises to measure Tenant's electrical  consumption within the Premises and, in
such  event,  Tenant  shall pay  Landlord  monthly  for the cost of  electricity
consumed within the Premises and Landlord shall exclude from Operating  Expenses
the cost of electricity so consumed  within the leased premises of other tenants
of the Building.
<PAGE>

         Excess Electricity. Tenant shall at all times comply with the rules and
regulations of the utility company supplying electricity to the Building. Tenant
shall not use any electrical equipment which, in Landlord's reasonable judgment,
would exceed the capacity of the electrical  equipment serving the Premises.  If
Landlord   determines   that  Tenant's   electrical   requirements   necessitate
installation of any additional risers, feeders or other electrical  distribution
equipment (collectively, "Electrical Equipment"), or if Tenant provides Landlord
with evidence  reasonably  satisfactory  to Landlord of Tenant's need for excess
electricity  and requests  that  additional  Electrical  Equipment be installed,
Landlord  shall,  at  Tenant's  expense,   install  such  additional  Electrical
Equipment,  provided that Landlord,  in its sole judgment,  determines  that (a)
such installation is practicable and necessary,  (b) such additional  Electrical
Equipment is permissible under applicable Requirements, and (c) the installation
of such Electrical  Equipment will not cause permanent damage to the Building or
the  Premises,  cause or  create a  hazardous  condition,  entail  excessive  or
unreasonable  alterations,  interfere  with or limit  electrical  usage by other
tenants or occupants of the Building or exceed the limits of the  switchgear  or
other  facilities  serving  the  Building,  or  require  power in excess of that
available from the utility company  serving the Building.  Any costs incurred by
Landlord in  connection  therewith  shall be paid by Tenant within 10 days after
the rendition of a bill therefor.

         Elevators.  Landlord  shall  provide  passenger  and  freight  elevator
service to the  Premises 24 hours per day, 7 days per week;  provided,  however,
Landlord may limit elevator  service  during times other than Ordinary  Business
Hours.

         Heating.  Ventilation and Air  Conditioning.  Landlord shall furnish to
the Premises heating,  ventilation and  air-conditioning  ("HVAC") in accordance
with the Design Standards set forth in Exhibit D during Ordinary Business Hours.
Landlord  shall have access to all  air-cooling,  fan,  ventilating  and machine
rooms and electrical closets and all other mechanical  installations of Landlord
(collectively,  "Mechanical  Installations"),  and  Tenant  shall not  construct
partitions or other  obstructions  which may interfere  with  Landlord's  access
thereto  or the  moving  of  Landlord's  equipment  to and from  the  Mechanical
Installations.   No  Tenant  Party  shall  at  any  time  enter  the  Mechanical
Installations  or tamper  with,  adjust,  or  otherwise  affect such  Mechanical
Installations.  Landlord  shall not be  responsible  if the HVAC System fails to
provide  cooled or heated air, as the case may be, to the Premises in accordance
with the Design Standards by reason of (i) any equipment installed by, for or on
behalf  of  Tenant,  which  has an  electrical  load in  excess  of the  average
electrical load and human occupancy factors for the HVAC System as designed,  or
(ii) any  rearrangement  of partitioning or other  Alterations made or performed
by, for or on behalf of Tenant.  Tenant shall  cooperate with Landlord and shall
abide by the rules and regulations  which Landlord may reasonably  prescribe for
the proper functioning and protection of the HVAC System.

         Overtime  Freight  Elevators and HVAC.  The Fixed Rent does not include
any charge to Tenant for the furnishing of any freight  elevator service or HVAC
to the Premises during any periods other than Ordinary Business Hours ("Overtime
Periods").  If Tenant desires any such services during Overtime Periods,  Tenant
shall deliver notice to the Building office requesting such services at least 24
hours prior to the time Tenant requests such services to be provided;  provided,
however,  that Landlord shall use reasonable  efforts to arrange such service on
such  shorter  notice as Tenant shall  provide.  If Landlord  furnishes  freight
elevator or HVAC service during Overtime  Periods,  Tenant shall pay to Landlord
the cost  thereof  at the  then  established  rates  for  such  services  in the
Building.

         Cleaning.  Landlord  shall cause the Premises  (excluding  any portions
thereof used for the storage,  preparation,  service or  consumption  of food or
beverages) to be cleaned,  substantially  in  accordance  with the standards set
forth in Exhibit E. Any areas of the Premises requiring additional cleaning such
as areas  used for  preparation  or  consumption  of  food,  private  bathrooms,
computer  rooms,  mail rooms and trading  floors  shall be cleaned,  at Tenant's
expense, by Landlord's cleaning contractor,  at rates which shall be competitive
with  rates of other  cleaning  contractors  providing  comparable  services  to
Comparable  Buildings.  Landlord's  cleaning  contractor and its employees shall
have access to the Premises at all times except during Ordinary Business Hours.

         Water.  Landlord  shall  provide  water in the core  lavatories on each
floor of the Building.  If Tenant  requires water for any  additional  purposes,
Tenant shall pay for the cost of bringing water to the Premises and Landlord may
install  a meter  to  measure  the  water.  Tenant  shall  pay the  cost of such
installation, and for all maintenance, repairs and replacements thereto, and for
the reasonable charges of Landlord for the water consumed.

         Refuse Removal.  Landlord shall provide refuse removal  services at the
Building.  Tenant shall pay to Landlord,  within 10 Business Days after delivery
of an invoice  therefor,  Landlord's  reasonable  charge for such removal to the
extent  that the refuse  generated  by Tenant  exceeds  the  refuse  customarily
generated by general office  tenants.  Tenant shall not dispose of any refuse in
the Common Areas,  and if Tenant does so, Tenant shall be liable for  Landlord's
reasonable charge for such removal.
<PAGE>

         Directory. The lobby shall contain a computerized directory wherein the
Building's  tenants  shall be listed with a capacity  for up to 25 listings  per
floor for Tenant and others permitted to occupy the Premises  hereunder.  Tenant
shall  be  entitled  to a  proportionate  share of such  listings,  based on the
rentable  square  footage  of the  Premises.  From  time to  time,  but not more
frequently than monthly,  Landlord shall reprogram the computerized directory to
reflect such changes in the listings therein as Tenant shall request.

         Service  Interruptions.  Landlord  reserves  the right to  suspend  any
service  when  necessary,   by  reason  of  Unavoidable  Delays,   accidents  or
emergencies,  or for Restorative Work which, in Landlord's  reasonable judgment,
are necessary or appropriate until such Unavoidable Delay, accident or emergency
shall cease or such  Restorative  Work is completed  and  Landlord  shall not be
liable for any interruption, curtailment or failure to supply services. Landlord
shall use  reasonable  efforts to minimize  interference  with  Tenant's use and
occupancy  of  the  Premises  as  a  result  of  any  such  failure,  defect  or
interruption  of,  or  change  in the  supply,  character  and/or  quantity  of,
electrical  service and to restore any such services,  remedy such situation and
minimize any interference  with Tenant's  business.  Subject to Section 6.3, the
exercise  of any such right or the  occurrence  of any such  failure by Landlord
shall not constitute an actual or  constructive  eviction,  in whole or in part,
entitle  Tenant to any  compensation,  abatement or diminution of Rent,  relieve
Tenant from any of its  obligations  under this Lease,  or impose any  liability
upon Landlord by reason of inconvenience to Tenant,  or interruption of Tenant's
business,  or otherwise.  Landlord  shall not be liable in any way to Tenant for
any  failure,  defect or  interruption  of, or change in the  supply,  character
and/or quantity of, electrical  service furnished to the Premises for any reason
except if attributable to the gross negligence or willful misconduct of Landlord
or its agents or contractors.

                                   ARTICLE 11

                       INSURANCE; PROPERTY LOSS OR DAMAGE

         Tenant's Insurance.  (a) Tenant, at its expense,  shall obtain and keep
in full force and effect during the Term:

                    (i) a policy of commercial general liability insurance on an
                    occurrence basis against claims for personal  injury,  death
                    and/or  property  damage  occurring  in or  about  the  Real
                    Property,  under  which  Tenant is named as the  insured and
                    Landlord,   Landlord's   Agent  and  any   Lessors  and  any
                    Mortgagees  whose  names have been  furnished  to Tenant are
                    named as additional insureds (the "Insured  Parties").  Such
                    insurance   shall   provide   primary    coverage    without
                    contribution  from any other insurance carried by or for the
                    benefit of the  Insured  Parties,  and Tenant  shall  obtain
                    blanket broad-form  contractual liability coverage to insure
                    its  indemnity  obligations  set forth in  Article  26.  The
                    minimum limits of liability shall be a combined single limit
                    with  respect  to each  occurrence  in an amount of not less
                    than  $5,000,000;  provided,  however,  that Landlord  shall
                    retain the right to require Tenant to increase such coverage
                    on no more than two  occasions  during the  initial  Term of
                    this Lease to that amount of insurance  which in  Landlord's
                    reasonable  judgment is then being  customarily  required by
                    landlords for similar office space in Comparable  Buildings.
                    The  deductible  or self insured  retention  for such policy
                    shall not exceed $10,000;

                    (ii)insurance against loss or damage by fire, and such other
                    risks and  hazards as are  insurable  under  then  available
                    standard  forms of "all risk"  property  insurance  policies
                    with extended  coverage,  insuring Tenant's Property and all
                    Alterations and improvements to the Premises  (including the
                    initial  installations)  to the extent such  Alterations and
                    improvements  exceed the cost of the improvements  typically
                    performed  in  connection  with  the  initial  occupancy  of
                    tenants in the Building ("Building Standard Installations"),
                    for the full  insurable  value thereof or  replacement  cost
                    thereof, having a deductible amount, if any not in excess of
                    $25,000;

                    (iii)  during  the  performance  of  any  Alteration,  until
                    completion  thereof,  Builder's  Risk  insurance  on an "all
                    risk"  basis  and on a  completed  value  form  including  a
                    Permission  to  Complete  and Occupy  endorsement,  for full
                    replacement  value  covering  the  interest of Landlord  and
                    Tenant (and their respective contractors and subcontractors)
                    in all work  incorporated  in the Building and all materials
                    and equipment in or about the Premises;

                    (iv)Workers' Compensation Insurance, as required by law;

                    (v) Business Interruption Insurance; and

                    (vi)such  other  insurance  in such  amounts as the  Insured
                    Parties may reasonably require from time to time.
<PAGE>

                   All  insurance  required  to be  carried  by Tenant (i) shall
contain a provision  that (x) no act or omission of Tenant shall affect or limit
the obligation of the insurance company to pay the amount of any loss sustained,
and (y) shall be  noncancellable  and/or no material change in coverage shall be
made  thereto  unless the Insured  Parties  receive 30 days' prior notice of the
same, by certified mail,  return receipt  requested,  and (ii) shall be effected
under valid and enforceable  policies issued by reputable  insurers permitted to
do business in the State of California and rated in Best's  Insurance  Guide, or
any successor  thereto as having a "Best's Rating" of "A-" and a "Financial Size
Category"  of at least  "X" or,  if such  ratings  are not then in  effect,  the
equivalent  thereof or such other  financial  rating as Landlord may at any time
consider appropriate.

                   On or prior to the Commencement Date, Tenant shall deliver to
Landlord  appropriate  policies of insurance,  including  evidence of waivers of
subrogation required to be carried pursuant to this Article 11 (the "Policies").
Evidence of each renewal or  replacement  of the Policies  shall be delivered by
Tenant to Landlord at least 10 days prior to the expiration of the Policies.  In
lieu of the  Policies,  Tenant may  deliver to  Landlord  a  certification  from
Tenant's insurance company (on the form currently  designated "Acord 27", or the
equivalent)  which shall be binding on  Tenant's  insurance  company,  and which
shall  expressly  provide  that such  certification  (i)  conveys to the Insured
Parties all the rights and  privileges  afforded  under the  Policies as primary
insurance,  and (ii)  contains  an  unconditional  obligation  of the  insurance
company to advise all  Insured  Parties in  writing by  certified  mail,  return
receipt  requested,  at least 30 days in advance of any termination or change to
the Policies that would affect the interest of any of the Insured Parties.

         Landlord's Insurance. Landlord shall, from and after the Effective Date
and until the Expiration Date, maintain in effect the following  insurance:  (i)
fire  and  "all  risk"  insurance  providing  coverage  in the  event  of  fire,
vandalism, malicious mischief and all other risks normally covered by "all risk"
policies in the area of the  Building,  covering  the  Building  (excluding  the
property required to be insured by Tenant pursuant to Section 11.1) in an amount
not less than 95% of the full replacement  value (less  commercially  reasonable
deductibles  which as of the  Effective  Date is  $25,000.00  but is  subject to
periodic change over the Term) of the Building excluding  foundations,  footings
and other below-grade structural elements; and (ii) commercial general liability
insurance or the  equivalent  in the amount of at least  $5,000,000.00,  against
claims of bodily  injury,  personal  injury or  property  damage  arising out of
Landlord's operations,  assumed liabilities,  contractual liabilities, or use of
the Building and Common  Areas.  Such  insurance may be carried under blanket or
umbrella insurance policies.  Upon written request from Tenant, but no more than
one time during any calendar  year,  Landlord shall provide Tenant with evidence
that  Landlord  is  carrying  the  insurance  Landlord  is  required to maintain
pursuant to this Section 11.2.

         Waiver of  Subrogation.  Landlord  and  Tenant  shall  each  procure an
appropriate clause in or endorsement to any property insurance covering the Real
Property and personal property,  fixtures and equipment located therein, wherein
the insurer waives subrogation or consents to a waiver of right of recovery, and
notwithstanding  anything  to the  contrary  in this Lease  Landlord  and Tenant
hereby  release and waive all claims against the other for any loss or damage to
its property or the property of others  resulting  from fire or other hazards to
the extent  covered by such property  insurance or would  normally be covered by
standard "all risk" property  insurance;  provided,  however,  that the release,
discharge, exoneration and covenant not to sue contained herein shall be limited
by and be coextensive with the terms and provisions of the waiver of subrogation
or waiver of right of recovery.  Tenant  acknowledges  that  Landlord  shall not
carry  insurance on, and shall not be  responsible  for, (i) damage to any Above
Building  Standard  Installations,  (ii) Tenant's  Property,  and (iii) any loss
suffered by Tenant due to interruption of Tenant's business.

         Restoration. (a) If the Premises are damaged by fire or other casualty,
or if the Building is damaged such that Tenant is deprived of reasonable  access
to the Premises,  the damage shall be repaired by Landlord, to substantially the
condition of the Premises prior to the damage,  subject to the provisions of any
Mortgage or Superior  Lease,  but Landlord shall have no obligation to repair or
restore (i) Tenant's Property or (ii) except as provided in Section 11.3(b), any
Above  Building  Standard  Installations.  So long as Tenant  is not in  default
beyond  applicable  grace or notice  provisions in the payment or performance of
its obligations  under this Section 11.3, and provided Tenant timely delivers to
Landlord either  Tenant's  Restoration  Payment (as hereinafter  defined) or the
Restoration  Security (as hereinafter  defined) or Tenant  expressly  waives any
obligation  of  Landlord to repair or restore  any of  Tenant's  Above  Building
Standard   Installations,   then  until  the  restoration  of  the  Premises  is
Substantially  Completed  or would  have been  Substantially  Completed  but for
Tenant Delay,  Fixed Rent,  Tenant's Tax Payment and Tenant's  Operating Payment
shall be reduced in the proportion by which the area of the part of the Premises
which is not  usable  (or  accessible  ) and is not used by Tenant  bears to the
total area of the Premises.
<PAGE>

                   As a condition  precedent to Landlord's  obligation to repair
or restore any Above Building  Standard  Installations,  Tenant shall (i) pay to
Landlord upon demand a sum ("Tenant's Restoration Payment") equal to the amount,
if  any,  by  which  (A) the  cost,  as  estimated  by a  reputable  independent
contractor  designated by Landlord,  of repairing and restoring all  Alterations
and  Initial  Installations  in the  Premises  to their  condition  prior to the
damage,  exceeds (B) the cost of restoring the Premises  with Building  Standard
Installations, or (ii) furnish to Landlord security (the "Restoration Security")
in form  and  amount  reasonably  acceptable  to  Landlord  to  secure  Tenant's
obligation  to pay all costs in excess of restoring  the Premises  with Building
Standard  Installations.  If Tenant shall fail to deliver to Landlord either (1)
Tenant's Restoration Payment or the Restoration Security, as applicable,  or (2)
a waiver by Tenant,  in form  satisfactory  to  Landlord,  of all of  Landlord's
obligations   to  repair  or  restore  any  of  the  Above   Building   Standard
Installations,  in either case within 15 days after Landlord's  demand therefor,
Landlord  shall  have no  obligation  to  restore  any Above  Building  Standard
Installations  and Tenant's  abatement  of Fixed Rent,  Tenant's Tax Payment and
Tenant's  Operating  Payment  shall cease when the  restoration  of the Premises
(other  than  any  Above  Building  Standard   Installations)  is  Substantially
Complete.

         Landlord's Termination Right.  Notwithstanding anything to the contrary
contained in Section 11.3,  if the Premises are totally  damaged or are rendered
wholly untenantable,  or if the Building shall be so damaged that, in Landlord's
reasonable opinion, substantial alteration, demolition, or reconstruction of the
Building  shall be  required  (whether  or not the  Premises  are so  damaged or
rendered untenantable) and the estimated period for the repair or restoration of
the Premises or the Building set forth in the Restoration Notice (as hereinafter
defined)  is more than 12 months  from the date of such damage or (ii) under the
provisions  of any Mortgage or Superior  Lease,  Landlord  shall be unable so to
restore the Premises or Tenant's reasonable access to the Premises, then in such
event,  Landlord  may, not later than 60 days  following the date of the damage,
terminate this Lease by notice to Tenant,  provided that if the Premises are not
damaged,  Landlord  may not  terminate  this  Lease  unless  Landlord  similarly
terminates the leases of other tenants in the Building  aggregating at least 75%
of the portion of the Building occupied for office purposes immediately prior to
such damage. If this Lease is so terminated,  (a) the Term shall expire upon the
30th day after such notice is given,  (b) Tenant  shall  vacate the Premises and
surrender the same to Landlord,  (c) Tenant's  liability for Rent shall cease as
of the date of the  damage,  and (d) any prepaid  Rent for any period  after the
date of the damage shall be refunded by Landlord to Tenant.

         Tenant's Termination Right. If the Premises are totally damaged and are
thereby  rendered  wholly  untenantable,  or if the Building shall be so damaged
that Tenant is deprived of reasonable  access to the  Premises,  and if Landlord
elects to restore the Premises,  Landlord  shall,  within 60 days  following the
date of the damage, cause a contractor or architect selected by Landlord to give
notice (the "Restoration Notice") to Tenant of the date by which such contractor
or architect  estimates the  restoration  of the Premises  (excluding  any Above
Building Standard  Installations) shall be Substantially  Completed. If (i) such
date, as set forth in the  Restoration  Notice,  is more than 12 months from the
date of such damage and if  Landlord  has not  elected to  terminate  this Lease
pursuant to Section  11.4,  then Tenant shall have the right to  terminate  this
Lease by giving notice to Landlord not later than 30 days following  delivery of
the Restoration  Notice to Tenant, or (ii) Landlord elects not to terminate this
Lease pursuant to Section 11.4, but fails to  Substantially  Complete the repair
or restoration of the Premises or the Building, as applicable,  within 12 months
from the date of  damage  or  destruction,  Tenant,  upon not less than 30 days'
prior written  notice,  may elect to terminate this Lease (either such notice in
(i) or (ii), a "Termination  Notice").  If Tenant delivers a Termination Notice,
unless,  with respect to a Termination  Notice delivered pursuant to clause (ii)
of the preceding  sentence,  Landlord  within such 30-day  period  Substantially
Completes  such  repair  or  restoration,  this  Lease  shall be  deemed to have
terminated as of the date of the giving of the Termination Notice, in the manner
set forth in the second sentence of Section 11.4.

         Final 12  Months.  Notwithstanding  anything  to the  contrary  in this
Article  11, if any  damage  during  the final 12 months of the Term  (including
extensions thereof) renders the Premises wholly untenantable, either Landlord or
Tenant  may  terminate  this Lease by notice to the other  party  within 30 days
after the  occurrence of such damage and this Lease shall expire on the 30th day
after the date of such notice.  For purposes of this Section 11.6,  the Premises
shall be deemed wholly untenantable if Tenant shall be precluded from using more
than 50% of the Premises for the conduct of its business and Tenant's  inability
to so use the Premises is reasonably expected to continue for more than 90 days.

         Landlord's Liability.  Any Building employee to whom any property shall
be  entrusted by or on behalf of Tenant shall be deemed to be acting as Tenant's
agent with respect to such property and neither Landlord nor its agents shall be
liable  for any  damage  to such  property,  or for the loss of or damage to any
property of Tenant by theft or otherwise.  None of the Insured  Parties shall be
liable  for any  injury or damage to  persons or  property  or  interruption  of
Tenant's  business  resulting from fire or other casualty,  any damage caused by
other  tenants or persons in the  Building or Garage or by  construction  of any
private, public or quasi-public work, or any latent defect in the Premises or in
the  Building or Garage  (except that  Landlord  shall be required to repair the
same to the extent  provided in Article 5). No penalty  shall  accrue for delays
which  may  arise by  reason  of  adjustment  of fire  insurance  on the part of
Landlord or Tenant,  or for any  Unavoidable  Delays  arising from any repair or
restoration  of any portion of the Real  Property,  provided that Landlord shall
use reasonable efforts to minimize  interference with Tenant's use and occupancy
of the Premises during the performance of any such repair or restoration.


<PAGE>

                                   ARTICLE 12

                                 EMINENT DOMAIN

          Section 12.1 Taking.

                  Total  Taking.  If  all  or  substantially  all  of  the  Real
Property,  the Building or the Premises  shall be acquired or condemned  for any
public or quasi-public purpose (a "Taking"),  this Lease shall terminate and the
Term shall end as of the date of the vesting of title and Rent shall be prorated
and adjusted as of such date.

                  Partial  Taking.  Upon a  Taking  of only a part  of the  Real
Property,  the Building or the Premises then, except as hereinafter  provided in
this  Article 12, this Lease shall  continue in full force and effect,  provided
that from and after the date of the  vesting of title,  Fixed Rent and  Tenant's
Proportionate  Share shall be modified to reflect the  reduction of the Premises
and/or the Building as a result of such Taking.

                  Landlord's  Termination Right. Whether or not the Premises are
affected,  Landlord may, by notice to Tenant,  within 60 days following the date
upon  which  Landlord  receives  notice of the Taking of all or a portion of the
Real Property, the Building or the Premises, terminate this Lease, provided that
Landlord elects to terminate  leases  (including this Lease)  affecting at least
75% of the rentable area of the Building.

                  Tenant's  Termination  Right. If the part of the Real Property
so Taken  contains  more than 20% of the total area of the Premises  occupied by
Tenant immediately prior to such Taking, or if, by reason of such Taking, Tenant
no longer has reasonable  means of access to the Premises or Tenant's use of the
Premises is materially and adversely affected thereby, Tenant may terminate this
Lease by notice to Landlord  given within 30 days  following the date upon which
Tenant is given  notice of such  Taking.  If Tenant so notifies  Landlord,  this
Lease  shall  end and  expire  upon the 30th day  following  the  giving of such
notice.  If a part of the  Premises  shall  be so Taken  and  this  Lease is not
terminated in accordance with this Section 12.1 Landlord, without being required
to spend more than it collects as an award, shall,  subject to the provisions of
any Mortgage or Superior  Lease,  restore that part of the Premises not so Taken
to a  self-contained  rental  unit  substantially  equivalent  (with  respect to
character,  quality,  appearance and services) to that which existed immediately
prior  to such  Taking,  excluding  Tenant's  Property  and any  Above  Building
Standard Installations.

                  Apportionment  of Rent.  Upon any  termination  of this  Lease
pursuant to the  provisions of this Article 12, Rent shall be apportioned as of,
and shall be paid or refunded up to and including, the date of such termination.

         Awards.  Upon any Taking,  Landlord  shall receive the entire award for
any such  Taking,  and  Tenant  shall  have no  claim  against  Landlord  or the
condemning  authority  for the  value of any  unexpired  portion  of the Term or
Tenant's Alterations;  and Tenant hereby assigns to Landlord all of its right in
and to such  award.  Nothing  contained  in this  Article  12 shall be deemed to
prevent Tenant from making a separate claim in any condemnation  proceedings for
the then value of any Tenant's Property or Alterations or Initial  Installations
paid for by Tenant included in such Taking and for any moving expenses, provided
any such award is in  addition  to, and does not result in a  reduction  of, the
award made to Landlord.

         Temporary  Taking.  If  all or  any  part  of  the  Premises  is  Taken
temporarily  during  the Term for any  public or  quasi-public  use or  purpose,
Tenant shall give prompt notice to Landlord and the Term shall not be reduced or
affected in any way and Tenant shall  continue to pay all Rent payable by Tenant
without reduction or abatement and to perform all of its other obligations under
this  Lease,  except to the extent  prevented  from  doing so by the  condemning
authority, and Tenant shall be entitled to receive any award or payment from the
condemning authority for such use, which shall be received,  held and applied by
Tenant as a trust fund for payment of the Rent falling due.


<PAGE>

                                  ARTICLE 13

                            ASSIGNMENT AND SUBLETTING

         Section 13.1      Consent Requirements.

                  No  Assignment  or  Subletting.  Except as expressly set forth
herein,  Tenant  shall not assign,  mortgage,  pledge,  encumber,  or  otherwise
transfer  this Lease,  whether by operation of law or  otherwise,  and shall not
sublet,  or permit,  or suffer the  Premises  or any part  thereof to be used or
occupied by others  (whether for desk space,  mailing  privileges or otherwise),
without  Landlord's  prior consent in each instance.  Any assignment,  sublease,
mortgage,  pledge, encumbrance or transfer in contravention of the provisions of
this Article 13 shall be void and shall constitute an Event of Default.

                  Collection  of  Rent.  If,  without  Landlord's  consent  when
required  under this  Article  13,  this Lease is  assigned,  or any part of the
Premises  is sublet or  occupied  by anyone  other than  Tenant or this Lease is
encumbered  (by operation of law or  otherwise),  Landlord may collect rent from
the assignee,  subtenant or occupant,  and apply the net amount collected to the
Rent  herein  reserved.  No such  collection  shall be  deemed  a waiver  of the
provisions  of this  Article 13, an  acceptance  of the  assignee,  subtenant or
occupant  as tenant,  or a release of Tenant  from the  performance  of Tenant's
covenants  hereunder,  and in all cases Tenant shall remain fully liable for its
obligations under this Lease.

                  Further  Assignment/Subletting.   Landlord's  consent  to  any
assignment or subletting  shall not relieve Tenant from the obligation to obtain
Landlord's consent to any further assignment or subletting.  Except for a person
or entity who  acquired an interest in the  Premises  directly  from the initial
Tenant  named  herein,  no  subtenant  shall be  permitted  subtenant  assign or
encumber  its  sublease or further  sublet any portion of its sublet  space,  or
otherwise  suffer  or  permit  any  portion  of the  sublet  space to be used or
occupied by others.

         Tenant's  Notice.  If Tenant desires to assign this Lease or sublet all
or any  portion  of the  Premises  other  than to a  Permitted  Transferee  in a
transaction for which  Landlord's  consent is required  hereunder,  Tenant shall
give notice thereof to Landlord,  which shall be accompanied by (a) with respect
to an assignment  of this Lease,  the date Tenant  desires the  assignment to be
effective,  and (b) with respect to a sublet of all or a part of the Premises, a
description  of the portion of the  Premises to be sublet.  Such notice shall be
deemed an offer from Tenant to Landlord of the right, at Landlord's  option, (1)
with respect to a sublease for a term expiring no earlier than 6 months prior to
the  Expiration  Date,  to  terminate  this Lease with  respect to such space as
Tenant proposes to sublease (the "Partial Space"), upon the terms and conditions
hereinafter  set forth,  or (2) if the proposed  transaction is an assignment of
this Lease, to terminate this Lease. Such option may be exercised by notice from
Landlord to Tenant within 30 days after delivery of Tenant's notice. If Landlord
exercises its option to terminate all or a portion of this Lease, (a) this Lease
shall end and expire with  respect to all or a portion of the  Premises,  as the
case may be, on the date that such  assignment or sublease was to commence,  (b)
Rent shall be  apportioned,  paid or refunded as of such date, (c) the amount of
the Security  Deposit  shall be reduced to an amount equal to the product of (x)
the amount of the Security  Deposit and (y) a ratio,  the  numerator of which is
the number of rentable square feet in the remaining  portion of the Premises and
the  denominator of which is the number of rentable  square feet in the Premises
immediately  prior to  Landlord's  exercise of such  option,  (d)  Tenant,  upon
Landlord's  request,  shall enter into an amendment of this Lease  ratifying and
confirming such total or partial termination,  and setting forth any appropriate
modifications to the terms and provisions hereof, and (e) Landlord shall be free
to lease the Premises (or any part thereof) to Tenant's  prospective assignee or
subtenant.  If Landlord  exercises such option,  Landlord shall pay all costs to
make the Partial Space a self-contained rental unit.

         Conditions to Assignment/Subletting.  (a) If Landlord does not exercise
its  termination  option provided under Section 13.2, and provided that no Event
of Default  then  exists,  Landlord's  consent  to the  proposed  assignment  or
subletting shall not be unreasonably  withheld or delayed. Such consent shall be
granted or denied  within 20 days after  delivery  to Landlord of (i) a true and
complete statement reasonably detailing the identity of the proposed assignee or

<PAGE>

subtenant ("Transferee"), the nature of its business and its proposed use of the
Premises,  (ii) current  financial  information  with respect to the Transferee,
including its most recent financial statements,  and (iii) any other information
Landlord may reasonably request, provided that:

                    (A) in Landlord's  reasonable  judgment,  the  Transferee is
                    engaged in a business or activity,  and the Premises will be
                    used in a  manner,  which  (1) is in  keeping  with the then
                    standards of the Building,  (2) is for the  Permitted  Uses,
                    and (3) does not violate any  restrictions set forth in this
                    Lease,  any  Mortgage  or  Superior  Lease  or any  negative
                    covenant  as to use of the  Premises  required  by any other
                    lease in the Building;

                    (B) the  Transferee is reputable with  sufficient  financial
                    means to perform all of its obligations  under this Lease or
                    the sublease, as the case may be;

                    (C) the  Transferee  is not a person or entity (or affiliate
                    of a person or  entity)  with whom  Landlord  is then or has
                    been  within the prior 6 months  negotiating  in  connection
                    with the rental of space in the Building;

                    (D) there shall be not more than 3 subtenants  in each floor
                    of the Premises;

                    (E) the aggregate consideration to be paid by the Transferee
                    under the terms of the proposed  sublease  shall not be less
                    than  90% of the  fixed  rent  at  which  Landlord  is  then
                    offering to lease other space in the  Building  (the "Market
                    Sub-rent") determined as though the Premises were vacant and
                    taking  into  account  (1)  the  length  of the  term of the
                    proposed  sublease,  (2) any  rent  concessions  granted  to
                    Transferee,  and  (3)  the  cost  of any  Alterations  being
                    performed for the  Transferee;  provided,  however,  that if
                    after a period of 60 days Tenant is unable to  consummate  a
                    sublease  transaction  for an amount  at least  equal to the
                    Market Subrent; then for the first 30 days thereafter Tenant
                    may advertise the Space at a rental rate no less than eighty
                    percent (80%) of the Market Subrent, for the next 30 days at
                    seventy  percent (70%) of the Market  Subrent and thereafter
                    at such other rental rate as Tenant may determine;

                    (F) Tenant shall,  upon demand,  reimburse  Landlord for all
                    reasonable  expenses incurred by Landlord in connection with
                    such assignment or sublease, including any investigations as
                    to the  acceptability  of the Transferee and all legal costs
                    reasonably  incurred in connection  with the granting of any
                    requested consent, which investigation and legal costs shall
                    not exceed the aggregate amount of $2,500 ("Expense Limit");
                    provided,  however,  that such Expense Limit shall not apply
                    to  any  assignment  or  sublease  in  connection  with  the
                    bankruptcy or  reorganization  of Tenant or that involves an
                    amendment to this Lease, and all costs  reasonably  incurred
                    in reviewing any plans and  specifications  for  Alterations
                    proposed to be made in connection therewith;

                    (G)  Subject  to  (F)  above,   Tenant  shall  not  publicly
                    advertise the  availability of the Premises at a rental rate
                    less than the Market Sub-rent; and

                    (H)  the  Transferee  shall  not be  entitled,  directly  or
                    indirectly, to diplomatic or sovereign immunity,  regardless
                    of whether the Transferee agrees to waive such diplomatic or
                    sovereign  immunity,  and shall be subject to the service of
                    process  in,  and the  jurisdiction  of the  courts  of, the
                    County of Santa Clara and State of California.
<PAGE>

Within 15 days after Landlord's receipt of Tenant's notice,  Landlord shall give
written  notice to Tenant of consent  to the  proposed  transfer,  or specify in
writing and with reasonable  particularly the basis for withholding its consent.
If Landlord  fails to so advise  Tenant prior to the  expiration  of such 15-day
period,  Tenant shall deliver a second notice to Landlord,  stating in bold type
on the front page  thereof  "URGENT -- DELAY  NOTICE" and if  Landlord  fails to
respond within 5 days thereafter, Landlord's consent shall be deemed granted.

                   With respect to each and every subletting  and/or  assignment
approved by Landlord under the provisions of this Lease:

                    (i) the form of the proposed assignment or sublease shall be
                    reasonably satisfactory to Landlord;

                    (ii) no sublease  shall be for a term ending  later than one
                    day prior to the Expiration Date;

                    (iii) no Transferee shall take possession of any part of the
                    Premises,  until an executed counterpart of such sublease or
                    assignment  has been  delivered  to Landlord and approved by
                    Landlord as provided in Section 13.3(a);

                    (iv)if an Event of  Default  occurs  prior to the  effective
                    date of such  assignment or subletting and be continuing yet
                    uncured on the date that would  otherwise be such  effective
                    date,  then  Landlord's   consent  thereto,   if  previously
                    granted, shall be immediately deemed revoked without further
                    notice to  Tenant,  and any such  assignment  or  subletting
                    deemed  unconsented  shall  constitute  a  further  Event of
                    Default hereunder; and

                    (v) each sublease  shall be subject and  subordinate to this
                    Lease and to the  matters to which this Lease is or shall be
                    subordinate;  and Tenant and each Transferee shall be deemed
                    to have  agreed  that upon the  occurrence  and  during  the
                    continuation  of an Event of Default  hereunder,  Tenant has
                    hereby  assigned  to  Landlord,  and  Landlord  may,  at its
                    option,  accept  such  assignment  of, all right,  title and
                    interest  of  Tenant as  sublandlord  under  such  sublease,
                    together  with all  modifications,  extensions  and renewals
                    thereof  then  in  effect  and  such  Transferee  shall,  at
                    Landlord's  option,  attorn to Landlord pursuant to the then
                    executory provisions of such sublease,  except that Landlord
                    shall not be (A) liable for any  previous act or omission of
                    Tenant under such sublease, (B) subject to any counterclaim,
                    offset or defense not expressly  provided in such  sublease,
                    which theretofore accrued to such Transferee against Tenant,
                    (C) bound by any previous  modification of such sublease not
                    consented to by Landlord or by any  prepayment  of more than
                    one  month's  rent,  (D) bound to return  such  Transferee's
                    security  deposit,  if any,  except to the  extent  Landlord
                    shall  receive  actual  possession  of such deposit and such
                    Transferee  shall be  entitled  to the  return of all or any
                    portion of such deposit under the terms of its sublease,  or
                    (E)  obligated  to make any  payment to or on behalf of such
                    Transferee, or to perform any work in the subleased space or
                    the Building,  or in any way to prepare the subleased  space
                    for  occupancy,  beyond  Landlord's  obligations  under this
                    Lease.  The provisions of this Section  13.3(b)(v)  shall be
                    self-operative,  and no further instrument shall be required
                    to  give  effect  to  this  provision,   provided  that  the
                    Transferee   shall  execute  and  deliver  to  Landlord  any
                    instruments  Landlord may reasonably request to evidence and
                    confirm such subordination and attornment.

         Binding on Tenant;  Indemnification  of Landlord.  Notwithstanding  any
assignment  or  subletting  or any  acceptance  of rent  by  Landlord  from  any
Transferee, Tenant shall remain fully liable for the payment of all Rent due and
for the performance of all the covenants, terms and conditions contained in this
Lease on Tenant's part to be observed and  performed,  and any default under any
term,  covenant or condition of this Lease by any Transferee or anyone  claiming
under or through any Transferee shall be deemed to be a default under this Lease
by Tenant.  Except for claims for personal  injury or property  damage caused by
the gross  negligence  or willful  misconduct  of Landlord or its  employees  or
agents, Tenant shall indemnify,  defend, protect and hold harmless Landlord from
and  against  any and all  Losses  resulting  from any  claims  that may be made
against  Landlord  by the  Transferee  or anyone  claiming  under or through any
Transferee or by any brokers or other  persons  claiming a commission or similar
compensation   in   connection   with  the  proposed   assignment  or  sublease,
irrespective  of whether  Landlord  shall give or decline to give its consent to
any proposed  assignment or sublease,  or if Landlord  shall exercise any of its
options under this Article 13.

         Tenant's  Failure  to  Complete.  If  Landlord  consents  to a proposed
assignment  or sublease and Tenant fails to execute and deliver to Landlord such
assignment  or sublease  within 90 days after the giving of such  consent,  then
Tenant shall again comply with all of the  provisions  and conditions of Section
13.2 before assigning this Lease or subletting all or part of the Premises.
<PAGE>

         Profits.  If Tenant enters into any  assignment  or sublease  permitted
hereunder  or  consented  to by  Landlord,  Tenant  shall,  within  60  days  of
Landlord's consent to such assignment or sublease, deliver to Landlord a list of
Tenant's  reasonable  third-party  brokerage fees, legal fees and  architectural
fees paid or to be paid in connection with such transaction and any actual costs
incurred  by Tenant in  separately  demising  and  otherwise  improving  for the
transferee the subleased space  (collectively,  "Transaction  Costs"),  together
with a list of all of Tenant's  Property to be transferred  to such  Transferee.
The Transaction  Costs shall be amortized,  on a straight-line  basis,  over the
term of any sublease.  Tenant shall deliver to Landlord  evidence of the payment
of such Transaction  Costs promptly after the same are paid. In consideration of
such assignment or subletting, Tenant shall pay to Landlord:

                   In the case of an  assignment,  on the effective  date of the
assignment,  50% of all sums  and  other  consideration  paid to  Tenant  by the
Transferee for or by reason of such assignment (including sums paid for the sale
or rental of Tenant's  Property,  less, in the case of a sale thereof,  the then
fair market value,  or in the case of the rental  thereof,  the then fair rental
value thereof,  as reasonably  determined by Landlord) after first deducting the
Transaction Costs; or

                   In the case of a sublease,  50% of any consideration  payable
under the  sublease to Tenant by the  Transferee  which  exceeds on a per square
foot basis the Fixed Rent accruing during the term of the sublease in respect of
the  subleased  space  (together  with any sums  paid for the sale or  rental of
Tenant's Property,  less, in the case of the sale thereof,  the then fair market
value, or in the case of the rental thereof, the then fair rental value thereof,
as  reasonably  determined  by  Landlord)  after  first  deducting  the  monthly
amortized amount of Transaction  Costs. The sums payable under this clause shall
be paid by Tenant to  Landlord  monthly  as and when  paid by the  subtenant  to
Tenant.

         Section 13.7      Transfers.

                  Related Entities. If Tenant is a corporation, the transfer (by
one or more  transfers)  of a majority of the stock of Tenant  shall be deemed a
voluntary assignment of this Lease;  provided,  however,  that the provisions of
this  Article 13 shall not apply to the transfer of shares of stock of Tenant if
and so long as  Tenant  is  publicly  traded on a  nationally  recognized  stock
exchange. For purposes of this Section 13.7 the term "transfers" shall be deemed
to include the issuance of new stock which results in a majority of the stock of
Tenant  being held by a person or entity  which does not hold a majority  of the
stock of Tenant on the Effective Date. If Tenant is a limited liability company,
partnership,  trust,  or any other legal  entity,  the  transfer (by one or more
transfers) of a majority of the beneficial  ownership  interests in such entity,
however characterized, shall be deemed a voluntary assignment of this Lease. The
provisions  of  Sections  13.1 and 13.6 shall not apply to  transactions  with a
corporation  into or with  which  Tenant is merged or  consolidated  or to which
substantially  all of  Tenant's  assets  are  transferred  (each,  a  "Permitted
Transferee") so long as (i) such transfer was made for a legitimate  independent
business  purpose and not for the purpose of transferring  this Lease,  (ii) the
successor  to Tenant  has a net worth  computed  in  accordance  with  generally
accepted  accounting  principles  at  least  equal to the net  worth  of  Tenant
immediately  prior to such merger,  consolidation  or transfer,  and (iii) proof
satisfactory  to  Landlord of such net worth is  delivered  to Landlord no later
than 10 days after the effective date of any such  transaction.  Section 13.6 or
the termination  right as provided in Section 13.2 shall not apply to any of the
foregoing  transfers  whether or not the  foregoing net worth text is satisfied.
Tenant may also, upon prior notice to Landlord,  permit any corporation or other
business  entity which  controls,  is controlled  by, or is under common control
with the original Tenant (a "Related  Corporation") to sublet all or part of the
Premises  for  the  Permitted  Uses,  provided  the  Related  Corporation  is in
Landlord's reasonable judgment of a character and engaged in a business which is
in keeping  with the  standards  for the Building and for so long as such entity
remains a Related Corporation.  Such sublease shall not be deemed to vest in any
such  Related  Corporation  any  right or  interest  in this  Lease nor shall it
relieve, release, impair or discharge any of Tenant's obligations hereunder. For
the purposes  hereof,  "control"  shall be deemed to mean  ownership of not less
than 50% of all of the voting stock of such  corporation or not less than 50% of
all of the legal and equitable  interest in any other business  entity if Tenant
is not a corporation.  Notwithstanding the foregoing, Tenant shall have no right
to assign this Lease or  sublease  all or any  portion of the  Premises  without
Landlord's  consent  pursuant to this  Section 13.7 if Tenant is not the initial
Tenant herein named or a person or entity who acquired Tenant's interest in this
Lease in a transaction approved by Landlord.
<PAGE>

                  Applicability.  The limitations set forth in this Section 13.7
shall apply to  Transferee(s)  and  guarantor(s)  of this Lease, if any, and any
transfer  by any such  entity  in  violation  of this  Section  13.7  shall be a
transfer in violation of Section 13.1.

                  Modifications,    Takeover   Agreements.   Any   modification,
amendment  or  extension  of a sublease  and/or any other  agreement  by which a
landlord of a building other than the Building  agrees to assume the obligations
of Tenant  under  this  Lease  shall be deemed a sublease  for the  purposes  of
Section 13.1 hereof.

         Assumption of Obligations. No assignment or transfer shall be effective
unless and until the Transferee executes,  acknowledges and delivers to Landlord
an agreement in form and substance  reasonably  satisfactory to Landlord whereby
the assignee (a) assumes  Tenant's  obligations  under this Lease and (b) agrees
that,  notwithstanding  such  assignment or transfer,  the provisions of Section
13.1 hereof  shall be binding upon it in respect of all future  assignments  and
transfers.

         Tenant's  Liability.  The joint and several liability of Tenant and any
successors-in-interest of Tenant and the due performance of Tenant's obligations
under this Lease shall not be discharged,  released or impaired by any agreement
or  stipulation  made by  Landlord,  or any  grantee or  assignee  of  Landlord,
extending the time, or modifying any of the terms and  provisions of this Lease,
or by any waiver or failure of Landlord, or any grantee or assignee of Landlord,
to enforce any of the terms and provisions of this Lease.

         Listings in Building Directory. The listing of any name other than that
of Tenant on the doors of the  Premises,  the  Building  directory  or elsewhere
shall not vest any right or  interest in this Lease or in the  Premises,  nor be
deemed to constitute  Landlord's  consent to any  assignment or transfer of this
Lease or to any sublease of the  Premises or to the use or occupancy  thereof by
others.  Any such listing shall  constitute a privilege  revocable in Landlord's
reasonable discretion by notice to Tenant.

         Lease Disaffirmance or Rejection. If at any time after an assignment by
Tenant named herein, this Lease is not affirmed or is rejected in any bankruptcy
proceeding or any similar proceeding, or upon a termination of this Lease due to
any such proceeding,  Tenant named herein,  upon request of Landlord given after
such  disaffirmance,  rejection or  termination  (and actual  notice  thereof to
Landlord  in the  event  of a  disaffirmance  or  rejection  or in the  event of
termination  other than by act of Landlord),  shall (a) pay to Landlord all Rent
and other charges due and owing by the assignee to Landlord  under this Lease to
and including the date of such disaffirmance,  rejection or termination, and (b)
as  "tenant,"  enter into a new lease of the Premises  with  Landlord for a term
commencing on the effective date of such disaffirmance, rejection or termination
and ending on the Expiration  Date, at the same Rent and upon the then executory
terms,  covenants and  conditions  contained in this Lease,  except that (i) the
rights of Tenant  named  herein  under the new  lease  shall be  subject  to the
possessory  rights of the assignee under this Lease and the possessory rights of
any persons  claiming through or under such assignee or by virtue of any statute
or of any order of any court,  (ii) such new lease shall  require  all  defaults
existing under this Lease to be cured by Tenant named herein with due diligence,
and (iii)  such new lease  shall  require  Tenant  named  herein to pay all Rent
which,  had this Lease not been so  disaffirmed,  rejected or terminated,  would
have  become  due  under the  provisions  of this  Lease  after the date of such
disaffirmance,  rejection  or  termination  with  respect  to any  period  prior
thereto.  If Tenant named herein  defaults in its obligations to enter into such
new lease for a period of 10 days after Landlord's request, then, in addition to
all other rights and remedies by reason of default,  either at law or in equity,
Landlord shall have the same rights and remedies  against Tenant named herein as
if it had  entered  into such new lease and such new lease had  thereafter  been
terminated  as of the  commencement  date thereof by reason of Tenant's  default
thereunder.
<PAGE>

                                   ARTICLE 14

                               ACCESS TO PREMISES

         Landlord's Access. (a) Landlord,  Landlord's agents and utility service
providers  servicing the Building may erect,  use and maintain  concealed ducts,
pipes and conduits in and through the Premises  provided such use does not cause
the  usable  area of the  Premises  to be reduced  beyond a de  minimis  amount.
Landlord  shall  promptly  repair any damage to the Premises  caused by any work
performed pursuant to this Article 14.

                   Landlord,  any  Lessor  or  Mortgagee  and  any  other  party
designated by Landlord and their respective agents shall have the right to enter
the  Premises  at all  reasonable  times,  upon  not less  than 24  hours  prior
telephonic notice except in the case of emergency,  to examine the Premises,  to
show the Premises to prospective purchasers,  Mortgagees, Lessors or, during the
last  15  months  of  the  Term,   tenants  and  their  respective   agents  and
representatives  or others,  to perform  Restorative Work to the Premises or the
Building,  and Landlord  shall be allowed to take all material into the Premises
that may be required for the  performance of such  Restorative  Work without the
same  constituting an actual or  constructive  eviction of Tenant in whole or in
part and without any abatement of Rent;  provided,  however,  that all such work
shall be done as promptly as  reasonably  possible  and so as to cause as little
interference  to Tenant as  reasonably  possible  and  shall be  subject  to the
provisions of Section 14.4 below.

                   All  parts  (except  surfaces  facing  the  interior  of  the
Premises) of all walls, windows and doors bounding the Premises,  all balconies,
terraces  and roofs  adjacent to the  Premises,  all space in or adjacent to the
Premises used for shafts,  stacks,  stairways,  mail chutes,  conduits and other
mechanical  facilities,  Building Systems;  Building facilities and Common Areas
are not part of the Premises, and Landlord shall have the use thereof and access
thereto   through  the  Premises   for  the  purposes  of  Building   operation,
maintenance, alteration and repair.

         Alterations to Real Property. Landlord has the right at any time to (a)
change the name,  number or designation by which the Building is commonly known,
and (b) alter the Building and Garage to change the  arrangement  or location of
entrances or  passageways,  doors and doorways,  corridors,  elevators,  stairs,
toilets or other Common Areas  without any such acts  constituting  an actual or
constructive  eviction and without incurring any liability to Tenant, so long as
such changes do not deprive Tenant of access to the Premises. Landlord shall not
exercise any of its rights pursuant to this Section 14.2, to the extent doing so
would unreasonably interfere with Tenant's use of the Premises or Garage.

         Light  and  Air.  If at  any  time  any  windows  of the  Premises  are
temporarily  darkened or covered over by reason of any Restorative  Work, any of
such windows are permanently  darkened or covered over due to any Requirement or
there is otherwise a diminution of light, air or view by another structure which
may hereinafter be erected  (whether or not by Landlord),  Landlord shall not be
liable for any damages and Tenant shall not be entitled to any  compensation  or
abatement of any Rent,  nor shall the same release  Tenant from its  obligations
hereunder or constitute an actual or constructive eviction.

         Tenant's Security  Requirements.  Landlord acknowledges that Tenant has
advised  Landlord  that  Tenant's  business at the Premises  involves  sensitive
information and operations and that Tenant has security  requirements to protect
such  information and operations.  Landlord and any person entering the Premises
with, at the direction of or under the authority of, Landlord shall,  subject to
Tenant's  compliance with its obligations  pursuant to this Section 14.4, follow
Tenant's  commercially  reasonable  security  requirements,  which  include  the
requirement   that  all  persons   entering   the  Premises  be  attended  by  a
representative  of Tenant,  Tenant shall make a  representative  available  upon
24-hours prior telephone  notice by Landlord.  Tenant  acknowledges  that to the
extent Tenant does not facilitate  Landlord's  access to the Premises or certain
portions thereof,  Landlord shall be absolved from the obligation to perform any
services within such portion of the Premises including cleaning services. In the
event of an  emergency  that could  cause  damage to health,  safety or property
Landlord shall use good faith efforts to follow Tenant's  security  requirements
and in such event  Landlord will be required to give only such notice that it in
good faith believes is feasible under the  circumstances and need not wait to be
accompanied  by Tenant  or its  employees  or  representatives  (although  these
parties may still accompany Landlord if they are available and wish to do so).
<PAGE>

                                   ARTICLE 15

                                     DEFAULT

         Tenant's  Defaults.  Each of the following events shall be an "Event of
Default" hereunder:

                   Tenant fails to pay when due any installment of Rent and such
default  shall  continue  for 5 days  after  notice of such  default is given to
Tenant,  except  that if  Landlord  shall have given 2 such  notices  during any
calendar year of the Term, Tenant shall not be entitled to any further notice of
its  delinquency in the payment of any  installment of rent until the expiration
of such calendar year without Tenant having defaulted in any such payment; or

                   Tenant  fails to observe or perform any other term,  covenant
or condition of this Lease and such failure  continues for more than 30 days (10
days with  respect to a default  under  Article 3) after  notice by  Landlord to
Tenant of such default,  or if such default  (other than a default under Article
3) is of a nature that it cannot be completely  remedied within 30 days, failure
by Tenant to commence to remedy such failure within said 30 days, and thereafter
diligently  prosecute to completion all steps  necessary to remedy such default,
provided in all events the same is completed within 90 days; or

                   if  Landlord  applies  or  retains  any part of the  Security
Deposit,  and Tenant  fails to deposit  with  Landlord  the amount so applied or
retained by Landlord, or to provide Landlord with a replacement Letter of Credit
(as hereinafter defined), if applicable,  within 5 days after notice by Landlord
to Tenant stating the amount applied or retained.

         Landlord's  Remedies.  (a) Upon the  occurrence of an Event of Default,
Landlord, at its option, and without limiting the exercise of any other right or
remedy  Landlord  may have on account of such Event of Default,  and without any
further  demand or notice,  may give to Tenant 3 days' notice of  termination of
this  Lease,  in which  event  this  Lease and the Term shall come to an end and
expire  (whether or not the Term shall have  commenced)  upon the  expiration of
such 3 day period with the same force and effect as if the date set forth in the
notice was the  Expiration  Date stated  herein;  and Tenant shall then quit and
surrender  the Premises to Landlord,  but Tenant shall remain liable for damages
as provided in this Article 15, and/or, to the extent permitted by law, Landlord
may remove all persons and property from the Premises,  which  property shall be
stored by Landlord at a warehouse or elsewhere at the risk,  expense and for the
account of Tenant.

                   If  Landlord  elects to  terminate  this  Lease,  pursuant to
Section  1951.2 of the  California  Civil  Code,  Landlord  shall be entitled to
recover from Tenant the aggregate of:

                    (i) The  worth at the time of award of the  unpaid  Rent and
                    charges  equivalent  to Rent  earned  as of the  date of the
                    termination hereof;

                    (ii)The  worth at the time of award of the  amount  by which
                    the unpaid Rent and charges  equivalent  to Rent which would
                    have been earned after the date of termination  hereof until
                    the time of award  exceeds  the amount of such  rental  loss
                    that Tenant proves could have been reasonably avoided;

                    (iii) The worth at the time of award of the  amount by which
                    the  unpaid  Rent  and  charges  equivalent  to Rent for the
                    balance  of the Term  after  the time of award  exceeds  the
                    amount of such  rental loss that  Tenant  proves  could have
                    been reasonably avoided;

                    (iv) Any other amount  necessary to compensate  Landlord for
                    the  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; and

                    (v)  Any  other  amount  which  Landlord  may  hereafter  be
                    permitted to recover from Tenant to compensate  Landlord for
                    the detriment caused by Tenant's default.
<PAGE>

For the  purposes of this  Section  15.2(b),  the "time of award" shall mean the
date upon which the judgment in any action brought by Landlord against Tenant by
reason of such Event of Default is entered or such earlier date as the court may
determine;  the  "worth  at the time of  award" of the  amounts  referred  to in
Sections  15.2(b)(i) and 15.2(b)(ii)  shall be computed by allowing  interest on
such amounts at the Interest  Rate;  and the "worth at the time of award" of the
amount referred to in Section 15.2(b)(iii) 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 1% per  annum.  Tenant  agrees  that such  charges  shall be
recoverable by Landlord under California Code of Civil Procedure Section 1174(b)
or any similar, successor or related provision of law.

         Recovering Rent as It Comes Due. Upon any Event of Default, in addition
to any other  remedies  available  to Landlord at law or in equity or under this
Lease, Landlord shall have the remedy described in California Civil Code Section
1951.4.  Accordingly,  if  Landlord  does not  elect to  terminate  this  Lease,
Landlord  may, from time to time,  enforce all of its rights and remedies  under
this  Lease,  including  the right to recover all Rent as it becomes  due.  Such
remedy may be exercised by Landlord without prejudice to its right thereafter to
terminate this Lease in accordance with the other  provisions  contained in this
Article 15.  Landlord's  reentry to perform acts of maintenance or  preservation
of, or in  connection  with  efforts  to relet,  the  Premises,  or any  portion
thereof, or the appointment of a receiver upon Landlord's  initiative to protect
Landlord's  interest  under this Lease  shall not  terminate  Tenant's  right to
possession of the Premises or any portion  thereof and, until Landlord elects to
terminate  this Lease,  this Lease shall continue in full force and Landlord may
pursue all its remedies hereunder. Nothing in this Article 15 shall be deemed to
affect Landlord's right to indemnification,  under the  indemnification  clauses
contained in this Lease,  for Losses arising from events  occurring prior to the
termination of this Lease.

         General. (a) All rights,  powers and remedies of Landlord hereunder and
under any other agreement now or hereafter in force between  Landlord and Tenant
shall be cumulative and not  alternative and shall be in addition to all rights,
powers and remedies  given to Landlord at law or in equity.  The exercise of any
one or more of such  rights or  remedies  shall not impair  Landlord's  right to
exercise any other right or remedy  including any and all rights and remedies of
Landlord under  California  Civil Code Section 1951.8,  California Code of Civil
Procedure   Section  1161  et  seq.,  or  any  similar,   successor  or  related
Requirements.

                   If, after Tenant's abandonment of the Premises, Tenant leaves
behind any of  Tenant's  Property,  then  Landlord  shall  store  such  Tenant's
Property at a warehouse or any other  location at the risk,  expense and for the
account  of Tenant,  and such  property  shall be  released  only upon  Tenant's
payment of such charges,  together with moving and other costs relating  thereto
and all other sums due and owing  under this  Lease.  If Tenant does not reclaim
such Tenant's  Property  within the period  permitted by law,  Landlord may sell
such  Tenant's  Property in  accordance  with law and apply the proceeds of such
sale to any sums due and owing  hereunder,  or retain  said  Property,  granting
Tenant credit against sums due and owing  hereunder for the reasonable  value of
such Property.
<PAGE>

                   To the extent  permitted  by law,  Tenant  hereby  waives all
provisions of, and  protections  under,  any  Requirement to the extent same are
inconsistent and in conflict with specific terms and provisions hereof.

         Interest.  If any payment of Rent is not paid when due,  interest shall
accrue on such payment,  from the date such payment became due until paid at the
Interest  Rate.  Tenant  acknowledges  that late  payment by Tenant of Rent will
cause Landlord to incur costs not  contemplated by this Lease,  the exact amount
of such costs being  extremely  difficult and  impracticable  to fix. Such costs
include, without limitation, processing and accounting charges, and late charges
that maybe  imposed on Landlord  by the terms of any note  secured by a Mortgage
covering the Premises,  Therefore, in addition to interest, if any amount is not
paid when due,  a late  charge  equal to 5% of such  amount  shall be  assessed;
provided,  however,  that on 2 occasions  during any calendar  year of the Term,
Landlord  shall give Tenant  notice of such late payment and Tenant shall have a
period of 5 days thereafter in which to make such payment before any late charge
is assessed.  Such interest and late charges are separate and cumulative and are
in addition  to and shall not  diminish or  represent  a  substitute  for any of
Landlord's rights or remedies under any other provision of this Lease.

         Other Rights of Landlord.  If Tenant fails to pay any  Additional  Rent
when due,  Landlord,  in addition  to any other right or remedy,  shall have the
same rights and remedies as in the case of a default by Tenant in the payment of
Fixed  Rent.  If Tenant is in arrears  in the  payment  of Rent,  Tenant  waives
Tenant's  right,  if any, to designate the items against which any payments made
by Tenant are to be credited, and Landlord may apply any payments made by Tenant
to any items  Landlord sees fit,  regardless of any request by Tenant.  Landlord
reserves the right,  without  liability to Tenant and without  constituting  any
claim of constructive eviction, to suspend furnishing or rendering to Tenant any
supplemental or overtime property,  material,  labor,  utility or other service,
which Landlord is not obligated to furnish or render in accordance  with Article
10, in the event  that (but only for so long as)  Tenant is in arrears in paying
Landlord  for such items for more than 30 days after  notice  from  Landlord  to
Tenant demanding the payment of such arrears.

         Landlord's  Default.  Landlord shall not be in default hereunder unless
Landlord fails to perform any obligation required of Landlord under the terms of
this Lease  within a reasonable  time,  but in no event later than 30 days after
written  notice by Tenant  to  Landlord,  specifying  the  nature of  Landlord's
failure to perform.  If,  however,  the nature of Landlord's  obligation is such
that more than 30 days are reasonably  required for  performance,  than Landlord
shall not be in default hereunder if Landlord commences  performance within such
30 day period and thereafter diligently  prosecutes such cure to completion.  If
Landlord at the  expiration  of such notice and cure  periods has failed to cure
such  default,  then,  subject to the  exculpatory  provisions  of Section  26.3
hereof,  Tenant may pursue any of its legal or  equitable  remedies,  but Tenant
shall have no right to otherwise terminate this Lease.

                                   ARTICLE 16

                   LANDLORD'S RIGHT TO CURE; FEES AND EXPENSES

                  If Tenant defaults in the performance of its obligations under
this Lease, Landlord, without waiving such default, may perform such obligations
at  Tenant's  expense:  (a)  immediately,  and  without  notice,  in the case of
emergency or if the default (i) materially  interferes with the use by any other
tenant of the Building,  (ii) materially interferes with the efficient operation
of the  Building,  (iii)  results in a  violation  of any  Requirement,  or (iv)
results or will result in a cancellation of any insurance  policy  maintained by
Landlord, and (b) in any other case if such default continues after 10 days from
the date Landlord gives notice of Landlord's  intention to perform the defaulted
obligation.  All costs and expenses  incurred by Landlord in connection with any
such performance by it and all costs and expenses,  including reasonable counsel
fees and  disbursements,  incurred  by  Landlord  in any  action  or  proceeding
(including any unlawful detainer  proceeding) brought by Landlord to enforce any
obligation  of Tenant  under this Lease  and/or  right of  Landlord in or to the
Premises,  shall be paid by Tenant to Landlord on demand,  with interest thereon
at the Interest  Rate from the date  incurred by  Landlord.  Except as expressly
provided to the contrary in this Lease,  all costs and expenses which,  pursuant
to this Lease are  incurred by Landlord  and payable to Landlord by Tenant,  and
all charges,  amounts and sums  payable to Landlord by Tenant for any  property,
material,  labor, utility or other services which,  pursuant to this Lease or at
the request and for the account of Tenant,  are provided,  furnished or rendered
by Landlord,  shall  become due and payable by Tenant to Landlord in  accordance
with the terms of the bills rendered by Landlord to Tenant.
<PAGE>

                                   ARTICLE 17

               NO REPRESENTATIONS BY LANDLORD; LANDLORD'S APPROVAL

         No Representations.  Except as expressly set forth herein, Landlord and
Landlord's  agents  have  made no  warranties,  representations,  statements  or
promises with respect to the Building,  the Real Property or the Premises and no
rights,  easements  or  licenses  are  acquired  by  Tenant  by  implication  or
otherwise.  Tenant is entering into this Lease after full  investigation  and is
not relying upon any statement or  representation  made by Landlord not embodied
in this Lease.

         No Money Damages. Wherever in this Lease Landlord's consent or approval
is  required,  Landlord  hereby  acknowledges  its duty to act in each such case
consistent  with a covenant of good faith and fair dealing (but  Landlord  shall
not otherwise be subject to a  "reasonableness"  standard where Landlord has not
expressly agreed herein to not  unreasonably  withhold its consent or approval).
If Landlord  refuses to grant such consent or approval,  whether or not Landlord
expressly  agreed  that such  consent  or  approval  would  not be  unreasonably
withheld,  Tenant shall not make, and Tenant hereby waives,  any claim for money
damages  (including any claim by way of set-off,  counterclaim or defense) based
upon Tenant's claim or assertion that Landlord  unreasonably withheld or delayed
its consent or approval.  Tenant's  sole remedy shall be an action or proceeding
to enforce such provision,  by specific  performance,  injunction or declaratory
judgment.  In no event shall  Landlord be liable for,  and Tenant,  on behalf of
itself and all other Tenant Parties,  hereby waives any claim for, any indirect,
consequential  or  punitive  damages,  including  loss or  profits  or  business
opportunity, arising under or in connection with this Lease. Notwithstanding the
foregoing, Tenant's waiver set forth in the second sentence of this Section 17.2
shall not apply to any final  non-appealable  judgment (or a judgment that is in
fact not appealed)  that Tenant  obtains from a court of competent  jurisdiction
that  Landlord  acted in bad faith in making its  determination  to withhold its
consent or approval.

         Reasonable Efforts. For purposes of this Lease, "reasonable efforts" by
Landlord  shall not  include an  obligation  to employ  contractors  or labor at
overtime  or other  premium  pay rates or to incur any other  overtime  costs or
additional expenses whatsoever.

                                   ARTICLE 18

                                   END OF TERM

         Expiration.  Upon the  expiration or other  termination  of this Lease,
Tenant shall quit and surrender the Premises to Landlord vacant, broom clean and
in good order and condition,  ordinary wear and tear and damage for which Tenant
is not  responsible  under the terms of this Lease  excepted,  and Tenant  shall
remove all of Tenant's  Property  and  Tenant's  Alterations  as may be required
pursuant to Article 5.

         Holdover Rent.  Landlord and Tenant  recognize that Landlord's  damages
resulting from Tenant's failure to timely  surrender  possession of the Premises
may be  substantial,  may exceed the amount of the Rent payable  hereunder,  and
will be  impossible  to accurately  measure.  Accordingly,  if possession of the
Premises  is not  surrendered  to  Landlord  on the  Expiration  Date or  sooner
termination of this Lease, in addition to any other rights or remedies  Landlord
may have  hereunder  or at law,  Tenant shall (a) pay to Landlord for each month
(or any portion  thereof)  during which Tenant holds over in the Premises  after
the  Expiration  Date or sooner  termination  of this Lease,  in addition to all
Additional  Rent, (i) for the first month, a sum equal to 150% of the Fixed Rent
payable  under this Lease for the last full  calendar  month of the Term ("Final
Fixed  Rent" and  thereafter  200% of such Final  Fixed  Rent,  (b) be liable to
Landlord for (i) any payment or rent  concession  which Landlord may be required
to make to any tenant  obtained by Landlord  for all or any part of the Premises
(a "New  Tenant") in order to induce such New Tenant not to terminate  its lease
by reason of the holding-over by Tenant, and (ii) the loss of the benefit of the
bargain  if  any  New  Tenant  shall  terminate  its  lease  by  reason  of  the
holding-over by Tenant, and (c) if any such nonconsensual holding-over continues
for more than 30 days,  indemnify Landlord against all claims for actual damages
(but in no event any  consequential  damages) by any New Tenant. No holding-over
by Tenant,  nor the payment to Landlord of the amounts  specified  above,  shall
operate to extend the Term hereof.  Nothing herein  contained shall be deemed to
permit Tenant to retain  possession of the Premises after the Expiration Date or
sooner termination of this Lease, and no acceptance by Landlord of payments from
Tenant after the  Expiration  Date or sooner  termination of this Lease shall be
deemed  to be other  than on  account  of the  amount  to be paid by  Tenant  in
accordance with the provisions of this Section 18.2.
<PAGE>

                                   ARTICLE 19

                                 QUIET ENJOYMENT

                  Provided  this  Lease is in full force and effect and no Event
of Default  then exists,  Tenant may  peaceably  and quietly  enjoy the Premises
without  hindrance by Landlord or any person lawfully  claiming through or under
Landlord,  subject to the terms and conditions of this Lease and to all Superior
Leases and Mortgages.

                                   ARTICLE 20

                             NO SURRENDER; NO WAIVER

         No Surrender or Release. No act or thing done by Landlord or Landlord's
agents or employees during the Term shall be deemed an acceptance of a surrender
of the  Premises,  and no  provision  of this Lease shall be deemed to have been
waived by Landlord, unless such waiver is in writing and is signed by Landlord.

         No Waiver.  The failure of either party to seek  redress for  violation
of, or to insist upon the strict  performance  of, any  covenant or condition of
this Lease,  or any of the Rules and  Regulations,  shall not be  construed as a
waiver or relinquishment  for the future performance of such obligations of this
Lease or the Rules and  Regulations,  or of the right to exercise  such election
but the same shall  continue and remain in full force and effect with respect to
any  subsequent  breach,  act or  omission.  The receipt by Landlord of any Rent
payable pursuant to this Lease or any other sums with knowledge of the breach of
any  covenant  of this  Lease  shall not be deemed a waiver of such  breach.  No
payment by Tenant or receipt by  Landlord  of a lesser  amount  than the monthly
Rent herein  stipulated shall be deemed to be other than a payment on account of
the earliest  stipulated  Rent,  or as Landlord may elect to apply such payment,
nor shall any  endorsement or statement on any check or any letter  accompanying
any check or payment as Rent be deemed an accord and satisfaction,  and Landlord
may accept  such check or  payment  without  prejudice  to  Landlord's  right to
recover  the  balance of such Rent or pursue any other  remedy  provided in this
Lease.

                                   ARTICLE 21

                      WAIVER OF TRIAL BY JURY; COUNTERCLAIM

         Jury Trial Waiver. THE PARTIES HEREBY AGREE THAT THIS LEASE CONSTITUTES
A WRITTEN  CONSENT  TO WAIVER OF TRIAL BY JURY  PURSUANT  TO THE  PROVISIONS  OF
CALIFORNIA  CODE OF CIVIL  PROCEDURE  SECTION  631 AND EACH  PARTY  DOES  HEREBY
CONSTITUTE  AND APPOINT  THE OTHER  PARTY ITS TRUE AND LAWFUL  ATTORNEY-IN-FACT,
WHICH  APPOINTMENT  IS COUPLED  WITH AN  INTEREST,  AND EACH  PARTY DOES  HEREBY
AUTHORIZE  AND EMPOWER  THE OTHER  PARTY,  IN THE NAME,  PLACE AND STEAD OF SUCH
PARTY,  TO FILE THIS  LEASE  WITH THE  CLERK OR JUDGE OF ANY COURT OF  COMPETENT
JURISDICTION AS A STATUTORY WRITTEN CONSENT TO WAIVER OF TRIAL BY JURY.

                  LANDLORD'S INITIALS: _____         TENANT'S INITIALS: _____

         Waiver of Counterclaim.  If Landlord  commences any summary  proceeding
against  Tenant,  Tenant will not  interpose any  counterclaim  of any nature or
description in any such proceeding  (unless failure to impose such  counterclaim
would preclude Tenant from asserting in a separate action the claim which is the
subject of such counterclaim),  and will not seek to consolidate such proceeding
with any other  action which may have been or will be brought in any other court
by Tenant.

                                   ARTICLE 22

                                     NOTICES

                  Except as  otherwise  expressly  provided in this  Lease,  all
consents,  notices, demands,  requests,  approvals or other communications given
under this Lease shall be in writing and shall be deemed  sufficiently  given or
rendered if delivered by hand (provided a signed receipt is obtained) or if sent
by registered or certified  mail (return  receipt  requested) or by a nationally
recognized overnight delivery service making receipted deliveries,  addressed to
Landlord  and Tenant as set forth in Article 1, and to any  Mortgagee  or Lessee
who shall require copies of notices and whose address is provided to Tenant,  or
to such other  address(es)  as Landlord,  Tenant or any  Mortgagee or Lessor may
designate as its new  address(es)  for such purpose by notice given to the other
in  accordance  with the  provisions  of this  Article  22.  Any such  approval,
consent,  notice, demand, request or other communication shall be deemed to have
been given on the date of receipted delivery, refusal to accept delivery or when
delivery  is first  attempted  but cannot be made due to a change of address for
which no notice is given or 3 Business  Days after it shall have been  mailed as
provided in this Article 22, whichever is earlier.
<PAGE>

                                   ARTICLE 23

                              RULES AND REGULATIONS

                  All Tenant Parties shall observe and comply with the Rules and
Regulations, as supplemented or amended from time to time. Landlord reserves the
right, from time to time, to adopt additional Rules and Regulations and to amend
the Rules and Regulations then in effect.  Nothing contained in this Lease shall
impose upon  Landlord any  obligation  to enforce the Rules and  Regulations  or
terms,  covenants or conditions  in any other lease  against any other  Building
tenant,  and Landlord shall not be liable to Tenant for violation of the same by
any other tenant, its employees,  agents,  visitors or licensees,  provided that
Landlord  shall enforce the Rules or  Regulations  against  Tenant and all other
tenants of the Building in a non-discriminatory fashion.

                                   ARTICLE 24

                                     BROKER

                  Landlord has  retained  Landlord's  Agent as leasing  agent in
connection  with this Lease and Landlord will be solely  responsible for any fee
that may be payable to Landlord's Agent.  Landlord agrees to pay a commission to
Tenant's  Broker pursuant to a separate  agreement.  Each of Landlord and Tenant
represents  and  warrants  to the other that it has not dealt with any broker in
connection with this Lease other than Landlord's  Agent,  Landlord's  Broker and
Tenant's  Broker and that no other  broker,  finder or like  entity  procured or
negotiated  this Lease or is entitled  to any fee or  commission  in  connection
herewith. Each of Landlord and Tenant shall indemnify,  defend, protect and hold
the  other  party  harmless  from  and  against  any and all  Losses  which  the
indemnified  party  may incur by  reason  of any  claim of or  liability  to any
broker, finder or like agent (other than Landlord's Agent, Landlord's Broker and
Tenant's  Broker) arising out of any dealings  claimed to have occurred  between
the  indemnifying  party and the claimant in connection with this Lease,  and/or
the above representation being false.

                                   ARTICLE 25

                                    INDEMNITY

         Tenant's Indemnity. Tenant shall not do or permit to be done any act or
thing upon the Premises or the Real Property  which may subject  Landlord to any
liability or responsibility for injury, damages to persons or property or to any
liability by reason of any violation of any Requirement, and shall exercise such
control  over  the  Premises  as to  fully  protect  Landlord  against  any such
liability. Except to the extent of the gross negligence or willful misconduct of
Landlord or its agents or contractors,  Tenant shall indemnify,  defend, protect
and hold harmless each of the  Indemnitees  from and against any and all Losses,
resulting  from any claims (i) against  the  Indemnitees  arising  from any act,
omission  or  negligence  of (A) all  Tenant  Parties or (B) both  Landlord  and
Tenant,  provided,  however,  that Tenant's liability  hereunder with respect to
matters judicially  determined to have arisen out of the negligence of Landlord,
which  determination  shall not be subject  to  appeal,  shall be limited to the
amount of  insurance  coverage  carried by Tenant  pursuant  to Article 11, (ii)
against the Indemnitees  arising from any accident,  injury or damage whatsoever
caused to any person or to the property of any person and  occurring in or about
the  Premises,  and (iii)  against the  Indemnitees  resulting  from any breach,
violation  or  nonperformance  of any  covenant,  condition or agreement of this
Lease on the part of Tenant to be fulfilled, kept, observed or performed.

         Landlord's  Indemnity.   Landlord  shall  indemnify,  defend  and  hold
harmless  Tenant from and against all Losses incurred by Tenant arising from any
accident,  injury or damage  whatsoever  caused to any person or the property of
any person in or about the Common  Areas and with respect to claims for personal
injury,  the Premises,  to the extent  attributable  to the gross  negligence or
willful misconduct of Landlord or its employees, agents or contractors.

         Defense and Settlement.  If any claim,  action or proceeding is made or
brought against any Indemnitee,  then upon demand by an Indemnitee,  Tenant,  at
its sole  cost and  expense,  shall  resist  or  defend  such  claim,  action or
proceeding in the Indemnitee's name (if necessary), by attorneys approved by the
Indemnitee,  which approval shall not be  unreasonably  withheld  (attorneys for
Tenant's  insurer shall be deemed  approved for purposes of this Section  25.3).
Notwithstanding  the  foregoing,  an Indemnitee  may retain its own attorneys to
participate  or assist in defending any claim,  action or  proceeding  involving
potential  liability in excess of the amount available under Tenant's  liability
insurance  carried  under  Section  11.1 for such claim and Tenant shall pay the
reasonable  fees  and  disbursements  of such  attorneys.  If  Tenant  fails  to
diligently defend or if there is a legal conflict or other conflict of interest,
then Landlord may retain separate counsel at Tenant's  expense.  Notwithstanding
anything herein  contained to the contrary,  Tenant may direct the Indemnitee to
settle any claim,  suit or other  proceeding  provided that (a) such  settlement
shall involve no obligation on the part of the Indemnitee other than the payment
of money,  (b) any payments to be made pursuant to such settlement shall be paid
in full  exclusively by Tenant at the time such settlement is reached,  (c) such
settlement shall not require the Indemnitee to admit any liability,  and (d) the
Indemnitee shall have received an  unconditional  release from the other parties
to such claim, suit or other proceeding.
<PAGE>

                                   ARTICLE 26

                                  MISCELLANEOUS

         Delivery.  This Lease  shall not be  binding  upon  Landlord  or Tenant
unless and until  Landlord  shall have executed and  delivered a fully  executed
copy of this Lease to Tenant.

         Transfer  of Real  Property.  In the  event  of the  sale,  conveyance,
assignment or transfer  (collectively,  a "Transfer")  by such Landlord (or upon
any subsequent  landlord after the Transfer by such subsequent  landlord) of its
interest in the Building or the Real Property, as the case may be, such Landlord
shall be  entirely  freed and  relieved  of all  covenants  and  obligations  of
Landlord  hereunder  accruing from and after the date of Transfer,  provided the
transferee of Landlord's  interest (or that of such subsequent  Landlord) in the
Building  or the Real  Property,  as the case may be, has assumed in writing all
obligations under this Lease arising from and after the date of Transfer.

         Limitation  on  Liability.  The  liability of Landlord  for  Landlord's
obligations under this Lease shall be limited to Landlord's interest in the Real
Property and  Landlord's  interest in the net proceeds from the sale thereof and
Tenant  shall  not look to any other  property  or  assets  of  Landlord  or the
property  or  assets  of  any  direct  or  indirect  partner,  member,  manager,
shareholder,  director,  officer,  principal,  employee  or  agent  of  Landlord
(collectively,   the  "Parties")  in  seeking   either  to  enforce   Landlord's
obligations under this Lease or to satisfy a judgment for Landlord's  failure to
perform such obligations; and none of the Parties shall be personally liable for
the performance of Landlord's obligations under this Lease.

         Rent.  All amounts  payable by Tenant to or on behalf of Landlord under
this  Lease,  whether or not  expressly  denominated  Fixed Rent,  Tenant's  Tax
Payment,  Tenant's Operating Payment,  Additional Rent or Rent, shall constitute
rent for the purposes of Section 502(b)(6) of the United States Bankruptcy Code.

         Entire  Document.  This Lease  (including  any  Schedules  and Exhibits
referred  to  herein  and all  supplementary  agreements  provided  for  herein)
contains the entire agreement between the parties and all prior negotiations and
agreements  are  merged  into this  Lease.  All of the  Schedules  and  Exhibits
attached hereto are incorporated in and made a part of this Lease, provided that
in the event of any inconsistency between the terms and provisions of this Lease
and the terms and provisions of the Schedules and Exhibits hereto, the terms and
provisions of this Lease shall control.

         Governing Law. This Lease shall be governed in all respects by the laws
of the State of California.

         Unenforceability. If any provision of this Lease, or its application to
any Person or circumstance,  shall ever be held to be invalid or  unenforceable,
then in each such event the remainder of this Lease or the  application  of such
provision to any other Person or any other circumstance  (other than those as to
which it shall be invalid or unenforceable)  shall not be thereby affected,  and
each provision  hereof shall remain valid and  enforceable to the fullest extent
permitted by law.

         Lease Disputes.  (a) Tenant agrees that all disputes arising,  directly
or indirectly, out of or relating to this Lease, and all actions to enforce this
Lease,  shall be dealt with and  adjudicated in the state courts of the State of
California  or the United  States  District  Court for the Northern  District of
California and for that purpose hereby expressly and irrevocably  submits itself
to the  jurisdiction  of such courts.  Tenant agrees that so far as is permitted
under   applicable  law,  this  consent  to  personal   jurisdiction   shall  be
self-operative  and no  further  instrument  or action,  other  than  service of
process in one of the manners specified in this Lease, or as otherwise permitted
by law, shall be necessary in order to confer  jurisdiction  upon it in any such
court.

                   To the extent  that Tenant has or  hereafter  may acquire any
immunity  from  jurisdiction  of any  court or from any legal  process  (whether
through service or notice,  attachment  prior to judgment,  attachment in aid of
execution,  execution  or  otherwise)  with  respect to itself or its  property,
Tenant irrevocably waives such immunity in respect of its obligations under this
Lease.


         Landlord's Agent.  Unless Landlord delivers written notice to Tenant to
the contrary,  Landlord's  Agent is  authorized  to act as  Landlord's  agent in
connection  with the  performance  of this Lease,  and Tenant  shall  direct all
correspondence   and   requests   to,  and  shall  be   entitled  to  rely  upon
correspondence   received  from  Landlord's  Agent.   Tenant  acknowledges  that
Landlord's  Agent is acting solely as agent for Landlord in connection  with the
foregoing;  and  neither  Landlord's  Agent nor any of its  direct  or  indirect
partners,  members,  managers,  officers,  shareholders,  directors,  employees,
principals,  agents or  representatives  shall have any  liability  to Tenant in
connection  with the  performance  of this Lease,  and Tenant waives any and all
claims against any and all of such parties (other than Landlord) arising out of,
or in any way connected with, this Lease, the Building or the Real Property.
<PAGE>

         Estoppel.  Within 10 Business Days following request from Landlord, any
Mortgagee or any Lessor,  Tenant shall deliver to Landlord a statement  executed
and  acknowledged by Tenant,  in form reasonably  satisfactory to Landlord,  (a)
stating the  Commencement  Date, the Rent  Commencement  Date and the Expiration
Date,  and that this  Lease is then in full  force and  effect  and has not been
modified (or if modified,  setting forth all  modifications),  (b) setting forth
the date to which  the  Fixed  Rent and any  Additional  Rent  have  been  paid,
together  with the  amount  of  monthly  Fixed  Rent and  Additional,  Rent then
payable,  (c)  stating  whether or not, to Tenant's  current  actual  knowledge,
Landlord is in default under this Lease, and, if Landlord is in default, setting
forth the specific  nature of all such  defaults,  (d) stating the amount of the
Security  Deposit,  if any, under this Lease,  (e) stating whether there are any
subleases or  assignments  affecting  the  Premises,  (f) stating the address of
Tenant to which all  notices and  communications  under the Lease shall be sent,
and (g) responding to any other matters reasonably  requested by Landlord,  such
Mortgagee or such  Lessor.  Tenant  acknowledges  that any  statement  delivered
pursuant to this Section  26.10 may be relied upon by any  purchaser or owner of
the Real Property or the Building,  or all or any portion of Landlord's interest
in the Real Property or the Building or any Superior Lease, or by any Mortgagee,
or assignee thereof or by any Lessor, or assignee thereof.

         Certain  Interpretational  Rules. For purposes of this Lease,  whenever
the words "include",  "includes",  or "including" are used, they shall be deemed
to be followed by the words "without limitation" and, whenever the circumstances
or the context  requires,  the singular  shall be  construed as the plural,  the
masculine  shall be construed as the feminine  and/or the neuter and vice versa.
This Lease  shall be  interpreted  and  enforced  without  the aid of any canon,
custom or rule of law  requiring or  suggesting  construction  against the party
drafting or causing the drafting of the  provision in question.  The captions in
this Lease are inserted only as a matter of convenience and for reference and in
no way define,  limit or  describe  the scope of this Lease or the intent of any
provision hereof.

         Parties  Bound.  The  terms,   covenants,   conditions  and  agreements
contained  in this Lease  shall bind and inure to the  benefit of  Landlord  and
Tenant and,  except as  otherwise  provided in this Lease,  to their  respective
legal representatives, successors, and assigns.

         Memorandum  of Lease.  This Lease shall not be  recorded;  however,  at
either party's request, Landlord and Tenant shall promptly execute,  acknowledge
and deliver a memorandum with respect to this Lease sufficient for recording and
either party may record the  Memorandum  provided that if Tenant so request that
such  memorandum be recorded,  prior to such  recordation  Tenant shall execute,
acknowledge  and deliver to Landlord a quitclaim  deed for the  Building and the
underlying real property  together with Tenant's  irrevocable  instructions that
such quitclaim  deed may be recorded upon the expiration or earlier  termination
of this Lease.

         Counterparts.  This Lease may be  executed  in 2 or more  counterparts,
each of which  shall  constitute  an  original,  but all of  which,  when  taken
together, shall constitute but one instrument.

         Survival.  All obligations and liabilities of Landlord or Tenant to the
other which accrued  before the  expiration or other  termination of this Lease,
and all such  obligations  and  liabilities  which by their  nature or under the
circumstances  can only be, or by the provisions of this Lease may be, performed
after such  expiration or other  termination,  shall  survive the  expiration or
other  termination  of  this  Lease.  Without  limiting  the  generality  of the
foregoing,  the  rights  and  obligations  of the  parties  with  respect to any
indemnity  under this Lease,  and with respect to any Rent and any other amounts
payable under this Lease,  shall survive the expiration or other  termination of
this Lease.

         Code  Waivers.  Tenant  hereby  waives  any and all  rights  under  and
benefits  of  Subsection  1 of  Section  1931,  1932(2),  Subdivision  2,  1933,
Subdivision 4, 1941 and 1942 of the California  Civil Code,  Section 1265.130 of
the  California  Code of Civil  Procedure  (allowing  either party to petition a
court to  terminate  a lease in the  event of a  partial  taking),  and  Section
1174(c) of the  California  Code of Civil  Procedure  and Section  1951.7 of the
California  Civil Code  (providing  for Tenant's  right to satisfy a judgment in
order to prevent a  forfeiture  of this Lease or  requiring  Landlord to deliver
written notice to Tenant of any reletting of the Premises), and any similar law,
statute or ordinance now or hereinafter in effect.

         Inability to Perform.  This Lease and the  obligation  of Tenant to pay
Rent  and to  perform  all of the  other  covenants  and  agreements  of  Tenant
hereunder shall not be affected,  impaired or excused by any Unavoidable Delays.
Landlord  shall  use  reasonable  efforts  to  promptly  notify  Tenant  of  any
Unavoidable Delay which prevents Landlord from fulfilling any of its obligations
under this Lease.

         Transportation Demand Management Program. If, during the Term, the City
of Santa Clara so  requires,  then Tenant shall  institute  and maintain for its
employees  working at the Building a Transportation  Demand  Management  Program
("TDMP") which shall involve, as so required, measures such as shuttle services,
carpool matching, guaranteed ride home program and employee subsidies for travel
costs. Upon request of Landlord, Tenant shall report to Landlord and the City of
Santa Clara on the status of Tenant's TDMP.

         Reasonable  Expenditures.  Notwithstanding anything to the contrary set
forth herein, any expenditure by a party permitted or required under this Lease,
for which such party is entitled to and does demand reimbursement from the other
party,  shall be  entitled  to the fair  market  value of the good and  services
involved, shall be reasonably incurred, and shall be reasonably substantiated by
reasonable  supporting  documentary evidence available for inspection and review
by the other party upon  reasonable  prior  written  request  and during  normal
business hours.
<PAGE>

                                   ARTICLE 27

                                SECURITY DEPOSIT

         Security  Deposit.  Tenant  shall  deposit the  Security  Deposit  with
Landlord  upon the  execution of this Lease in cash or check as security for the
faithful  performance  and  observance  by Tenant of the  terms,  covenants  and
conditions of this Lease.

         Letter of Credit. In lieu of a cash or check Security  Deposit,  Tenant
may  deliver  the  Security  Deposit  to  Landlord  in  the  form  of  a  clean,
irrevocable,  non-documentary and unconditional letter of credit (the "Letter of
Credit")  issued by and drawable upon any  commercial  bank which is a member of
the New York Clearing House Association or other bank reasonably satisfactory to
Landlord,  trust  company,  national  banking  association  or savings  and loan
association  with offices for banking purposes in the City of San Francisco (the
"Issuing  Bank"),  which has outstanding  unsecured,  uninsured and unguaranteed
indebtedness,  or shall have issued a letter of credit or other credit  facility
that constitutes the primary security for any outstanding indebtedness (which is
otherwise  uninsured and  unguaranteed),  that is then rated,  without regard to
qualification  of  such  rating  by  symbols  such  as "+"  or "-" or  numerical
notation,  "Aa" or better by  Moody's  Investors  Service  and "AA" or better by
Standard  &  Poor's  Rating  Service,  and has  combined  capital,  surplus  and
undivided  profits of not less than  $500,000,000.  Landlord  hereby approves of
Canadian  Imperial Bank of Commerce as an Issuing Bank and the form of Letter of
Credit  attached  hereto  as  Exhibit  I. Such  Letter of Credit  shall (a) name
Landlord as beneficiary,  (b) be in the amount of the Security Deposit, (c) have
a term of not less than one year,  (d) permit  multiple  drawings,  (e) be fully
transferable by Landlord without the payment of any fees or charges by Landlord,
and (f) otherwise be in form and content reasonably satisfactory to Landlord. If
upon any  transfer  of the  Letter of Credit,  any fees or  charges  shall be so
imposed,  then such fees or charges  shall be  payable  solely by Tenant and the
Letter of Credit shall so specify.  The Letter of Credit  shall  provide that it
shall be  deemed  automatically  renewed,  without  amendment,  for  consecutive
periods of one year each  thereafter  during the Term (and in no event shall the
Letter of Credit  expire prior to the 45th day following  the  Expiration  Date)
unless the Issuing Bank sends a notice (the "Non-Renewal Notice") to Landlord by
certified mail, return receipt  requested,  not less than 45 days next preceding
the then  expiration  date of the Letter of Credit stating that the Issuing Bank
has  elected not to renew the Letter of Credit.  Landlord  shall have the right,
upon receipt of the Non-Renewal Notice, to draw the full amount of the Letter of
Credit,  by sight draft on the Issuing Bank, and shall  thereafter hold or apply
the cash proceeds of the Letter of Credit  pursuant to the terms of this Article
27, until Tenant delivers to Landlord a substitute  Letter of Credit which meets
the  requirements  of this Section  27.2.  The Issuing Bank shall agree with all
drawers,  endorsers  and bona  fide  holders  that  drafts  drawn  under  and in
compliance  with  the  terms  of the  Letter  of  Credit  and  accompanied  by a
certificate signed by an authorized officer of Landlord (not in their individual
capacity,  but solely as an officer of Landlord) under penalty of perjury,  that
to such person's  knowledge,  information and belief, a default of Tenant beyond
all  applicable  notice and cure periods has occurred and is continuing and that
Landlord is entitled  under the Lease to draw the amount  being  drawn,  will be
duly honored upon  presentation to the Issuing Bank at an office location in San
Francisco,  California. The Letter of Credit shall be subject in all respects to
the Uniform  Customs and  Practice  for  Documentary  Credits  (1993  revision),
International Chamber of Commerce Publication No. 500.

         Application of Security. If an Event of Default by Tenant occurs in the
payment or  performance  of any of the terms,  covenants or  conditions  of this
Lease,  including the payment of Rent, Landlord may apply or retain the whole or
any part of the  cash  Security  Deposit  or may  notify  the  Issuing  Bank and
thereupon  receive all or a portion of the Security  Deposit  represented by the
Letter  of  Credit  and use,  apply,  or  retain  the  whole or any part of such
proceeds,  as the case may be, to the  extent  required  for the  payment of any
Fixed Rent or any other sum as to which Tenant is in default  beyond  applicable
notice and cure periods  including (i) any sum which  Landlord may expend or may
be required to expend by reason of Tenant's default beyond applicable notice and
cure periods,  and/or (i) any damages to which Landlord is entitled  pursuant to
this Lease,  whether such damages accrue before or after summary  proceedings or
other reentry by Landlord. If Landlord applies any part of the Security Deposit,
Tenant,  upon  demand,  shall  deposit  with  Landlord  the amount so applied or
retained so that Landlord  shall have the full  Security  Deposit on hand at all
times during the Term. Except for portions of the Security Deposit so applied by
Landlord and not re-posted by Tenant,  the Security Deposit shall be returned to
Tenant  after  the  Expiration  Date and after  delivery  of  possession  of the
Premises to Landlord in the manner required by this Lease.

         Transfer.  Upon a sale or other  transfer  of the Real  Property or the
Building,  or any financing of Landlord's interest therein,  Landlord shall have
the right to transfer the Security  Deposit to its  transferee  or lender.  With
respect to the Letter of Credit,  within 5 days after notice of such transfer or
financing,  Tenant,  at its sole cost,  shall  arrange  for the  transfer of the
Letter of Credit to the new landlord or the lender, as designated by Landlord in
the  foregoing  notice or have the Letter of Credit  reissued in the name of the
new landlord or the lender.  Upon such Transfer  Tenant shall look solely to the
new landlord or lender for the return of such cash Security Deposit or Letter of
Credit and the  provisions  hereof shall apply to every  transfer or  assignment
made of the Security  Deposit to a new landlord.  Except in  connection  with an
assignment of this Lease to a Permitted  Transferee,  Tenant shall not assign or
encumber or attempt to assign or encumber the cash Security Deposit or Letter of
Credit and neither  Landlord nor its successors or assigns shall be bound by any
such action or attempted assignment, or encumbrance.

         Reduction.  If Tenant (a) has not, on more than 2 occasions  during the
12-month  period  preceding  the  applicable   Reduction  Date  (as  hereinafter
defined),  failed to pay Fixed Rent within 5 days of receiving written notice of
nonpayment,  and (b) no Event of Default then exists, then, provided that Tenant
complies with the provisions of this Section 27.5, (i) on the 3rd anniversary of
the Commencement Date and on each annual  anniversary  thereafter (in each case,
the  "Reduction  Date"),  the  Security  Deposit  shall be reduced by  $600,000;
provided that in no event shall the amount of the Security  Deposit ever be less
than $600,000 (the "Reduction  Minimum").  The Security Deposit shall be reduced
as follows:  (A) if the Security Deposit is in the form of cash, Landlord shall,
within 10 Business  Days  following  notice by Tenant to Landlord that Tenant is
entitled to reduce the Security Deposit  pursuant to this Section 27.5,  deliver
to Tenant the amount by which the  Security  Deposit is  reduced,  or (B) if the
Security  Deposit is in the form of a Letter of Credit,  Tenant shall deliver to
Landlord  an  amendment  to the  Letter  of  Credit  (which  amendment  must  be
reasonably  acceptable to Landlord in all respects),  reducing the amount of the
Letter of Credit by the amount of the permitted  reduction,  and Landlord  shall
execute the amendment and such other  documents as are  reasonably  necessary to
reduce the amount of the Letter of Credit in  accordance  with the terms hereof.
If  Tenant  delivers  to  Landlord  an  amendment  to the  Letter  of  Credit in
accordance with the terms hereof,  Landlord shall, within 10 Business Days after
delivery of such amendment, either (1) provide its reasonable objections to such
amendment  or (2) execute such  amendment of the Letter of Credit in  accordance
with the terms hereof.
<PAGE>

                                   ARTICLE 28

                                     PARKING

                  Located  adjacent to the  Building  is the Garage  serving the
Building. Except as otherwise provided below, the Garage is open 24 hours a day,
7 days a week to tenants and their  Building  employees  holding valid  Building
entry cards.  The Garage allows  monthly  parking with unlimited 24 hours access
with the Building's  entry cards.  Visitor parking is available  during Ordinary
Business Hours. During the Term of this Lease and subject to Unavoidable Delays,
Landlord shall make available or cause to be available to Tenant through-out the
Term 3.77  unreserved  parking  spaces  per 1,000  rentable  square  feet of the
Premises at no additional cost to Tenant.

                  Tenant  shall at all times  comply  with  (and the  provisions
hereof shall be expressly subject to) all applicable  Requirements regarding the
use of the  Garage.  Landlord  reserves  the right to adopt,  modify and enforce
reasonable rules (the "Garage Rules")  governing the use of the Garage from time
to time,  including any key card,  sticker or other  identification  or entrance
system.  Landlord  may refuse to permit any person who  violates any such Garage
Rules to park in the Garage,  and any  violation of the Rules shall  subject the
car to removal, at such person's expense from the Garage. The use of all parking
spaces  shall be solely for use by Tenant's  employees  (or the  employees  of a
permitted subtenant) working in the Building.

                  The unreserved  parking spaces hereunder may be provided on an
unreserved valet parking basis.  Tenant  acknowledges  that Landlord may arrange
for the Garage to be operated by an independent contractor.  Accordingly, Tenant
acknowledges  that if Landlord is not the operator of the Garage  Landlord shall
have  no  liability  for  claims  arising  through  acts  or  omissions  of such
independent contractor except to the extent due to Landlord's, or its agents' or
contractors' gross negligence or willful  misconduct.  Except when caused by the
gross  negligence  or criminal  acts of Landlord  or  Landlord's  Agent or their
respective  employees,  agents or contractors,  Landlord shall have no liability
whatsoever  for any damage to property or any other items located in the Garage,
nor for any personal injuries or death arising out of any matter relating to the
Garage, and in all events,  Tenant agrees to look first to its insurance carrier
for payment of any losses sustained in connection with any use of the Garage and
secondly to the  operator of the Garage.  Landlord  reserves the right to assign
specific  spaces,  and to reserve spaces for visitors,  small cars,  handicapped
persons and for other tenants,  guests of tenants or other  parties,  and Tenant
shall not park in any such assigned or reserved  spaces.  Landlord also reserves
the right to close all or any portion of the Garage in order to make  repairs or
perform maintenance  services,  or to alter,  modify,  re-stripe or renovate the
Garage, or if required by casualty,  condemnation or Unavoidable  Delay. In such
event, Landlord shall use its reasonable efforts to complete such maintenance or
repair as soon as reasonably possible.

                  Tenant  agrees to acquaint all persons to whom Tenant  assigns
parking  space of any Garage Rules  promulgated  by Landlord with respect to the
Garage and the parking privileges granted to Tenant herein.

                                   ARTICLE 29

                                  RENEWAL TERM

         Renewal Term.  Tenant shall have the right to renew the Term for all of
the Premises for one renewal  term of 5 years (the  "Renewal  Term") which shall
commence on the day following the  expiration of the initial Term and end on the
5th  anniversary  of the Expiration  Date,  unless the Renewal Term shall sooner
terminate  pursuant to any of the terms of this Lease or otherwise.  The Renewal
Term shall  commence only if (a) Tenant shall have notified  Landlord in writing
of  Tenant's  exercise  of such  renewal  right at least 15 months  prior to the
Expiration  Date, (b) at the time of the exercise of such right and  immediately
prior to the  Expiration  Date,  no event of Default  shall have occurred and be
continuing hereunder, and (c) PMC-Sierra,  Inc. and/or Related Entities shall be
in  occupancy  of at least 70% of the Premises at the time such notice is given.
Time is of the  essence  with  respect to the  giving of the notice of  Tenant's
exercise  of the  renewal  option.  The  Renewal  Term  shall be upon all of the
agreements,  terms,  covenants and conditions hereof binding upon Tenant, except
that the Fixed Rent (as defined in Section 1.1) shall be  determined as provided
in Section 29.2 and Tenant shall have no further  right to renew the Term.  Upon
the commencement of the Renewal Term, (A) the Renewal Term shall be added to and
become part of the Term (but shall not be considered  part of the initial Term),
(B) any  reference to "this Lease",  to the "Term",  the "term of this Lease" or
any similar  expression shall be deemed to include the Renewal Term, and (C) the
expiration of the Renewal Term shall become the Expiration Date.

<PAGE>

         Renewal Term Rent.  If the Term shall be renewed as provided in Section
29.1,  the annual Fixed Rent  payable  during the Renewal Term shall be equal to
the greater of (a) the annual  fair market  rental  value of the  Premises  (the
"Fair Market Value") as of the day  immediately  following the expiration of the
initial Term (the "Calculation  Date"), and (b) the amount of Fixed Rent payable
by Tenant  during the last year of the initial  Term.  Any  dispute  between the
parties  as to the  annual  fair  market  rental  value  shall  be  resolved  by
arbitration as provided in Section 29.3 hereof.  For purposes hereof,  the "Fair
Market Value" shall mean the rent at which tenants,  as of the  commencement  of
the Renewal Term,  will be leasing  non-sublease  space on a "triple-net"  basis
comparable in size, location and quality to the Premises, for a comparable term,
and considering all other factors  relevant to the  determination of Fair Market
Value, which comparable space is located in Comparable Buildings. Within 30 days
following  Landlord's  receipt of the  Exercise  Notice,  Landlord  shall advise
Tenant in writing of  Landlord's  determination  of Fair Market Value (the "Rent
Notice").  Within 30 days of Tenant's receipt of Landlord's Rent Notice,  Tenant
shall advise Landlord in writing whether Tenant accepts Landlord's determination
of Fair Market Value,  elects to rescind Tenant's exercise of the renewal option
or  elects  to have  the  determination  of Fair  Market  Value be  resolved  by
arbitration  as provided in Section 29.3 hereof.  Tenant's  failure to so advise
Landlord of its election  within such 30-day  period shall  constitute  Tenant's
acceptance of Landlord's  determination  of Fair Market Value.  If Tenant timely
elects to rescind its  exercise of the  renewal  option,  the Term of this Lease
shall end on the  Expiration  Date. If the Fixed Rent payable during the Renewal
Term has not been determined prior to the commencement thereof, Tenant shall pay
Fixed Rent in an amount  equal to the fair market  rental value for the Premises
as determined by Landlord (the "Interim Rent").  Upon final determination of the
Fixed Rent for the Renewal Term, Tenant shall commence paying such Fixed Rent as
so determined,  and within 10 days after such determination Tenant shall pay any
deficiency  in  prior  payments  of  Fixed  Rent  or,  if the  Fixed  Rent as so
determined  shall be less than the Interim  Rent,  Tenant shall be entitled to a
credit against the next succeeding installments of Fixed Rent in an amount equal
to the difference between each installment of Interim Rent and the Fixed Rent as
so determined which should have been paid for such  installment  until the total
amount of the over payment has been recouped.

         Arbitration.  If Tenant shall dispute Landlord's  determination of Fair
Market Value  pursuant to Section 29.2,  Tenant shall give notice to Landlord of
such dispute within 10 days of Tenant's receipt of Landlord's determination, and
such dispute shall be determined by a single arbitrator  appointed in accordance
with the American  Arbitration  Association  Real Estate  Valuation  Arbitration
Proceeding Rules. The arbitrator shall be impartial and shall have not less than
10 years'  experience  in the County of Santa Clara in a calling  related to the
leasing  of  commercial  office  space in  office  buildings  comparable  to the
Building, and the fees of the arbitrator shall be shared by Landlord and Tenant.
Within 15 days following the appointment of the arbitrator,  Landlord and Tenant
shall attend a hearing  before the arbitrator at which each party shall submit a
report setting forth its  determination of the Fair Market Value of the Premises
for the Renewal Term,  together with such information on comparable  rentals and
such other  evidence as such party shall deem relevant.  The  arbitrator  shall,
within 30 days following such hearing and submission of evidence,  render his or
her decision by selecting the  determination  of Fair Market Value  submitted by
either Landlord or Tenant which, in the judgment of the arbitrator,  most nearly
reflects the Fair Market Value of the Premises for the Renewal  Term,  provided,
however,  that Tenant shall have the right,  by written  notice to Landlord,  to
terminate the exercise of its renewal option, within ten (10) days of receipt of
the judgment of the  arbitrator.  If Tenant  elects to so terminate  its option,
then the (a)  Expiration  Date shall be the later to occur of (a) the Expiration
Date, and (b) the 450th day following the date of Tenant's  termination  notice,
(b) Tenant shall pay the fees of the arbitrator,  and (c) the Fixed Rent payable
for any period of time  beyond the stated  Expiration  Date shall be 103% of the
Fixed Rent payable for the final month of the Initial Term. The arbitrator shall
have no power or  authority  to select any Fair  Market  Value other than a Fair
Market Value submitted by Landlord or Tenant, and the decision of the arbitrator
shall be final and binding upon Landlord and Tenant.
<PAGE>

                                   ARTICLE 30

                        ROOF SPACE AND SATELLITE ANTENNA

                  Tenant is hereby granted,  subject to Article 5 hereof and the
provisions of this Article 30 and such other requirements as shall be imposed by
Landlord  and at no  additional  cost to Tenant,  the right to install,  secure,
maintain,  replace  and operate on the roof (the  "Roof") of the  Building in an
area  reasonably  designated by Landlord and reasonably  acceptable to Tenant of
not more than 100 square feet (the "Roof Space"), a communications  transmitter,
receiver or other supplemental equipment (the "Antenna").  The dimensions of the
Antenna shall be subject to Landlord's  approval.  In addition,  also subject to
Article 5 and the  provisions of this Article 30, Tenant shall have the right to
install  cables  leading from the Antenna to the Premises at Tenant's  sole cost
and expense and in a location, manner, material and size as shall be approved by
Landlord.

          Tenant  shall  diligently  service,  repair,  paint and  maintain  the
Antenna,  including,  without limitation,  all electrical wires, guide wires and
conduits related thereto.

          No signs, whether temporary or permanent,  shall be affixed, installed
or  attached  to  the  Antenna  or  the  Roof  other  than  those   required  by
Requirements.  All signs required,  if any, and the location  thereof,  shall be
first approved in writing by Landlord.

          In  the   performance  of  any   installation,   alteration,   repair,
maintenance, removal and/or any other work with respect to the Roof Space or the
Antenna, Tenant shall comply with all of the applicable provisions of this Lease
including, without limitation, those set forth in Articles 5, 6 (with respect to
any damage to the roof caused by Tenant),  8, 11 and 25, and the  provisions  of
this Article 30 shall be  applicable  to the Roof Space as if the Roof Space was
part of the Premises.

          Any and all taxes,  filing fees,  charges or license fees imposed upon
Landlord by virtue of the existence  and/or use of the Antenna  (including those
shown to be  specifically  related to any increase in the assessed  valuation of
the Building  attributable to the Antenna),  whether imposed by any local, state
and/or federal  government or any agency thereof,  shall be exclusively borne by
Tenant.  Landlord  agrees to cooperate  reasonably  with Tenant in any necessary
applications for any necessary  license or permits  provided  Landlord incurs no
expense or liability in so doing.

          During Ordinary  Business Hours and upon reasonable  advance notice to
Landlord,  Monday through Friday  (exclusive of Building  holidays),  Tenant may
have access to the Roof Space for the sole purpose of servicing and  maintaining
the Antenna.  Landlord shall have the right (in its sole discretion) to have its
representative(s)  accompany  Tenant  whenever  it  services  or  maintains  the
Antenna.  At all other times,  Landlord may keep the entrances to the Roof Space
locked.  Tenant  shall not have any tools  and/or  materials  stored in the Roof
Space, and Tenant's  employees and independent  contractors shall close and lock
the  entrance  door to the Roof when leaving the same.  If Tenant shall  require
access any of the Roof Space,  at times other than those  specified in the first
sentence of this Section 30.6,  then except in the case of an emergency,  Tenant
shall give Landlord at least two full business days prior written notice of such
requirement  and  shall  pay  all  reasonable  costs  incurred  by  Landlord  in
connection therewith,  including,  without limitation,  any compensation paid to
Building employees or any independent contractors of Landlord.

          On or before the  termination  of this Lease,  Tenant shall remove the
Antenna and any and all  appurtenant  cables,  wires,  and other  equipment  and
repair and restore  the Roof and any other  damage  caused to the  Building as a
result of such removal.  Such repair and restoration work shall proceed with due
diligence and dispatch and shall be completed prior to the Expiration  Date. Any
holes,  damage or injury in or to the Roof  and/or  Building  arising  out of or
connected  to the  removal of the  Antenna  and any or all  appurtenant  cables,
wires,  and other  equipment shall be promptly and duly repaired and restored by
Tenant at Tenant's sole cost and expense.

          During the Term,  Tenant  shall  inspect  the  Antenna at least once a
month.  Tenant  shall be solely  responsible  for  preserving  the  water  tight
integrity  of the Roof as may be caused  by, or relates  to,  the  installation,
maintenance,  operation and repair of the Antenna.  Tenant shall be  responsible
for all  leaks in the Roof  arising  out of or  connected  to its  installation.
Tenant's  Antenna shall not exceed the applicable  load-bearing  capacity of the
Roof Space.

           (a) If, at any time during the Term, Landlord, in its judgment, shall
determine  that it is  necessary to move the Antenna to another area of the Roof
Space,  then Landlord may give notice thereof to Tenant (which notice shall have
annexed  thereto  a plan on  which  such  other  area  of the  Roof  Space  (the
"Substitute Space") shall be substantially identified by hatching or otherwise).
The Substitute Space with respect to the Antenna shall not be located in an area
of the Roof in which  the  Antenna's  reception  would  differ  in a  materially
adverse way from the  Antenna's  reception in the initial Roof Space.  Within 30
days of receipt of Landlord's  notice (or, if a governmental  permit is required
to be obtained for  installation of the Antenna on the Substitute  Space,  then,
within 30 days of the  obtaining of such permit  (which Tenant shall make prompt
application for, with Landlord's reasonable cooperation),  Landlord, at its sole
cost (but  subject to  recoupment  pursuant  to Article 8 above)  shall move the
Antenna to the Substitute Space which shall then become the Roof Space hereunder
and the original Roof Space shall be deleted from the coverage of this Lease.
<PAGE>

                   Tenant's   operation   or  use  of  the  Antenna   shall  not
unreasonably prevent or unreasonably  interfere with the operation or use of any
equipment  of (i) any present or future  tenant or  occupant of the  Building or
Building Two, or (ii) Landlord. If, at any time during the Term hereof, Landlord
shall  reasonably  determine  that the  Antenna  causes such  interference  with
equipment of any such present or future tenant or occupant or of Landlord,  then
Landlord may so notify  Tenant,  and Landlord may require  Tenant to replace the
Antenna  with  another  antenna  which  would not cause such  interference  (the
"Replacement").  Tenant,  within  30 days of  receipt  of such  notice  or, if a
government permit is required to install the Replacement, then within 30 days of
the obtaining of such permit (which  Tenant shall make prompt  application  for,
with  Landlord's  cooperation  but at no cost to  Landlord),  shall  replace the
Antenna with the new  non-interfering  Replacement which shall then be deemed to
be the Antenna hereunder.

          Tenant agrees that Landlord has made no warranties or  representations
as to the  condition  or  suitability  of the Roof Space or the Building (or the
electricity available to the Roof Space) for the installation,  use, maintenance
or  operation of the  Antenna,  and Tenant  agrees to accept same in its "as is"
condition and without any work or alterations to be made by Landlord.

                                   ARTICLE 31

                                    GENERATOR

          Tenant is hereby granted at no additional  cost to Tenant,  subject to
Article  5  hereof  and  the  provisions  of  this  Article  31 and  such  other
requirements as shall be reasonably  imposed by Landlord,  the right to install,
secure,  maintain,  replace and operate in the location as reasonably determined
on the lower level of its Garage (the  "Space"),  a 150 kilowatt  diesel powered
emergency  electric generator and a 200 gallon diesel fuel "ready tank" together
with all ancillary equipment,  mountings,  piping, duct work, venting,  conduit,
wiring and support, including,  without limitation, the emergency electric riser
and emergency  fuel pumps,  as shall be  reasonably  necessary for the operation
thereof,  (collectively the "Generator"). Any parking spaces which are displaced
by the Space  shall be in  reduction  of the  number of  spaces  required  to be
provided to Tenant in accordance with Article 28.

          Tenant is also  granted at no  additional  cost to Tenant,  subject to
Article  5  hereof  and  the  provisions  of  this  Article  31 and  such  other
requirements  as may be  reasonably  imposed by Landlord,  the right to install,
operate and maintain in shaft space to be reasonably  designated by Landlord, an
electric  riser from the Space to the electric  closets  serving the Premises in
order to bring electric power from the Generator to such electric closets.

          Tenant  shall  diligently  service,  repair,  paint and  maintain  the
Generator,  including, without limitation, all electrical wires, guide wires and
conduits related thereto.

          No signs, whether temporary or permanent,  shall be affixed, installed
or  attached  to the  Generator  or the  Space  other  than  those  required  by
Requirements.  All signs required,  if any, and the location  thereof,  shall be
first approved in writing by Landlord.

          In  the   performance  of  any   installation,   alteration,   repair,
maintenance,  removal  and/or  any other  work with  respect to the Space or the
Generator,  Tenant shall comply with all of the  applicable  provisions  of this
Lease  including,  without  limitation,  those set forth in  Articles 5, 6 (with
respect  to any  damage  to the  Garage  cause by  Tenant's  installation,  use,
maintenance  and repair of the  Generator),  8, 11 and 25, and the provisions of
this Article  shall be  applicable  to the Space as if the Space was part of the
Premises.

          Any and all taxes,  filing fees,  charges or license fees imposed upon
Landlord by virtue of the existence and/or use of the Generator (including those
shown to be  specifically  related to any increase in the assessed  valuation of
the Building attributable to the Generator), whether imposed by any local, state
and/or federal  government or any agency thereof,  shall be exclusively borne by
Tenant.  Landlord  agrees to cooperate  reasonably  with Tenant in any necessary
applications for any necessary  license or permits  provided  Landlord incurs no
expense or liability in so doing.
<PAGE>

          During Ordinary  Business Hours and upon reasonable  advance notice to
Landlord,  Monday through Friday  (exclusive of Building  holidays),  and at any
time in the event of an  emergency,  Tenant may have access to the Space for the
sole purpose of servicing and maintaining  the Generator.  Tenant shall not have
any tools and/or  materials  stored in the Space. If Tenant shall require access
to the Space at times other than those  specified in the first  sentence of this
Section  31.7,  then  except  in the case of an  emergency,  Tenant  shall  give
Landlord at least 2 full business days prior written notice of such  requirement
and shall pay all reasonable costs incurred by Landlord in connection therewith,
including,  without  limitation,  any compensation paid to Building employees or
any independent contractors of Landlord.

          During the Term,  Tenant shall  inspect the  Generator at least once a
month. The Generator shall not exceed the load-bearing capacity of the Space.

          (a) If, at any time during the Term, Landlord, in its judgment,  shall
determine  that it is  necessary  to move the  Generator  to another area of the
Garage, then Landlord may give notice thereof to Tenant (which notice shall have
annexed thereto a plan on which such other area (the  "Substitute  Space") shall
be substantially identified by hatching or otherwise). Within 30 days of receipt
of Landlord's  notice (or, if a  governmental  permit is required to be obtained
for installation of the Generator in the Substitute Space,  then, within 30 days
of the obtaining of such permit (which Tenant shall make prompt application for,
with Landlord's reasonable cooperation), Landlord, at its sole cost (but subject
to  recoupment  pursuant  to Article 7 above)  shall move the  Generator  to the
Substitute  Space (with only a commercially  reasonable  lapse of service) which
shall then become the Space  hereunder  and the original  Space shall be deleted
from the coverage of this Lease.

                   Tenant's   operation  or  use  of  the  Generator  shall  not
unreasonably prevent or unreasonably  interfere with the operation or use of any
equipment of any present or future tenant or occupant of the Building,  Building
Two  or of  Landlord.  Testing  of  the  Generator  shall  be  performed  during
non-business hours exclusive of Sundays. If, at any time during the term hereof,
Landlord shall reasonably  determine that the Generator causes such interference
with other  equipment,  then  Landlord  may so notify  Tenant,  and Landlord may
require Tenant to replace the Generator with another  generator  which would not
cause such interference (the "Replacement").  Tenant,  within 30 days of receipt
of  such  notice  or,  if  a  government  permit  is  required  to  install  the
Replacement,  then within 30 days of the  obtaining of such permit (which Tenant
shall make prompt application for, with Landlord's cooperation but at no cost to
Landlord), shall replace the Generator with the new non-interfering  Replacement
which shall then be deemed to be the Generator hereunder.

          Tenant agrees that Landlord has made no warranties or  representations
as to the  condition  or  suitability  of the  Space  or the  Building  (or  the
electricity  available to the Space) for the installation,  use,  maintenance or
operation  of the  Generator,  and Tenant  agrees to accept  same in its "as is"
condition and without any work or alterations to be made by Landlord.

                                   ARTICLE 32

                                     SIGNAGE

                  From and  after the  Effective  Date,  Landlord  shall use its
commercially  reasonable  efforts  to obtain the  approval  of the City of Santa
Clara to the erection of a monument  sign on the Real  Property  (the  "Monument
Sign") and, if such  approval is granted,  Landlord  shall use its  commercially
reasonable efforts to substantially  complete  construction of the Monument Sign
by the Commencement  Date. The size,  location,  configuration and design of the
Monument  Sign shall be as  determined  by Landlord in its sole  discretion.  If
constructed,  Tenant shall be entitled to it Proportionate Share of space on the
Monument  Sign to place upon the Monument Sign (in the location as determined by
Landlord) and at Tenant's sole cost and expense,  Tenant's corporate logo design
identifying  Tenant's  occupancy at the  Building.  In addition,  subject to the
receipt  of  Landlord's  approval,  which  approval  shall  not be  unreasonably
withheld,  Tenant shall have the right to install, at its sole cost and expense,
identifying  signage of a size no greater  than 10 square  feet to be located on
the  interior  wall of the ground  floor of the  Building  adjacent  to Tenant's
entryway to the Premises.  Tenant shall also be entitled to install  identifying
signage on each of the other floors of the Premises.

                                    * * * * *



<PAGE>



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

LANDLORD:                                                 TENANT:

WHTS FREEDOM CIRCLE PARTNERS II, L.L.C.,                  PMC - SIERRA, INC.,
a Delaware limited liability company                      a Delaware corporation


By:  Tishman  Speyer/Travelers Real Estate Venture, L.P.,
     a Delaware limited partnership                       By:___________________

     By: Tishman Speyer/Travelers Associates,             Its:__________________
         a Delaware limited partnership
         Its general partner                              By: __________________

         By:  TSCE Venture Corp., a Delaware corporation
              Its general partner                         Its:__________________

              By: ___________________________

                  Its:________________________

and

By:  Whitehall  Street Real Estate Limited  Partnership  IX, a
     Delaware limited partnership, its managing member

     By: Whitehall  Advisors,  L.L.C.  IX,  Inc.,  a  Delaware
         limited liability company, its general partner

         By:  Whitehall  IX/X,  Inc., a Delaware  corporation,
              its managing member

              By: ___________________________

              Its:___________________________



<PAGE>

                                   EXHIBIT A-1

                          Floor Plan of the First Floor

The floor plan which follows is intended solely to identify the general location
of the  Premises,  and  should  not be used for any other  purpose.  All  areas,
dimensions and locations are approximate,  and any physical conditions indicated
may not exist as shown.


<PAGE>

                                   EXHIBIT A-2

                         Floor Plan of the Second Floor

The floor plan which follows is intended solely to identify the general location
of the  Premises,  and  should  not be used for any other  purpose.  All  areas,
dimensions and locations are approximate,  and any physical conditions indicated
may not exist as shown.


<PAGE>


                                   EXHIBIT A-3

                          Floor Plan of the Third Floor

The floor plan which follows is intended solely to identify the general location
of the  Premises,  and  should  not be used for any other  purpose.  All  areas,
dimensions and locations are approximate,  and any physical conditions indicated
may not exist as shown.


<PAGE>


                                   EXHIBIT A-4

                         Floor Plan of the Fourth Floor

The floor plan which follows is intended solely to identify the general location
of the  Premises,  and  should  not be used for any other  purpose.  All  areas,
dimensions and locations are approximate,  and any physical conditions indicated
may not exist as shown.


<PAGE>


                                   EXHIBIT A-5

                          Floor Plan of the Fifth Floor

The floor plan which follows is intended solely to identify the general location
of the  Premises,  and  should  not be used for any other  purpose.  All  areas,
dimensions and locations are approximate,  and any physical conditions indicated
may not exist as shown.


<PAGE>


                                    EXHIBIT B

                                   Definitions

                   Base Rate:  The annual  rate of interest  publicly  announced
from time to time by Citibank,  N.A., or its successor, in New York, New York as
its "base rate" (or such other term as may be used by Citibank,  N.A., from time
to time, for the rate presently referred to as its "base rate").

                  Building  Systems:  The  mechanical,   electrical,   plumbing,
sanitary,  sprinkler,  heating,  ventilation  and  air  conditioning,  security,
life-safety,  elevator and other  service  systems or facilities of the Building
which is installed by Landlord as part of the Base Building Work.

                  Business Days: All days, excluding Saturdays,  Sundays and all
days observed by either the State in which the Building is located,  the Federal
Government or the labor unions servicing the Building as legal holidays.

                  Code: The Internal  Revenue Code of 1986, as amended,  and the
regulations promulgated thereunder, as amended.

                  Common Areas:  The lobby,  plaza and sidewalk  areas and other
similar areas of general access and the areas on individual  multi-tenant floors
in the Building devoted to corridors,  elevator  lobbies,  restrooms,  and other
similar facilities serving the Premises.

                   Comparable   Buildings:   First-class   office  buildings  of
comparable age and quality in Santa Clara, California.

                  CC&R's:  That certain Agreement  Containing  Covenants Running
with the Land, dated January 7, 1997, by and between Richard T. Peery,  Trustee,
or his successor trustee, under Trust Agreement, dated July 20, 1997 (Richard T.
Peery Separate Property Trust), as amended, and John Arrillaga,  Trustee, or his
successor  trustee,  under Trust  Agreement,  dated July 20, 1997 (the Arrillaga
Family Trust), as amended, and BNP Leasing  Corporation,  recorded on January 7,
1997, as Document Number 13571632 in the Official Records of Santa Clara County,
California.

                  Excluded  Expenses:  (a) Taxes;  (b) franchise or income taxes
imposed upon  Landlord;  (c) mortgage  amortization  and  interest;  (d) leasing
commissions;  (e) the cost of tenant  installations and decorations  incurred in
connection with preparing space for any Building tenant,  including  workletters
and  concessions;  (f) rent under Superior  Leases,  if any; (g) management fees
equal to the greater of (A) 3% of the gross rentals and other revenues collected
for the Real Property,  and (B) fees charged by Landlord or related entities for
the management by any of them of other first class properties in the area of the
Building;  (h) wages,  salaries and benefits paid to any persons above the grade
of Building  Manager and their  immediate  supervisor;  (i) legal and accounting
fees  relating  to (A)  disputes  with  tenants,  prospective  tenants  or other
occupants of the Building, (B) disputes with purchasers, prospective purchasers,
mortgagees or prospective mortgagees of the Building or the Real Property or any
part of either,  or (C) negotiations of leases,  contracts of sale or mortgages;
(j)  costs  of  services  provided  to  other  tenants  of  the  Building  on  a
"rent-inclusion" basis which are not provided to Tenant on such basis; (k) costs
that are  reimbursed out of insurance,  warranty or  condemnation  proceeds,  or
which are  reimbursable  by Tenant or other  tenants  other than  pursuant to an
expense  escalation  clause;  (l) costs in the nature of penalties or fines; (m)
costs for services,  supplies or repairs paid to any related entity in excess of
costs  that would be payable in an "arm's  length" or  unrelated  situation  for
comparable services,  supplies or repairs; (n) allowances,  concessions or other
costs and expenses of improving or decorating any demised or demisable  space in
the Building; (o) appraisal,  advertising and promotional expenses in connection
with  leasing  of the  Building;  (p) the  costs of  installing,  operating  and
maintaining a specialty improvement,  including a cafeteria,  lodging or private
dining facility, or an athletic,  luncheon or recreational club unless Tenant is
permitted  to  make  use  of  such  facility  without  additional  cost  or on a
subsidized  basis  consistent  with  other  users;  (q) any  costs  or  expenses
(including fines, interest,  penalties and legal fees) arising out of Landlord's
failure  to timely  pay  Operating  Expenses  or Taxes;  (r) costs  incurred  in
connection with the removal, encapsulation or other treatment of asbestos or any
other Hazardous Materials; (s) the cost of capital improvements other than those
expressly  included in  Operating  Expenses  pursuant to Section  7.1; (t) costs
occasioned by the grossly negligent act or omission or violation of Requirements
by Landlord,  any other occupant of the Building,  or their  respective  agents,
employees or  contractors;  (u) costs of correcting  defects in, or  significant
design error relating to, the initial  design or condition of the Building;  (v)
costs incurred to comply with any Requirements  applicable to the Premises,  the
Building or the Project on the Commencement Date; (w) costs (i) arising from the
disproportionate use of any utility or service supplied by Landlord to any other
occupant of the Project or (ii)  associated with utilities or services of a type
not provided to Tenant; (x) except for any amortization or depreciation  charges
expressly  provided  for in this  Lease as  includable  in  Operating  Expenses,
depreciation  charges or  contributions  to capital  replacement  reserves;  (y)
except for costs and expenses  incurred for insuring,  securing and  maintenance
and repair of objects of art on or about the Real Property for which Landlord is
responsible, costs for the acquisition of objects of art; (z) costs specifically
allocated  to  Mission  Towers  II;  (aa)  insurance   costs  for  coverage  not
customarily  carried by owners of  Comparable  Buildings  (provided  that in all
events Operating Expenses shall include the premium for earthquake insurance and
such other insurance which any Mortgagee requires to be carried); (ab) increases
in insurance costs caused by the activities of another  occupant of the Project;
(ac) the amount of any  deductible  carried  by  Landlord's  insurance  policies
respecting  the Building  which exceed  $150,000,  or with respect to earthquake
insurance,  5% of the replacement value of the Building;  and (ad) capital costs
for repair, maintenance and replacement of structural portions of the Building.
<PAGE>

                  Governmental Authority: The United States of America, the City
of Santa Clara, County of Santa Clara, or State of California,  or any political
subdivision, agency, department, commission, board, bureau or instrumentality of
any of the foregoing,  now existing or hereafter  created,  having  jurisdiction
over the Real Property.

                  Hazardous  Materials:  Any  substances,  materials  or  wastes
currently or in the future  deemed or defined in any  Requirement  as "hazardous
substances,"  "toxic  substances,"  "contaminants,"  "pollutants"  or  words  of
similar import.

                  HVAC Systems: The Building System designed to provide heating,
ventilation and air conditioning.

                  Indemnitees:  Landlord,  Landlord's  Agent, each Mortgagee and
Lessor,  and each of their respective  direct and indirect  partners,  officers,
shareholders, directors, members, managers, trustees, beneficiaries,  employees,
principals, contractors, servants, agents, and representatives.

                  Lessor:  A lessor under a Superior Lease.

                  Losses:  Any and all  losses,  liabilities,  damages,  claims,
judgments,  fines, suits,  demands,  costs, interest and expenses of any kind or
nature  (including  reasonable  attorneys' fees and  disbursements)  incurred in
connection with any claim,  proceeding or judgment and the defense thereof,  and
including all costs of repairing any damage to the Premises, the Building or the
Garage  or the  appurtenances  of any of the  foregoing  to  which a  particular
indemnity and hold harmless agreement applies.

                  Mortgage(s):  Any mortgage, trust indenture or other financing
document which may now or hereafter affect the Premises,  the Real Property, the
Building or any Superior Lease and the leasehold  interest created thereby,  and
all renewals, extensions, supplements, amendments, modifications, consolidations
and replacements thereof or thereto,  substitutions  therefor, and advances made
thereunder.

                   Mortgagee(s):  Any  mortgagee,  trustee or other  holder of a
Mortgage.

                   Ordinary  Business Hours:  6:00 a.m. to 6:00 p.m. on Business
Days and from 9:00 a.m. to 12:00 p.m.  on  Saturdays  which are not  observed as
legal  holidays by the Federal  Government  or the labor  unions  servicing  the
Building.
<PAGE>

                  Prohibited  Use: Any use or occupancy of the Premises  that in
Landlord's  reasonable  judgment would:  (a) cause damage to the Building or any
equipment, facilities or other systems therein; (b) impair the appearance of the
Building; (c) interfere with the efficient and economical maintenance, operation
and repair of the  Premises or the  Building  or the  equipment,  facilities  or
systems  thereof;  (d) adversely  affect any service provided to, and/or the use
and occupancy by, any Building tenant or occupants;  (e) violate the certificate
of  occupancy  issued for the  Premises  or the  Building;  (f)  materially  and
adversely affect the first-class image of the Building or (g) result in protests
or civil disorder or commotions at, or other  disruptions of the normal business
activities in, the Building. Prohibited Use also includes the use of any part of
the Premises for: (i) a restaurant or bar;  (ii) the  preparation,  consumption,
storage,  manufacture  or sale of food or beverages  (except in connection  with
vending  machines  (provided that each machine,  where  necessary,  shall have a
waterproof pan  thereunder and be connected to a drain) and/or warming  kitchens
installed for the use of Tenant's  employees  only),  liquor,  tobacco or drugs;
(iii)  the  business  of  photocopying,  multilith  or offset  printing  (except
photocopying  in  connection  with  Tenant's  own  business);  (iv) a school  or
classroom;  (v) lodging or sleeping;  (vi) the  operation  of retail  facilities
(meaning  a  business  whose  primary  patronage  arises  from  the  generalized
solicitation of the general public to visit Tenant's offices in person without a
prior appointment) of a savings and loan association or retail facilities of any
financial, lending, securities brokerage or investment activity; (vii) a payroll
office;  (viii) a barber,  beauty or manicure shop; (ix) an employment agency or
similar  enterprise;  (x)  offices of any  Governmental  Authority,  any foreign
government,  the United  Nations,  or any agency or department of the foregoing;
(xi) the  manufacture,  retail  sale,  storage  of  merchandise  or  auction  of
merchandise,  goods or property of any kind to the  general  public  which could
reasonably be expected to create a volume of pedestrian traffic substantially in
excess of that  normally  encountered  in the  Premises;  (xii) the rendering of
medical,  dental or other  therapeutic  or  diagnostic  services;  or (xiii) any
illegal  purposes or any activity  constituting a nuisance.  Landlord agrees and
acknowledges  that Tenant will have an  electronic  verification  lab within the
Premises and a small  shipping and receiving area on the first floor adjacent to
the  Building's  loading  dock,  and  neither  of the same  shall  constitute  a
Prohibited Use.

                  Requirements:  All present  and future  laws,  rules,  orders,
ordinances,  regulations,  statutes,  requirements,  codes and executive orders,
extraordinary  and ordinary of (i) all Governmental  Authorities,  including the
Americans With Disabilities  Act, 42 U.S.C.  ss.12,101 (et seq.), and any law of
like  import,  and all rules,  regulations  and  government  orders with respect
thereto, and any of the foregoing relating to Hazardous Materials, environmental
matters,  public  health and safety  matters,  (ii) any  applicable  fire rating
bureau or other body exercising similar  functions,  affecting the Real Property
or the maintenance, use or occupation thereof, or any street, avenue or sidewalk
comprising  a part of or in front  thereof  or any  vault in or under  the same,
(iii) all requirements of all insurance bodies affecting the Premises,  and (iv)
utility service providers.

                  Rules and  Regulations:  The rules and regulations  annexed to
and made a part of this Lease as Exhibit F, as they may be modified from time to
time by Landlord.

                  Specialty  Alterations:  Alterations  which  are not  standard
office installations such as full-service kitchens,  executive bathrooms, raised
computer floors, computer installations,  safe deposit boxes, vaults,  libraries
or file rooms requiring reinforcement of floors, internal staircases, conveyors,
dumbwaiters,  and other Alterations of a similar character (excluding,  however,
small  kitchens  not  requiring  venting  or  grease  traps  and file  rooms not
requiring the reinforcement of floors).

                  Substantial  Completion:  As to any construction  performed by
any party in the Premises, including the Initial Installations, any Alterations,
or Landlord's Work, "Substantial Completion" or "Substantially  Completed" means
that  such work has been  completed,  as  reasonably  determined  by  Landlord's
architect,  in  accordance  with (a) the  provisions  of this  Lease  applicable
thereto,  (b) the plans and specifications for such work, and (c) all applicable
Requirements,   except  for  minor  details  of  construction,   decoration  and
mechanical  adjustments,  if any, the noncompletion of which does not materially
interfere  with  Tenant's use of the Premises or which in  accordance  with good
construction practices should be completed after the completion of other work in
the Premises or Building.
<PAGE>

                  Superior Lease(s):  Any ground or underlying lease of the Real
Property or any part thereof  heretofore  or hereafter  made by Landlord and all
renewals, extensions, supplements,  amendments,  modifications,  consolidations,
and replacements thereof.

                   Tenant Party:  Tenant and any  subtenants or occupants of the
Premises and their respective agents,  contractors,  subcontractors,  employees,
invitees or licensees.

                  Tenant's  Property:  Tenant's  movable  fixtures  and  movable
partitions,  telephone and other equipment,  computer  systems,  trade fixtures,
furniture, furnishings, and other items of personal property which are removable
without material damage to the Building.

                  Unavoidable Delays:  Landlord's  inability to fulfill or delay
in fulfilling any of its obligations  under this Lease expressly or impliedly to
be performed by Landlord or Landlord's  inability to make or delay in making any
repairs,  additions,  alterations,  improvements  or  decorations  or Landlord's
inability  to  supply  or delay in  supplying  any  equipment  or  fixtures,  if
Landlord's  inability  or delay is due to or arises by reason of strikes,  labor
troubles or by accident, or by any cause whatsoever beyond reasonable Landlord's
control,  including  governmental  preemption  in  connection  with  a  national
emergency,  Requirements or shortages,  or unavailability of labor, fuel, steam,
water,  electricity  or materials,  or delays caused by Tenant or other tenants,
mechanical breakdown,  acts of God, enemy action, civil commotion, fire or other
casualty.


<PAGE>


                                    EXHIBIT C

                                   Work Letter

                  1.  Proposed and Final Plans.

                    (a) Tenant  shall  cause to be  prepared  and  delivered  to
Landlord,  for Landlord's  approval,  the following proposed drawings ("Proposed
Plans") for all improvements Tenant desires to complete or have completed in the
Premises (the "Initial Installations"):

                    (i) Architectural drawings (consisting of floor construction
                    plan,  ceiling  lighting and layout,  power,  and  telephone
                    plan).

                    (ii)Mechanical  drawings  (consisting  of  HVAC,  sprinkler,
                    electrical, telephone, and plumbing).

                    (iii) Finish schedule (consisting of wall finishes and floor
                    finishes and miscellaneous details).

                    (b) All architectural drawings shall be prepared at Tenant's
sole  expense  by a  licensed  architect  employed  by Tenant  and  approved  by
Landlord,  which  approval  shall  not  be  unreasonably  withheld,  delayed  or
conditioned.  Tenant  shall  deliver  two  sets  of  reproducible  architectural
drawings to Landlord. All mechanical drawings shall be prepared at Tenant's sole
expense by a licensed engineer designated by Landlord, whom Tenant shall employ.
Tenant shall reimburse Landlord for all reasonable  out-of-pocket costs incurred
by Landlord in  reviewing  the Proposed  Plans  except for drawings  prepared by
Landlord's designated  engineers,  consultants or Essential Subs (as hereinafter
defined).

                    (c)  Within  15  days  after   Landlord's   receipt  of  the
architectural drawings,  Landlord shall approve or disapprove such drawings, and
if  disapproved,  Landlord  shall  advise  Tenant of any  changes or  additional
information required to obtain Landlord's approval.

                    (d) Within 15 days after  receipt  of  mechanical  drawings,
Landlord shall approve or disapprove such drawings, and if disapproved, Landlord
shall advise Tenant of any changes required to obtain Landlord's approval.

                    (e) If  Landlord  disapproves  of,  or  requests  additional
information   regarding  the  Proposed  Plans,  Tenant  shall,  within  10  days
thereafter,  revise the Proposed Plans disapproved by Landlord and resubmit such
plans to Landlord or otherwise provide such additional  information to Landlord.
Landlord shall, within 15 days after receipt of Tenant's revised plans,  approve
or disapprove such drawings, and if disapproved, Landlord shall advise Tenant of
any additional changes which may be required to obtain Landlord's  approval.  If
Landlord  disapproves  the revised  plans  specifying  the reason  therefor,  or
requests further additional information, Tenant shall, within 10 days of receipt
of Landlord's required changes,  revise such plans and resubmit them to Landlord
or deliver to Landlord  such  further  information  as Landlord  has  requested.
Landlord  shall,  again within 15 days after receipt of Tenant's  revised plans,
approve or disapprove such drawings,  and if disapproved,  Landlord shall advise
Tenant of further  changes,  if any,  required  for  Landlord's  approval.  This
process shall  continue until Landlord has approved  Tenant's  revised  Proposed
Plans. "Final Plans" shall mean the Proposed Plans, as revised,  which have been
approved by Landlord and Tenant in writing.  In connection  with the exercise of
its  approval  rights  pursuant  to  Section 1 hereof,  Landlord  agrees  not to
withhold its approval  unreasonably  withheld or delayed so long as such Initial
Installations  (i) are  non-structural  and do not affect any Building  Systems,
(ii) affect only the Premises and are not visible from outside of the  Premises,
(iii) do not affect the certificate of occupancy  issued for the Building or the
Premises, and (iv) do not violate any Requirement. If Landlord's approval to any
of the Proposed Plans or the Final Plans is not approved or  disapproved  within
15 days following Tenant's request for consent,  and Landlord fails to so advise
Tenant  within 5 days  following  receipt  of a second  notice  labeled  in bold
letters "URGENT -- DELAY NOTICE", Landlord's consent shall be deemed granted. In
addition,  so long as the  Initial  Installations  as  proposed by Tenant are in
reasonable  conformance  with  customary  office space in Comparable  Buildings,
Landlord shall not withhold its consent on aesthetic grounds.

                    (f) All Proposed Plans and Final Plans shall comply with all
applicable Requirements. Neither review nor approval by Landlord of the Proposed
Plans and resulting Final Plans shall constitute a representation or warranty by
Landlord that such plans either (i) are complete or suitable for their  intended
purpose, or (ii) comply with applicable Requirements,  it being expressly agreed
by Tenant that Landlord  assumes no  responsibility  or liability  whatsoever to
Tenant or to any other person or entity for such  completeness,  suitability  or
compliance.  Tenant  shall  not make any  changes  in the  Final  Plans  without
Landlord's prior approval,  which shall not be unreasonably withheld or delayed;
provided that Landlord may, in the exercise of its sole and absolute discretion,
disapprove any proposed changes  adversely  affecting the Building's  structure,
systems,  equipment or the  appearance  or value of the  Building.  Landlord and
Tenant  shall  confer  and  negotiate  in  good  faith  to  reach  agreement  on
modifications to the Final Plans.
<PAGE>

                    (g) Tenant  acknowledges  that certain  portions of the Base
Building Work may not be  Substantially  Complete at the time  Landlord  tenders
possession  of the Premises to Tenant.  For purposes of  completing  the Initial
Installations,  Landlord shall use its commercially  reasonable efforts to cause
the completion of the Base Building Work in a manner which does not unreasonably
interfere  with  Tenant's  performance  of its Initial  Installations.  Landlord
agrees to use reasonable  efforts to complete all such Base Building Work in the
Premises on or before the Commencement  Date,  subject to Unavoidable  Delay. At
the time of  Landlord's  tender of  possession  of the  Premises to Tenant those
portions of the Base  Building  Work which are necessary to be completed for the
orderly  and   efficient   progress  of  the  Initial   Installation   shall  be
Substantially Completed.

                  2.  Performance of the Initial Installations.

                    (a) Filing of Final Plans, Permits. Tenant, at its sole cost
and expense, shall file the Final Plans with the Governmental Authorities having
jurisdiction over the Initial Installations.  Tenant shall furnish Landlord with
copies of all documents submitted to all such Governmental  Authorities and with
the   authorizations   to  commence   work  and  the  permits  for  the  Initial
Installations issued by such Governmental Authorities. Tenant shall not commence
the Initial  Installations  until the required  governmental  authorizations for
such work are obtained and delivered to Landlord.

                    (b)  Landlord  Approval of  Contractors.  Tenant shall enter
into a contract for  construction  of the Initial  Installations  with a general
contractor  reasonably  acceptable  to  Landlord  (the  "General   Contractor").
Tenant's  construction  contract with the General Contractor shall be subject to
Landlord's  prior approval,  which approval shall not be unreasonably  withheld.
The General  Contractor  shall be  responsible  for all  required  construction,
management and supervision.  In addition, Tenant shall only utilize for purposes
of mechanical, electrical, structural, sprinkler, fire and life safety and those
contractors as specifically designated by Landlord (collectively, the "Essential
Subs"),  which  list of  Essential  Subs  shall  include 3 names  each for those
Essential Subs engaged in mechanical, electrical or structural contracting and 1
Essential  Sub for fire alarm and life  safety.  Tenant shall submit to Landlord
not less  than 10 days  prior to  commencement  of  construction  the  following
information and items:

                    (i) The names and addresses of the other subcontractors, and
                    subsubcontractors  (collectively,  together with the General
                    Contractor and Essential  Subs, the "Tenant's  Contractors")
                    Tenant intends to employ in the  construction of the Initial
                    Installations.  Landlord  shall have the right to approve or
                    disapprove Tenant's Contractors, and Tenant shall employ, as
                    Tenant's   Contractors,   only  those  persons  or  entities
                    approved  by  Landlord.   Landlord  shall  not  unreasonably
                    withhold  its approval to any of Tenant's  Contractors.  All
                    contractors  and  subcontractors  engaged by or on behalf of
                    Tenant  for the  Premises  shall  be  licensed  contractors,
                    possessing  good  labor  relations,  capable  of  performing
                    quality  workmanship  and working in harmony with Landlord's
                    contractors and  subcontractors  and with other  contractors
                    and  subcontractors  on the job  site.  All  work  shall  be
                    coordinated  with  any  general  construction  work  in  the
                    Building.

                    (ii)The  scheduled  commencement  date of construction,  the
                    estimated date of completion of construction work, fixturing
                    work, and date of occupancy of the Premises by Tenant.

                    (iii)  Itemized  statement of estimated  construction  cost,
                    including permits and fees, architectural,  engineering, and
                    contracting fees.

                    (iv)Certified  copies of insurance  policies or certificates
                    of  insurance  as  hereinafter  described.Tenant  shall  not
                    permit  Tenant's  Contractors  to  commence  work  until the
                    required insurance has been obtained and certified copies of
                    policies or certificates have been delivered to Landlord.
<PAGE>

                    (c) Access to Premises.  Tenant,  its employees,  designers,
contractors  and  workmen  shall  have  access  to  the  Premises  prior  to the
Commencement Date to construct the Initial  Installations,  provided that Tenant
and its employees,  agents, contractors,  and suppliers only access the Premises
via the  Building  freight  elevator,  work  in  reasonable  harmony  and do not
unreasonably  interfere  with the  performance  of other work in the Building by
Landlord,  Landlord's  contractors,  other  tenants or occupants of the Building
(whether or not the terms of their  respective  leases have  commenced) or their
contractors.  If at any time such entry shall cause, or in Landlord's reasonable
judgment  threaten to cause,  such  disharmony  or  interference,  Landlord  may
terminate such permission upon 24 hours' notice to Tenant, and thereupon, Tenant
or its employees,  agents, contractors, and suppliers causing such disharmony or
interference shall immediately withdraw from the Premises and the Building until
Landlord determines such disturbance no longer exists.

                    (d)  Landlord's  Right to Perform.  Landlord  shall have the
right, but not the obligation,  to perform,  on behalf of and for the account of
Tenant,  subject to  reimbursement by Tenant,  any of the Initial  Installations
which (i) Landlord  reasonably deems necessary to be done on an emergency basis,
(ii) pertains to structural components or the general Building systems, or (iii)
pertains  to the  erection  of  temporary  safety  barricades  or  signs  during
construction.  Except in case of emergency, Landlord shall give prior reasonable
written notice to Tenant of its intention to perform such work.

                    (e) Warranties.  On completion of the Initial Installations,
Tenant shall provide Landlord with copies of all warranties of at least one year
duration on all the Initial Installations.  At Landlord's request,  Tenant shall
enforce,  at  Tenant's  expense,  all  guarantees  and  warranties  made  and/or
furnished to Tenant with respect to the Initial Installations.

                    (f)  Protection  of Building.  All work  performed by Tenant
shall be  performed  with a minimum  of  interference  with  other  tenants  and
occupants  of the Building and shall  conform to the Rules and  Regulations  and
those rules and regulations  governing  construction in the Building as Landlord
or Landlord's  Agent may impose.  Tenant will take all  reasonable and customary
precautionary  steps to protect  its  facilities  and the  facilities  of others
affected by the Initial  Installations  and to properly police same and Landlord
shall have no  responsibility  for any loss by theft or otherwise.  Construction
equipment  and  materials  are to be located in confined  areas and delivery and
loading of equipment and materials  shall be done at such  reasonable  locations
and at such time as Landlord  shall direct so as not to burden the  operation of
the Building.  Landlord  shall advise Tenant in advance of any special  delivery
and loading dock  requirements.  Tenant shall at all times keep the Premises and
adjacent areas free from  accumulations  of waste materials or rubbish caused by
its suppliers,  contractors  or workmen.  Landlord may require daily clean-up if
required for fire  prevention  and life safety  reasons or  applicable  laws and
reserves  the right to do clean-up  at the expense of Tenant if Tenant  fails to
comply with Landlord's  cleanup  requirements.  At the completion of the Initial
Installations,  Tenant's  Contractors shall forthwith remove all rubbish and all
tools, equipment and surplus materials from and about the Premises and Building.
Any damage caused by Tenant's  Contractors  to any portion of the Building or to
any  property of Landlord or other  tenants  shall be repaired  forthwith  after
written notice from Landlord to its condition  prior to such damage by Tenant at
Tenant's expense.

                    (g)  Compliance  by all  Tenant  Contractors.  Tenant  shall
impose and enforce all terms hereof on Tenant's  Contractors  and its designers,
architects and  engineers.  Landlord shall have the right to order Tenant or any
of Tenant's  Contractors,  designers,  architects  or  engineers  who  willfully
violate the  provisions of this  Workletter to cease work and remove  himself or
itself and his or its equipment and employees from the Building.

                    (h)  Accidents,  Notice to  Landlord.  Tenant's  Contractors
shall assume  responsibility  for the  prevention of accidents to its agents and
employees and shall take all reasonable  safety  precautions with respect to the
work to be  performed  and shall  comply  with all  reasonable  safety  measures
initiated by the Landlord and with all applicable Requirements for the safety of
persons or property.  Tenant shall advise the Tenant's  Contractors to report to
Landlord any injury to any of its agents or employees and shall furnish Landlord
a copy of the accident report filed with its insurance  carrier within 3 days of
its occurrence.
<PAGE>

                    (i)  Required   Insurance.   Tenant  shall  cause   Tenant's
Contractors  to secure,  pay for, and  maintain  during the  performance  of the
construction of the Initial  Installations,  insurance in the following  minimum
coverages and limits of liability:

                    (i)  Workmen's   Compensation   and   Employer's   Liability
                    Insurance as required by Requirements.

                    (ii)Commercial   General  Liability   Insurance   (including
                    Owner's and Contractors'  Protective Liability) in an amount
                    not less than $2,000,000 per occurrence,  whether  involving
                    bodily injury  liability (or death  resulting  therefrom) or
                    property  damage  liability or a combination  thereof with a
                    minimum  aggregate  limit of  $2,000,000,  and with umbrella
                    coverage  with  limits  not  less  than  $10,000,000.   Such
                    insurance   shall   provide  for   explosion  and  collapse,
                    completed  operations  coverage  with a  two-year  extension
                    after  completion  of  the  work,  and  broad  form  blanket
                    contractual  liability  coverage and shall  insure  Tenant's
                    Contractors  against  any and all claims for bodily  injury,
                    including  death  resulting  therefrom  and  damage  to  the
                    property of others and arising from its operations under the
                    contracts  whether such operations are performed by Tenant's
                    Contractors, or by anyone directly or indirectly employed by
                    any of them.

                    (iii) Business Automobile Liability Insurance, including the
                    ownership,  maintenance,  and  operation  of any  automotive
                    equipment,  owned, hired, or non-owned in an amount not less
                    than  $500,000  for  each  person  in  one   accident,   and
                    $1,000,000 for injuries  sustained by two or more persons in
                    any one accident and property damage  liability in an amount
                    not less than  $1,000,000 for each accident.  Such insurance
                    shall insure Tenant's Contractors against any and all claims
                    for bodily injury,  including death resulting therefrom, and
                    damage to the property of others arising from its operations
                    under the contracts,  whether such  operations are performed
                    by Tenant's Contractors, or by anyone directly or indirectly
                    employed by any of them.

                    (iv)"All-risk"  builder's  risk  insurance  upon the  entire
                    Initial  Installations  to the full insurance value thereof.
                    Such  insurance  shall  include the interest of Landlord and
                    Tenant (and their respective  contractors and subcontractors
                    of any tier to the extent of any insurable interest therein)
                    in the Initial  Installations  and shall insure  against the
                    perils  of fire and  extended  coverage  and  shall  include
                    "all-risk"  builder's  risk  insurance  for physical loss or
                    damage including,  without  duplication of coverage,  theft,
                    vandalism,  and  malicious  mischief.  If  portions  of  the
                    Initial  Installations  are  stored  off  the  site  of  the
                    Building  or in transit to such site are not  covered  under
                    such "all-risk" builder's risk insurance,  then Tenant shall
                    effect  and  maintain  similar  property  insurance  on such
                    portions  of the  Initial  Installations.  Any loss  insured
                    under such  "all-risk"  builder's  risk  insurance  is to be
                    adjusted  with  Landlord  and  Tenant  and made  payable  to
                    Landlord as trustee for the insureds,  as their interest may
                    appear,  subject to the agreement reached by such parties in
                    interest,  or in the absence of any such agreement,  then in
                    accordance with a final,  nonappealable  order of a court of
                    competent jurisdiction.  If after such loss no other special
                    agreement  is made,  the  decision to replace or not replace
                    any such damaged the Initial  Installations shall be made in
                    accordance  with  the  terms  and  provisions  of the  Lease
                    including,  this  Workletter.   The  waiver  of  subrogation
                    provisions  contained  in  the  Lease  shall  apply  to  the
                    "all-risk" builder's risk insurance policy to be obtained by
                    Tenant pursuant to this paragraph (iv).

                  All policies (except the Workmen's  Compensation policy) shall
be endorsed to include as additional  named insureds  Landlord and its officers,
employees,  and agents,  Landlord's contractors,  Landlord's architect,  Tishman
Speyer Properties,  L.P., any Mortgages and Superior Lessors and such additional
persons as Landlord may designate. Such endorsements shall also provide that all
additional  insured  parties shall be given 30 days' prior written notice of any
reduction,  cancellation,  or nonrenewal of coverage by certified  mail,  return
receipt  requested  (except that 10 days' notice shall be sufficient in the case
of cancellation  for nonpayment of premium) and shall provide that the insurance
coverage afforded to the additional  insured parties thereunder shall be primary
to any insurance carried  independently by such additional  insured parties.  At
Tenant's  request,  Landlord  shall  furnish  a list of names and  addresses  of
parties to be named as  additional  insureds.  The insurance  policies  required
hereunder  shall be considered as the primary  insurance and shall not call into
contribution  any insurance  then  maintained by Landlord.  Additionally,  where
applicable,  such policy shall  contain a cross  liability and  severability  of
interest clause.
<PAGE>

                  To the fullest extent  permitted by law,  except to the extent
of the gross  negligence  or willful  misconduct  of Landlord or its  employees,
agents or  contractors,  Tenant (and Tenant's  Contractors)  shall indemnify and
hold  harmless  the  Indemnitees  from and  against all Losses  necessitated  by
activities of the indemnifying party's contractors,  bodily injury to persons or
damage to  property of the  Indemnitees  arising  out of or  resulting  from the
performance of work by the indemnifying party or its contractors.  The foregoing
indemnity shall be in addition to the insurance requirements set forth above and
shall not be in discharge or  substitution of the same, and shall not be limited
in any way by any limitations on the amount or type of damages,  compensation or
benefits  payable by or for  Tenant's  Contractors  under  Workers' or Workmen's
Compensation Acts, Disability Benefit Acts or other Employee Benefit Acts.

                    (j)  Quality of Work.  The  Initial  Installations  shall be
constructed  in a  first-class  workmanlike  manner  using  only good  grades of
material and in compliance  with the Final Plans,  all  insurance  requirements,
applicable  laws and  ordinances  and  rules  and  regulations  of  governmental
departments  or agencies and the rules and  regulations  adopted by Landlord for
the Building.

                    (k)  "As-Built"   Plans.  Upon  completion  of  the  Initial
Installations,  Tenant  shall  furnish  Landlord  with "as built"  plans for the
Premises,  final  waivers  of lien for the  Initial  Installations,  a  detailed
breakdown of the costs of the Initial Installations (which may be in the form of
an owner's  affidavit)  and  evidence  of  payment  reasonably  satisfactory  to
Landlord,  and an occupancy permit for the Premises.  The "as-built" plans shall
be prepared on an AutoCAD Computer  Assisted Drafting and Design System (or such
other system or medium as Landlord may accept),  using naming conventions issued
by the American  Institute  of  Architects  in June,  1990 (or such other naming
conventions  as Landlord may accept) and magnetic  computer media of such record
drawings  and  specifications   translated  in  DFX  format  or  another  format
acceptable to Landlord.

                    (l)  Mechanics'  Liens.  Tenant  shall not permit any of the
Tenant's  Contractors to place any lien upon the Building,  and if any such lien
is placed upon the  Building,  Tenant  shall  within 10 days of notice  thereof,
cause such lien to be discharged of record,  by bonding or otherwise.  If Tenant
shall  fail to cause any such lien to be  discharged,  Landlord  shall  have the
right to have such lien discharged and Landlord's expense in so doing, including
bond premiums,  reasonable  legal fees and filing fees, shall be immediately due
and payable by Tenant.

                  3.  Payment of Costs of the Initial Installations.

                    (a)  Subject  to  Landlord's  Contribution  as  provided  in
Paragraph 3(b) below, the Initial  Installations shall be installed by Tenant at
Tenant's  sole cost and  expense.  The cost of the Initial  Installations  shall
include, and Tenant agrees to pay Landlord for, the following costs ("Landlord's
Costs"):  (i) the cost of all work performed by Landlord on behalf of Tenant and
for all materials and labor furnished on Tenant's  behalf,  (ii) the cost of any
services provided to Tenant or Tenant's Contractors including but not limited to
the cost for rubbish removal, hoisting, and utilities to the extent not included
in general conditions charges by the general contractor, and (iii) a supervision
fee equal to 3% of Landlord's Contribution.  Landlord may render bills to Tenant
monthly for Landlord's  Costs (provided that the supervision fee shall be billed
based on the cost of the Initial  Installations  performed  during the period in
question).  All bills  shall be due and payable no later than the 30th day after
delivery of such bills to Tenant.  Landlord  shall be  responsible  for,  Tenant
shall have no responsibility for, and Landlord's  Contribution shall not be used
for (a) costs incurred to remove  Hazardous  Materials from the Premises present
within the Premises at the time  possession  thereof is tendered to Tenant,  and
(b)  costs to bring  the Base  Building  Work into  compliance  with  applicable
Requirements applicable to the Base Building Work as of the Effective Date.
<PAGE>

                    (b)  Landlord  shall pay to  Tenant an amount  not to exceed
Landlord's  Contribution toward the cost of the Initial Installations,  provided
as of the date on which  Landlord is required to make payment  thereof,  (i) the
Lease is in full force and  effect,  and (ii) no Event of Default  then  exists.
Tenant shall pay all costs of the Initial  Installations in excess of Landlord's
Contribution.  Landlord's  Contribution  shall be  payable  solely on account of
labor directly related to the Initial  Installations and materials  delivered to
the Premises in connection  with the Initial  Installations,  except that Tenant
may apply up to 10% of Landlord's  Contribution to pay "soft costs",  consisting
of  architectural,  consulting,  engineering  and legal fees,  and furniture and
equipment  (exclusive of computer  equipment)  acquired for use in the Premises,
incurred in  connection  with the  Initial  Installations.  Tenant  shall not be
entitled to receive any portion of Landlord's Contribution not actually expended
by Tenant in the  performance of the Initial  Installations  in accordance  with
this Workletter, nor shall Tenant have any right to apply any unexpended portion
of Landlord's  Contribution as a credit against Rent or any other  obligation of
Tenant under the Lease.  Upon the  completion of the Initial  Installations  and
satisfaction  of the conditions  set forth below,  or upon the occurrence of the
date which is twelve  months  after the  Commencement  Date (which date shall be
extended by reason of strikes,  labor  trouble or any other similar cause beyond
Tenant's  control in  performing  the Initial  Installations),  whichever  first
occurs,  any amount of  Landlord's  Contribution  which has not been  previously
disbursed shall be retained by Landlord; provided, however, that notwithstanding
anything contained herein to the contrary,  such retained amounts shall continue
to be held for the benefit of Tenant by Landlord if Tenant  delivers a notice to
Landlord prior to  satisfaction  of the conditions set forth below that it is in
dispute  with any  contractors,  subcontractors,  vendors or other  providers of
service and refuses to make  payments at such time or if any  contracts  provide
for retainage which has not then been finally paid.

                    (c)  Landlord  shall make  progress  payments to Tenant on a
monthly  basis,  for the  work  performed  during  the  previous  month,  less a
retainage of 10% of each  progress  payment  ("Retainage").  Each of  Landlord's
progress  payments shall be limited to an amount equal to the aggregate  amounts
(reduced  by the  Retainage)  theretofore  paid by Tenant  (as  certified  by an
officer  of  Tenant  and  by  Tenant's   independent   architect)   to  Tenant's
contractors,  subcontractors  and material suppliers which have not been subject
to previous  disbursements  from  Landlord's  Contribution  that fraction of the
total amount of such payment, the numerator of which is the amount of Landlord's
Contribution,  and the  denominator of which is the total contract price (or, if
there is no specified  or fixed  contract  price for the Initial  Installations,
then Landlord's  reasonable  estimate thereof) for the performance of all of the
Initial  Installations  shown  on  all  plans  and  specifications  approved  by
Landlord.  Provided that Tenant delivers requisitions to Landlord on or prior to
the 10th day of any month,  such progress  payments shall be made within 30 days
next following the delivery to Landlord of requisitions therefor,  signed by the
chief financial officer of Tenant,  which requisitions shall set forth the names
of each  contractor  and  subcontractor  to whom  payment is due, and the amount
thereof,  and  shall  be  accompanied  by (i) with the  exception  of the  first
requisition,  copies of  conditional  waivers and releases of lien upon progress
payment  in the  form  prescribed  in the  Requirements  from  all  contractors,
subcontractors,  and material  suppliers  covering all work and materials  which
were the subject of previous  progress  payments by Landlord and Tenant,  (ii) a
written  certification  from  Tenant's  architect  that the work for  which  the
requisition is being made has been completed  substantially  in accordance  with
the Final Plans and (iii) such other  documents and  information as Landlord may
reasonably   request,   including  in  connection   with  title   drawdowns  and
endorsements.  Any requisition made following the 10th day of any month shall be
paid no later than the last day of the month  following  the month in which such
requisitions are made. Landlord shall disburse the Retainage (and any portion of
the  Landlord  Contribution  expended  by Tenant  but unpaid by  Landlord)  upon
submission by Tenant to Landlord of Tenant's requisition therefor accompanied by
all documentation  required under this Section 3(c),  together with (A) proof of
the  satisfactory  completion  of all required  inspections  and issuance of any
required  approvals,  permits  and  sign-offs  for the Initial  Installation  by
Governmental  Authorities having  jurisdiction  thereover,  (B) final "as-built"
plans and specifications  for the Initial  Installations as required pursuant to
Section 2(k) and (C) issuance of final,  unconditional lien waivers and releases
in the form prescribed by the  Requirements by all  contractors,  subcontractors
and   material   suppliers   covering   all   of  the   Initial   Installations.
Notwithstanding  anything to the  contrary set forth in this  Section  3(c),  if
Tenant does not timely (or otherwise  bond-over any such lien in accordance with
Section  2(l)  above)  pay  any  contractor  or  supplier  as  required  by this
provision,  then if necessary to prevent the  imposition of any  mechanics  lien
Landlord  shall have the right,  but not the  obligation,  to pay,  following  5
Business Days notice to Tenant,  to such  contractor or supplier all sums so due
from  Tenant,  and Tenant  agrees the same shall be deemed  Additional  Rent and
shall be paid by Tenant  within 10 days  after  Landlord  delivers  to Tenant an
invoice therefor.
<PAGE>

                  4.  Miscellaneous.

                    (a) All defined terms as used herein shall have the meanings
ascribed to them in the Lease.

                    (b) Tenant  agrees  that,  in  connection  with the  Initial
Installations  and its use of the Premises prior to the commencement of the Term
of the Lease,  Tenant  shall have those  duties  and  obligations  with  respect
thereto that it has pursuant to the Lease during the Term, except the obligation
for payment of rent, and further agrees that Landlord shall not be liable in any
way  for  injury,  loss,  or  damage  which  may  occur  to any  of the  Initial
Installations or installations made in the Premises, or to any personal property
placed therein, the same being at Tenant's sole risk.

                    (c) Except as  expressly  set forth  herein or in the Lease,
Landlord has no other agreement with Tenant and Landlord has no other obligation
to do any other work or pay any amounts with respect to the Premises.  Any other
work in the Premises  which may be  permitted by Landlord  pursuant to the terms
and  conditions of the Lease shall be done at Tenant's sole cost and expense and
in accordance with the terms and conditions of the Lease.

                    (d) This  Workletter  shall not be deemed  applicable to any
additional  space  added to the  original  Premises  at any time or from time to
time, whether by any options under the Lease or otherwise,  or to any portion of
the  original  Premises  or any  additions  thereto in the event of a renewal or
extension  of the initial  term of the Lease,  whether by any options  under the
Lease or otherwise,  unless  expressly so provided in the Lease or any amendment
or supplement thereto.

                    (e) The  failure by Tenant to pay any  monies  due  Landlord
pursuant to this Workletter within the time period herein stated shall be deemed
a default under the terms of the Lease for which  Landlord  shall be entitled to
exercise all remedies  available to Landlord for  nonpayment  of Rent  (subject,
however,  to applicable notice and cure periods as set forth in the Lease).  All
late payments shall bear interest pursuant to Section 15.6 of the Lease.


<PAGE>

                                    EXHIBIT D

                                Design Standards

                  (a) HVAC.  The Building HVAC System serving the Premises shall
maintain average  temperatures within the Premises during the hours of 6:00 a.m.
to 6:00 p.m. on  Business  Days of (i) not less than 70(0) F. during the heating
season when the outdoor  temperature  is 34(0) F. or more and (ii) not more than
75(0) F. and 50%  humidity  + 5% during the  cooling  season,  when the  outdoor
temperatures  are at 86(0) F. dry bulb and 68(0) F. wet bulb,  with, in the case
of clauses (i) and (ii), a population load per floor of not more than one person
per 150 square feet of useable area,  other than in dining and other special use
areas per floor for all purposes,  and shades fully drawn and closed,  including
lighting and power,  and to provide at least .15 CFM of outside  ventilation per
square foot of rentable  area.  Use of the Premises,  or any part thereof,  in a
manner   exceeding  the  foregoing   design   conditions  or   rearrangement  of
partitioning after the initial preparation of the Premises which interferes with
normal  operation  of the  air-conditioning  service in the Premises may require
changes in the air-conditioning system serving the Premises at Tenant's expense.

                    (b) Electrical.  The Building  Electrical System serving the
Premises shall provide


                    (i) 1  1/2watts  per  usable  square  foot of  high  voltage
                    (480/277 volt) connected load/lighting to each floor

                    (ii) 4 watts per usable square foot of low voltage  (120/280
                    volts) connected load/convenience power to each floor

                    (iii)  4  1/2watts   per  usable   square   foot   connected
                    load/mechanical to each floor




<PAGE>



                                    EXHIBIT E

                             Cleaning Specifications

GENERAL CLEANING

NIGHTLY

      General Offices:

1.   All hard surfaced flooring to be swept using approved dustdown preparation.
2.   Carpet  sweep  all  carpets,  moving  only  light  furniture  (desks,  file
     cabinets, etc. not to be moved).
3.   Hand dust and wipe clean all furniture, fixtures and window sills.
4.   Empty all waste receptacles and remove wastepaper.
5.   Wash clean all Building water fountains and coolers.
6.   Sweep all private stairways.

     Lavatories:

7.   Sweep and wash all floors, using proper disinfectants.
8.   Wash and polish all mirrors, shelves, bright work and enameled surfaces.
9.   Wash and disinfect all basins, bowls and urinals.
10.  Wash all toilet seats.
11.  Hand dust and clean all partitions,  tile walls, dispensers and receptacles
     in lavatories and restrooms.

12.  Empty paper receptacles, fill receptacles and remove wastepaper.
13.  Fill toilet tissue holders.
14.  Empty and clean sanitary disposal receptacles.

WEEKLY

15.  Vacuum all carpeting and rugs.
16.  Dust all door  louvers  and other  ventilating  louvers  within a  person's
     normal reach.
17.  Wipe clean all brass and other bright work.
18.  Wax all hard surface flooring

QUARTERLY

    High dust premises complete including the following:

19.  Dust all  pictures,  frames,  charts,  graphs and similar wall hangings not
     reached in nightly cleaning.
20.  Dust all vertical surfaces, such as walls,  partitions,  doors, door frames
     and other surfaces not reached in nightly cleaning.
21.  Dust all venetian blinds.
22.  Wash all windows.


<PAGE>

                                    EXHIBIT F

                              Rules and Regulations

1. Nothing shall be attached to the outside walls of the Building.  No curtains,
blinds, shades, screens or other obstructions shall be attached to or hung in or
used in  connection  with any  exterior  window or entry  door of the  Premises,
without the prior consent of Landlord.

2. No sign,  advertisement,  notice or other lettering visible from the exterior
of the Premises shall be exhibited, inscribed, painted or affixed to any part of
the Premises  without the prior  written  consent of Landlord.  All lettering on
doors  shall be  inscribed,  painted  or  affixed  in a size,  color  and  style
acceptable to Landlord.

3. The grills, louvers, skylights, windows and doors that reflect or admit light
and/or air into the Premises or Common Areas shall not be covered or  obstructed
by Tenant,  nor shall any articles be placed on the window  sills,  radiators or
convectors.  4. Landlord shall have the right to prohibit any advertising by any
Tenant  which,  in  Landlord's  opinion,  tends to impair the  reputation of the
Building,  and upon written notice from  Landlord,  Tenant shall refrain from or
discontinue such advertising.  5. The sidewalks,  entrances,  passages,  courts,
elevators, vestibules,  stairways, corridors or halls shall not be obstructed or
encumbered  by any Tenant or used for any purposes  other than ingress of egress
to and from the  Premises  and for delivery of  merchandise  and  equipment in a
prompt and efficient manner, using elevators and passageways designated for such
delivery by Landlord. 6. Except in those areas designated by Tenant as "security
areas,"  all  locks or bolts of any kind  shall be  operable  by the  Building's
Master Key. No locks shall be placed upon any of the doors or windows by Tenant,
nor shall any changes be made in locks or the mechanism thereof which shall make
such locks  inoperable by the  Building's  Master Key.  Tenant  shall,  upon the
termination  of its Lease,  deliver to Landlord all keys of stores,  offices and
lavatories, either furnished to or otherwise procured by Tenant and in the event
of the loss of any keys furnished by Landlord,  Tenant shall pay to Landlord the
cost thereof.  7. Tenant shall keep the entrance door to the Premises  closed at
all times.

8. All movement in or out of any freight,  furniture, boxes, crates or any other
large object or matter of any description  must take place during such times and
in such  elevators as Landlord  may  prescribe.  Landlord  reserves the right to
inspect all  articles to be brought  into the  Building  and to exclude from the
Building all articles  which violate any of these Rules and  Regulations  or the
Lease of which these Rules and Regulations are a part. Landlord may require that
any person leaving the public areas of the Building with any article to submit a
pass, signed by an authorized  person,  listing each article being removed,  but
the  establishment  and  enforcement  of such  requirement  shall not impose any
responsibility  on Landlord for the protection of any Tenant against the removal
of property from the Premises.

9. All hand trucks  shall be equipped  with rubber  tires,  side guards and such
other  safeguards  as Landlord  may  require.  10.  None of Tenant's  employees,
visitors or  contractors  shall be  permitted  to have access to the  Building's
roof,  mechanical,   electrical  or  telephone  rooms  without  permission  from
Landlord.

11. Tenant shall not lay floor tile, or other similar floor covering so that the
same shall come in direct  contact with the concrete  floor of the Premises and,
if such floor  covering  is  desired to be used,  an  interlining  of  builder's
deadening felt shall be first affixed to the floor by a paste or other material,
soluble in water;  the use of cement or other similar  adhesive  material  being
expressly prohibited.

12.  Tenant  shall not permit or suffer the Premises to be occupied or used in a
manner offensive or objectionable to Landlord or other occupants of the Building
by reason of noise, odors, vibrations or interfere in any way with other tenants
or those having business therein.
<PAGE>

13.  Tenant  shall not employ any  person or persons  other than the  janitor of
Landlord for the purpose of cleaning the Premises,  unless otherwise  reasonably
agreed to by Landlord. Tenant shall not cause any unnecessary labor by reason of
such Tenant's carelessness or indifference in the preservation of good order and
cleanliness.

14. Tenant shall store all its trash and  recyclables  within its  Premises.  No
material  shall  be  disposed  of  which  may  result  in  a  violation  of  any
Requirement.  All  refuse  disposal  shall be made only  though  entry  ways and
elevators  provided  for  such  purposes  and at such  times as  Landlord  shall
designate. Tenant shall use the Building's hauler.

15. Except in connection  with  Decorative  Alterations,  Tenant shall not mark,
paint, drill into or in any way deface any part of the Building, except with the
prior  written  consent of Landlord in the case of the  Premises,  which consent
shall not be  unreasonably  withheld.  No boring,  cutting or stringing of wires
shall be permitted,  except with prior  reasonable  consent of Landlord,  and as
Landlord may direct.

16. The water and wash  closets,  electrical  closets,  mechanical  rooms,  fire
stairs and other plumbing fixtures shall not be used for any purposes other than
those for which they were constructed and no sweepings,  rubbish, rags, acids or
other  substances  shall be deposited  therein.  All damages  resulting from any
misuse of the fixtures  shall be borne by Tenant where a Tenant Party caused the
same.

17. Tenant,  before closing and leaving the Premises at any time, shall see that
all lights,  water  faucets,  etc.  are turned off.  All  entrance  doors in the
Premises shall be kept locked by Tenant when the Premises are not in use. 18. No
bicycles,  in-line  roller  skates,  vehicles or animals of any kind (except for
seeing  eye dogs)  shall be  brought  into or kept by any Tenant in or about the
Premises or the Building.

19.  Canvassing or soliciting in the Building is prohibited.
20.  Employees of Landlord or Landlord's  Agent shall not perform any work or do
anything outside of the regular duties,  unless under special  instructions from
the office of Landlord or in response to any emergency condition.  21. Tenant is
responsible for the delivery and pick up of all mail from the United States Post
Office.  22.  Landlord  reserves the right to exclude  from the Building  during
other  than  Ordinary  Business  Hours all  persons  who do not  present a valid
Building pass. Tenant shall be responsible for all persons for whom a pass shall
be issued at the request of Tenant and shall be liable to Landlord  for all acts
of such persons.

23.  Landlord  shall not be responsible to Tenant or to any other person for the
non-observance  or violation of these Rules and  Regulations by any other tenant
or other person.  Tenant shall be deemed to have read Rules and  Regulations and
to have agreed to abide by them as a condition to its occupancy of the Premises.


<PAGE>


                                    exhibit g

                           Development Specifications


<PAGE>


                                    exhibit h

                               Base Building Work

base building work by Landlord
A.   All site work, including landscaping, parking and site utilities.
B.   Main building lobby including:

     (i) All surfaces finished
     (ii) Lighting
     (iii)  All doors, hardware and glazing installed.
C.   Required  building exit corridors on the first floor complete on the inside
     including all finishes, doors and hardware, glazing and lighting.
D.   Typical, elevator vestibule, fire taped.
E.   Elevator  cabs  complete,  including  all  finishes,  doors,  hardware  and
     lighting.
F.   Building stairs complete, including all finishes, doors and lighting.
G.   Building mechanical equipment room, including doors, hardware and lighting.
H.   Building electrical rooms, including doors, hardware and lighting.
I.   Building  telephone  closets  (less  paint and  backboard),  including  all
     finishes, doors, hardware and lighting.
J.   Restrooms complete,  including all finishes, doors and hardware,  lighting,
     plumbing,   fixtures,  life  safety  devices,  partitions  and  accessories
     installed to meet code and ADA.

K.   HVAC ducts and piping distributed to each floor stubbed out of the shafts.
L.   Main power distribution brought to each floor.
M.   Fire  sprinklers and fire protection on each floor as required per code for
     base building installed to an open plan.
N.   Main telecommunications route to each floor.
O.   Provision of one dedicated  4-inch conduit from the main electrical room on
     the first level of the Building to each of the  electrical  closets  within
     the Premises.
P.   Cable TV service and fiber optics brought to the Building.
Q.   120/208  Volt  3-Phase  4-wire power to  electrical  room on each floor.  2
     panels with 84 circuits on each floor;  additional circuits or 277/480 Volt
     power available at Tenant's cost.
R.   Centralized  computer security system monitoring all doors,  service areas,
     elevators, and select building stairwells.
S.   Demising  walls  fire  taped and ready for tenant  finish;  exterior  walls
     insulated.
T.   Exterior windows tinted and equiped with horizontal venetian blinds.



<PAGE>


                                    Exhibit I

                      425 LEXINGTON AVENUE, NEW YORK, 10017
                                February 1, 2000

                                    exhibit i

                                          ISSUE DATE: February 1, 2000

                                          EXPIRY DATE: January 30, 2001


              IRREVOCABLE STANDBY LETTER OF CREDIT NO. SYN-00-10006

Beneficiary:                                                 Applicant:
------------                                                 ---------

WHTS Freedom Circle Partners, L.L.C.                         PMC-Sierra, Inc.
c/o Tishman Speyer Properties, L.P.
520 Madison Avenue
New York, NY 10022
ATT:  GENERAL COUNSEL


We hereby establish our Irrevocable Standby Letter of Credit No. SYN-00-10006 in
your favor for a principal amount of USD 2,500,000.00  (Two Million Five Hundred
Thousand  and 00/100  U.S.  Dollars),  available  at Canadian  Imperial  Bank of
Commerce,  425 Lexington  Avenue,  New York, New York 10017,  by payment against
your  drafts  at  sight  (in the  form  of  Exhibit  A  attached  hereto)  to be
accompanied by:

1.   This Original Letter of Credit and all amendments, if any;

2.   An affidavit, purportedly signed by an authorized officer of the
     Beneficiary, under penalty of perjury stating:

"(1) A default of PMC-Sierra, Inc. beyond applicable notice and cure periods has
occurred and is continuing under that certain lease (the "Lease") dated February
1, 2000  between  PMC-Sierra,  Inc. as Tenant and the  Beneficiary  hereunder as
Landlord ("Landlord"),  and (2) Landlord is entitled under the Lease to draw the
amount being drawn."

                  OR

                  "Notice of non renewal of Canadian  Imperial  Bank of Commerce
                  Irrevocable Letter of Credit SYN-00-10006 has been received by
                  the  Beneficiary  and a  replacement  letter of credit has not
                  been  received by the  Beneficiary  within 15 business days of
                  the  expiry  date.   Beneficiary   hereby  instructs  Canadian
                  Imperial   Bank  of  Commerce  to  pay  the  draft  amount  to
                  _________________ at _________."

This Letter of Credit may be  transferred  upon  presentation  to us of a signed
transfer  form in the form of Annex 1 accompanied  by this Letter of Credit,  in
which the Beneficiary irrevocably transfers to such transferee all of its rights
hereunder,  whereupon we agree to either issue a substitute  letter of credit to
such successor  (which  designates the transferee as  beneficiary,  and with all
references  to "you"  referring  to it and is otherwise in the same form as this
letter of credit and is also  transferable)  or  endorse  such  transfer  on the
reverse of this Letter of Credit.
<PAGE>

Partial drawings are permitted.

It is a  condition  of this  Irrevocable  Standby  Letter of  Credit  that it is
automatically extended without amendment for successive periods of one year from
the then relevant  expiration date, but in no event later than September 30,2010
unless we notify you by  registered  Mail or overnight  courier at least 30 days
prior to the then  relevant  expiration  date to the effect that we elect not to
extend this Irrevocable Standby Letter of Credit for any further periods. In the
event this credit is not extended for an  additional  period as provided  above,
you may draw as provided for above.

                  Except as expressly  stated  herein,  this  undertaking is not
subject to any agreements,  requirements or qualification.  Our obligation under
this letter of credit is our  individual  obligation and is on no way contingent
upon reimbursement with respect thereto or upon our ability to perfect any lien,
security interest or any other reimbursement.

All correspondence shall be addressed to Canadian Imperial Bank of Commerce, 425
Lexington Avenue, New York, NY 10017, USA, Attention: Agency Services, and shall
mention this Letter of Credit number.

All drafts so drawn must be marked "Drawn under Irrevocable Letter of Credit No.
SYN-00-10006, dated January 31, 2000.

This  Letter of Credit is  subject  to the  Uniform  Customs  and  Practice  for
Documentary   Credits  (1993   Revision)   International   Chamber  of  Commerce
Publication No. 500, and shall be deemed to be a contract made under,  and as to
matters not governed by the UCP,  shall be governed and  construed in accordance
with the laws of the State of New York and applicable U.S. law.

Sincerely,

Canadian Imperial Bank of Commerce

----------------------------------    ------------------------------------
Authorized Signatory                  Countersigned

----------------------------------    ------------------------------------
Beneficiary's Approval                Applicant's Approval


<PAGE>


                                     ANNEX 1

Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York  10017

Reference is made to Canadian Imperial Bank of Commerce Letter of Credit
SYN-00-10006.

The undersigned,  as beneficiary  hereby  irrevocably  transfers to ___________,
(the  "Transferee")  all rights of the  undersigned  to draw under the Letter of
Credit.

                                Very truly yours,

                                --------------------------------
                                WHTS Freedom Circle Partners, L.L.C.


<PAGE>


                                    Exhibit A

for value received

pay  at   sight   by  wire   transfer   in   immediately   available   funds  to
_____________________  the sum of U.s.  $______________  drawn under irrevocable
letter of credit no.  _______________,  dated  ___________,  2000___,  issued by
_______________________________.



to:  [CIBC]


         ----------------------------
         New York, New York
<PAGE>
                                      lease

                    WHTS freedom circle partners ii, l.l.c.,

                      a Delaware limited liability company,

                                    Landlord

                                       and

                               pmc - sierra, inc.,

                             a Delaware corporation,

                                     Tenant

                                       for

                                Mission Towers II

                            3985 Freedom Circle Drive

                             Santa Clara, California

                                  July 20, 2000


<PAGE>

                                TABLE OF CONTENTS

                                                                           Page


ARTICLE 1 BASIC LEASE PROVISIONS............................................

ARTICLE 2 PREMISES, TERM, RENT..............................................

ARTICLE 3 USE AND OCCUPANCY.................................................

ARTICLE 4 CONDITION OF THE PREMISES.........................................

ARTICLE 5 ALTERATIONS.......................................................

ARTICLE 6 REPAIRS...........................................................

ARTICLE 7 INCREASES IN TAXES AND OPERATING EXPENSES.........................

ARTICLE 8 REQUIREMENTS OF LAW...............................................

ARTICLE 9 SUBORDINATION.....................................................

ARTICLE 10 SERVICES.........................................................

ARTICLE 11 INSURANCE; PROPERTY LOSS OR DAMAGE...............................

ARTICLE 12 EMINENT DOMAIN...................................................

ARTICLE 13 ASSIGNMENT AND SUBLETTING........................................

ARTICLE 14 ACCESS TO PREMISES...............................................

ARTICLE 15 DEFAULT..........................................................

ARTICLE 16 LANDLORD'S RIGHT TO CURE; FEES AND EXPENSES......................

ARTICLE 17 NO REPRESENTATIONS BY LANDLORD; LANDLORD'S APPROVAL..............

ARTICLE 18 END OF TERM......................................................

ARTICLE 19 QUIET ENJOYMENT..................................................

ARTICLE 20 NO SURRENDER; NO WAIVER..........................................

ARTICLE 21 WAIVER OF TRIAL BY JURY; COUNTERCLAIM............................

ARTICLE 22 NOTICES..........................................................

ARTICLE 23 RULES AND REGULATIONS............................................

ARTICLE 24 BROKER...........................................................

ARTICLE 25 INDEMNITY........................................................

ARTICLE 26 MISCELLANEOUS....................................................

ARTICLE 27 SECURITY DEPOSIT.................................................

ARTICLE 28 PARKING..........................................................

ARTICLE 29 RENEWAL TERM.....................................................

ARTICLE 30 ROOF SPACE AND SATELLITE ANTENNA.................................

ARTICLE 31 [Intentionally Deleted]..........................................

ARTICLE 32 SIGNAGE..........................................................


<PAGE>


                              Schedule of Exhibits

Exhibit A-1       Floor Plan of the First Floor

Exhibit A-2       Floor Plan of the Second Floor

Exhibit A-3       Floor Plan of the Third Floor

Exhibit A-4       Floor Plan of the Fourth Floor

Exhibit A-5       Floor Plan of the Fifth Floor

Exhibit A-6       Floor Plan of the Sixth Floor

Exhibit B         Definitions

Exhibit C         Work Letter

Exhibit D         Design Standards

Exhibit E         Cleaning Specifications

Exhibit F         Rules and Regulations

Exhibit G         Development Specifications

Exhibit H         Base Building Work

Exhibit I         Form of Letter of Credit


<PAGE>


                                      LEASE

                  THIS  LEASE  is  made  as  of  the  ____  day  of  June,  2000
("Effective Date"), between WHTS freedom circle towers II, l.l.c.  ("Landlord"),
a Delaware limited  liability  company,  and pmc - sierra,  inc.  ("Tenant"),  a
Delaware corporation.

                  Landlord and Tenant hereby agree as follows:

                                   ARTICLE 1

                             BASIC LEASE PROVISIONS

PREMISES            The entire first,  second,  third,  fourth,  fifth and sixth
                    floors  of the  Building,  as  more  particularly  shown  on
                    Exhibits A-1, A-2, A-3, A-4, A-5 and A-6.

BUILDING            The building, fixtures, equipment and other improvements and
                    appurtenances  to be  hereafter  erected,  located or placed
                    upon the land  known as  Mission  Towers  II,  3985  Freedom
                    Circle Drive, Santa Clara, California.

BUILDING            ONE The building, fixtures, equipment and other improvements
                    and appurtenances now located or hereafter erected,  located
                    or  placed  upon the land  known as  Mission  Towers I, 3975
                    Freedom Circle Drive, Santa Clara, California.

PROJECT             The Building,  Building One and the Garage together with all
                    related Common Areas.

GARAGE              The parking  structure,  fixtures and other improvements and
                    appurtenances now located or hereafter  erected,  located or
                    placed upon the land known as Mission Towers I, 3975 Freedom
                    Circle Drive, Santa Clara, California.

REAL PROPERTY       The  Building,  together with the plot of land upon which it
                    stands.

SCHEDULED DELIVERY
DATE                July 1, 2001.


SCHEDULED
COMMENCEMENT DATE   October 1, 2001.

COMMENCEMENT DATE   The later to occur of (a) the Scheduled  Commencement  Date,
                    and  (b)  the  90th  calendar  day  following  the  date  of
                    Landlord's  tender of  possession  of the Premises  with the
                    Base  Building Work at a stage of completion so as to permit
                    Tenant's Contractors to commence construction of the Initial
                    Installation without unreasonable delay or interference.

RENT COMMENCEMENT
DATE                The Commencement Date.


<PAGE>



EXPIRATION DATE     The date  which is the  last day of the  month in which  the
                    10th  anniversary of the  Commencement  Date occurs,  or the
                    last day of any  renewal or  extended  term,  if the Term of
                    this  Lease is  extended  in  accordance  with  any  express
                    provision hereof.

TERM                The period commencing on the Commencement Date and ending on
                    the Expiration Date.

PERMITTED USES      Offices for the transaction of Tenant's  business in keeping
                    with  Comparable  Buildings,  including  the operation of an
                    electronic  verification  lab  within  the  Premises  and  a
                    shipping and receiving area adjacent to the Building loading
                    dock.

TENANT'S
PROPORTIONATE
SHARE               47.5043%

AREA OF BUILDING    282,080 rentable square feet (253,901 usable square feet).

AREA OF PREMISES    Floor 1:  12,763 rentable square feet
                              (11,488 usable square feet).
                    Floor 2:  21,813 rentable square feet
                              (19,634 usable square feet).
                    Floor 3:  24,856 rentable square feet
                              (22,373 usable square feet).
                    Floor 4:  24,856 rentable square feet
                              (22,373 usable square feet).
                    Floor 5:  24,856 rentable square feet
                              (22,373 usable square feet)
                    Floor 6:  24,856 rentable square feet
                              (22,373 usable square feet)
                    Total:    134,000 rentable square feet
                              (120,614 usable square feet).

FIXED RENT          Period        Per Annum        Per Month
                    ------        ---------        ---------
                    Year 1        $7,236,000.00    $603,000.00
                    Year 2        $7,489,260.00    $624,105.00
                    Year 3        $7,751,384.10    $645,948.68
                    Year 4        $8,022,682.54    $668,556.88
                    Year 5        $8,303,476.43    $691,956.37
                    Year 6        $8,594,098.11    $716,174.84
                    Year 7        $8,894,891.54    $741,240.96
                    Year 8        $9,206,212.75    $767,184.40
                    Year 9        $9,528,430.19    $794,035.85
                    Year 10       $9,861,925.25    $821,827.10

ADDITIONAL          RENT All sums other  than  Fixed  Rent  payable by Tenant to
                    Landlord under this Lease,  including  Tenant's Tax Payment,
                    Tenant's Operating Payment, late charges, overtime or excess
                    service  charges,  damages,  and  interest  and other  costs
                    related  to   Tenant's   failure  to  perform   any  of  its
                    obligations under this Lease.

RENT                Fixed Rent and Additional Rent, collectively.

INTEREST  RATE      The lesser of (i) 4% per annum above the  then-current  Base
                    Rate, and (ii) the maximum rate permitted by applicable law.

SECURITY DEPOSIT    $2,000,000,  subject to reduction in accordance with Section
                    27.5.

<PAGE>

TENANT'S ADDRESS
FOR NOTICES         Until  Tenant   commences   business   operations  from  the
                    Premises:

                          PMC - Sierra, Inc.
                          8555 Baxter Place, Suite 105
                          Burnaby, British Columbia V5A4V7
                          Canada
                          Attn:  Geraldine Jones

                          Thereafter:

                          PMC - Sierra, Inc.
                          3975 Freedom Circle Drive
                          Santa Clara, California  95054
                          Attn:  Vice President - Administration

LANDLORD'S ADDRESS
FOR NOTICES               WHTS Freedom Circle Partners II, L.L.C.
                          c/o Tishman Speyer Properties, L.P.
                          444 Castro Street
                          Mountain View, California  94041
                          Attn:  Property Manager

                          Copies to:

                          WHTS Freedom Circle Partners II, L.L.C.
                          c/o Tishman Speyer Properties, L.P.
                          520 Madison Avenue
                          New York, New York  10022
                          Attn:  Chief Financial Officer

                          and:

                          Tishman Speyer Properties, L.P.
                          520 Madison Avenue
                          New York, New York  10022
                          Attn:  General Counsel

                          and:

                          Goldman, Sachs & Co.
                          100 Crescent Court, Suite 1000
                          Dallas, Texas  75201
                          Attention:  Mr. Paul Milosevich

                          and:

                          Whitehall Street Real Estate Limited Partnership IX
                          c/o Goldman, Sachs & Co.
                          85 Broad Street
                          New York, New York  10004
                          Attention:  Mr. Steven M. Feldman

<PAGE>

TENANT'S BROKER     Colliers International.

LANDLORD'S BROKER   Cornish & Carey Commercial

LANDLORD'S AGENT    Tishman  Speyer   Properties,   L.P.  or  any  other  person
                    designated  at any time and from time to time by Landlord as
                    Landlord's Agent.

LANDLORD'S
CONTRIBUTION        4,020,000.00.

All  capitalized  terms used in this Lease  without  definition  are  defined in
Exhibit B.


                                   ARTICLE 2

                              PREMISES, TERM, RENT

Section  2.1 Lease of  Premises.  Subject to the terms of this  Lease,  Landlord
leases to Tenant and Tenant  leases from  Landlord the Premises for the Term. In
addition,  Landlord grants to Tenant the right to use, on a non-exclusive  basis
and in common with other tenants, the Common Areas.

Section  2.2  Rentable  Area.  Subject to  adjustment  as herein  provided,  the
rentable  square  footage of the  Premises and the Building are agreed to be the
numbers of square feet  respectively  specified in the Basic Lease  Information.
The  "usable  area"  of the  Premises  and  Building  has  been  calculated  and
determined in accordance  with the "Standard  Method for Measuring Floor Area in
Office Buildings," ANSI/BOMA Z65.1-1996, as published by the Building Owners and
Managers  Association  International (the "BOMA Standard").  The rentable square
footage of the  Building  and the Premises are  determined  by  multiplying  the
usable area of the Premises and Building by 111.10% (the "Load  Factor"),  which
Load Factor is agreed to by Landlord and Tenant. If Tenant wishes to verify that
the usable area of the Premises and the Building (as  determined  in  accordance
with BOMA  Standards) are as set forth in the Basic Lease  Information,  then at
any time prior to the Commencement  Date Tenant shall have the right to cause an
independent  architect  or space  planner to verify  Landlord's  square  footage
numbers, which determination shall be subject to Landlord's reasonable approval.
If the final  rentable  square  footage  of the  Premises  as so  determined  is
different  then as set forth in the Basic  Lease  Information,  the Fixed  Rent,
Tenant's Proportionate Share and Landlord's  Contribution shall be appropriately
adjusted.

Section 2.3 Commencement Date. Upon the Effective Date, the terms and provisions
hereof shall be fully binding on Landlord and Tenant prior to the  occurrence of
the Commencement Date. The Term of this Lease shall commence on the Commencement
Date.  Unless sooner  terminated or extended as hereinafter  provided,  the Term
shall end on the Expiration Date. If Landlord does not tender  possession of the
Premises  to Tenant on or before the  Scheduled  Delivery  Date,  for any reason
whatsoever,  Landlord  shall not be liable  for any damage  thereby,  this Lease
shall not be void or voidable thereby, and the Term shall not commence until the
90th calendar day after Landlord tenders possession of the Premises to Tenant in
the  condition  required  by Article 4. No failure to tender  possession  of the
Premises to Tenant on or before the  Scheduled  Delivery  Date shall  affect any
other obligations of Tenant hereunder; provided, however, that if Landlord fails
to tender possession of the Premises to Tenant on or before March 1, 2002, then,
except to the extent caused by Unavoidable Delays, Tenant shall receive for each
day of delay thereafter with respect to the Premises a credit against Fixed Rent
in an amount equal to $20,100.00 per day. If Landlord,  despite its commercially
reasonable  efforts,  is unable to Commence  Construction  by November 30, 2000,
Landlord,  upon written notice to Tenant  delivered  prior to December 15, 2000,
shall have the right to terminate this Lease.  For purposes of this Section 2.2,
the term "Commences  Construction"  shall mean the date Landlord's  pile-driving
subcontractor  mobilizes  its  pile-driving  equipment  on  the  Real  Property.
Landlord  shall  use its  commercially  reasonable  efforts  to  cause  the Base
Building Work to be Substantially  Complete on or before the Commencement  Date.
The Base Building Work shall be deemed to be  "Substantially  Complete" upon the
date by which there remains no incomplete or defective item of the Base Building
Work  that  would  materially  adversely  affect  Tenant's  intended  use of the
Premises and that  Landlord has  obtained (or as of the  Commencement  Date will
have obtained) all necessary permits and approvals from Governmental Authorities
with respect to the Base Building  Work required for the legal  occupancy of the
Premises for the Permitted Use (subject to  Substantial  Completion by Tenant of
the Initial Installations).  Once the Commencement Date is determined,  Landlord
and  Tenant  shall  execute  an  agreement  stating  the  Commencement  Date and
Expiration  Date, but the failure to do so will not affect the  determination of
such dates.
<PAGE>

Section 2.4 Payment of Rent.  Tenant  shall pay to Landlord,  without  notice or
demand,   and  without  any  set-off,   counterclaim,   abatement  or  deduction
whatsoever,  except as may be expressly set forth in this Lease, in lawful money
of the United  States by wire  transfer  of funds or by check  drawn upon a bank
approved by Landlord, (i) Fixed Rent in equal monthly installments,  in advance,
on the  first  day of  each  month  during  the  Term,  commencing  on the  Rent
Commencement  Date, and (ii) Additional Rent, at the times and in the manner set
forth in this Lease.

Section 2.5 First Month's Rent. Tenant shall pay one month's Fixed Rent upon the
execution of this Lease ("Advance  Rent").  If the Rent  Commencement Date is on
the first day of a month,  the Advance Rent shall be credited  towards the first
month's Fixed Rent payment.  If the Rent  Commencement Date is not the first day
of a month,  then on the Rent  Commencement Date Tenant shall pay Fixed Rent for
the period from the Rent  Commencement  Date through the last day of such month,
and the  Advance  Rent  shall  be  credited  towards  Fixed  Rent  for the  next
succeeding calendar month.

                                   ARTICLE 3

                                USE AND OCCUPANCY

                  Tenant  shall use and occupy the  Premises  for the  Permitted
Uses and for no other purpose.  Tenant shall not use or occupy or permit the use
or occupancy of any part of the Premises in a manner  constituting  a Prohibited
Use. If Tenant uses the Premises for a purpose  constituting  a Prohibited  Use,
violating  any  Requirement,  or causing the  Building to be in violation of any
Requirement, then Tenant shall promptly discontinue such use upon notice of such
violation.  Tenant, at its expense,  shall procure and at all times maintain and
comply with the terms and  conditions  of all licenses and permits  required for
the lawful conduct of the Permitted Uses in the Premises.


                                   ARTICLE 4

                            CONDITION OF THE PREMISES

                  Landlord  shall  use  its   reasonable   efforts  to  commence
construction  of the core and shell of the  Building  and the  expansion  of the
Garage  on  or  about  August  14,  2000.  Attached  hereto  as  Exhibit  G  and
incorporated  herein by reference  is a list of the drawings and  specifications
for the design and construction of the Building  (collectively  the "Development
Specifications").  The  Development  Specifications  have  previously  been made
available  to Tenant for its  review.  Landlord,  at its sole cost and  expense,
shall complete construction of the Building:  (a) in substantial accordance with
the  Development  Specifications;  and (b) in a good  workmanlike  manner,  to a
general  standard  of  construction  equal  to or  greater  than  that of  other
Comparable  Buildings.  At the time of  Landlord's  tender of  possession of the
Premises,  those  portions  of the  Base  Building  Work,  as more  particularly
described on Exhibit H, which are  necessary to be completed for the orderly and
effective  construction  of the  Initial  Installations  shall be  Substantially
Complete.  Subject to the foregoing,  Tenant shall: (a) accept possession of the
Premises  in  its  then  "As-Is"  condition,   and  (b)  except  for  Landlord's
Contribution,  Landlord  has no  obligation  to  perform  any work,  supply  any
materials,  incur any expense or make any alterations or improvements to prepare
the  Premises  for  Tenant's  occupancy.  Tenant's  occupancy of any part of the
Premises  shall be conclusive  evidence,  as against  Tenant,  that Landlord has
Substantially  Completed the Base Building Work, Tenant has accepted  possession
of the Premises in its then current  condition  and at the time such  possession
was  taken,  the  Premises  and the  Building  were in a good  and  satisfactory
condition  as  required  by this Lease  except  for  latent  defects in the Base
Building  Work not visually  discoverable  by Tenant upon a reasonably  diligent
inspection  and subject to the  completion by Landlord of any "punch list" items
or similar  corrective  work;  provided,  however,  that Landlord  shall have no
obligation to correct  latent defects not reported to Landlord in writing within
12 months of the acceptance of the Premises by Tenant.  Landlord,  at Landlord's
sole  cost and  expense  and not as a  deduction  or offset  from the  amount of
Landlord's  Contribution or as part of Operating Expenses,  shall be responsible
for  ensuring  that,  as of  the  Commencement  Date,  the  Base  Building  Work
(including the roof and all Building  Systems) is in good working  condition and
repair,  free  from  any  known  code  violations  and in  compliance  with  all
Requirements.  In  addition,  in  accordance  with the terms and  provisions  of
Section 6.1 below,  Landlord  shall be  responsible  for the  correction  of any
latent or patent defects in the Landlord Repair Areas (as  hereinafter  defined)
at any time during  this Term of the Lease or any  extension  thereof.  Landlord
agrees to  exercise  commercially  reasonable  efforts  to  enforce  any and all
construction,  design and materials warranties obtained by Landlord with respect
to the Base  Building  Work  ("Construction  Warranties").  No provision of this
Article 4 shall diminish Landlord's obligations under Section 6.1 below.
<PAGE>


                                   ARTICLE 5

                                   ALTERATIONS

Section 5.1 Tenant's Alterations. (a) (a) Tenant shall not make any alterations,
additions  or other  physical  changes in or about the  Premises  (collectively,
"Alterations")  other  than  decorative  Alterations  such  as  painting,   wall
coverings and floor coverings (collectively,  "Decorative Alterations"), without
Landlord's  prior consent,  which consent shall not be unreasonably  withheld so
long as such Alterations (i) are  non-structural  and do not affect any Building
Systems,  (ii) affect only the  Premises and are not visible from outside of the
Premises,  (iii) do not  affect  the  certificate  of  occupancy  issued for the
Building  or  the   Premises,   and  (iv)  do  not   violate  any   Requirement.
Notwithstanding the foregoing, Tenant may perform Alterations without Landlord's
prior  approval,  if the cost to perform  such work does not exceed  $10,000 and
provided the same (i) are non-structural and do not affect any Building Systems,
(ii) affect only the Premises and are not visible from outside of the  Premises,
(iii) do not affect the certificate of occupancy  issued for the Building or the
Premises, and (iv) do not violate any Requirement.

          (b) Plans and Specifications. Prior to making any Alterations, Tenant,
at its expense,  shall (i) submit to Landlord for its approval,  detailed  plans
and specifications  ("Plans") of each proposed Alteration (other than Decorative
Alterations),  and with respect to any Alteration affecting any Building System,
evidence that the  Alteration has been designed by, or reviewed and approved by,
Landlord's designated engineer for the affected Building System, (ii) obtain all
permits,  approvals and certificates  required by any Governmental  Authorities,
(iii)  furnish to  Landlord  duplicate  original  policies  or  certificates  of
worker's  compensation  (covering  all  persons to be  employed  by Tenant,  and
Tenant's  contractors and subcontractors in connection with such Alteration) and
commercial general liability  (including property damage coverage) insurance and
Builder's Risk coverage (as described in Article 11) all in such form, with such
companies,  for such  periods  and in such  amounts as Landlord  may  reasonably
require,  naming  Landlord,  Landlord's  Agent any Lessor and any  Mortgagee  as
additional  insureds,  and (iv) with  respect  to any  Alterations  individually
costing at least $500,000,  furnish to Landlord reasonably satisfactory evidence
of Tenant's  ability to complete  and to fully pay for such  Alterations  (other
than the Initial  Installations and Decorative  Alterations).  Tenant shall give
Landlord  not  less  than 5  Business  Days'  notice  prior  to  performing  any
Decorative  Alteration,  which  notice  shall  contain  a  description  of  such
Decorative  Alteration.

          (c) Governmental Approvals. Tenant, at its expense, shall, as and when
required,  promptly  obtain  certificates  of partial and final approval of such
Alterations  required by any  Governmental  Authority and shall furnish Landlord
with  copies  thereof,  together  with  "as-built"  Plans  for such  Alterations
prepared on an AutoCAD  Computer  Assisted  Drafting and Design  System (or such
other system or medium as Landlord may accept),  using naming conventions issued
by the American  Institute  of  Architects  in June,  1990 (or such other naming
conventions  as Landlord may accept) and magnetic  computer media of such record
drawings  and  specifications   translated  in  DFX  format  or  another  format
acceptable to Landlord.

<PAGE>

Section  5.2  Manner  and  Quality  of  Alterations.  All  Alterations  shall be
performed  (a) in a good and  workmanlike  manner  and free  from  defects,  (b)
substantially  in  accordance  with the Plans,  and by  contractors  approved by
Landlord,  and (c) in compliance with all Requirements,  the terms of this Lease
and all construction procedures and regulations then prescribed by Landlord. All
materials  and  equipment  shall be of first  quality  and at least equal to the
applicable standards for the Building then established by Landlord,  and no such
materials or equipment  (other than Tenant's  Property)  shall be subject to any
lien or other encumbrance.

Section 5.3 Removal of Tenant's  Property.  Tenant's  Property  shall remain the
property  of Tenant  and Tenant may remove the same at any time on or before the
Expiration  Date.  On or prior to the  Expiration  Date,  Tenant  shall,  unless
otherwise  directed by  Landlord,  at  Tenant's  expense,  remove any  Specialty
Alteration  and close up any slab  penetrations  in the  Premises.  Tenant shall
repair and restore, in a good and workmanlike manner, any damage to the Premises
or the  Building  caused by Tenant's  removal of any  Specialty  Alterations  or
Tenant's Property or by the closing of any slab  penetrations,  and upon default
thereof,  Tenant shall  reimburse  Landlord,  on demand,  for Landlord's cost of
repairing and restoring such damage.  Any Above Building Standard  Installations
(as  hereinafter  defined) or Tenant's  Property not so removed  shall be deemed
abandoned  and Landlord  may remove and dispose of same,  and repair and restore
any damage  caused  thereby,  at  Tenant's  cost and without  accountability  to
Tenant.  Tenant shall not be required to remove any of the Initial Installations
or any  subsequent  Alterations  unless,  in either  case,  the same  constitute
Specialty  Alterations which Landlord advises Tenant must be removed at the time
consent  thereto was granted.  Concurrently  with the issuance of its consent to
the performance of the Initial  Installations  or of any  Alterations,  Landlord
will notify Tenant  whether any such component of the Initial  Installations  or
any such  Alterations,  or any material  component thereof  (including,  without
limitation,  any oversized or exposed conduit) not expressly included within the
definition of Specialty Alterations is considered by Landlord to be such.

Section 5.4 Mechanic's Liens.  Tenant, at its expense,  shall discharge any lien
or charge filed against the Real  Property in  connection  with any work done or
claimed to have been done by or on behalf of, or materials  furnished or claimed
to have been  furnished to,  Tenant,  within 10 days after  Tenant's  receipt of
notice  thereof by  payment,  filing the bond  required by law or  otherwise  in
accordance with law.

Section 5.5 Labor Relations.  Tenant shall not employ,  or permit the employment
of, any contractor, mechanic or laborer, or permit any materials to be delivered
to or used in the Building,  if, in Landlord's sole judgment,  such  employment,
delivery or use will  interfere  or cause any conflict  with other  contractors,
mechanics or laborers engaged in the  construction,  maintenance or operation of
the Building by Landlord,  Tenant or others.  If such  interference  or conflict
occurs, upon Landlord's request,  Tenant shall cause all contractors,  mechanics
or  laborers  causing  such  interference  or  conflict  to leave  the  Building
immediately.

<PAGE>

Section 5.6 Tenant's Costs. Tenant shall pay promptly to Landlord,  upon demand,
all  out-of-pocket  costs  actually  incurred  by Landlord  in  connection  with
Tenant's Alterations, including costs incurred in connection with (a) Landlord's
review of the Alterations  (including  review of requests for approval  thereof)
which  costs  reimbursable  by Tenant  shall not exceed  $1,500 per  request for
consent and (b) the provision of Building  personnel  during the  performance of
any  Alteration,  to operate  elevators  or  otherwise  to  facilitate  Tenant's
Alterations.  In addition,  if Tenant's  Alterations cost more than $100,000.00,
Tenant shall pay to Landlord,  upon demand, an  administrative  fee in an amount
equal  to 1% of the  total  cost  of  such  Alterations.

Section 5.7 Tenant's Equipment. Tenant shall provide notice to Landlord prior to
moving any heavy machinery,  heavy equipment,  freight, bulky matter or fixtures
(collectively,  "Equipment")  into  or out  of the  Building  and  shall  pay to
Landlord any costs  actually  incurred by Landlord in connection  therewith.  If
such  Equipment  requires  special  handling,  Tenant  agrees (a) to employ only
persons  holding  all  necessary  licenses  to perform  such work,  (b) all work
performed in connection therewith shall comply with all applicable  Requirements
and (c) such work shall be done only during hours designated by Landlord.

Section 5.8 Legal  Compliance.  The approval of Plans, or consent by Landlord to
the making of any  Alterations,  does not constitute  Landlord's  representation
that such Plans or Alterations comply with any Requirements.  Landlord shall not
be liable to Tenant or any other party in connection with Landlord's approval of
any Plans, or Landlord's consent to Tenant's performing any Alterations.  If any
Alterations  made by or on  behalf  of  Tenant,  require  Landlord  to make  any
alterations or  improvements to any part of the Building in order to comply with
any  Requirements,  Tenant shall pay all costs and expenses incurred by Landlord
in connection with such alterations or improvements.

Section  5.9  Floor  Load.  Tenant  shall not place a load upon any floor of the
Premises that exceeds 100 pounds per square foot "live load" on the ground floor
and 80 pounds per square foot "live load" on the upper floors. Landlord reserves
the right to reasonably  designate  the position of all  Equipment  which Tenant
wishes to place within the Premises,  and to place reasonable limitations on the
weight thereof consistent with the floor loads described above.


                                    ARTICLE 6

                                     REPAIRS

Section 6.1 Landlord's Repair and Maintenance.  Landlord shall operate, maintain
and, except as provided in Section 6.2 hereof,  make all necessary repairs (both
structural and nonstructural) to the structural portions of the Building and the
Premises  (including  without  limitation,  the roof,  foundation,  floor  slab,
exterior walls and load bearing walls), (ii) the Building Systems, and (iii) the
Common Areas, in conformance with standards  applicable to Comparable  Buildings
(collectively,  the "Landlord  Repair  Areas").

Section 6.2  Tenant's  Repair and  Maintenance.  Tenant shall  promptly,  at its
expense and in compliance with Article 5, make all nonstructural  repairs to the
Premises  and  the  fixtures,   equipment  and/or  and   appurtenances   therein
(collectively,  "Building Fixtures") as and when needed to preserve the Premises
in good working order and  condition,  except for  reasonable  wear and tear and
damage  from  condemnation  or  casualty.  All damage to the  Building or to any
portion  thereof,   or  to  any  Building  Fixtures   requiring   structural  or
nonstructural  repair caused by or resulting from any act, omission,  neglect or
improper conduct of or the moving of Tenant's Property or Equipment into, within
or out of the Premises by a Tenant Party,  shall be repaired at Tenant's expense
by (i) Tenant,  if the required  repairs are  nonstructural in nature and do not
affect any  Building  System,  or (ii)  Landlord,  if the  required  repairs are
structural in nature, involve replacement of exterior window glass or affect any
Building  System.  All Tenant  repairs  shall be of good quality  utilizing  new
construction  materials.  If Tenant fails after 10 days' notice (or such shorter
period as may be required in an emergency) to proceed with due diligence to make
any repairs  required to be made by Tenant,  Landlord  may make such repairs and
all costs and expenses  incurred by Landlord on account  thereof,  plus interest
thereon  at the  Interest  Rate,  shall be paid by Tenant  within 10 days  after
delivery of an invoice therefor.

<PAGE>

Section 6.3  Interruptions  Due to Repairs.  Landlord reserves the right to make
all changes, alterations,  additions,  improvements,  repairs or replacements to
the Real Property,  including the Building Systems  (collectively,  "Restorative
Work"),  as Landlord  deems  necessary or  desirable,  provided that in no event
shall the level of any Building  service  decrease in any material  respect from
the level  required of Landlord  in this Lease as a result  thereof  (other than
temporary  changes in the level of such services  during the  performance of any
such  Restorative  Work).  Landlord  shall use  reasonable  efforts to  minimize
interference  with  Tenant's  use  and  occupancy  of the  Premises  during  the
performance  of such  Restorative  Work.  There  shall be no Rent  abatement  or
allowance to Tenant for a diminution of rental value,  no actual or constructive
eviction of Tenant,  in whole or in part,  no relief from any of Tenant's  other
obligations under this Lease, and no liability on the part of Landlord by reason
of inconvenience,  annoyance or injury to business arising from Landlord, Tenant
or others  performing,  or failing to perform,  any Restorative  Work.  Landlord
shall use its  commercially  reasonable  efforts to restore any  interruption of
access,  use or services as soon as  reasonably  possible.  Notwithstanding  any
contrary  provision  of this Lease,  if Tenant is  prevented  from using for the
conduct of its business,  and does not use for the conduct of its business,  the
Premises or any material portion thereof,  for 15 consecutive Business Days (the
"Eligibility Period") as a result of (i) any construction,  repair,  maintenance
or  alteration  performed  by  Landlord  after  the  Commencement  Date  and not
necessitated  by the  negligence or willful  misconduct of any Tenant Party,  or
(ii)  the  failure  in  any  material  respect  of  Landlord  or its  agents  or
contractors  to  provide  to the  Premises  any of the  utilities  and  services
required to be provided  under this Lease  (including  Article 10 below) and not
caused by the negligence or willful  misconduct of any Tenant Party or otherwise
due to the  occurrence  of a  casualty  or  condemnation,  (iii) any  failure to
provide  access to the  Premises  and not  caused by the  negligence  or willful
misconduct of any Tenant Party or otherwise due to the  occurrence of a casualty
or condemnation,  or (iv) because of the presence of Hazardous  Materials in, on
or around the Building,  the Premises or the Real Property which were not caused
or introduced by any Tenant Party and which Hazardous  Materials pose a material
and significant  health risk to occupants of the Premises,  then, in any and all
such events,  Tenant's  obligation to pay Fixed Rent, Tenant's Operating Payment
and  Tenant's Tax Payment  shall be abated or reduced,  as the case may be, from
and after the first (1st) day following the last day of the  Eligibility  Period
and continuing for such time that Tenant continues to be so prevented from using
for the  conduct  of its  business,  and does not so use for the  conduct of its
business, the Premises or a material portion thereof, in the proportion that the
rentable  square feet of the portion of the  Premises  that Tenant is  prevented
from using,  and does not so use, bears to the total rentable square feet of the
Premises.

                                   ARTICLE 7

                    INCREASES IN TAXES AND OPERATING EXPENSES

Section 7.1 Definitions. For the purposes of this Article 7, the following terms
shall have the meanings set forth below:

          (a)  "Assessed  Valuation"  shall  mean the  amount for which the Real
Property is  assessed  by the County  Assessor of Santa Clara for the purpose of
imposition of Taxes.

          (b) "Comparison  Year" shall mean any calendar year all or any portion
of which occurs during the Term.

          (c)  "Operating  Expenses"  shall mean the  aggregate of all costs and
expenses,  without duplication,  paid or incurred by or on behalf of Landlord in
connection  with the ownership,  operation,  repair and  maintenance of the Real
Property, including capital improvements only if such capital improvement either
(i) is  reasonably  intended to result in a reduction in Operating  Expenses (as
for  example,  a  labor-saving  improvement)  provided,  the amount  included in
Operating  Expenses in any  Comparison  Year shall not exceed an amount equal to
the savings reasonably anticipated to result from the installation and operation
of  such  improvement,  and/or  (ii)  is  made  during  any  Comparison  Year in
compliance with Requirements. Such capital improvements shall be amortized (with
interest at the Base Rate) on a straight-line basis over the useful life of such

<PAGE>

capital  improvement  as Landlord  shall  reasonably  determine,  and the amount
included  in  Operating  Expenses in any  Comparison  Year shall be equal to the
annual  amortized  amount.  Operating  Expenses  shall not include any  Excluded
Expenses.  If during  all or part of any  Comparison  Year,  Landlord  shall not
furnish  any  particular  item(s)  of work or  service  (which  would  otherwise
constitute  an Operating  Expense) to any leasable  portions of the Building for
any reason but  continues  to furnish or provide  such work or  services  to the
Premises,  then, for purposes of computing  Operating  Expenses for such period,
the amount included in Operating  Expenses for such period shall be increased by
an amount  equal to the costs  and  expenses  that  would  have been  reasonably
incurred by Landlord  during such period if Landlord had furnished  such item(s)
of work or service to such portion of the Building. In determining the amount of
Operating  Expenses for any  Comparison  Year,  if less than 95% of the Building
rentable  area is  occupied  by tenants at any time  during any such  Comparison
Year,  Operating  Expenses shall be determined for such Comparison Year to be an
amount  equal to the like  expenses  which  would  normally  be  expected  to be
incurred had such occupancy been 95% throughout such Comparison Year.

          Tenant understands and acknowledges that, from time to time during the
Term, the Building may be operated jointly by Landlord and the owner of Building
One as part of the Project, comprising the Building, the Garage and Common Areas
adjacent to the Building  and Building  One. For purposes of this Article 7, the
Building and Building One are sometimes  hereinafter  jointly referred to as the
"Project."  Landlord shall have the right, from time to time during the Term, to
operate the Project in an integrated  fashion,  and to include within  Operating
Expenses  and Real  Property  Taxes a  reasonable  allocation  of the  amount of
Operating  Expenses and Real Property Taxes paid or incurred by Landlord and the
owner of Building One with  respect to the Project.  During such periods of time
as Landlord so elects,  "Tenant's Proportionate Share" shall mean the product of
(a) the rentable  area of the  Premises,  and (b) a fraction,  the  numerator of
which is one and the  denominator  of which is the rentable area of the Project.
In addition, during such periods of time as Landlord does not elect to determine
Operating  Expenses and Real Property Taxes on a Project-wide  basis,  Operating
Expenses  and Real Estate  Taxes for the  Building  shall  include a  reasonable
allocation of such costs and expenses as Landlord may incur in the  maintenance,
operation,  administration  and  repair  of the  Garage  and  the  Common  Areas
servicing the Project.

          (d) "Statement" shall mean a reasonably  detailed  statement (by major
categories  of  expenditures)  containing  the amount of Operating  Expenses and
Taxes for any Comparison Year and the amount of Tenant's  Operating  Payment and
Tax  Payment  for  any  such  Comparison  Year,   including  a  summary  of  the
calculations used to arrive at such amounts.

          (e) "Taxes" shall mean (i) all real estate taxes,  assessments,  sewer
and water rents, rates and charges and other governmental levies, impositions or
charges,  whether  general,  special,  ordinary,   extraordinary,   foreseen  or
unforeseen, which may be assessed, levied or imposed upon all or any part of the
Real Property,  and (ii) all expenses (including  reasonable attorneys' fees and
disbursements and experts' and other witnesses' fees) incurred in contesting any
of the foregoing or the Assessed Valuation of the Real Property. Taxes shall not
include (x) interest or penalties incurred by Landlord as a result of Landlord's
late  payment of Taxes,  or (y)  franchise  or net  income  taxes  imposed  upon
Landlord. If Landlord elects to pay any assessment in annual installments,  then
(i) such assessment shall be deemed to have been so divided and to be payable in
the maximum  number of  installments  permitted  by law, and (ii) there shall be
deemed  included  in Taxes for each  Comparison  Year the  installments  of such
assessment  becoming payable during such Comparison Year, together with interest
payable to the taxing authority during such Comparison Year on such installments
and on all  installments  thereafter  becoming due as provided by law, all as if
such  assessment  had been so  divided.  If at any time the  methods of taxation
prevailing  on the  Effective  Date shall be altered so that in lieu of or as an
addition to the whole or any part of Taxes,  there shall be assessed,  levied or
imposed (1) a tax, assessment, levy, imposition or charge based on the income or
rents  received from the Real  Property  whether or not wholly or partially as a
capital levy or otherwise,  (2) a tax,  assessment,  levy,  imposition or charge
measured  by or  based  in  whole  or in part  upon  all or any part of the Real
Property and imposed upon Landlord,  (3) a license fee measured by the rents, or
(4) any other tax, assessment,  levy, imposition,  charge or license fee however
described or imposed,  then all such taxes,  assessments,  levies,  impositions,
charges or license fees or the part thereof so measured or based shall be deemed
to be Taxes.  As of the Effective  Date,  the Real Property  comprises one legal
parcel,  which  Landlord  anticipates  subdividing in order to create a separate
legal parcel upon which the Building will be constructed.  Concurrently with the
development  of the  Building,  the  existing  Garage  (the  "Building  I Garage
Improvements")  will be expanded to provide  necessary parking for the Building.
Notwithstanding  anything set forth in this Lease to the  contrary,  Taxes shall
not include any real  property  taxes or  assessments  attributable  to the real
property  upon which the  Building I Garage  Improvements  sit,  the  Building I
Garage Improvements, the Building One land or Building One.
<PAGE>

Section 7.2  Tenant's Tax  Payment.  (a) Tenant  shall pay to Landlord  Tenant's
Proportionate  Share of the Taxes payable for any Comparison Year ("Tenant's Tax
Payment"). On or about the start of each Comparison Year, Landlord shall furnish
to Tenant a Statement  of the Taxes.  Tenant  shall pay  Tenant's Tax Payment to
Landlord,  in monthly  installments,  on the first day of each month during each
Comparison  Year,  an amount  equal to 1/12 of Tenant's Tax Payment due for each
Comparison  Year.  If there is any increase or decrease in Taxes payable for any
Comparison Year,  whether levied during or after such Comparison Year,  Landlord
may furnish a revised  Statement for such Comparison Year,  Tenant's Tax Payment
for such  Comparison  Year shall be adjusted and,  within 10 Business Days after
delivery of such  revised  Statement  (a) with  respect to any increase in Taxes
payable for such Comparison Year, Tenant shall pay such increase in Tenant's Tax
Payment to Landlord,  or

          (b) with respect to any decrease in Taxes payable for such  Comparison
Year,  Landlord  shall credit such decrease in Tenant's Tax Payment  against the
next  installment  of Rent payable by Tenant.  (b) Only  Landlord may  institute
proceedings  to reduce  the  Assessed  Valuation  of the Real  Property  and the
filings  of any such  proceeding  by Tenant  without  Landlord's  consent  shall
constitute an Event of Default.  If Landlord  receives a refund of Taxes for any
Comparison Year,  Landlord shall credit against subsequent  payments of Rent due
hereunder, an amount equal to Tenant's Proportionate Share of the refund, net of
any expenses  incurred by Landlord in achieving such refund,  which amount shall
not exceed  Tenant's Tax Payment paid for such Comparison  Year.  Landlord shall
not be obligated to file any  application or institute any proceeding  seeking a
reduction in Taxes or the Assessed Valuation.

          (c) Tenant shall be responsible  for any applicable  occupancy or rent
tax now in effect or hereafter enacted and, if payable by Landlord, Tenant shall
promptly pay such  amounts to  Landlord,  upon  Landlord's  demand.

Section  7.3  Tenant's  Operating  Payment.  (a)  Tenant  shall pay to  Landlord
Tenant's   Proportionate  Share  of  the  Operating  Expenses  payable  for  any
Comparison  Year  ("Tenant's  Operating  Payment").  For each  Comparison  Year,
Landlord shall furnish to Tenant a statement setting forth Landlord's reasonable
estimate  of  Tenant's   Operating   Payment  for  such   Comparison  Year  (the
"Estimate").  Tenant  shall pay to Landlord on the 1st day of each month  during
such Comparison Year an amount equal to 1/12 of Landlord's  estimate of Tenant's
Operating  Payment for such Comparison  Year. If Landlord  furnishes an Estimate
for a Comparison Year subsequent to the commencement thereof, then (a) until the
1st day of the month  following  the month in which the Estimate is furnished to
Tenant,  Tenant  shall pay to  Landlord  on the 1st day of each  month an amount
equal to the monthly sum  payable by Tenant to Landlord  under this  Section 7.3
during the last month of the preceding  Comparison  Year, (b) promptly after the
Estimate is  furnished  to Tenant or  together  therewith,  Landlord  shall give
notice to Tenant stating whether the installments of Tenant's  Operating Payment
previously  made  for  such  Comparison  Year  were  greater  or less  than  the
installments of Tenant's  Operating  Payment to be made for such Comparison Year
in accordance with the Estimate, and (i) if there shall be a deficiency,  Tenant
shall pay the amount thereof within 10 Business Days after demand  therefor,  or
(ii) if there shall have been an  overpayment,  Landlord shall credit the amount
thereof against  subsequent  payments of Rent due hereunder,  and (c) on the 1st
day of the month  following  the month in which the  Estimate  is  furnished  to
Tenant, and on the 1st day of each month thereafter  throughout the remainder of
such  Comparison  Year,  Tenant shall pay to Landlord an amount equal to 1/12 of
Tenant's Operating Payment shown on the Estimate.
<PAGE>

          (b) On or  before  May 1st of each  Comparison  Year,  Landlord  shall
furnish to Tenant a Statement for the immediately  preceding Comparison Year. If
the Statement  shows that the sums paid by Tenant under Section 7.3(a)  exceeded
the actual  amount of  Tenant's  Operating  Payment  for such  Comparison  Year,
Landlord shall credit the amount of such excess against  subsequent  payments of
Rent due hereunder.  If the Statement shows that the sums so paid by Tenant were
less than Tenant's  Operating Payment for such Comparison Year, Tenant shall pay
the amount of such  deficiency  within 10  Business  Days after  delivery of the
Statement  to Tenant.

Section 7.4 Non-Waiver; Disputes. (a) Landlord's failure to render any Statement
on a timely  basis with  respect  to any  Comparison  Year  shall not  prejudice
Landlord's  right  to  thereafter  render  a  Statement  with  respect  to  such
Comparison Year or any subsequent  Comparison Year, nor shall the rendering of a
Statement prejudice  Landlord's right to thereafter render a corrected Statement
for that Comparison Year.

          (b) Each Statement sent to Tenant shall be  conclusively  binding upon
Tenant  unless Tenant (i) pays to Landlord when due the amount set forth in such
Statement,  without  prejudice to Tenant's right to dispute such Statement,  and
(ii)  within 90 days after such  Statement  is sent,  sends a notice to Landlord
objecting to such Statement and specifying the reasons  therefor.  Tenant agrees
that Tenant will not employ,  in  connection  with any dispute under this Lease,
any person who is to be  compensated  in whole or in part, on a contingency  fee
basis. If the parties are unable to resolve any dispute as to the correctness of
such Statement  within 30 days following such notice of objection,  either party
may refer the issues  raised to one of the "Big Five"  public  accounting  firms
selected by Landlord and  reasonably  acceptable to Tenant,  and the decision of
such  accountants  shall be  conclusively  binding upon Landlord and Tenant.  In
connection  therewith,  Tenant and such accountants shall execute and deliver to
Landlord  a  confidentiality   agreement,   in  form  and  substance  reasonably
satisfactory  to Landlord,  whereby  such  parties  agree not to disclose to any
third party any of the  information  obtained in  connection  with such  review.
Tenant shall pay the fees and expenses  relating to such procedure,  unless such
accountants  determine that Landlord overstated  Operating Expenses by more than
5% for such  Comparison  Year,  in which case  Landlord  shall pay such fees and
expenses.

Section 7.5 Final Year of Term.  If the  Expiration  Date occurs on a date other
than December 31st, any Additional  Rent under this Article 7 for the Comparison
Year in which such  Expiration  Date occurs shall be apportioned on the basis of
the number of days in the period from January 1st to the Expiration  Date.  Upon
the expiration or earlier  termination of this Lease,  any Additional Rent under
this Article 7 shall be paid or reimbursed as  appropriate  (unless  Tenant then
has an outstanding  payable to Landlord)  within 30 days after submission of the
Statement.

Section  7.6 Net  Lease.  This  Lease  is  designed  as a "net  lease,"  and the
provisions  in this  Lease for  payment  by  Tenant  of its  share of  Operating
Expenses and Taxes are intended to pass on to Tenant and reimburse  Landlord for
Tenant's  Proportionate  Share of all costs and expenses  incurred in connection
with the  management,  operation,  maintenance  or repair  of the Real  Property
except as otherwise expressly herein provided.

<PAGE>

                                   ARTICLE 8

                               REQUIREMENTS OF LAW

Section 8.1   Compliance with Requirements.

          (a) Tenant's Compliance. Tenant, at its expense, shall comply with all
Requirements applicable to the Premises and with the terms and provisions of the
CC&R's  applicable  to  Tenant;  provided,  however,  that  Tenant  shall not be
obligated to comply with any Requirements  requiring any structural  alterations
to the Building unless the application of such Requirements  arises from (i) the
specific  manner and nature of Tenant's  use or occupancy  of the  Premises,  as
distinct from general office use, (ii)  Alterations  made by Tenant,  or (iii) a
breach  by  Tenant  of any  provisions  of  this  Lease.  Any  such  repairs  or
alterations  shall be made at Tenant's  expense by Tenant (1) in compliance with
Article 5 if such repairs or alterations are nonstructural and do not affect any
Building  System,  or (2)  by  Landlord  if  such  repairs  or  alterations  are
structural or affect any Building  System.  If Tenant  obtains  knowledge of any
failure to comply with any Requirements applicable to the Premises, Tenant shall
give Landlord prompt notice thereof.

          (b)  Hazardous  Materials.  Tenant  shall not cause or permit  (i) any
Hazardous  Materials to be brought into the Building or Garage, (ii) the storage
or use of Hazardous  Materials in any manner not permitted by any  Requirements,
or (iii) the escape, disposal or release of any Hazardous Materials within or in
the  vicinity of the Real  Property.  Nothing  herein shall be deemed to prevent
Tenant's use of any Hazardous Materials  customarily used in the ordinary course
of office work, provided such use is in accordance with all Requirements. Tenant
shall be  responsible,  at its expense,  for all matters  directly or indirectly
based on, or arising or resulting  from the  presence of Hazardous  Materials on
the Real Property  which is caused or permitted by a Tenant Party.  Tenant shall
provide to Landlord copies of all communications received by Tenant with respect
to any Requirements  relating to Hazardous Materials,  and/or any claims made in
connection   therewith.   Landlord  or  its  agents  may  perform  environmental
inspections of the Premises at any time. Under no circumstances  shall Tenant be
liable to  Landlord  for any  losses,  costs,  claims,  liabilities  and damages
(including attorneys' and consultants' fees) of every type and nature,  directly
or  indirectly  arising out of or in  connection  with any  Hazardous  Materials
present  at any time on or about  the Land,  or the  soils,  air,  improvements,
groundwater  or surface  water  thereof,  or the  violation of any  Requirements
relating to any such Hazardous  Materials,  except to the extent that any of the
foregoing  actually results from the release or emission of Hazardous  Materials
by any Tenant Party.

          (c) Landlord's Compliance.  Landlord shall comply with (or cause to be
complied  with) all  Requirements  applicable to the Building  which are not the
obligation of Tenant, to the extent that non-compliance  would materially impair
Tenant's use and occupancy of the Premises for the Permitted Uses.

          (d) Landlord's Insurance.  Tenant shall not cause or permit any action
or condition  that would (i)  invalidate or conflict with  Landlord's  insurance
policies, (ii) violate applicable rules,  regulations and guidelines of the Fire
Department,  Fire Insurance  Rating  Organization or any other authority  having
jurisdiction over the Building,  (iii) cause an increase in the premiums of fire
insurance  for the  Building  over  that  payable  with  respect  to  Comparable
Buildings,  or (iv) result in Landlord's insurance companies' refusing to insure
the Building or any property  therein in amounts and against risks as reasonably
determined  by  Landlord.  If fire  insurance  premiums  increase as a result of
Tenant's failure to comply with the provisions of this Section 8.1, Tenant shall
promptly cure such failure and shall  reimburse  Landlord for the increased fire
insurance premiums paid by Landlord as a result of such failure by Tenant.

<PAGE>

Section 8.2 Fire and Life Safety.  If the Fire Insurance Rating  Organization or
any Governmental  Authority or any of Landlord's insurers requires or recommends
any  modifications  and/or  alterations be made or any  additional  equipment be
supplied in connection  with the sprinkler  system or fire alarm and life-safety
system  serving the Building by reason of (i) the specific  manner and nature of
Tenant's  use of the  Premises,  as  distinct  from  general  office  use,  (ii)
Alterations  made by Tenant,  or (iii) a breach by Tenant of any  provisions  of
this Lease,  Landlord (to the extent  outside of the Premises) or Tenant (to the
extent within the Premises) shall make such  modifications  and/or  Alterations,
and supply such additional equipment, in either case at Tenant's expense.

                                   ARTICLE 9

                                  SUBORDINATION

Section  9.1  Subordination  and  Attornment.  (a) (a) This Lease is subject and
subordinate  to all  Mortgages and Superior  Leases,  and, at the request of any
Mortgagee  or Lessor,  Tenant  shall  attorn to such  Mortgagee  or Lessor,  its
successors in interest or any purchaser in a foreclosure sale.

          (b) If a Lessor  or  Mortgagee  or any other  person  or entity  shall
succeed to the rights of Landlord under this Lease,  whether through  possession
or  foreclosure  action  or the  delivery  of a new  lease or deed,  then at the
request of the successor  landlord and upon such  successor  landlord's  written
agreement to accept Tenant's attornment and to recognize Tenant's interest under
this  Lease,  Tenant  shall be deemed to have  attorned to and  recognized  such
successor  landlord as Landlord under this Lease. The provisions of this Section
9.1 are self-operative and require no further instruments to give effect hereto;
provided, however, that Tenant shall promptly execute and deliver any instrument
that  such  successor  landlord  may  reasonably  request  (i)  evidencing  such
attornment, (ii) setting forth the terms and conditions of Tenant's tenancy, and
(iii)  containing  such other  terms and  conditions  as may be required by such
Mortgagee  or Lessor,  provided  such terms and  conditions  do not increase the
Rent,  materially  increase  Tenant's  obligations  or materially  and adversely
affect Tenant's  rights under this Lease.  Upon such attornment this Lease shall
continue  in full  force and effect as a direct  lease  between  such  successor
landlord and Tenant upon all of the terms, conditions and covenants set forth in
this Lease except that such successor landlord shall not be

               (i) liable for any act or  omission  of  Landlord  (except to the
extent  such act or  omission  continues  beyond  the date when  such  successor
landlord succeeds to Landlord's  interest and Tenant gives notice of such act or
omission);

               (ii)  subject to any  defense,  claim,  counterclaim,  set-off or
offsets which Tenant may have against Landlord;

               (iii) bound by any  prepayment  of more than one month's  Rent to
any prior landlord;

               (iv) bound by any  obligation to make any payment to Tenant which
was required to be made prior to the time such successor  landlord  succeeded to
Landlord's interest;
<PAGE>

               (v)  bound  by any  obligation  to  perform  any  work or to make
improvements to the Premises except for (x) repairs and maintenance  required to
be made by  Landlord  under this  Lease,  and (y)  repairs to the  Premises as a
result of damage by fire or other casualty or a partial condemnation pursuant to
the  provisions  of this  Lease,  but only to the extent  that such  repairs can
reasonably  be made  from the net  proceeds  of any  insurance  or  condemnation
awards, respectively, actually made available to such successor landlord;

               (vi)  bound by any  modification,  amendment  or  renewal of this
Lease made without successor landlord's consent;

               (vii)  liable  for  the  repayment  of any  security  deposit  or
surrender  of any letter of  credit,  unless  and until  such  security  deposit
actually  is paid  or such  letter  of  credit  is  actually  delivered  to such
successor landlord; or

               (viii) liable for the payment of any unfunded tenant  improvement
allowance,  refurbishment allowance or similar obligation.

<PAGE>

          (c) Tenant shall from time to time within 10 Business  Days of request
from  Landlord  execute and deliver any  documents  or  instruments  that may be
reasonably required by any Mortgagee or Lessor to effectuate any subordination.


Section 9.2 Mortgage or Superior  Lease  Defaults.  Any Mortgagee may elect that
this Lease shall have  priority  over the Mortgage  and,  upon  notification  to
Tenant by such Mortgagee,  this Lease shall be deemed to have priority over such
Mortgage, regardless of the date of this Lease. In connection with any financing
of the Real Property,  Tenant shall consent to any reasonable  modifications  of
this Lease requested by any lending institution,  provided such modifications do
not increase the Rent,  materially  increase the obligations,  or materially and
adversely affect the rights, of Tenant under this Lease.

Section  9.3  Tenant's  Termination  Right.  As long as any  Superior  Lease  or
Mortgage exists,  Tenant shall not seek to terminate this Lease by reason of any
act or omission of Landlord until (a) Tenant shall have given notice of such act
or omission to all Lessors  and/or  Mortgagees,  and (b) a reasonable  period of
time shall have elapsed  following  the giving of notice of such default and the
expiration  of any  applicable  notice  or  grace  periods  (unless  such act or
omission is not capable of being remedied  within a reasonable  period of time),
during which period such Lessors and/or Mortgagees shall have the right, but not
the obligation, to remedy such act or omission and thereafter diligently proceed
to so remedy such act or obligation. If any Lessor or Mortgagee elects to remedy
such act or omission of Landlord,  Tenant shall not seek to terminate this Lease
so long as such Lessor or Mortgagee is proceeding with  reasonable  diligence to
effect such remedy.

Section 9.4 Provisions.  The provisions of this Article 9 shall (a) inure to the
benefit of  Landlord,  any future  owner of the  Building or the Real  Property,
Lessor or  Mortgagee  and any  sublessor  thereof and (b) apply  notwithstanding
that, as a matter of law, this Lease may terminate  upon the  termination of any
such Superior Lease or Mortgage.


                                   ARTICLE 10

                                    SERVICES

Section 10.1  Electricity.  Subject to any  Requirements  or any public  utility
rules or regulations governing energy consumption,  Landlord shall make or cause
to be made, customary  arrangements with utility companies and/or public service
companies  to furnish  electric  current to the  Premises  for  Tenant's  use in
accordance with the Design Standards.  If Landlord reasonably  determines by the
use of an electrical consumption survey or by other reasonable means that Tenant
is using electric current (including overhead fluorescent fixtures) in excess of
 .60 kilowatt hours per square foot of usable area in the Premises per month,  as
determined on an annualized  basis ("Excess  Electrical  Usage"),  then Landlord
shall have the right to charge Tenant an amount equal to  Landlord's  reasonable
estimate of Tenant's Excess  Electrical  Usage, and shall have the further right
to install an electric  current meter,  sub-meter or check meter in the Premises
(a "Meter") to measure the amount of electric  current consumed in the Premises.
The cost of such Meter special conduits,  wiring and panels needed in connection
therewith and the installation,  maintenance and repair thereof shall be paid by
Tenant. Tenant shall pay to Landlord,  from time to time, but no more frequently
than monthly,  for its Excess  Electrical Usage at the Premises.  The rate to be
paid by Tenant for  submetered  electricity  shall not exceed the amount paid by
Landlord  to the  supplier  of such  service,  together  with any taxes or other
charges in connection  therewith.  If Tenant so requests,  Tenant shall have the
right to  install,  at its sole cost and  expense,  meters on each  floor of the
Premises to measure Tenant's electrical  consumption within the Premises and, in
such  event,  Tenant  shall pay  Landlord  monthly  for the cost of  electricity
consumed within the Premises and Landlord shall exclude from Operating  Expenses
the cost of electricity so consumed  within the leased premises of other tenants
of the Building.
<PAGE>

Section 10.2 Excess Electricity. Tenant shall at all times comply with the rules
and  regulations of the utility company  supplying  electricity to the Building.
Tenant shall not use any electrical  equipment  which, in Landlord's  reasonable
judgment,  would exceed the  capacity of the  electrical  equipment  serving the
Premises.   If  Landlord  determines  that  Tenant's   electrical   requirements
necessitate  installation of any additional risers,  feeders or other electrical
distribution  equipment  (collectively,  "Electrical  Equipment"),  or if Tenant
provides Landlord with evidence reasonably  satisfactory to Landlord of Tenant's
need for excess electricity and requests that additional Electrical Equipment be
installed,   Landlord  shall,  at  Tenant's  expense,  install  such  additional
Electrical Equipment,  provided that Landlord, in its sole judgment,  determines
that (a) such  installation  is practicable  and necessary,  (b) such additional
Electrical Equipment is permissible under applicable  Requirements,  and (c) the
installation of such Electrical Equipment will not cause permanent damage to the
Building  or the  Premises,  cause  or  create  a  hazardous  condition,  entail
excessive or unreasonable alterations,  interfere with or limit electrical usage
by other  tenants  or  occupants  of the  Building  or exceed  the limits of the
switchgear or other facilities serving the Building,  or require power in excess
of that  available  from the utility  company  serving the  Building.  Any costs
incurred by Landlord in connection  therewith  shall be paid by Tenant within 10
days after the rendition of a bill therefor.

Section 10.3 Elevators.  Landlord shall provide  passenger and freight  elevator
service to the  Premises 24 hours per day, 7 days per week;  provided,  however,
Landlord may limit elevator  service  during times other than Ordinary  Business
Hours.

Section 10.4 Heating.  Ventilation and Air Conditioning.  Landlord shall furnish
to the Premises heating, ventilation and air-conditioning ("HVAC") in accordance
with the Design Standards set forth in Exhibit D during Ordinary Business Hours.
Landlord  shall have access to all  air-cooling,  fan,  ventilating  and machine
rooms and electrical closets and all other mechanical  installations of Landlord
(collectively,  "Mechanical  Installations"),  and  Tenant  shall not  construct
partitions or other  obstructions  which may interfere  with  Landlord's  access
thereto  or the  moving  of  Landlord's  equipment  to and from  the  Mechanical
Installations.   No  Tenant  Party  shall  at  any  time  enter  the  Mechanical
Installations  or tamper  with,  adjust,  or  otherwise  affect such  Mechanical
Installations.  Landlord  shall not be  responsible  if the HVAC System fails to
provide  cooled or heated air, as the case may be, to the Premises in accordance
with the Design Standards by reason of (i) any equipment installed by, for or on
behalf  of  Tenant,  which  has an  electrical  load in  excess  of the  average
electrical load and human occupancy factors for the HVAC System as designed,  or
(ii) any  rearrangement  of partitioning or other  Alterations made or performed
by, for or on behalf of Tenant.  Tenant shall  cooperate with Landlord and shall
abide by the rules and regulations  which Landlord may reasonably  prescribe for
the proper functioning and protection of the HVAC System.

Section  10.5  Overtime  Freight  Elevators  and HVAC.  The Fixed  Rent does not
include any charge to Tenant for the furnishing of any freight  elevator service
or HVAC to the Premises  during any periods other than Ordinary  Business  Hours
("Overtime  Periods").  If Tenant  desires  any such  services  during  Overtime
Periods,  Tenant shall deliver  notice to the Building  office  requesting  such
services at least 24 hours prior to the time Tenant requests such services to be
provided;  provided,  however,  that Landlord  shall use  reasonable  efforts to
arrange such service on such shorter notice as Tenant shall provide. If Landlord
furnishes freight elevator or HVAC service during Overtime Periods, Tenant shall
pay to Landlord the cost thereof at the then established rates for such services
in the Building.

Section 10.6 Cleaning. Landlord shall cause the Premises (excluding any portions
thereof used for the storage,  preparation,  service or  consumption  of food or
beverages) to be cleaned,  substantially  in  accordance  with the standards set
forth in Exhibit E. Any areas of the Premises requiring additional cleaning such
as areas  used for  preparation  or  consumption  of  food,  private  bathrooms,
computer  rooms,  mail rooms and trading  floors  shall be cleaned,  at Tenant's
expense, by Landlord's cleaning contractor,  at rates which shall be competitive
with  rates of other  cleaning  contractors  providing  comparable  services  to
Comparable  Buildings.  Landlord's  cleaning  contractor and its employees shall
have access to the Premises at all times except during Ordinary  Business Hours.

<PAGE>

Section 10.7 Water.  Landlord shall provide water in the core lavatories on each
floor of the Building.  If Tenant  requires water for any  additional  purposes,
Tenant shall pay for the cost of bringing water to the Premises and Landlord may
install  a meter  to  measure  the  water.  Tenant  shall  pay the  cost of such
installation, and for all maintenance, repairs and replacements thereto, and for
the reasonable charges of Landlord for the water consumed.

Section 10.8 Refuse Removal.  Landlord shall provide refuse removal  services at
the  Building.  Tenant  shall pay to  Landlord,  within 10  Business  Days after
delivery of an invoice therefor,  Landlord's  reasonable charge for such removal
to the extent that the refuse generated by Tenant exceeds the refuse customarily
generated by general office  tenants.  Tenant shall not dispose of any refuse in
the Common Areas,  and if Tenant does so, Tenant shall be liable for  Landlord's
reasonable  charge for such  removal.

Section 10.9 Directory. The lobby shall contain a computerized directory wherein
the Building's tenants shall be listed with a capacity for up to 25 listings per
floor for Tenant and others permitted to occupy the Premises  hereunder.  Tenant
shall  be  entitled  to a  proportionate  share of such  listings,  based on the
rentable  square  footage  of the  Premises.  From  time to  time,  but not more
frequently than monthly,  Landlord shall reprogram the computerized directory to
reflect such changes in the listings therein as Tenant shall request.

Section 10.10 Service Interruptions.  Landlord reserves the right to suspend any
service  when  necessary,   by  reason  of  Unavoidable  Delays,   accidents  or
emergencies,  or for Restorative Work which, in Landlord's  reasonable judgment,
are necessary or appropriate until such Unavoidable Delay, accident or emergency
shall cease or such  Restorative  Work is completed  and  Landlord  shall not be
liable for any interruption, curtailment or failure to supply services. Landlord
shall use  reasonable  efforts to minimize  interference  with  Tenant's use and
occupancy  of  the  Premises  as  a  result  of  any  such  failure,  defect  or
interruption  of,  or  change  in the  supply,  character  and/or  quantity  of,
electrical  service and to restore any such services,  remedy such situation and
minimize any interference  with Tenant's  business.  Subject to Section 6.3, the
exercise  of any such right or the  occurrence  of any such  failure by Landlord
shall not constitute an actual or  constructive  eviction,  in whole or in part,
entitle  Tenant to any  compensation,  abatement or diminution of Rent,  relieve
Tenant from any of its  obligations  under this Lease,  or impose any  liability
upon Landlord by reason of inconvenience to Tenant,  or interruption of Tenant's
business,  or otherwise.  Landlord  shall not be liable in any way to Tenant for
any  failure,  defect or  interruption  of, or change in the  supply,  character
and/or quantity of, electrical  service furnished to the Premises for any reason
except if attributable to the gross negligence or willful misconduct of Landlord
or its agents or contractors.
<PAGE>

                                   ARTICLE 11

                       INSURANCE; PROPERTY LOSS OR DAMAGE

Section 11.1 Tenant's  Insurance.  (a) Tenant, at its expense,  shall obtain and
keep in full  force  and  effect  during  the Term:

               (i) a policy of  commercial  general  liability  insurance  on an
occurrence  basis  against  claims for personal  injury,  death and/or  property
damage  occurring in or about the Real Property,  under which Tenant is named as
the insured and Landlord,  Landlord's  Agent and any Lessors and any  Mortgagees
whose names have been furnished to Tenant are named as additional  insureds (the
"Insured  Parties").  Such  insurance  shall provide  primary  coverage  without
contribution  from any other  insurance  carried  by or for the  benefit  of the
Insured  Parties,  and  Tenant  shall  obtain  blanket  broad-form   contractual
liability coverage to insure its indemnity  obligations set forth in Article 26.
The minimum limits of liability shall be a combined single limit with respect to
each  occurrence in an amount of not less than  $5,000,000;  provided,  however,
that Landlord shall retain the right to require Tenant to increase such coverage
on no more than two  occasions  during  the  initial  Term of this Lease to that
amount of  insurance  which in  Landlord's  reasonable  judgment  is then  being
customarily  required  by  landlords  for  similar  office  space in  Comparable
Buildings.  The  deductible or self insured  retention for such policy shall not
exceed $10,000;

               (ii)  insurance  against  loss or damage by fire,  and such other
risks and hazards as are insurable  under then available  standard forms of "all
risk" property  insurance  policies with extended  coverage,  insuring  Tenant's
Property and all  Alterations and  improvements  to the Premises  (including the
initial  installations)  to the extent such Alterations and improvements  exceed
the cost of the improvements  typically performed in connection with the initial
occupancy of tenants in the Building  ("Building Standard  Installations"),  for
the  full  insurable  value  thereof  or  replacement  cost  thereof,  having  a
deductible amount, if any not in excess of $25,000;

               (iii) during the performance of any Alteration,  until completion
thereof,  Builder's  Risk  insurance  on an "all risk"  basis and on a completed
value form including a Permission to Complete and Occupy  endorsement,  for full
replacement  value  covering  the  interest  of  Landlord  and Tenant (and their
respective  contractors  and  subcontractors)  in all work  incorporated  in the
Building and all materials and equipment in or about the Premises;

               (iv) Workers' Compensation Insurance, as required by law;

               (v) Business Interruption Insurance; and

               (vi) such other  insurance in such amounts as the Insured Parties
may reasonably require from time to time.

          (b) All insurance required to be carried by Tenant (i) shall contain a
provision  that (x) no act or  omission  of  Tenant  shall  affect  or limit the
obligation of the insurance company to pay the amount of any loss sustained, and
(y) shall be noncancellable  and/or no material change in coverage shall be made
thereto unless the Insured Parties receive 30 days' prior notice of the same, by
certified mail, return receipt requested, and (ii) shall be effected under valid
and enforceable  policies issued by reputable  insurers permitted to do business
in the State of California and rated in Best's Insurance Guide, or any successor
thereto as having a "Best's  Rating" of "A-" and a "Financial  Size Category" of
at least "X" or, if such ratings are not then in effect,  the equivalent thereof
or such other financial rating as Landlord may at any time consider appropriate.


          (c) On or prior to the  Commencement  Date,  Tenant  shall  deliver to
Landlord  appropriate  policies of insurance,  including  evidence of waivers of
subrogation required to be carried pursuant to this Article 11 (the "Policies").
Evidence of each renewal or  replacement  of the Policies  shall be delivered by
Tenant to Landlord at least 10 days prior to the expiration of the Policies.  In
lieu of the  Policies,  Tenant may  deliver to  Landlord  a  certification  from
Tenant's insurance company (on the form currently  designated "Acord 27", or the
equivalent)  which shall be binding on  Tenant's  insurance  company,  and which
shall  expressly  provide  that such  certification  (i)  conveys to the Insured
Parties all the rights and  privileges  afforded  under the  Policies as primary
insurance,  and (ii)  contains  an  unconditional  obligation  of the  insurance
company to advise all  Insured  Parties in  writing by  certified  mail,  return
receipt  requested,  at least 30 days in advance of any termination or change to
the Policies that would affect the interest of any of the Insured Parties.
<PAGE>


Section 11.2 Landlord's Insurance.  Landlord shall, from and after the Effective
Date and until the Expiration Date, maintain in effect the following  insurance:
(i) fire and "all  risk"  insurance  providing  coverage  in the  event of fire,
vandalism, malicious mischief and all other risks normally covered by "all risk"
policies in the area of the  Building,  covering  the  Building  (excluding  the
property required to be insured by Tenant pursuant to Section 11.1) in an amount
not less than 95% of the full replacement  value (less  commercially  reasonable
deductibles  which as of the  Effective  Date is  $25,000.00  but is  subject to
periodic change over the Term) of the Building excluding  foundations,  footings
and other below-grade structural elements; and (ii) commercial general liability
insurance or the  equivalent  in the amount of at least  $5,000,000.00,  against
claims of bodily  injury,  personal  injury or  property  damage  arising out of
Landlord's operations,  assumed liabilities,  contractual liabilities, or use of
the Building and Common  Areas.  Such  insurance may be carried under blanket or
umbrella insurance policies.  Upon written request from Tenant, but no more than
one time during any calendar  year,  Landlord shall provide Tenant with evidence
that  Landlord  is  carrying  the  insurance  Landlord  is  required to maintain
pursuant to this Section 11.2.

Section  11.3 Waiver of  Subrogation.  Landlord and Tenant shall each procure an
appropriate clause in or endorsement to any property insurance covering the Real
Property and personal property,  fixtures and equipment located therein, wherein
the insurer waives subrogation or consents to a waiver of right of recovery, and
notwithstanding  anything  to the  contrary  in this Lease  Landlord  and Tenant
hereby  release and waive all claims against the other for any loss or damage to
its property or the property of others  resulting  from fire or other hazards to
the extent  covered by such property  insurance or would  normally be covered by
standard "all risk" property  insurance;  provided,  however,  that the release,
discharge, exoneration and covenant not to sue contained herein shall be limited
by and be coextensive with the terms and provisions of the waiver of subrogation
or waiver of right of recovery.  Tenant  acknowledges  that  Landlord  shall not
carry  insurance on, and shall not be  responsible  for, (i) damage to any Above
Building  Standard  Installations,  (ii) Tenant's  Property,  and (iii) any loss
suffered by Tenant due to interruption of Tenant's business.

Section  11.4  Restoration.  (a) If the  Premises  are  damaged by fire or other
casualty,  or if the  Building  is  damaged  such  that  Tenant is  deprived  of
reasonable access to the Premises,  the damage shall be repaired by Landlord, to
substantially the condition of the Premises prior to the damage,  subject to the
provisions  of any  Mortgage  or  Superior  Lease,  but  Landlord  shall have no
obligation to repair or restore (i) Tenant's Property or (ii) except as provided
in Section 11.3(b), any Above Building Standard Installations. So long as Tenant
is not in default beyond applicable grace or notice provisions in the payment or
performance  of its  obligations  under this Section 11.3,  and provided  Tenant
timely delivers to Landlord either Tenant's  Restoration Payment (as hereinafter
defined)  or  the  Restoration  Security  (as  hereinafter  defined)  or  Tenant
expressly waives any obligation of Landlord to repair or restore any of Tenant's
Above  Building  Standard  Installations,  then  until  the  restoration  of the
Premises is Substantially  Completed or would have been Substantially  Completed
but for Tenant Delay,  Fixed Rent,  Tenant's Tax Payment and Tenant's  Operating
Payment shall be reduced in the  proportion by which the area of the part of the
Premises which is not usable (or accessible ) and is not used by Tenant bears to
the total area of the Premises.

          (b) As a condition  precedent to  Landlord's  obligation  to repair or
restore  any Above  Building  Standard  Installations,  Tenant  shall (i) pay to
Landlord upon demand a sum ("Tenant's Restoration Payment") equal to the amount,
if  any,  by  which  (A) the  cost,  as  estimated  by a  reputable  independent
contractor  designated by Landlord,  of repairing and restoring all  Alterations
and  Initial  Installations  in the  Premises  to their  condition  prior to the
damage,  exceeds (B) the cost of restoring the Premises  with Building  Standard
Installations, or (ii) furnish to Landlord security (the "Restoration Security")
in form  and  amount  reasonably  acceptable  to  Landlord  to  secure  Tenant's
obligation  to pay all costs in excess of restoring  the Premises  with Building
Standard  Installations.  If Tenant shall fail to deliver to Landlord either (1)
Tenant's Restoration Payment or the Restoration Security, as applicable,  or (2)
a waiver by Tenant,  in form  satisfactory  to  Landlord,  of all of  Landlord's
obligations   to  repair  or  restore  any  of  the  Above   Building   Standard
Installations,  in either case within 15 days after Landlord's  demand therefor,
Landlord  shall  have no  obligation  to  restore  any Above  Building  Standard
Installations  and Tenant's  abatement  of Fixed Rent,  Tenant's Tax Payment and
Tenant's  Operating  Payment  shall cease when the  restoration  of the Premises
(other  than  any  Above  Building  Standard   Installations)  is  Substantially
Complete.
<PAGE>

Section  11.5  Landlord's  Termination  Right.  Notwithstanding  anything to the
contrary  contained in Section 11.3, if the Premises are totally  damaged or are
rendered  wholly  untenantable,  or if the Building shall be so damaged that, in
Landlord's   reasonable  opinion,   substantial   alteration,   demolition,   or
reconstruction  of the Building  shall be required  (whether or not the Premises
are so damaged or rendered untenantable) and the estimated period for the repair
or  restoration  of the Premises or the  Building  set forth in the  Restoration
Notice (as  hereinafter  defined)  is more than 12 months  from the date of such
damage or (ii) under the provisions of any Mortgage or Superior Lease,  Landlord
shall be unable so to restore the Premises or Tenant's  reasonable access to the
Premises, then in such event, Landlord may, not later than 60 days following the
date of the damage,  terminate this Lease by notice to Tenant,  provided that if
the  Premises  are not damaged,  Landlord  may not  terminate  this Lease unless
Landlord  similarly  terminates  the  leases of other  tenants  in the  Building
aggregating  at least 75% of the  portion of the  Building  occupied  for office
purposes  immediately prior to such damage. If this Lease is so terminated,  (a)
the Term shall  expire upon the 30th day after such notice is given,  (b) Tenant
shall  vacate the  Premises and  surrender  the same to  Landlord,  (c) Tenant's
liability for Rent shall cease as of the date of the damage, and (d) any prepaid
Rent for any period  after the date of the damage  shall be refunded by Landlord
to Tenant.

Section 11.6 Tenant's Termination Right. If the Premises are totally damaged and
are thereby rendered wholly untenantable, or if the Building shall be so damaged
that Tenant is deprived of reasonable  access to the  Premises,  and if Landlord
elects to restore the Premises,  Landlord  shall,  within 60 days  following the
date of the damage, cause a contractor or architect selected by Landlord to give
notice (the "Restoration Notice") to Tenant of the date by which such contractor
or architect  estimates the  restoration  of the Premises  (excluding  any Above
Building Standard  Installations) shall be Substantially  Completed. If (i) such
date, as set forth in the  Restoration  Notice,  is more than 12 months from the
date of such damage and if  Landlord  has not  elected to  terminate  this Lease
pursuant to Section  11.4,  then Tenant shall have the right to  terminate  this
Lease by giving notice to Landlord not later than 30 days following  delivery of
the Restoration  Notice to Tenant, or (ii) Landlord elects not to terminate this
Lease pursuant to Section 11.4, but fails to  Substantially  Complete the repair
or restoration of the Premises or the Building, as applicable,  within 12 months
from the date of  damage  or  destruction,  Tenant,  upon not less than 30 days'
prior written  notice,  may elect to terminate this Lease (either such notice in
(i) or (ii), a "Termination  Notice").  If Tenant delivers a Termination Notice,
unless,  with respect to a Termination  Notice delivered pursuant to clause (ii)
of the preceding  sentence,  Landlord  within such 30-day  period  Substantially
Completes  such  repair  or  restoration,  this  Lease  shall be  deemed to have
terminated as of the date of the giving of the Termination Notice, in the manner
set forth in the second sentence of Section 11.4.

Section 11.7 Final 12 Months.  Notwithstanding  anything to the contrary in this
Article  11, if any  damage  during  the final 12 months of the Term  (including
extensions thereof) renders the Premises wholly untenantable, either Landlord or
Tenant  may  terminate  this Lease by notice to the other  party  within 30 days
after the  occurrence of such damage and this Lease shall expire on the 30th day
after the date of such notice.  For purposes of this Section 11.6,  the Premises
shall be deemed wholly untenantable if Tenant shall be precluded from using more
than 50% of the Premises for the conduct of its business and Tenant's  inability
to so use the Premises is reasonably expected to continue for more than 90 days.

Section 11.8 Landlord's  Liability.  Any Building  employee to whom any property
shall be  entrusted  by or on behalf  of Tenant  shall be deemed to be acting as
Tenant's agent with respect to such property and neither Landlord nor its agents
shall be liable for any damage to such property, or for the loss of or damage to
any property of Tenant by theft or otherwise.  None of the Insured Parties shall
be liable for any injury or damage to persons or  property  or  interruption  of
Tenant's  business  resulting from fire or other casualty,  any damage caused by
other  tenants or persons in the  Building or Garage or by  construction  of any
private, public or quasi-public work, or any latent defect in the Premises or in
the  Building or Garage  (except that  Landlord  shall be required to repair the
same to the extent  provided in Article 5). No penalty  shall  accrue for delays
which  may  arise by  reason  of  adjustment  of fire  insurance  on the part of
Landlord or Tenant,  or for any  Unavoidable  Delays  arising from any repair or
restoration  of any portion of the Real  Property,  provided that Landlord shall
use reasonable efforts to minimize  interference with Tenant's use and occupancy
of the  Premises  during  the  performance  of any such  repair or  restoration.
<PAGE>


                                   ARTICLE 12

                                 EMINENT DOMAIN

Section 12.1  Taking.

(a) Total Taking. If all or substantially all of the Real Property, the Building
or the Premises  shall be acquired or condemned  for any public or  quasi-public
purpose (a  "Taking"),  this Lease shall  terminate and the Term shall end as of
the date of the vesting of title and Rent shall be prorated  and  adjusted as of
such date.

(b)  Partial  Taking.  Upon a Taking  of only a part of the Real  Property,  the
Building or the Premises then,  except as  hereinafter  provided in this Article
12, this Lease shall  continue in full force and effect,  provided that from and
after the date of the vesting of title,  Fixed Rent and  Tenant's  Proportionate
Share  shall be modified to reflect the  reduction  of the  Premises  and/or the
Building as a result of such Taking.

(c)  Landlord's  Termination  Right.  Whether or not the Premises are  affected,
Landlord may, by notice to Tenant,  within 60 days following the date upon which
Landlord receives notice of the Taking of all or a portion of the Real Property,
the Building or the  Premises,  terminate  this Lease,  provided  that  Landlord
elects to terminate leases  (including this Lease) affecting at least 75% of the
rentable area of the Building.

(d)  Tenant's  Termination  Right.  If the  part of the Real  Property  so Taken
contains  more than 20% of the total  area of the  Premises  occupied  by Tenant
immediately  prior to such Taking,  or if, by reason of such  Taking,  Tenant no
longer has  reasonable  means of access to the  Premises or Tenant's  use of the
Premises is materially and adversely affected thereby, Tenant may terminate this
Lease by notice to Landlord  given within 30 days  following the date upon which
Tenant is given  notice of such  Taking.  If Tenant so notifies  Landlord,  this
Lease  shall  end and  expire  upon the 30th day  following  the  giving of such
notice.  If a part of the  Premises  shall  be so Taken  and  this  Lease is not
terminated in accordance with this Section 12.1 Landlord, without being required
to spend more than it collects as an award, shall,  subject to the provisions of
any Mortgage or Superior  Lease,  restore that part of the Premises not so Taken
to a  self-contained  rental  unit  substantially  equivalent  (with  respect to
character,  quality,  appearance and services) to that which existed immediately
prior  to such  Taking,  excluding  Tenant's  Property  and any  Above  Building
Standard Installations.

(e)  Apportionment  of Rent.  Upon any termination of this Lease pursuant to the
provisions  of this  Article 12, Rent shall be  apportioned  as of, and shall be
paid or refunded up to and including, the date of such termination.

Section 12.2 Awards.  Upon any Taking,  Landlord  shall receive the entire award
for any such  Taking,  and Tenant  shall have no claim  against  Landlord or the
condemning  authority  for the  value of any  unexpired  portion  of the Term or
Tenant's Alterations;  and Tenant hereby assigns to Landlord all of its right in
and to such  award.  Nothing  contained  in this  Article  12 shall be deemed to
prevent Tenant from making a separate claim in any condemnation  proceedings for
the then value of any Tenant's Property or Alterations or Initial  Installations
paid for by Tenant included in such Taking and for any moving expenses, provided
any such award is in  addition  to, and does not result in a  reduction  of, the
award made to Landlord.

Section  12.3  Temporary  Taking.  If all or any part of the  Premises  is Taken
temporarily  during  the Term for any  public or  quasi-public  use or  purpose,
Tenant shall give prompt notice to Landlord and the Term shall not be reduced or
affected in any way and Tenant shall  continue to pay all Rent payable by Tenant
without reduction or abatement and to perform all of its other obligations under
this  Lease,  except to the extent  prevented  from  doing so by the  condemning
authority, and Tenant shall be entitled to receive any award or payment from the
condemning authority for such use, which shall be received,  held and applied by
Tenant as a trust fund for payment of the Rent falling due.

<PAGE>

                                   ARTICLE 13

                            ASSIGNMENT AND SUBLETTING

Section 13.1  Consent Requirements.

(a) No Assignment or  Subletting.  Except as expressly set forth herein,  Tenant
shall not assign, mortgage,  pledge, encumber, or otherwise transfer this Lease,
whether by operation of law or otherwise,  and shall not sublet,  or permit,  or
suffer  the  Premises  or any part  thereof  to be used or  occupied  by  others
(whether for desk space,  mailing  privileges or otherwise),  without Landlord's
prior consent in each instance.  Any  assignment,  sublease,  mortgage,  pledge,
encumbrance  or transfer in  contravention  of the provisions of this Article 13
shall be void and shall constitute an Event of Default.

(b) Collection of Rent. If, without  Landlord's consent when required under this
Article 13,  this Lease is  assigned,  or any part of the  Premises is sublet or
occupied by anyone other than Tenant or this Lease is  encumbered  (by operation
of law or otherwise),  Landlord may collect rent from the assignee, subtenant or
occupant,  and apply the net amount  collected to the Rent herein  reserved.  No
such  collection  shall be deemed a waiver of the provisions of this Article 13,
an acceptance of the assignee,  subtenant or occupant as tenant, or a release of
Tenant from the performance of Tenant's  covenants  hereunder,  and in all cases
Tenant shall remain fully liable for its obligations under this Lease.

(c)  Further  Assignment/Subletting.  Landlord's  consent to any  assignment  or
subletting  shall not relieve  Tenant from the  obligation to obtain  Landlord's
consent to any further  assignment or subletting.  Except for a person or entity
who acquired an interest in the Premises  directly from the initial Tenant named
herein,  no  subtenant  shall be  permitted  subtenant  assign or  encumber  its
sublease or further sublet any portion of its sublet space, or otherwise  suffer
or permit any portion of the sublet space to be used or occupied by others.

Section 13.2 Tenant's  Notice.  If Tenant desires to assign this Lease or sublet
all or any portion of the  Premises  other than to a Permitted  Transferee  in a
transaction for which  Landlord's  consent is required  hereunder,  Tenant shall
give notice thereof to Landlord,  which shall be accompanied by (a) with respect
to an assignment  of this Lease,  the date Tenant  desires the  assignment to be
effective,  and (b) with respect to a sublet of all or a part of the Premises, a
description  of the portion of the  Premises to be sublet.  Such notice shall be
deemed an offer from Tenant to Landlord of the right, at Landlord's  option, (1)
with respect to a sublease for a term expiring no earlier than 6 months prior to
the  Expiration  Date,  to  terminate  this Lease with  respect to such space as
Tenant proposes to sublease (the "Partial Space"), upon the terms and conditions
hereinafter  set forth,  or (2) if the proposed  transaction is an assignment of
this Lease, to terminate this Lease. Such option may be exercised by notice from
Landlord to Tenant within 30 days after delivery of Tenant's notice. If Landlord
exercises its option to terminate all or a portion of this Lease, (a) this Lease
shall end and expire with  respect to all or a portion of the  Premises,  as the
case may be, on the date that such  assignment or sublease was to commence,  (b)
Rent shall be  apportioned,  paid or refunded as of such date, (c) the amount of
the Security  Deposit  shall be reduced to an amount equal to the product of (x)
the amount of the Security  Deposit and (y) a ratio,  the  numerator of which is
the number of rentable square feet in the remaining  portion of the Premises and
the  denominator of which is the number of rentable  square feet in the Premises
immediately  prior to  Landlord's  exercise of such  option,  (d)  Tenant,  upon
Landlord's  request,  shall enter into an amendment of this Lease  ratifying and
confirming such total or partial termination,  and setting forth any appropriate
modifications to the terms and provisions hereof, and (e) Landlord shall be free
to lease the Premises (or any part thereof) to Tenant's  prospective assignee or
subtenant.  If Landlord  exercises such option,  Landlord shall pay all costs to
make the Partial Space a self-contained rental unit.
<PAGE>

Section 13.3 Conditions to  Assignment/Subletting.  (a) (a) If Landlord does not
exercise its  termination  option provided under Section 13.2, and provided that
no Event of Default then exists,  Landlord's consent to the proposed  assignment
or subletting shall not be unreasonably  withheld or delayed. Such consent shall
be granted or denied within 20 days after delivery to Landlord of (i) a true and
complete statement reasonably detailing the identity of the proposed assignee or
subtenant ("Transferee"), the nature of its business and its proposed use of the
Premises,  (ii) current  financial  information  with respect to the Transferee,
including its most recent financial statements,  and (iii) any other information
Landlord may reasonably  request,  provided  that:

(A)      in  Landlord's  reasonable  judgment,  the  Transferee  is engaged in a
         business or activity, and the Premises will be used in a

         manner,  which  (1)  is in  keeping  with  the  then  standards  of the
         Building,  (2) is for the Permitted  Uses, and (3) does not violate any
         restrictions set forth in this Lease, any Mortgage or Superior Lease or
         any negative  covenant as to use of the Premises  required by any other
         lease in the Building;

(B)      the Transferee is reputable with sufficient  financial means to perform
         all of its  obligations  under this Lease or the sublease,  as the case
         may be;

(C)      the  Transferee  is not a person or entity (or affiliate of a person or
         entity)  with  whom  Landlord  is then or has been  within  the prior 6
         months  negotiating  in  connection  with  the  rental  of space in the
         Building;

(D)      there  shall  be not  more  than 3  subtenants  in  each  floor  of the
         Premises;

(E)      the  aggregate  consideration  to be paid by the  Transferee  under the
         terms of the proposed  sublease shall not be less than 90% of the fixed
         rent at which  Landlord  is then  offering  to lease other space in the
         Building (the "Market Sub-rent") determined as though the Premises were
         vacant  and  taking  into  account  (1) the  length  of the term of the
         proposed sublease, (2) any rent concessions granted to Transferee,  and
         (3) the cost of any  Alterations  being  performed for the  Transferee;
         provided,  however,  that if after a period of 60 days Tenant is unable
         to  consummate a sublease  transaction  for an amount at least equal to
         the Market Subrent;  then for the first 30 days  thereafter  Tenant may
         advertise the Space at a rental rate no less than eighty  percent (80%)
         of the Market Subrent, for the next 30 days at seventy percent (70%) of
         the Market  Subrent and  thereafter at such other rental rate as Tenant
         may determine;

(F)      Tenant  shall,  upon  demand,  reimburse  Landlord  for all  reasonable
         expenses  incurred by Landlord in  connection  with such  assignment or
         sublease,  including any  investigations as to the acceptability of the
         Transferee and all legal costs  reasonably  incurred in connection with
         the granting of any requested  consent,  which  investigation and legal
         costs  shall not  exceed  the  aggregate  amount  of  $2,500  ("Expense
         Limit"); provided,  however, that such Expense Limit shall not apply to
         any  assignment  or  sublease  in  connection  with the  bankruptcy  or
         reorganization  of Tenant or that  involves an amendment to this Lease,
         and  all  costs   reasonably   incurred  in  reviewing  any  plans  and
         specifications  for  Alterations  proposed  to be  made  in  connection
         therewith;
<PAGE>

(G)      Subject  to  (F)  above,   Tenant  shall  not  publicly  advertise  the
         availability  of the  Premises  at a rental  rate less than the  Market
         Sub-rent; and

(H)      the  Transferee  shall not be  entitled,  directly  or  indirectly,  to
         diplomatic or sovereign immunity,  regardless of whether the Transferee
         agrees to waive such  diplomatic  or sovereign  immunity,  and shall be
         subject  to the  service of process  in,  and the  jurisdiction  of the
         courts of, the County of Santa Clara and State of California.

Within 15 days after Landlord's receipt of Tenant's notice,  Landlord shall give
written  notice to Tenant of consent  to the  proposed  transfer,  or specify in
writing and with reasonable  particularly the basis for withholding its consent.
If Landlord  fails to so advise  Tenant prior to the  expiration  of such 15-day
period,  Tenant shall deliver a second notice to Landlord,  stating in bold type
on the front page  thereof  "URGENT -- DELAY  NOTICE" and if  Landlord  fails to
respond within 5 days thereafter, Landlord's consent shall be deemed granted.

(b) With  respect to each and every  subletting  and/or  assignment  approved by
Landlord  under  the  provisions  of this  Lease:

          (i)  the  form  of  the  proposed  assignment  or  sublease  shall  be
reasonably satisfactory to Landlord;

          (ii) no sublease  shall be for a term ending  later than one day prior
to the Expiration Date;

          (iii) no Transferee shall take possession of any part of the Premises,
until an executed  counterpart of such sublease or assignment has been delivered
to Landlord and approved by Landlord as provided in Section 13.3(a);

          (iv) if an Event of Default occurs prior to the effective date of such
assignment  or subletting  and be continuing  yet uncured on the date that would
otherwise be such effective date, then Landlord's consent thereto, if previously
granted,  shall be immediately  deemed revoked without further notice to Tenant,
and any such  assignment or subletting  deemed  unconsented  shall  constitute a
further Event of Default hereunder; and

          (v) each sublease  shall be subject and  subordinate to this Lease and
to the  matters to which this Lease is or shall be  subordinate;  and Tenant and
each  Transferee  shall be deemed to have  agreed that upon the  occurrence  and
during  the  continuation  of an Event of Default  hereunder,  Tenant has hereby
assigned to Landlord,  and Landlord may, at its option,  accept such  assignment
of, all right,  title and interest of Tenant as sublandlord under such sublease,
together with all modifications,  extensions and renewals thereof then in effect
and such Transferee shall, at Landlord's option,  attorn to Landlord pursuant to
the then executory  provisions of such sublease,  except that Landlord shall not
be (A) liable for any previous  act or omission of Tenant  under such  sublease,
(B) subject to any  counterclaim,  offset or defense not  expressly  provided in
such sublease,  which theretofore accrued to such Transferee against Tenant, (C)
bound by any previous modification of such sublease not consented to by Landlord
or by any  prepayment  of more than one month's  rent,  (D) bound to return such
Transferee's  security  deposit,  if any,  except to the extent  Landlord  shall
receive actual  possession of such deposit and such Transferee shall be entitled
to the  return  of all or any  portion  of such  deposit  under the terms of its
sublease,  or (E)  obligated  to  make  any  payment  to or on  behalf  of  such
Transferee, or to perform any work in the subleased space or the Building, or in
any  way to  prepare  the  subleased  space  for  occupancy,  beyond  Landlord's
obligations under this Lease. The provisions of this Section 13.3(b)(v) shall be
self-operative,  and no further  instrument  shall be required to give effect to
this  provision,  provided  that the  Transferee  shall  execute  and deliver to
Landlord any instruments Landlord may reasonably request to evidence and confirm
such subordination and attornment.
<PAGE>

Section 13.4 Binding on Tenant; Indemnification of Landlord. Notwithstanding any
assignment  or  subletting  or any  acceptance  of rent  by  Landlord  from  any
Transferee, Tenant shall remain fully liable for the payment of all Rent due and
for the performance of all the covenants, terms and conditions contained in this
Lease on Tenant's part to be observed and  performed,  and any default under any
term,  covenant or condition of this Lease by any Transferee or anyone  claiming
under or through any Transferee shall be deemed to be a default under this Lease
by Tenant.  Except for claims for personal  injury or property  damage caused by
the gross  negligence  or willful  misconduct  of Landlord or its  employees  or
agents, Tenant shall indemnify,  defend, protect and hold harmless Landlord from
and  against  any and all  Losses  resulting  from any  claims  that may be made
against  Landlord  by the  Transferee  or anyone  claiming  under or through any
Transferee or by any brokers or other  persons  claiming a commission or similar
compensation   in   connection   with  the  proposed   assignment  or  sublease,
irrespective  of whether  Landlord  shall give or decline to give its consent to
any proposed  assignment or sublease,  or if Landlord  shall exercise any of its
options  under this Article 13.

Section 13.5 Tenant's  Failure to Complete.  If Landlord  consents to a proposed
assignment  or sublease and Tenant fails to execute and deliver to Landlord such
assignment  or sublease  within 90 days after the giving of such  consent,  then
Tenant shall again comply with all of the  provisions  and conditions of Section
13.2 before  assigning  this Lease or  subletting  all or part of the  Premises.

Section 13.6 Profits. If Tenant enters into any assignment or sublease permitted
hereunder  or  consented  to by  Landlord,  Tenant  shall,  within  60  days  of
Landlord's consent to such assignment or sublease, deliver to Landlord a list of
Tenant's  reasonable  third-party  brokerage fees, legal fees and  architectural
fees paid or to be paid in connection with such transaction and any actual costs
incurred  by Tenant in  separately  demising  and  otherwise  improving  for the
transferee the subleased space  (collectively,  "Transaction  Costs"),  together
with a list of all of Tenant's  Property to be transferred  to such  Transferee.
The Transaction  Costs shall be amortized,  on a straight-line  basis,  over the
term of any sublease.  Tenant shall deliver to Landlord  evidence of the payment
of such Transaction  Costs promptly after the same are paid. In consideration of
such assignment or subletting, Tenant shall pay to Landlord:

(a) In the case of an assignment,  on the effective date of the assignment,  50%
of all sums and other  consideration  paid to Tenant by the Transferee for or by
reason  of such  assignment  (including  sums  paid  for the sale or  rental  of
Tenant's  Property,  less, in the case of a sale  thereof,  the then fair market
value, or in the case of the rental thereof, the then fair rental value thereof,
as reasonably  determined  by Landlord)  after first  deducting the  Transaction
Costs; or

(b) In the  case of a  sublease,  50% of any  consideration  payable  under  the
sublease to Tenant by the  Transferee  which  exceeds on a per square foot basis
the Fixed  Rent  accruing  during  the term of the  sublease  in  respect of the
subleased  space (together with any sums paid for the sale or rental of Tenant's
Property,  less, in the case of the sale thereof, the then fair market value, or
in the case of the  rental  thereof,  the then fair  rental  value  thereof,  as
reasonably  determined by Landlord) after first deducting the monthly  amortized
amount of Transaction Costs. The sums payable under this clause shall be paid by
Tenant to Landlord monthly as and when paid by the subtenant to Tenant.
<PAGE>

Section 13.7  Transfers.

(a) Related Entities.  If Tenant is a corporation,  the transfer (by one or more
transfers)  of a  majority  of the stock of Tenant  shall be deemed a  voluntary
assignment of this Lease; provided, however, that the provisions of this Article
13 shall not apply to the  transfer  of shares of stock of Tenant if and so long
as Tenant is publicly  traded on a nationally  recognized  stock  exchange.  For
purposes of this  Section 13.7 the term  "transfers"  shall be deemed to include
the  issuance  of new stock  which  results in a majority of the stock of Tenant
being held by a person or entity  which does not hold a majority of the stock of
Tenant  on the  Effective  Date.  If  Tenant  is a  limited  liability  company,
partnership,  trust,  or any other legal  entity,  the  transfer (by one or more
transfers) of a majority of the beneficial  ownership  interests in such entity,
however characterized, shall be deemed a voluntary assignment of this Lease. The
provisions  of  Sections  13.1 and 13.6 shall not apply to  transactions  with a
corporation  into or with  which  Tenant is merged or  consolidated  or to which
substantially  all of  Tenant's  assets  are  transferred  (each,  a  "Permitted
Transferee") so long as (i) such transfer was made for a legitimate  independent
business  purpose and not for the purpose of transferring  this Lease,  (ii) the
successor  to Tenant  has a net worth  computed  in  accordance  with  generally
accepted  accounting  principles  at  least  equal to the net  worth  of  Tenant
immediately  prior to such merger,  consolidation  or transfer,  and (iii) proof
satisfactory  to  Landlord of such net worth is  delivered  to Landlord no later
than 10 days after the effective date of any such  transaction.  Section 13.6 or
the termination  right as provided in Section 13.2 shall not apply to any of the
foregoing  transfers  whether or not the  foregoing net worth text is satisfied.
Tenant may also, upon prior notice to Landlord,  permit any corporation or other
business  entity which  controls,  is controlled  by, or is under common control
with the original Tenant (a "Related  Corporation") to sublet all or part of the
Premises  for  the  Permitted  Uses,  provided  the  Related  Corporation  is in
Landlord's reasonable judgment of a character and engaged in a business which is
in keeping  with the  standards  for the Building and for so long as such entity
remains a Related Corporation.  Such sublease shall not be deemed to vest in any
such  Related  Corporation  any  right or  interest  in this  Lease nor shall it
relieve, release, impair or discharge any of Tenant's obligations hereunder. For
the purposes  hereof,  "control"  shall be deemed to mean  ownership of not less
than 50% of all of the voting stock of such  corporation or not less than 50% of
all of the legal and equitable  interest in any other business  entity if Tenant
is not a corporation.  Notwithstanding the foregoing, Tenant shall have no right
to assign this Lease or  sublease  all or any  portion of the  Premises  without
Landlord's  consent  pursuant to this  Section 13.7 if Tenant is not the initial
Tenant herein named or a person or entity who acquired Tenant's interest in this
Lease in a transaction approved by Landlord.

(b) Applicability. The limitations set forth in this Section 13.7 shall apply to
Transferee(s)  and  guarantor(s)  of this Lease, if any, and any transfer by any
such entity in  violation  of this Section 13.7 shall be a transfer in violation
of Section 13.1.

(c) Modifications, Takeover Agreements. Any modification, amendment or extension
of a sublease and/or any other agreement by which a landlord of a building other
than the Building  agrees to assume the  obligations  of Tenant under this Lease
shall be deemed a sublease for the purposes of Section 13.1 hereof.

Section 13.8  Assumption of  Obligations.  No  assignment  or transfer  shall be
effective unless and until the Transferee executes, acknowledges and delivers to
Landlord an agreement in form and substance reasonably  satisfactory to Landlord
whereby the assignee (a) assumes Tenant's  obligations  under this Lease and (b)
agrees that,  notwithstanding  such  assignment or transfer,  the  provisions of
Section  13.1  hereof  shall  be  binding  upon  it in  respect  of  all  future
assignments  and  transfers.

Section 13.9 Tenant's  Liability.  The joint and several liability of Tenant and
any  successors-in-interest  of  Tenant  and the  due  performance  of  Tenant's
obligations  under this Lease shall not be  discharged,  released or impaired by
any  agreement or  stipulation  made by Landlord,  or any grantee or assignee of
Landlord,  extending the time,  or modifying any of the terms and  provisions of
this Lease, or by any waiver or failure of Landlord,  or any grantee or assignee
of Landlord, to enforce any of the terms and provisions of this Lease.

Section 13.10 Listings in Building Directory. The listing of any name other than
that of Tenant on the doors of the Premises, the Building directory or elsewhere
shall not vest any right or  interest in this Lease or in the  Premises,  nor be
deemed to constitute  Landlord's  consent to any  assignment or transfer of this
Lease or to any sublease of the  Premises or to the use or occupancy  thereof by
others.  Any such listing shall  constitute a privilege  revocable in Landlord's
reasonable discretion by notice to Tenant.
<PAGE>


Section  13.11  Lease  Disaffirmance  or  Rejection.  If at any  time  after  an
assignment by Tenant named herein,  this Lease is not affirmed or is rejected in
any bankruptcy  proceeding or any similar  proceeding,  or upon a termination of
this Lease due to any such  proceeding,  Tenant  named  herein,  upon request of
Landlord given after such  disaffirmance,  rejection or termination  (and actual
notice  thereof to Landlord in the event of a  disaffirmance  or rejection or in
the  event of  termination  other  than by act of  Landlord),  shall  (a) pay to
Landlord  all Rent and other  charges due and owing by the  assignee to Landlord
under this Lease to and including the date of such  disaffirmance,  rejection or
termination,  and (b) as "tenant,"  enter into a new lease of the Premises  with
Landlord for a term  commencing  on the  effective  date of such  disaffirmance,
rejection or termination and ending on the Expiration Date, at the same Rent and
upon the then executory terms, covenants and conditions contained in this Lease,
except that (i) the rights of Tenant  named  herein under the new lease shall be
subject  to the  possessory  rights of the  assignee  under  this  Lease and the
possessory  rights of any persons  claiming through or under such assignee or by
virtue of any  statute or of any order of any court,  (ii) such new lease  shall
require  all  defaults  existing  under this  Lease to be cured by Tenant  named
herein with due  diligence,  and (iii) such new lease shall require Tenant named
herein to pay all Rent which,  had this Lease not been so disaffirmed,  rejected
or  terminated,  would have become due under the  provisions of this Lease after
the date of such  disaffirmance,  rejection or  termination  with respect to any
period prior  thereto.  If Tenant named herein  defaults in its  obligations  to
enter  into such new lease for a period  of 10 days  after  Landlord's  request,
then, in addition to all other rights and remedies by reason of default,  either
at law or in equity,  Landlord  shall have the same rights and remedies  against
Tenant  named herein as if it had entered into such new lease and such new lease
had thereafter been terminated as of the commencement  date thereof by reason of
Tenant's default thereunder.

                                   ARTICLE 14

                               ACCESS TO PREMISES

Section  14.1  Landlord's  Access.(a)  Landlord,  Landlord's  agents and utility
service providers  servicing the Building may erect, use and maintain  concealed
ducts, pipes and conduits in and through the Premises provided such use does not
cause the usable area of the Premises to be reduced beyond a de minimis  amount.
Landlord  shall  promptly  repair any damage to the Premises  caused by any work
performed pursuant to this Article 14.

          (b) Landlord,  any Lessor or Mortgagee and any other party  designated
by  Landlord  and  their  respective  agents  shall  have the right to enter the
Premises at all reasonable  times,  upon not less than 24 hours prior telephonic
notice  except in the case of emergency,  to examine the  Premises,  to show the
Premises to prospective purchasers,  Mortgagees,  Lessors or, during the last 15
months of the Term,  tenants and their respective agents and  representatives or
others,  to  perform  Restorative  Work to the  Premises  or the  Building,  and
Landlord  shall be allowed to take all material  into the  Premises  that may be
required  for  the  performance  of  such  Restorative  Work  without  the  same
constituting  an actual or  constructive  eviction of Tenant in whole or in part
and without any abatement of Rent; provided,  however,  that all such work shall
be  done as  promptly  as  reasonably  possible  and so as to  cause  as  little
interference  to Tenant as  reasonably  possible  and  shall be  subject  to the
provisions of Section 14.4 below.

          (c) All parts (except surfaces facing the interior of the Premises) of
all walls, windows and doors bounding the Premises, all balconies,  terraces and
roofs  adjacent to the  Premises,  all space in or adjacent to the Premises used
for shafts,  stacks,  stairways,  mail  chutes,  conduits  and other  mechanical
facilities,  Building Systems; Building facilities and Common Areas are not part
of the  Premises,  and  Landlord  shall have the use thereof and access  thereto
through  the  Premises  for the  purposes of  Building  operation,  maintenance,
alteration and repair.

Section 14.2 Alterations to Real Property. Landlord has the right at any time to
(a) change the name,  number or  designation  by which the  Building is commonly
known,  and (b) alter the  Building  and  Garage to change  the  arrangement  or
location of entrances or passageways, doors and doorways, corridors,  elevators,
stairs,  toilets or other Common  Areas  without any such acts  constituting  an
actual or constructive  eviction and without  incurring any liability to Tenant,
so long as such  changes  do not  deprive  Tenant  of  access  to the  Premises.
Landlord shall not exercise any of its rights  pursuant to this Section 14.2, to
the  extent  doing so would  unreasonably  interfere  with  Tenant's  use of the
Premises or Garage.

Section  14.3  Light and Air.  If at any time any  windows of the  Premises  are
temporarily  darkened or covered over by reason of any Restorative  Work, any of
such windows are permanently  darkened or covered over due to any Requirement or
there is otherwise a diminution of light, air or view by another structure which
may hereinafter be erected  (whether or not by Landlord),  Landlord shall not be
liable for any damages and Tenant shall not be entitled to any  compensation  or
abatement of any Rent,  nor shall the same release  Tenant from its  obligations
hereunder  or  constitute  an  actual or  constructive  eviction.  Section  14.4
Tenant's Security  Requirements.  Landlord  acknowledges that Tenant has advised
Landlord that Tenant's business at the Premises involves  sensitive  information
and  operations  and that  Tenant has  security  requirements  to  protect  such
information and operations.  Landlord and any person entering the Premises with,
at the  direction  of or under the  authority  of,  Landlord  shall,  subject to
Tenant's  compliance with its obligations  pursuant to this Section 14.4, follow
Tenant's  commercially  reasonable  security  requirements,  which  include  the
requirement   that  all  persons   entering   the  Premises  be  attended  by  a
representative  of Tenant,  Tenant shall make a  representative  available  upon
24-hours prior telephone  notice by Landlord.  Tenant  acknowledges  that to the
extent Tenant does not facilitate  Landlord's  access to the Premises or certain
portions thereof,  Landlord shall be absolved from the obligation to perform any
services within such portion of the Premises including cleaning services. In the
event of an  emergency  that could  cause  damage to health,  safety or property
Landlord shall use good faith efforts to follow Tenant's  security  requirements
and in such event  Landlord will be required to give only such notice that it in
good faith believes is feasible under the  circumstances and need not wait to be
accompanied  by Tenant  or its  employees  or  representatives  (although  these
parties may still accompany Landlord if they are available and wish to do so).

<PAGE>


                                   ARTICLE 15

                                     DEFAULT

Section 15.1 Tenant's Defaults.  Each of the following events shall be an "Event
of Default" hereunder:

          (a)  Tenant  fails to pay when  due any  installment  of Rent and such
default  shall  continue  for 5 days  after  notice of such  default is given to
Tenant,  except  that if  Landlord  shall have given 2 such  notices  during any
calendar year of the Term, Tenant shall not be entitled to any further notice of
its  delinquency in the payment of any  installment of rent until the expiration
of such calendar year without Tenant having defaulted in any such payment; or

          (b) Tenant  fails to observe or perform  any other  term,  covenant or
condition  of this Lease and such  failure  continues  for more than 30 days (10
days with  respect to a default  under  Article 3) after  notice by  Landlord to
Tenant of such default,  or if such default  (other than a default under Article
3) is of a nature that it cannot be completely  remedied within 30 days, failure
by Tenant to commence to remedy such failure within said 30 days, and thereafter
diligently  prosecute to completion all steps  necessary to remedy such default,
provided in all events the same is completed within 90 days; or

          (c) if Landlord  applies or retains any part of the Security  Deposit,
and Tenant fails to deposit  with  Landlord the amount so applied or retained by
Landlord,  or to  provide  Landlord  with a  replacement  Letter of  Credit  (as
hereinafter defined),  if applicable,  within 5 days after notice by Landlord to
Tenant stating the amount applied or retained.

Section  15.2  Landlord's  Remedies.  (a)  Upon  the  occurrence  of an Event of
Default, Landlord, at its option, and without limiting the exercise of any other
right or remedy  Landlord  may have on  account of such  Event of  Default,  and
without  any  further  demand or  notice,  may give to Tenant 3 days'  notice of
termination of this Lease,  in which event this Lease and the Term shall come to
an end and  expire  (whether  or not the Term  shall  have  commenced)  upon the
expiration  of such 3 day  period  with the same force and effect as if the date
set forth in the notice was the Expiration Date stated herein;  and Tenant shall
then quit and surrender the Premises to Landlord, but Tenant shall remain liable
for damages as provided in this Article 15, and/or,  to the extent  permitted by
law,  Landlord  may remove all persons and  property  from the  Premises,  which
property  shall be stored by Landlord at a warehouse  or  elsewhere at the risk,
expense and for the account of Tenant.
<PAGE>


          (b) If Landlord  elects to terminate  this Lease,  pursuant to Section
1951.2 of the California Civil Code,  Landlord shall be entitled to recover from
Tenant the  aggregate  of:

               (i) The worth at the time of award of the unpaid Rent
and charges equivalent to Rent earned as of the date of the termination  hereof;

               (ii) The  worth at the time of award of the  amount  by which the
unpaid Rent and charges  equivalent  to Rent which would have been earned  after
the date of  termination  hereof  until the time of award  exceeds the amount of
such rental loss that Tenant proves could have been reasonably avoided;

               (iii) The  worth at the time of award of the  amount by which the
unpaid Rent and charges equivalent to Rent for the balance of the Term after the
time of award  exceeds the amount of such rental loss that Tenant  proves  could
have been reasonably avoided;

               (iv) Any other amount  necessary to  compensate  Landlord for the
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; and

               (v) Any other amount which Landlord may hereafter be permitted to
recover from Tenant to compensate  Landlord for the detriment caused by Tenant's
default.

For the  purposes of this  Section  15.2(b),  the "time of award" shall mean the
date upon which the judgment in any action brought by Landlord against Tenant by
reason of such Event of Default is entered or such earlier date as the court may
determine;  the  "worth  at the time of  award" of the  amounts  referred  to in
Sections  15.2(b)(i) and 15.2(b)(ii)  shall be computed by allowing  interest on
such amounts at the Interest  Rate;  and the "worth at the time of award" of the
amount referred to in Section 15.2(b)(iii) 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 1% per  annum.  Tenant  agrees  that such  charges  shall be
recoverable by Landlord under California Code of Civil Procedure Section 1174(b)
or any similar, successor or related provision of law.

Section  15.3  Recovering  Rent as It Comes Due.  Upon any Event of Default,  in
addition  to any other  remedies  available  to  Landlord at law or in equity or
under this Lease,  Landlord shall have the remedy  described in California Civil
Code Section 1951.4.  Accordingly,  if Landlord does not elect to terminate this
Lease,  Landlord may, from time to time,  enforce all of its rights and remedies
under this Lease,  including  the right to recover  all Rent as it becomes  due.
Such  remedy  may be  exercised  by  Landlord  without  prejudice  to its  right
thereafter  to  terminate  this Lease in  accordance  with the other  provisions
contained in this Article 15. Landlord's  reentry to perform acts of maintenance
or preservation of, or in connection with efforts to relet, the Premises, or any
portion thereof, or the appointment of a receiver upon Landlord's  initiative to
protect Landlord's  interest under this Lease shall not terminate Tenant's right
to possession of the Premises or any portion  thereof and, until Landlord elects
to terminate  this Lease,  this Lease shall  continue in full force and Landlord
may  pursue all its  remedies  hereunder.  Nothing  in this  Article 15 shall be
deemed to affect Landlord's right to indemnification,  under the indemnification
clauses  contained in this Lease, for Losses arising from events occurring prior
to the termination of this Lease.


<PAGE>

Section 15.4 General. (a) All rights,  powers and remedies of Landlord hereunder
and under any other  agreement  now or hereafter in force  between  Landlord and
Tenant shall be cumulative and not  alternative  and shall be in addition to all
rights,  powers and remedies given to Landlord at law or in equity. The exercise
of any one or more of such rights or remedies shall not impair  Landlord's right
to exercise any other right or remedy  including any and all rights and remedies
of Landlord under California Civil Code Section 1951.8, California Code of Civil
Procedure   Section  1161  et  seq.,  or  any  similar,   successor  or  related
Requirements.

          (b) If, after  Tenant's  abandonment  of the  Premises,  Tenant leaves
behind any of  Tenant's  Property,  then  Landlord  shall  store  such  Tenant's
Property at a warehouse or any other  location at the risk,  expense and for the
account  of Tenant,  and such  property  shall be  released  only upon  Tenant's
payment of such charges,  together with moving and other costs relating  thereto
and all other sums due and owing  under this  Lease.  If Tenant does not reclaim
such Tenant's  Property  within the period  permitted by law,  Landlord may sell
such  Tenant's  Property in  accordance  with law and apply the proceeds of such
sale to any sums due and owing  hereunder,  or retain  said  Property,  granting
Tenant credit against sums due and owing  hereunder for the reasonable  value of
such Property.

          (c)  To  the  extent  permitted  by  law,  Tenant  hereby  waives  all
provisions of, and  protections  under,  any  Requirement to the extent same are
inconsistent and in conflict with specific terms and provisions hereof.

Section  15.5  Interest.  If any payment of Rent is not paid when due,  interest
shall accrue on such payment,  from the date such payment  became due until paid
at the Interest Rate.  Tenant  acknowledges  that late payment by Tenant of Rent
will cause  Landlord to incur costs not  contemplated  by this Lease,  the exact
amount of such costs being extremely  difficult and  impracticable  to fix. Such
costs include,  without limitation,  processing and accounting charges, and late
charges  that maybe  imposed on Landlord  by the terms of any note  secured by a
Mortgage  covering the  Premises,  Therefore,  in addition to  interest,  if any
amount is not paid when due, a late charge  equal to 5% of such amount  shall be
assessed; provided, however, that on 2 occasions during any calendar year of the
Term,  Landlord  shall give Tenant  notice of such late payment and Tenant shall
have a period of 5 days thereafter in which to make such payment before any late
charge is assessed.  Such interest and late charges are separate and  cumulative
and are in addition to and shall not diminish or represent a substitute  for any
of  Landlord's  rights or  remedies  under any other  provision  of this  Lease.

Section  15.6 Other Rights of  Landlord.  If Tenant fails to pay any  Additional
Rent when due,  Landlord,  in addition to any other right or remedy,  shall have
the same  rights  and  remedies  as in the case of a  default  by  Tenant in the
payment of Fixed Rent.  If Tenant is in arrears in the  payment of Rent,  Tenant
waives Tenant's right, if any, to designate the items against which any payments
made by Tenant are to be credited,  and Landlord may apply any payments  made by
Tenant to any items  Landlord  sees fit,  regardless  of any  request by Tenant.
Landlord   reserves  the  right,   without   liability  to  Tenant  and  without
constituting  any claim of  constructive  eviction,  to  suspend  furnishing  or
rendering to Tenant any  supplemental  or overtime  property,  material,  labor,
utility or other  service,  which Landlord is not obligated to furnish or render
in  accordance  with  Article  10, in the  event  that (but only for so long as)
Tenant is in  arrears  in paying  Landlord  for such items for more than 30 days
after notice from Landlord to Tenant demanding the payment of such arrears.

Section 15.7  Landlord's  Default.  Landlord  shall not be in default  hereunder
unless  Landlord fails to perform any obligation  required of Landlord under the
terms of this Lease within a reasonable time, but in no event later than 30 days
after written notice by Tenant to Landlord,  specifying the nature of Landlord's
failure to perform.  If,  however,  the nature of Landlord's  obligation is such
that more than 30 days are reasonably  required for  performance,  than Landlord
shall not be in default hereunder if Landlord commences  performance within such
30 day period and thereafter diligently  prosecutes such cure to completion.  If
Landlord at the  expiration  of such notice and cure  periods has failed to cure
such  default,  then,  subject to the  exculpatory  provisions  of Section  26.3
hereof,  Tenant may pursue any of its legal or  equitable  remedies,  but Tenant
shall have no right to otherwise terminate this Lease.
<PAGE>

                                   ARTICLE 16

                   LANDLORD'S RIGHT TO CURE; FEES AND EXPENSES

                  If Tenant defaults in the performance of its obligations under
this Lease, Landlord, without waiving such default, may perform such obligations
at  Tenant's  expense:  (a)  immediately,  and  without  notice,  in the case of
emergency or if the default (i) materially  interferes with the use by any other
tenant of the Building,  (ii) materially interferes with the efficient operation
of the  Building,  (iii)  results in a  violation  of any  Requirement,  or (iv)
results or will result in a cancellation of any insurance  policy  maintained by
Landlord, and (b) in any other case if such default continues after 10 days from
the date Landlord gives notice of Landlord's  intention to perform the defaulted
obligation.  All costs and expenses  incurred by Landlord in connection with any
such performance by it and all costs and expenses,  including reasonable counsel
fees and  disbursements,  incurred  by  Landlord  in any  action  or  proceeding
(including any unlawful detainer  proceeding) brought by Landlord to enforce any
obligation  of Tenant  under this Lease  and/or  right of  Landlord in or to the
Premises,  shall be paid by Tenant to Landlord on demand,  with interest thereon
at the Interest  Rate from the date  incurred by  Landlord.  Except as expressly
provided to the contrary in this Lease,  all costs and expenses which,  pursuant
to this Lease are  incurred by Landlord  and payable to Landlord by Tenant,  and
all charges,  amounts and sums  payable to Landlord by Tenant for any  property,
material,  labor, utility or other services which,  pursuant to this Lease or at
the request and for the account of Tenant,  are provided,  furnished or rendered
by Landlord,  shall  become due and payable by Tenant to Landlord in  accordance
with the terms of the bills rendered by Landlord to Tenant.

                                   ARTICLE 17

               NO REPRESENTATIONS BY LANDLORD; LANDLORD'S APPROVAL

Section 17.1 No Representations.  Except as expressly set forth herein, Landlord
and Landlord's  agents have made no warranties,  representations,  statements or
promises with respect to the Building,  the Real Property or the Premises and no
rights,  easements  or  licenses  are  acquired  by  Tenant  by  implication  or
otherwise.  Tenant is entering into this Lease after full  investigation  and is
not relying upon any statement or  representation  made by Landlord not embodied
in this Lease.

Section  17.2 No Money  Damages.  Wherever in this Lease  Landlord's  consent or
approval is required,  Landlord hereby acknowledges its duty to act in each such
case  consistent  with a covenant of good faith and fair dealing  (but  Landlord
shall not otherwise be subject to a "reasonableness" standard where Landlord has
not  expressly  agreed  herein  to not  unreasonably  withhold  its  consent  or
approval). If Landlord refuses to grant such consent or approval, whether or not
Landlord   expressly   agreed  that  such  consent  or  approval  would  not  be
unreasonably  withheld,  Tenant shall not make,  and Tenant hereby  waives,  any
claim for money damages (including any claim by way of set-off,  counterclaim or
defense)  based upon  Tenant's  claim or assertion  that  Landlord  unreasonably
withheld or delayed its consent or  approval.  Tenant's  sole remedy shall be an
action or  proceeding  to  enforce  such  provision,  by  specific  performance,
injunction or  declaratory  judgment.  In no event shall Landlord be liable for,
and Tenant, on behalf of itself and all other Tenant Parties,  hereby waives any
claim for, any indirect,  consequential or punitive  damages,  including loss or
profits or business opportunity, arising under or in connection with this Lease.
Notwithstanding the foregoing,  Tenant's waiver set forth in the second sentence
of this Section 17.2 shall not apply to any final non-appealable  judgment (or a
judgment  that is in fact not  appealed)  that  Tenant  obtains  from a court of
competent   jurisdiction  that  Landlord  acted  in  bad  faith  in  making  its
determination to withhold its consent or approval.

Section  17.3  Reasonable  Efforts.  For  purposes  of this  Lease,  "reasonable
efforts" by Landlord  shall not include an obligation to employ  contractors  or
labor at  overtime  or other  premium  pay rates or to incur any other  overtime
costs or additional expenses whatsoever.
<PAGE>

                                   ARTICLE 18

                                   END OF TERM

Section 18.1 Expiration. Upon the expiration or other termination of this Lease,
Tenant shall quit and surrender the Premises to Landlord vacant, broom clean and
in good order and condition,  ordinary wear and tear and damage for which Tenant
is not  responsible  under the terms of this Lease  excepted,  and Tenant  shall
remove all of Tenant's  Property  and  Tenant's  Alterations  as may be required
pursuant to Article 5.

Section 18.2  Holdover  Rent.  Landlord  and Tenant  recognize  that  Landlord's
damages  resulting from Tenant's failure to timely  surrender  possession of the
Premises  may  be  substantial,  may  exceed  the  amount  of the  Rent  payable
hereunder,  and  will be  impossible  to  accurately  measure.  Accordingly,  if
possession of the Premises is not surrendered to Landlord on the Expiration Date
or sooner termination of this Lease, in addition to any other rights or remedies
Landlord may have hereunder or at law, Tenant shall (a) pay to Landlord for each
month (or any portion  thereof)  during  which Tenant holds over in the Premises
after the Expiration  Date or sooner  termination of this Lease,  in addition to
all  Additional  Rent, (i) for the first month, a sum equal to 150% of the Fixed
Rent  payable  under  this  Lease for the last full  calendar  month of the Term
("Final Fixed Rent" and thereafter  200% of such Final Fixed Rent, (b) be liable
to  Landlord  for (i) any  payment  or rent  concession  which  Landlord  may be
required to make to any tenant  obtained by Landlord  for all or any part of the
Premises (a "New  Tenant")  in order to induce such New Tenant not to  terminate
its lease by  reason of the  holding-over  by  Tenant,  and (ii) the loss of the
benefit of the bargain if any New Tenant shall  terminate its lease by reason of
the  holding-over  by  Tenant,  and (c) if any such  nonconsensual  holding-over
continues  for more than 30 days,  indemnify  Landlord  against  all  claims for
actual damages (but in no event any consequential damages) by any New Tenant. No
holding-over  by Tenant,  nor the payment to  Landlord of the amounts  specified
above,  shall operate to extend the Term hereof.  Nothing herein contained shall
be deemed  to permit  Tenant to  retain  possession  of the  Premises  after the
Expiration  Date or sooner  termination  of this  Lease,  and no  acceptance  by
Landlord of payments from Tenant after the Expiration Date or sooner termination
of this  Lease  shall be deemed to be other  than on account of the amount to be
paid by Tenant in accordance with the provisions of this Section 18.2.

                                   ARTICLE 19

                                 QUIET ENJOYMENT

                  Provided  this  Lease is in full force and effect and no Event
of Default  then exists,  Tenant may  peaceably  and quietly  enjoy the Premises
without  hindrance by Landlord or any person lawfully  claiming through or under
Landlord,  subject to the terms and conditions of this Lease and to all Superior
Leases and Mortgages.

                                   ARTICLE 20

                             NO SURRENDER; NO WAIVER

Section  20.1 No  Surrender  or  Release.  No act or thing done by  Landlord  or
Landlord's  agents or employees during the Term shall be deemed an acceptance of
a surrender of the  Premises,  and no provision of this Lease shall be deemed to
have been waived by Landlord,  unless such waiver is in writing and is signed by
Landlord.

Section  20.2 No  Waiver.  The  failure  of  either  party to seek  redress  for
violation  of, or to insist  upon the strict  performance  of, any  covenant  or
condition  of this  Lease,  or any of the  Rules and  Regulations,  shall not be
construed  as a waiver or  relinquishment  for the  future  performance  of such
obligations  of this  Lease or the  Rules  and  Regulations,  or of the right to
exercise such election but the same shall  continue and remain in full force and
effect with respect to any subsequent  breach,  act or omission.  The receipt by
Landlord  of any Rent  payable  pursuant  to this  Lease or any other  sums with
knowledge  of the breach of any  covenant  of this  Lease  shall not be deemed a
waiver of such  breach.  No payment by Tenant or receipt by Landlord of a lesser
amount than the monthly Rent herein  stipulated shall be deemed to be other than
a payment on account of the earliest  stipulated  Rent, or as Landlord may elect
to apply such payment,  nor shall any  endorsement  or statement on any check or
any  letter  accompanying  any check or  payment as Rent be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice to
Landlord's  right to recover the balance of such Rent or pursue any other remedy
provided in this Lease.
<PAGE>

                                   ARTICLE 21

                      WAIVER OF TRIAL BY JURY; COUNTERCLAIM

Section  21.1 Jury  Trial  Waiver.  THE  PARTIES  HEREBY  AGREE  THAT THIS LEASE
CONSTITUTES  A  WRITTEN  CONSENT  TO  WAIVER  OF TRIAL BY JURY  PURSUANT  TO THE
PROVISIONS OF CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 631 AND EACH PARTY DOES
HEREBY   CONSTITUTE   AND   APPOINT   THE  OTHER   PARTY  ITS  TRUE  AND  LAWFUL
ATTORNEY-IN-FACT,  WHICH APPOINTMENT IS COUPLED WITH AN INTEREST, AND EACH PARTY
DOES HEREBY  AUTHORIZE AND EMPOWER THE OTHER PARTY, IN THE NAME, PLACE AND STEAD
OF SUCH  PARTY,  TO FILE  THIS  LEASE  WITH THE  CLERK OR JUDGE OF ANY  COURT OF
COMPETENT  JURISDICTION  AS A  STATUTORY  WRITTEN  CONSENT TO WAIVER OF TRIAL BY
JURY.

                  LANDLORD'S INITIALS: _____         TENANT'S INITIALS: _____

Section  21.2  Waiver  of  Counterclaim.   If  Landlord  commences  any  summary
proceeding  against  Tenant,  Tenant will not interpose any  counterclaim of any
nature or  description  in any such  proceeding  (unless  failure to impose such
counterclaim would preclude Tenant from asserting in a separate action the claim
which is the  subject of such  counterclaim),  and will not seek to  consolidate
such  proceeding with any other action which may have been or will be brought in
any other court by Tenant.

                                   ARTICLE 22

                                     NOTICES

                  Except as  otherwise  expressly  provided in this  Lease,  all
consents,  notices, demands,  requests,  approvals or other communications given
under this Lease shall be in writing and shall be deemed  sufficiently  given or
rendered if delivered by hand (provided a signed receipt is obtained) or if sent
by registered or certified  mail (return  receipt  requested) or by a nationally
recognized overnight delivery service making receipted deliveries,  addressed to
Landlord  and Tenant as set forth in Article 1, and to any  Mortgagee  or Lessee
who shall require copies of notices and whose address is provided to Tenant,  or
to such other  address(es)  as Landlord,  Tenant or any  Mortgagee or Lessor may
designate as its new  address(es)  for such purpose by notice given to the other
in  accordance  with the  provisions  of this  Article  22.  Any such  approval,
consent,  notice, demand, request or other communication shall be deemed to have
been given on the date of receipted delivery, refusal to accept delivery or when
delivery  is first  attempted  but cannot be made due to a change of address for
which no notice is given or 3 Business  Days after it shall have been  mailed as
provided in this Article 22, whichever is earlier.

                                   ARTICLE 23

                              RULES AND REGULATIONS

                  All Tenant Parties shall observe and comply with the Rules and
Regulations, as supplemented or amended from time to time. Landlord reserves the
right, from time to time, to adopt additional Rules and Regulations and to amend
the Rules and Regulations then in effect.  Nothing contained in this Lease shall
impose upon  Landlord any  obligation  to enforce the Rules and  Regulations  or
terms,  covenants or conditions  in any other lease  against any other  Building
tenant,  and Landlord shall not be liable to Tenant for violation of the same by
any other tenant, its employees,  agents,  visitors or licensees,  provided that
Landlord  shall enforce the Rules or  Regulations  against  Tenant and all other
tenants of the Building in a non-discriminatory fashion.
<PAGE>

                                   ARTICLE 24

                                     BROKER

                  Landlord has  retained  Landlord's  Agent as leasing  agent in
connection  with this Lease and Landlord will be solely  responsible for any fee
that may be payable to Landlord's Agent.  Landlord agrees to pay a commission to
Tenant's  Broker pursuant to a separate  agreement.  Each of Landlord and Tenant
represents  and  warrants  to the other that it has not dealt with any broker in
connection with this Lease other than Landlord's  Agent,  Landlord's  Broker and
Tenant's  Broker and that no other  broker,  finder or like  entity  procured or
negotiated  this Lease or is entitled  to any fee or  commission  in  connection
herewith. Each of Landlord and Tenant shall indemnify,  defend, protect and hold
the  other  party  harmless  from  and  against  any and all  Losses  which  the
indemnified  party  may incur by  reason  of any  claim of or  liability  to any
broker, finder or like agent (other than Landlord's Agent, Landlord's Broker and
Tenant's  Broker) arising out of any dealings  claimed to have occurred  between
the  indemnifying  party and the claimant in connection with this Lease,  and/or
the above representation being false.

                                   ARTICLE 25

                                    INDEMNITY

Section 25.1  Tenant's  Indemnity.  Tenant shall not do or permit to be done any
act or thing upon the Premises or the Real Property  which may subject  Landlord
to any liability or responsibility for injury, damages to persons or property or
to any  liability  by  reason of any  violation  of any  Requirement,  and shall
exercise such control over the Premises as to fully protect Landlord against any
such  liability.  Except  to the  extent  of the  gross  negligence  or  willful
misconduct  of Landlord or its agents or  contractors,  Tenant shall  indemnify,
defend,  protect and hold harmless each of the Indemnitees  from and against any
and all Losses,  resulting from any claims (i) against the  Indemnitees  arising
from any act,  omission  or  negligence  of (A) all  Tenant  Parties or (B) both
Landlord and Tenant,  provided,  however, that Tenant's liability hereunder with
respect to matters judicially determined to have arisen out of the negligence of
Landlord,  which determination shall not be subject to appeal,  shall be limited
to the amount of insurance  coverage  carried by Tenant  pursuant to Article 11,
(ii)  against  the  Indemnitees  arising  from any  accident,  injury  or damage
whatsoever  caused to any person or to the property of any person and  occurring
in or about the Premises,  and (iii) against the Indemnitees  resulting from any
breach,  violation or nonperformance of any covenant,  condition or agreement of
this Lease on the part of Tenant to be fulfilled, kept, observed or performed.

Section 25.2 Landlord's  Indemnity.  Landlord shall  indemnify,  defend and hold
harmless  Tenant from and against all Losses incurred by Tenant arising from any
accident,  injury or damage  whatsoever  caused to any person or the property of
any person in or about the Common  Areas and with respect to claims for personal
injury,  the Premises,  to the extent  attributable  to the gross  negligence or
willful misconduct of Landlord or its employees, agents or contractors.
<PAGE>



Section 25.3 Defense and Settlement.  If any claim, action or proceeding is made
or brought against any Indemnitee, then upon demand by an Indemnitee, Tenant, at
its sole  cost and  expense,  shall  resist  or  defend  such  claim,  action or
proceeding in the Indemnitee's name (if necessary), by attorneys approved by the
Indemnitee,  which approval shall not be  unreasonably  withheld  (attorneys for
Tenant's  insurer shall be deemed  approved for purposes of this Section  25.3).
Notwithstanding  the  foregoing,  an Indemnitee  may retain its own attorneys to
participate  or assist in defending any claim,  action or  proceeding  involving
potential  liability in excess of the amount available under Tenant's  liability
insurance  carried  under  Section  11.1 for such claim and Tenant shall pay the
reasonable  fees  and  disbursements  of such  attorneys.  If  Tenant  fails  to
diligently defend or if there is a legal conflict or other conflict of interest,
then Landlord may retain separate counsel at Tenant's  expense.  Notwithstanding
anything herein  contained to the contrary,  Tenant may direct the Indemnitee to
settle any claim,  suit or other  proceeding  provided that (a) such  settlement
shall involve no obligation on the part of the Indemnitee other than the payment
of money,  (b) any payments to be made pursuant to such settlement shall be paid
in full  exclusively by Tenant at the time such settlement is reached,  (c) such
settlement shall not require the Indemnitee to admit any liability,  and (d) the
Indemnitee shall have received an  unconditional  release from the other parties
to such claim, suit or other proceeding.

                                   ARTICLE 26

                                  MISCELLANEOUS

Section 26.1  Delivery.  This Lease shall not be binding upon Landlord or Tenant
unless and until  Landlord  shall have executed and  delivered a fully  executed
copy of this Lease to Tenant.

Section 26.2 Transfer of Real  Property.  In the event of the sale,  conveyance,
assignment or transfer  (collectively,  a "Transfer")  by such Landlord (or upon
any subsequent  landlord after the Transfer by such subsequent  landlord) of its
interest in the Building or the Real Property, as the case may be, such Landlord
shall be  entirely  freed and  relieved  of all  covenants  and  obligations  of
Landlord  hereunder  accruing from and after the date of Transfer,  provided the
transferee of Landlord's  interest (or that of such subsequent  Landlord) in the
Building  or the Real  Property,  as the case may be, has assumed in writing all
obligations under this Lease arising from and after the date of Transfer.

Section 26.3  Limitation on Liability.  The liability of Landlord for Landlord's
obligations under this Lease shall be limited to Landlord's interest in the Real
Property and  Landlord's  interest in the net proceeds from the sale thereof and
Tenant  shall  not look to any other  property  or  assets  of  Landlord  or the
property  or  assets  of  any  direct  or  indirect  partner,  member,  manager,
shareholder,  director,  officer,  principal,  employee  or  agent  of  Landlord
(collectively,   the  "Parties")  in  seeking   either  to  enforce   Landlord's
obligations under this Lease or to satisfy a judgment for Landlord's  failure to
perform such obligations; and none of the Parties shall be personally liable for
the performance of Landlord's  obligations under this Lease.

Section  26.4 Rent.  All  amounts  payable by Tenant to or on behalf of Landlord
under this Lease, whether or not expressly  denominated Fixed Rent, Tenant's Tax
Payment,  Tenant's Operating Payment,  Additional Rent or Rent, shall constitute
rent for the purposes of Section 502(b)(6) of the United States Bankruptcy Code.

Section 26.5 Entire  Document.  This Lease (including any Schedules and Exhibits
referred  to  herein  and all  supplementary  agreements  provided  for  herein)
contains the entire agreement between the parties and all prior negotiations and
agreements  are  merged  into this  Lease.  All of the  Schedules  and  Exhibits
attached hereto are incorporated in and made a part of this Lease, provided that
in the event of any inconsistency between the terms and provisions of this Lease
and the terms and provisions of the Schedules and Exhibits hereto, the terms and
provisions of this Lease shall control.
<PAGE>

Section 26.6  Governing Law. This Lease shall be governed in all respects by the
laws of the State of California.

Section  26.7  Unenforceability.   If  any  provision  of  this  Lease,  or  its
application to any Person or  circumstance,  shall ever be held to be invalid or
unenforceable,  then in each  such  event  the  remainder  of this  Lease or the
application  of such  provision  to any other  Person or any other  circumstance
(other than those as to which it shall be invalid or unenforceable) shall not be
thereby  affected,  and each provision hereof shall remain valid and enforceable
to the fullest extent permitted by law.

Section  26.8 Lease  Disputes.  (a) Tenant  agrees  that all  disputes  arising,
directly or  indirectly,  out of or  relating to this Lease,  and all actions to
enforce this Lease,  shall be dealt with and  adjudicated in the state courts of
the State of  California or the United  States  District  Court for the Northern
District of California  and for that purpose  hereby  expressly and  irrevocably
submits itself to the jurisdiction of such courts.  Tenant agrees that so far as
is permitted under applicable law, this consent to personal  jurisdiction  shall
be  self-operative  and no further  instrument or action,  other than service of
process in one of the manners specified in this Lease, or as otherwise permitted
by law, shall be necessary in order to confer  jurisdiction  upon it in any such
court.

          (b) To the  extent  that  Tenant  has or  hereafter  may  acquire  any
immunity  from  jurisdiction  of any  court or from any legal  process  (whether
through service or notice,  attachment  prior to judgment,  attachment in aid of
execution,  execution  or  otherwise)  with  respect to itself or its  property,
Tenant irrevocably waives such immunity in respect of its obligations under this
Lease.

Section 26.9 Landlord's Agent. Unless Landlord delivers written notice to Tenant
to the contrary,  Landlord's  Agent is authorized to act as Landlord's  agent in
connection  with the  performance  of this Lease,  and Tenant  shall  direct all
correspondence   and   requests   to,  and  shall  be   entitled  to  rely  upon
correspondence   received  from  Landlord's  Agent.   Tenant  acknowledges  that
Landlord's  Agent is acting solely as agent for Landlord in connection  with the
foregoing;  and  neither  Landlord's  Agent nor any of its  direct  or  indirect
partners,  members,  managers,  officers,  shareholders,  directors,  employees,
principals,  agents or  representatives  shall have any  liability  to Tenant in
connection  with the  performance  of this Lease,  and Tenant waives any and all
claims against any and all of such parties (other than Landlord) arising out of,
or in any way connected with, this Lease, the Building or the Real Property.

Section 26.10 Estoppel. Within 10 Business Days following request from Landlord,
any  Mortgagee  or any  Lessor,  Tenant  shall  deliver to  Landlord a statement
executed  and  acknowledged  by  Tenant,  in  form  reasonably  satisfactory  to
Landlord,  (a) stating the Commencement Date, the Rent Commencement Date and the
Expiration  Date,  and that this  Lease is then in full force and effect and has
not been modified (or if modified, setting forth all modifications), (b) setting
forth the date to which the Fixed Rent and any  Additional  Rent have been paid,
together  with the  amount  of  monthly  Fixed  Rent and  Additional,  Rent then
payable,  (c)  stating  whether or not, to Tenant's  current  actual  knowledge,
Landlord is in default under this Lease, and, if Landlord is in default, setting
forth the specific  nature of all such  defaults,  (d) stating the amount of the
Security  Deposit,  if any, under this Lease,  (e) stating whether there are any
subleases or  assignments  affecting  the  Premises,  (f) stating the address of
Tenant to which all  notices and  communications  under the Lease shall be sent,
and (g) responding to any other matters reasonably  requested by Landlord,  such
Mortgagee or such  Lessor.  Tenant  acknowledges  that any  statement  delivered
pursuant to this Section  26.10 may be relied upon by any  purchaser or owner of
the Real Property or the Building,  or all or any portion of Landlord's interest
in the Real Property or the Building or any Superior Lease, or by any Mortgagee,
or assignee thereof or by any Lessor, or assignee thereof.

Section  26.11  Certain  Interpretational  Rules.  For  purposes  of this Lease,
whenever the words "include", "includes", or "including" are used, they shall be
deemed to be  followed  by the words  "without  limitation"  and,  whenever  the
circumstances  or the context  requires,  the singular shall be construed as the
plural,  the masculine  shall be construed as the feminine and/or the neuter and
vice versa.  This Lease shall be interpreted and enforced without the aid of any
canon,  custom or rule of law requiring or suggesting  construction  against the
party  drafting  or causing the  drafting  of the  provision  in  question.  The
captions  in this Lease are  inserted  only as a matter of  convenience  and for
reference and in no way define, limit or describe the scope of this Lease or the
intent of any provision hereof.

Section 26.12 Parties  Bound.  The terms,  covenants,  conditions and agreements
contained  in this Lease  shall bind and inure to the  benefit of  Landlord  and
Tenant and,  except as  otherwise  provided in this Lease,  to their  respective
legal representatives, successors, and assigns.

Section 26.13 Memorandum of Lease. This Lease shall not be recorded; however, at
either party's request, Landlord and Tenant shall promptly execute,  acknowledge
and deliver a memorandum with respect to this Lease sufficient for recording and
either party may record the  Memorandum  provided that if Tenant so request that
such  memorandum be recorded,  prior to such  recordation  Tenant shall execute,
acknowledge  and deliver to Landlord a quitclaim  deed for the  Building and the
underlying real property  together with Tenant's  irrevocable  instructions that
such quitclaim  deed may be recorded upon the expiration or earlier  termination
of this Lease.  Section 26.14  Counterparts.  This Lease may be executed in 2 or
more counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute but one instrument.

Section 26.15 Survival. All obligations and liabilities of Landlord or Tenant to
the other which  accrued  before the  expiration  or other  termination  of this
Lease, and all such  obligations and liabilities  which by their nature or under
the  circumstances  can only be,  or by the  provisions  of this  Lease  may be,
performed  after  such  expiration  or  other  termination,  shall  survive  the
expiration or other  termination of this Lease.  Without limiting the generality
of the foregoing,  the rights and obligations of the parties with respect to any
indemnity  under this Lease,  and with respect to any Rent and any other amounts
payable under this Lease,  shall survive the expiration or other  termination of
this Lease.
<PAGE>

Section  26.16 Code  Waivers.  Tenant hereby waives any and all rights under and
benefits  of  Subsection  1 of  Section  1931,  1932(2),  Subdivision  2,  1933,
Subdivision 4, 1941 and 1942 of the California  Civil Code,  Section 1265.130 of
the  California  Code of Civil  Procedure  (allowing  either party to petition a
court to  terminate  a lease in the  event of a  partial  taking),  and  Section
1174(c) of the  California  Code of Civil  Procedure  and Section  1951.7 of the
California  Civil Code  (providing  for Tenant's  right to satisfy a judgment in
order to prevent a  forfeiture  of this Lease or  requiring  Landlord to deliver
written notice to Tenant of any reletting of the Premises), and any similar law,
statute or ordinance now or hereinafter in effect.

Section 26.17  Inability to Perform.  This Lease and the obligation of Tenant to
pay Rent and to perform  all of the other  covenants  and  agreements  of Tenant
hereunder shall not be affected,  impaired or excused by any Unavoidable Delays.
Landlord  shall  use  reasonable  efforts  to  promptly  notify  Tenant  of  any
Unavoidable Delay which prevents Landlord from fulfilling any of its obligations
under this Lease.

Section 26.18 Transportation Demand Management Program. If, during the Term, the
City of Santa Clara so requires,  then Tenant shall  institute  and maintain for
its employees working at the Building a Transportation Demand Management Program
("TDMP") which shall involve, as so required, measures such as shuttle services,
carpool matching, guaranteed ride home program and employee subsidies for travel
costs. Upon request of Landlord, Tenant shall report to Landlord and the City of
Santa  Clara  on  the  status  of  Tenant's  TDMP.

Section 26.19 Reasonable Expenditures.  Notwithstanding anything to the contrary
set forth herein,  any  expenditure by a party  permitted or required under this
Lease,  for which such party is entitled to and does demand  reimbursement  from
the other  party,  shall be entitled  to the fair  market  value of the good and
services  involved,  shall be  reasonably  incurred,  and  shall  be  reasonably
substantiated  by  reasonable  supporting  documentary  evidence  available  for
inspection and review by the other party upon  reasonable  prior written request
and during normal business hours.

                                   ARTICLE 27

                                SECURITY DEPOSIT

Section 27.1 Security  Deposit.  Tenant shall deposit the Security  Deposit with
Landlord  upon the  execution of this Lease in cash or check as security for the
faithful  performance  and  observance  by Tenant of the  terms,  covenants  and
conditions  of this Lease.

Section  27.2  Letter of Credit.  In lieu of a cash or check  Security  Deposit,
Tenant may  deliver  the  Security  Deposit to  Landlord in the form of a clean,
irrevocable,  non-documentary and unconditional letter of credit (the "Letter of
Credit")  issued by and drawable upon any  commercial  bank which is a member of
the New York Clearing House Association or other bank reasonably satisfactory to
Landlord,  trust  company,  national  banking  association  or savings  and loan
association  with offices for banking purposes in the City of San Francisco (the
"Issuing  Bank"),  which has outstanding  unsecured,  uninsured and unguaranteed
indebtedness,  or shall have issued a letter of credit or other credit  facility
that constitutes the primary security for any outstanding indebtedness (which is
otherwise  uninsured and  unguaranteed),  that is then rated,  without regard to
qualification  of  such  rating  by  symbols  such  as "+"  or "-" or  numerical
notation,  "Aa" or better by  Moody's  Investors  Service  and "AA" or better by
Standard  &  Poor's  Rating  Service,  and has  combined  capital,  surplus  and
undivided  profits of not less than  $500,000,000.  Landlord  hereby approves of
Canadian  Imperial Bank of Commerce as an Issuing Bank and the form of Letter of
Credit  attached  hereto  as  Exhibit  I. Such  Letter of Credit  shall (a) name
Landlord as beneficiary,  (b) be in the amount of the Security Deposit, (c) have
a term of not less than one year,  (d) permit  multiple  drawings,  (e) be fully
transferable by Landlord without the payment of any fees or charges by Landlord,
and (f) otherwise be in form and content reasonably satisfactory to Landlord. If
upon any  transfer  of the  Letter of Credit,  any fees or  charges  shall be so
imposed,  then such fees or charges  shall be  payable  solely by Tenant and the
Letter of Credit shall so specify.  The Letter of Credit  shall  provide that it
shall be  deemed  automatically  renewed,  without  amendment,  for  consecutive
periods of one year each  thereafter  during the Term (and in no event shall the
Letter of Credit  expire prior to the 45th day following  the  Expiration  Date)
unless the Issuing Bank sends a notice (the "Non-Renewal Notice") to Landlord by
certified mail, return receipt  requested,  not less than 45 days next preceding
the then  expiration  date of the Letter of Credit stating that the Issuing Bank
has  elected not to renew the Letter of Credit.  Landlord  shall have the right,
upon receipt of the Non-Renewal Notice, to draw the full amount of the Letter of
Credit,  by sight draft on the Issuing Bank, and shall  thereafter hold or apply
the cash proceeds of the Letter of Credit  pursuant to the terms of this Article
27, until Tenant delivers to Landlord a substitute  Letter of Credit which meets
the  requirements  of this Section  27.2.  The Issuing Bank shall agree with all
drawers,  endorsers  and bona  fide  holders  that  drafts  drawn  under  and in
compliance  with  the  terms  of the  Letter  of  Credit  and  accompanied  by a
certificate signed by an authorized officer of Landlord (not in their individual
capacity,  but solely as an officer of Landlord) under penalty of perjury,  that
to such person's  knowledge,  information and belief, a default of Tenant beyond
all  applicable  notice and cure periods has occurred and is continuing and that
Landlord is entitled  under the Lease to draw the amount  being  drawn,  will be
duly honored upon  presentation to the Issuing Bank at an office location in San
Francisco,  California. The Letter of Credit shall be subject in all respects to
the Uniform  Customs and  Practice  for  Documentary  Credits  (1993  revision),
International  Chamber of Commerce Publication No. 500.

Section 27.3 Application of Security. If an Event of Default by Tenant occurs in
the payment or performance of any of the terms,  covenants or conditions of this
Lease,  including the payment of Rent, Landlord may apply or retain the whole or
any part of the  cash  Security  Deposit  or may  notify  the  Issuing  Bank and
thereupon  receive all or a portion of the Security  Deposit  represented by the
Letter  of  Credit  and use,  apply,  or  retain  the  whole or any part of such
proceeds,  as the case may be, to the  extent  required  for the  payment of any
Fixed Rent or any other sum as to which Tenant is in default  beyond  applicable
notice and cure periods  including (i) any sum which  Landlord may expend or may
be required to expend by reason of Tenant's default beyond applicable notice and
cure periods,  and/or (i) any damages to which Landlord is entitled  pursuant to
this Lease,  whether such damages accrue before or after summary  proceedings or
other reentry by Landlord. If Landlord applies any part of the Security Deposit,
Tenant,  upon  demand,  shall  deposit  with  Landlord  the amount so applied or
retained so that Landlord  shall have the full  Security  Deposit on hand at all
times during the Term. Except for portions of the Security Deposit so applied by
Landlord and not re-posted by Tenant,  the Security Deposit shall be returned to
Tenant  after  the  Expiration  Date and after  delivery  of  possession  of the
Premises to Landlord in the manner required by this Lease.

<PAGE>


Section 27.4 Transfer. Upon a sale or other transfer of the Real Property or the
Building,  or any financing of Landlord's interest therein,  Landlord shall have
the right to transfer the Security  Deposit to its  transferee  or lender.  With
respect to the Letter of Credit,  within 5 days after notice of such transfer or
financing,  Tenant,  at its sole cost,  shall  arrange  for the  transfer of the
Letter of Credit to the new landlord or the lender, as designated by Landlord in
the  foregoing  notice or have the Letter of Credit  reissued in the name of the
new landlord or the lender.  Upon such Transfer  Tenant shall look solely to the
new landlord or lender for the return of such cash Security Deposit or Letter of
Credit and the  provisions  hereof shall apply to every  transfer or  assignment
made of the Security  Deposit to a new landlord.  Except in  connection  with an
assignment of this Lease to a Permitted  Transferee,  Tenant shall not assign or
encumber or attempt to assign or encumber the cash Security Deposit or Letter of
Credit and neither  Landlord nor its successors or assigns shall be bound by any
such action or attempted assignment, or encumbrance.

Section 27.5 Reduction.  If Tenant (a) has not, on more than 2 occasions  during
the 12-month  period  preceding the applicable  Reduction  Date (as  hereinafter
defined),  failed to pay Fixed Rent within 5 days of receiving written notice of
nonpayment,  and (b) no Event of Default then exists, then, provided that Tenant
complies with the provisions of this Section 27.5, (i) on the 3rd anniversary of
the Commencement Date and on each annual  anniversary  thereafter (in each case,
the  "Reduction  Date"),  the  Security  Deposit  shall be reduced by  $480,000;
provided that in no event shall the amount of the Security  Deposit ever be less
than $480,000 (the "Reduction  Minimum").  The Security Deposit shall be reduced
as follows:  (A) if the Security Deposit is in the form of cash, Landlord shall,
within 10 Business  Days  following  notice by Tenant to Landlord that Tenant is
entitled to reduce the Security Deposit  pursuant to this Section 27.5,  deliver
to Tenant the amount by which the  Security  Deposit is  reduced,  or (B) if the
Security  Deposit is in the form of a Letter of Credit,  Tenant shall deliver to
Landlord  an  amendment  to the  Letter  of  Credit  (which  amendment  must  be
reasonably  acceptable to Landlord in all respects),  reducing the amount of the
Letter of Credit by the amount of the permitted  reduction,  and Landlord  shall
execute the amendment and such other  documents as are  reasonably  necessary to
reduce the amount of the Letter of Credit in  accordance  with the terms hereof.
If  Tenant  delivers  to  Landlord  an  amendment  to the  Letter  of  Credit in
accordance with the terms hereof,  Landlord shall, within 10 Business Days after
delivery of such amendment, either (1) provide its reasonable objections to such
amendment  or (2) execute such  amendment of the Letter of Credit in  accordance
with the terms hereof.

                                   ARTICLE 28

                                     PARKING

                  Concurrently  with  Landlord's  construction  of the Building,
Landlord shall  construct an expansion of the Garage so as to serve the Building
and Building  One.  Except as otherwise  provided  below,  the Garage is open 24
hours a day, 7 days a week to tenants and their Building employees holding valid
Building entry cards.  The Garage allows monthly parking with unlimited 24 hours
access with the  Building's  entry cards.  Visitor  parking is available  during
Ordinary  Business  Hours.  During  the  Term  of  this  Lease  and  subject  to
Unavoidable  Delays,  Landlord  shall make available or cause to be available to
Tenant  through-out the Term 3.77  unreserved  parking spaces per 1,000 rentable
square feet of the Premises at no additional cost to Tenant.
<PAGE>

                  Tenant  shall at all times  comply  with  (and the  provisions
hereof shall be expressly subject to) all applicable  Requirements regarding the
use of the  Garage.  Landlord  reserves  the right to adopt,  modify and enforce
reasonable rules (the "Garage Rules")  governing the use of the Garage from time
to time,  including any key card,  sticker or other  identification  or entrance
system.  Landlord  may refuse to permit any person who  violates any such Garage
Rules to park in the Garage,  and any  violation of the Rules shall  subject the
car to removal, at such person's expense from the Garage. The use of all parking
spaces  shall be solely for use by Tenant's  employees  (or the  employees  of a
permitted subtenant) working in the Building.

                  The unreserved  parking spaces hereunder may be provided on an
unreserved valet parking basis.  Tenant  acknowledges  that Landlord may arrange
for the Garage to be operated by an independent contractor.  Accordingly, Tenant
acknowledges  that if Landlord is not the operator of the Garage  Landlord shall
have  no  liability  for  claims  arising  through  acts  or  omissions  of such
independent contractor except to the extent due to Landlord's, or its agents' or
contractors' gross negligence or willful  misconduct.  Except when caused by the
gross  negligence  or criminal  acts of Landlord  or  Landlord's  Agent or their
respective  employees,  agents or contractors,  Landlord shall have no liability
whatsoever  for any damage to property or any other items located in the Garage,
nor for any personal injuries or death arising out of any matter relating to the
Garage, and in all events,  Tenant agrees to look first to its insurance carrier
for payment of any losses sustained in connection with any use of the Garage and
secondly to the  operator of the Garage.  Landlord  reserves the right to assign
specific  spaces,  and to reserve spaces for visitors,  small cars,  handicapped
persons and for other tenants,  guests of tenants or other  parties,  and Tenant
shall not park in any such assigned or reserved  spaces.  Landlord also reserves
the right to close all or any portion of the Garage in order to make  repairs or
perform maintenance  services,  or to alter,  modify,  re-stripe or renovate the
Garage, or if required by casualty,  condemnation or Unavoidable  Delay. In such
event, Landlord shall use its reasonable efforts to complete such maintenance or
repair as soon as reasonably possible.

                  Tenant  agrees to acquaint all persons to whom Tenant  assigns
parking  space of any Garage Rules  promulgated  by Landlord with respect to the
Garage and the parking privileges granted to Tenant herein.

                                   ARTICLE 29

                                  RENEWAL TERM

Section 29.1 Renewal Term. Tenant shall have the right to renew the Term for all
of the Premises for one renewal term of 5 years (the "Renewal Term") which shall
commence on the day following the  expiration of the initial Term and end on the
5th  anniversary  of the Expiration  Date,  unless the Renewal Term shall sooner
terminate  pursuant to any of the terms of this Lease or otherwise.  The Renewal
Term shall  commence only if (a) Tenant shall have notified  Landlord in writing
of  Tenant's  exercise  of such  renewal  right at least 15 months  prior to the
Expiration  Date, (b) at the time of the exercise of such right and  immediately
prior to the  Expiration  Date,  no event of Default  shall have occurred and be
continuing hereunder, and (c) PMC-Sierra,  Inc. and/or Related Entities shall be
in  occupancy  of at least 70% of the Premises at the time such notice is given.
Time is of the  essence  with  respect to the  giving of the notice of  Tenant's
exercise  of the  renewal  option.  The  Renewal  Term  shall be upon all of the
agreements,  terms,  covenants and conditions hereof binding upon Tenant, except
that the Fixed Rent (as defined in Section 1.1) shall be  determined as provided
in Section 29.2 and Tenant shall have no further  right to renew the Term.  Upon
the commencement of the Renewal Term, (A) the Renewal Term shall be added to and
become part of the Term (but shall not be considered  part of the initial Term),
(B) any  reference to "this Lease",  to the "Term",  the "term of this Lease" or
any similar  expression shall be deemed to include the Renewal Term, and (C) the
expiration of the Renewal Term shall become the Expiration Date.
<PAGE>

Section  29.2  Renewal  Term Rent.  If the Term shall be renewed as  provided in
Section  29.1,  the annual Fixed Rent  payable  during the Renewal Term shall be
equal to the greater of (a) the annual fair market  rental value of the Premises
(the "Fair Market Value") as of the day immediately  following the expiration of
the  initial  Term (the  "Calculation  Date"),  and (b) the amount of Fixed Rent
payable by Tenant during the last year of the initial Term. Any dispute  between
the  parties as to the annual  fair  market  rental  value  shall be resolved by
arbitration as provided in Section 29.3 hereof.  For purposes hereof,  the "Fair
Market Value" shall mean the rent at which tenants,  as of the  commencement  of
the Renewal Term,  will be leasing  non-sublease  space on a "triple-net"  basis
comparable in size, location and quality to the Premises, for a comparable term,
and considering all other factors  relevant to the  determination of Fair Market
Value, which comparable space is located in Comparable Buildings. Within 30 days
following  Landlord's  receipt of the  Exercise  Notice,  Landlord  shall advise
Tenant in writing of  Landlord's  determination  of Fair Market Value (the "Rent
Notice").  Within 30 days of Tenant's receipt of Landlord's Rent Notice,  Tenant
shall advise Landlord in writing whether Tenant accepts Landlord's determination
of Fair Market Value,  elects to rescind Tenant's exercise of the renewal option
or  elects  to have  the  determination  of Fair  Market  Value be  resolved  by
arbitration  as provided in Section 29.3 hereof.  Tenant's  failure to so advise
Landlord of its election  within such 30-day  period shall  constitute  Tenant's
acceptance of Landlord's  determination  of Fair Market Value.  If Tenant timely
elects to rescind its  exercise of the  renewal  option,  the Term of this Lease
shall end on the  Expiration  Date. If the Fixed Rent payable during the Renewal
Term has not been determined prior to the commencement thereof, Tenant shall pay
Fixed Rent in an amount  equal to the fair market  rental value for the Premises
as determined by Landlord (the "Interim Rent").  Upon final determination of the
Fixed Rent for the Renewal Term, Tenant shall commence paying such Fixed Rent as
so determined,  and within 10 days after such determination Tenant shall pay any
deficiency  in  prior  payments  of  Fixed  Rent  or,  if the  Fixed  Rent as so
determined  shall be less than the Interim  Rent,  Tenant shall be entitled to a
credit against the next succeeding installments of Fixed Rent in an amount equal
to the difference between each installment of Interim Rent and the Fixed Rent as
so determined which should have been paid for such  installment  until the total
amount of the over  payment has been  recouped.

Section 29.3 Arbitration.  If Tenant shall dispute  Landlord's  determination of
Fair Market Value pursuant to Section 29.2, Tenant shall give notice to Landlord
of such dispute within 10 days of Tenant's receipt of Landlord's  determination,
and  such  dispute  shall be  determined  by a single  arbitrator  appointed  in
accordance  with the  American  Arbitration  Association  Real Estate  Valuation
Arbitration  Proceeding  Rules. The arbitrator shall be impartial and shall have
not less than 10 years'  experience  in the  County of Santa  Clara in a calling
related to the leasing of commercial office space in office buildings comparable
to the Building,  and the fees of the arbitrator shall be shared by Landlord and
Tenant. Within 15 days following the appointment of the arbitrator, Landlord and
Tenant shall attend a hearing  before the  arbitrator  at which each party shall
submit a report setting forth its  determination of the Fair Market Value of the
Premises for the Renewal  Term,  together  with such  information  on comparable
rentals  and  such  other  evidence  as such  party  shall  deem  relevant.  The
arbitrator  shall,  within 30 days  following  such  hearing and  submission  of
evidence,  render his or her decision by  selecting  the  determination  of Fair
Market Value  submitted by either  Landlord or Tenant which,  in the judgment of
the  arbitrator,  most nearly reflects the Fair Market Value of the Premises for
the  Renewal  Term,  provided,  however,  that Tenant  shall have the right,  by
written  notice to Landlord,  to terminate  the exercise of its renewal  option,
within ten (10) days of receipt of the  judgment  of the  arbitrator.  If Tenant
elects to so terminate  its option,  then the (a)  Expiration  Date shall be the
later to occur of (a) the  Expiration  Date, and (b) the 450th day following the
date of  Tenant's  termination  notice,  (b)  Tenant  shall  pay the fees of the
arbitrator,  and (c) the Fixed Rent  payable  for any period of time  beyond the
stated  Expiration  Date shall be 103% of the Fixed Rent  payable  for the final
month of the Initial Term.  The  arbitrator  shall have no power or authority to
select  any Fair  Market  Value  other than a Fair  Market  Value  submitted  by
Landlord  or  Tenant,  and the  decision  of the  arbitrator  shall be final and
binding upon Landlord and Tenant.
<PAGE>

                                   ARTICLE 30

                        ROOF SPACE AND SATELLITE ANTENNA

                  Tenant is hereby granted,  subject to Article 5 hereof and the
provisions of this Article 30 and such other requirements as shall be imposed by
Landlord  and at no  additional  cost to Tenant,  the right to install,  secure,
maintain,  replace  and operate on the roof (the  "Roof") of the  Building in an
area  reasonably  designated by Landlord and reasonably  acceptable to Tenant of
not more than 100 square feet (the "Roof Space"), a communications  transmitter,
receiver or other supplemental equipment (the "Antenna").  The dimensions of the
Antenna shall be subject to Landlord's  approval.  In addition,  also subject to
Article 5 and the  provisions of this Article 30, Tenant shall have the right to
install  cables  leading from the Antenna to the Premises at Tenant's  sole cost
and expense and in a location, manner, material and size as shall be approved by
Landlord.

Section  30.2 Tenant  shall  diligently  service,  repair,  paint and
maintain the Antenna, including, without limitation, all electrical wires, guide
wires and conduits related thereto.

Section  30.3 No  signs,  whether  temporary  or  permanent,  shall be  affixed,
installed  or attached  to the Antenna or the Roof other than those  required by
Requirements.  All signs required,  if any, and the location  thereof,  shall be
first  approved in writing by Landlord.

Section  30.4  In the  performance  of  any  installation,  alteration,  repair,
maintenance, removal and/or any other work with respect to the Roof Space or the
Antenna, Tenant shall comply with all of the applicable provisions of this Lease
including, without limitation, those set forth in Articles 5, 6 (with respect to
any damage to the roof caused by Tenant),  8, 11 and 25, and the  provisions  of
this Article 30 shall be  applicable  to the Roof Space as if the Roof Space was
part of the Premises.

Section  30.5 Any and all taxes,  filing  fees,  charges or license fees imposed
upon  Landlord by virtue of the existence  and/or use of the Antenna  (including
those shown to be specifically related to any increase in the assessed valuation
of the Building  attributable  to the  Antenna),  whether  imposed by any local,
state and/or  federal  government or any agency  thereof,  shall be  exclusively
borne by Tenant.  Landlord  agrees to  cooperate  reasonably  with Tenant in any
necessary  applications for any necessary  license or permits provided  Landlord
incurs no expense or liability in so doing.

Section 30.6 During Ordinary  Business Hours and upon reasonable  advance notice
to Landlord, Monday through Friday (exclusive of Building holidays),  Tenant may
have access to the Roof Space for the sole purpose of servicing and  maintaining
the Antenna.  Landlord shall have the right (in its sole discretion) to have its
representative(s)  accompany  Tenant  whenever  it  services  or  maintains  the
Antenna.  At all other times,  Landlord may keep the entrances to the Roof Space
locked.  Tenant  shall not have any tools  and/or  materials  stored in the Roof
Space, and Tenant's  employees and independent  contractors shall close and lock
the  entrance  door to the Roof when leaving the same.  If Tenant shall  require
access any of the Roof Space,  at times other than those  specified in the first
sentence of this Section 30.6,  then except in the case of an emergency,  Tenant
shall give Landlord at least two full business days prior written notice of such
requirement  and  shall  pay  all  reasonable  costs  incurred  by  Landlord  in
connection therewith,  including,  without limitation,  any compensation paid to
Building employees or any independent  contractors of Landlord.

Section 30.7 On or before the termination of this Lease, Tenant shall remove the
Antenna and any and all  appurtenant  cables,  wires,  and other  equipment  and
repair and restore  the Roof and any other  damage  caused to the  Building as a
result of such removal.  Such repair and restoration work shall proceed with due
diligence and dispatch and shall be completed prior to the Expiration  Date. Any
holes,  damage or injury in or to the Roof  and/or  Building  arising  out of or
connected  to the  removal of the  Antenna  and any or all  appurtenant  cables,
wires,  and other  equipment shall be promptly and duly repaired and restored by
Tenant at Tenant's sole cost and expense.

Section 30.8 During the Term,  Tenant shall  inspect the Antenna at least once a
month.  Tenant  shall be solely  responsible  for  preserving  the  water  tight
integrity  of the Roof as may be caused  by, or relates  to,  the  installation,
maintenance,  operation and repair of the Antenna.  Tenant shall be  responsible
for all  leaks in the Roof  arising  out of or  connected  to its  installation.
Tenant's  Antenna shall not exceed the applicable  load-bearing  capacity of the
Roof Space.
<PAGE>

Section 30.9 (a) (a) If, at any time during the Term, Landlord, in its judgment,
shall  determine that it is necessary to move the Antenna to another area of the
Roof Space,  then Landlord may give notice thereof to Tenant (which notice shall
have  annexed  thereto a plan on which  such  other  area of the Roof Space (the
"Substitute Space") shall be substantially identified by hatching or otherwise).
The Substitute Space with respect to the Antenna shall not be located in an area
of the Roof in which  the  Antenna's  reception  would  differ  in a  materially
adverse way from the  Antenna's  reception in the initial Roof Space.  Within 30
days of receipt of Landlord's  notice (or, if a governmental  permit is required
to be obtained for  installation of the Antenna on the Substitute  Space,  then,
within 30 days of the  obtaining of such permit  (which Tenant shall make prompt
application for, with Landlord's reasonable cooperation),  Landlord, at its sole
cost (but  subject to  recoupment  pursuant  to Article 8 above)  shall move the
Antenna to the Substitute Space which shall then become the Roof Space hereunder
and the original Roof Space shall be deleted from the coverage of this Lease.

          (b) Tenant's  operation or use of the Antenna  shall not  unreasonably
prevent or unreasonably  interfere with the operation or use of any equipment of
(i) any present or future tenant or occupant of the Building or Building Two, or
(ii) Landlord. If, at any time during the Term hereof, Landlord shall reasonably
determine that the Antenna causes such  interference  with equipment of any such
present or future tenant or occupant or of Landlord, then Landlord may so notify
Tenant,  and  Landlord  may require  Tenant to replace the Antenna  with another
antenna which would not cause such  interference  (the  "Replacement").  Tenant,
within 30 days of receipt of such notice or, if a government  permit is required
to install the Replacement,  then within 30 days of the obtaining of such permit
(which Tenant shall make prompt application for, with Landlord's cooperation but
at no cost to Landlord),  shall replace the Antenna with the new non-interfering
Replacement  which  shall then be deemed to be the  Antenna  hereunder.  Section
30.10 Tenant agrees that Landlord has made no warranties or  representations  as
to the  condition  or  suitability  of the Roof  Space or the  Building  (or the
electricity available to the Roof Space) for the installation,  use, maintenance
or  operation of the  Antenna,  and Tenant  agrees to accept same in its "as is"
condition and without any work or alterations to be made by Landlord.

                                   ARTICLE 31

                             [Intentionally Deleted]

                                   ARTICLE 32

                                     SIGNAGE

Section  32.1  Eyebrow  Sign.  Subject to the  provisions  of this  Article  31,
including,  without  limitation,  the  receipt of all  approvals  therefor  from
Governmental  Authorities,  Tenant  shall  have the right,  during the Term,  to
install one sign (on the western  elevation of the Building facing Great America
Parkway and Highway 101) (the "Eyebrow  Sign"),  in which case Tenant shall bear
all  costs  and  expenses  relating  to the  design,  construction,  permitting,
maintenance  and repair of such Eyebrow Sign.  The Eyebrow Sign shall be located
on the  exterior  wall of the Building at the top of the Building and a location
reasonably  acceptable to the parties.  Landlord agrees to exercise commercially
reasonable  efforts in support of Tenant's efforts to obtain required  approvals
from  Governmental  Authorities  for such Eyebrow Sign, so long as such Landlord
efforts  result in no cost or expense to Landlord.  Tenant  hereby  acknowledges
that neither Landlord nor any agent of Landlord has made any  representation  or
warranty  concerning  the obtaining of approvals from  Governmental  Authorities
concerning  any such  Eyebrow  Sign.  The size and  quantity of the Eyebrow Sign
shall be consistent  with the tenant  identity  signage  programs of first class
office buildings in Santa Clara, California comparable to the Building, shall be
in  keeping  with the  overall  character  of the  Building's  architecture  and
construction  materials,  and shall be  otherwise  subject to  Landlord's  prior
review  and  approval.  Tenant  shall be  solely  responsible  for all costs and
expenses relating to the design,  permitting (including receipt of all necessary
electrical,   building  and  other  permits  and/or   approvals),   fabrication,
installation,  operation, removal and all on-going maintenance and repair of any
and all signage  installed by Tenant in accordance with the terms and provisions
of this Article 32, together with all electrical  equipment related thereto. The
rights afforded by this Article 32 are personal to PMC - Sierra, Inc. and shall,
at Landlord's  election,  terminate at such time as PMC - Sierra,  Inc. does not
physically occupy at least 75% of the rentable square footage of the Premises.
<PAGE>

Section 32.2 Premises Identity.  Landlord shall provide,  at its cost,  Building
standard Premises signage and lobby directory identification.

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

LANDLORD:                                                 TENANT:

WHTS FREEDOM CIRCLE PARTNERS II, L.L.C.,                  PMC - SIERRA, INC.,
a Delaware limited liability company                      a Delaware corporation


By:  Tishman  Speyer/Travelers Real Estate Venture, L.P.,
     a Delaware limited partnership                       By:___________________

     By: Tishman Speyer/Travelers Associates,             Its:__________________
         a Delaware limited partnership
         Its general partner                              By: __________________

         By:  TSCE Venture Corp., a Delaware corporation
              Its general partner                         Its:__________________

              By: ___________________________

                  Its:________________________

and

By:  Whitehall  Street Real Estate Limited  Partnership  IX, a
     Delaware limited partnership, its managing member

     By: Whitehall  Advisors,  L.L.C.  IX,  Inc.,  a  Delaware
         limited liability company, its general partner

         By:  Whitehall  IX/X,  Inc., a Delaware  corporation,
              its managing member

              By: ___________________________

              Its:___________________________



<PAGE>


                                   EXHIBIT A-1

                          Floor Plan of the First Floor

The floor plan which follows is intended solely to identify the general location
of the  Premises,  and  should  not be used for any other  purpose.  All  areas,
dimensions and locations are approximate,  and any physical conditions indicated
may not exist as shown.


<PAGE>



                                   EXHIBIT A-2

                         Floor Plan of the Second Floor

The floor plan which follows is intended solely to identify the general location
of the  Premises,  and  should  not be used for any other  purpose.  All  areas,
dimensions and locations are approximate,  and any physical conditions indicated
may not exist as shown.


<PAGE>

                                   EXHIBIT A-3

                          Floor Plan of the Third Floor

The floor plan which follows is intended solely to identify the general location
of the  Premises,  and  should  not be used for any other  purpose.  All  areas,
dimensions and locations are approximate,  and any physical conditions indicated
may not exist as shown.


<PAGE>


                                   EXHIBIT A-4

                         Floor Plan of the Fourth Floor

The floor plan which follows is intended solely to identify the general location
of the  Premises,  and  should  not be used for any other  purpose.  All  areas,
dimensions and locations are approximate,  and any physical conditions indicated
may not exist as shown.


<PAGE>


                                   EXHIBIT A-5

                          Floor Plan of the Fifth Floor

The floor plan which follows is intended solely to identify the general location
of the  Premises,  and  should  not be used for any other  purpose.  All  areas,
dimensions and locations are approximate,  and any physical conditions indicated
may not exist as shown.


<PAGE>


                                   EXHIBIT A-6

                          Floor Plan of the Sixth Floor

The floor plan which follows is intended solely to identify the general location
of the  Premises,  and  should  not be used for any other  purpose.  All  areas,
dimensions and locations are approximate,  and any physical conditions indicated
may not exist as shown.


<PAGE>

                                    EXHIBIT B

                                   Definitions

                  Base Rate: The annual rate of interest publicly announced from
time to time by Citibank,  N.A., or its successor,  in New York, New York as its
"base rate" (or such other term as may be used by Citibank,  N.A.,  from time to
time, for the rate presently referred to as its "base rate").

                  Building  Systems:  The  mechanical,   electrical,   plumbing,
sanitary,  sprinkler,  heating,  ventilation  and  air  conditioning,  security,
life-safety,  elevator and other  service  systems or facilities of the Building
which is installed by Landlord as part of the Base Building Work.

                  Business Days: All days, excluding Saturdays,  Sundays and all
days observed by either the State in which the Building is located,  the Federal
Government or the labor unions servicing the Building as legal holidays.

                  Code: The Internal  Revenue Code of 1986, as amended,  and the
regulations promulgated thereunder, as amended.

                  Common Areas:  The lobby,  plaza and sidewalk  areas and other
similar areas of general access and the areas on individual  multi-tenant floors
in the Building devoted to corridors,  elevator  lobbies,  restrooms,  and other
similar facilities serving the Premises.

                  Comparable   Buildings:   First-class   office   buildings  of
comparable age and quality in Santa Clara, California.

                  CC&R's:  That certain Agreement  Containing  Covenants Running
with the Land, dated January 7, 1997, by and between Richard T. Peery,  Trustee,
or his successor trustee, under Trust Agreement, dated July 20, 1997 (Richard T.
Peery Separate Property Trust), as amended, and John Arrillaga,  Trustee, or his
successor  trustee,  under Trust  Agreement,  dated July 20, 1997 (the Arrillaga
Family Trust), as amended, and BNP Leasing  Corporation,  recorded on January 7,
1997, as Document Number 13571632 in the Official Records of Santa Clara County,
California.

                  Excluded  Expenses:  (a) Taxes;  (b) franchise or income taxes
imposed upon  Landlord;  (c) mortgage  amortization  and  interest;  (d) leasing
commissions;  (e) the cost of tenant  installations and decorations  incurred in
connection with preparing space for any Building tenant,  including  workletters
and  concessions;  (f) rent under Superior  Leases,  if any; (g) management fees
exceeding  the  greater  of (A) 3% of  the  gross  rentals  and  other  revenues
collected  for the Real  Property,  and (B) fees  charged by Landlord or related
entities for the  management  by any of them of other first class  properties in
the area of the Building;  (h) wages,  salaries and benefits paid to any persons
above the grade of Building  Manager and their immediate  supervisor;  (i) legal
and accounting fees relating to (A) disputes with tenants,  prospective  tenants
or other occupants of the Building,  (B) disputes with  purchasers,  prospective
purchasers,  mortgagees  or  prospective  mortgagees of the Building or the Real
Property or any part of either, or (C) negotiations of leases, contracts of sale
or mortgages; (j) costs of services provided to other tenants of the Building on
a  "rent-inclusion"  basis which are not  provided to Tenant on such basis;  (k)
costs that are reimbursed out of insurance,  warranty or condemnation  proceeds,
or which are  reimbursable  by Tenant or other tenants other than pursuant to an
expense  escalation  clause;  (l) costs in the nature of penalties or fines; (m)
costs for services,  supplies or repairs paid to any related entity in excess of
costs  that would be payable in an "arm's  length" or  unrelated  situation  for
comparable services,  supplies or repairs; (n) allowances,  concessions or other
costs and expenses of improving or decorating any demised or demisable  space in
the Building; (o) appraisal,  advertising and promotional expenses in connection
with  leasing  of the  Building;  (p) the  costs of  installing,  operating  and
maintaining a specialty improvement,  including a cafeteria,  lodging or private
dining facility, or an athletic,  luncheon or recreational club unless Tenant is
permitted  to  make  use  of  such  facility  without  additional  cost  or on a

<PAGE>

subsidized  basis  consistent  with  other  users;  (q) any  costs  or  expenses
(including fines, interest,  penalties and legal fees) arising out of Landlord's
failure  to timely  pay  Operating  Expenses  or Taxes;  (r) costs  incurred  in
connection with the removal, encapsulation or other treatment of asbestos or any
other Hazardous Materials; (s) the cost of capital improvements other than those
expressly  included in  Operating  Expenses  pursuant to Section  7.1; (t) costs
occasioned by the grossly negligent act or omission or violation of Requirements
by Landlord,  any other occupant of the Building,  or their  respective  agents,
employees or  contractors;  (u) costs of correcting  defects in, or  significant
design error relating to, the initial  design or condition of the Building;  (v)
costs incurred to comply with any Requirements  applicable to the Premises,  the
Building or the Project on the Commencement Date; (w) costs (i) arising from the
disproportionate use of any utility or service supplied by Landlord to any other
occupant of the Project or (ii)  associated with utilities or services of a type
not provided to Tenant; (x) except for any amortization or depreciation  charges
expressly  provided  for in this  Lease as  includable  in  Operating  Expenses,
depreciation  charges or  contributions  to capital  replacement  reserves;  (y)
except for costs and expenses  incurred for insuring,  securing and  maintenance
and repair of objects of art on or about the Real Property for which Landlord is
responsible, costs for the acquisition of objects of art; (z) costs specifically
allocated  to  Mission  Towers  II;  (aa)  insurance   costs  for  coverage  not
customarily  carried by owners of  Comparable  Buildings  (provided  that in all
events Operating Expenses shall include the premium for earthquake insurance and
such other insurance which any Mortgagee requires to be carried); (ab) increases
in insurance costs caused by the activities of another  occupant of the Project;
(ac) the amount of any  deductible  carried  by  Landlord's  insurance  policies
respecting  the Building  which exceed  $150,000,  or with respect to earthquake
insurance,  5% of the replacement value of the Building;  and (ad) capital costs
for repair, maintenance and replacement of structural portions of the Building.

                  Governmental Authority: The United States of America, the City
of Santa Clara, County of Santa Clara, or State of California,  or any political
subdivision, agency, department, commission, board, bureau or instrumentality of
any of the foregoing,  now existing or hereafter  created,  having  jurisdiction
over the Real Property.

                  Hazardous  Materials:  Any  substances,  materials  or  wastes
currently or in the future  deemed or defined in any  Requirement  as "hazardous
substances,"  "toxic  substances,"  "contaminants,"  "pollutants"  or  words  of
similar import.

                  HVAC Systems: The Building System designed to provide heating,
ventilation and air conditioning.

                  Indemnitees:  Landlord,  Landlord's  Agent, each Mortgagee and
Lessor,  and each of their respective  direct and indirect  partners,  officers,
shareholders, directors, members, managers, trustees, beneficiaries,  employees,
principals, contractors, servants, agents, and representatives.

                  Lessor:  A lessor under a Superior Lease.

                  Losses:  Any and all  losses,  liabilities,  damages,  claims,
judgments,  fines, suits,  demands,  costs, interest and expenses of any kind or
nature  (including  reasonable  attorneys' fees and  disbursements)  incurred in
connection with any claim,  proceeding or judgment and the defense thereof,  and
including all costs of repairing any damage to the Premises, the Building or the
Garage  or the  appurtenances  of any of the  foregoing  to  which a  particular
indemnity and hold harmless agreement applies.

                  Mortgage(s):  Any mortgage, trust indenture or other financing
document which may now or hereafter affect the Premises,  the Real Property, the
Building or any Superior Lease and the leasehold  interest created thereby,  and
all renewals, extensions, supplements, amendments, modifications, consolidations
and replacements thereof or thereto,  substitutions  therefor, and advances made
thereunder.
<PAGE>

                  Mortgagee(s):  Any  mortgagee,  trustee  or other  holder of a
Mortgage.

                  Ordinary  Business  Hours:  6:00 a.m. to 6:00 p.m. on Business
Days and from 9:00 a.m. to 12:00 p.m.  on  Saturdays  which are not  observed as
legal  holidays by the Federal  Government  or the labor  unions  servicing  the
Building.

                  Prohibited  Use: Any use or occupancy of the Premises  that in
Landlord's  reasonable  judgment would:  (a) cause damage to the Building or any
equipment, facilities or other systems therein; (b) impair the appearance of the
Building; (c) interfere with the efficient and economical maintenance, operation
and repair of the  Premises or the  Building  or the  equipment,  facilities  or
systems  thereof;  (d) adversely  affect any service provided to, and/or the use
and occupancy by, any Building tenant or occupants;  (e) violate the certificate
of  occupancy  issued for the  Premises  or the  Building;  (f)  materially  and
adversely affect the first-class image of the Building or (g) result in protests
or civil disorder or commotions at, or other  disruptions of the normal business
activities in, the Building. Prohibited Use also includes the use of any part of
the Premises for: (i) a restaurant or bar;  (ii) the  preparation,  consumption,
storage,  manufacture  or sale of food or beverages  (except in connection  with
vending  machines  (provided that each machine,  where  necessary,  shall have a
waterproof pan  thereunder and be connected to a drain) and/or warming  kitchens
installed for the use of Tenant's  employees  only),  liquor,  tobacco or drugs;
(iii)  the  business  of  photocopying,  multilith  or offset  printing  (except
photocopying  in  connection  with  Tenant's  own  business);  (iv) a school  or
classroom;  (v) lodging or sleeping;  (vi) the  operation  of retail  facilities
(meaning  a  business  whose  primary  patronage  arises  from  the  generalized
solicitation of the general public to visit Tenant's offices in person without a
prior appointment) of a savings and loan association or retail facilities of any
financial, lending, securities brokerage or investment activity; (vii) a payroll
office;  (viii) a barber,  beauty or manicure shop; (ix) an employment agency or
similar  enterprise;  (x)  offices of any  Governmental  Authority,  any foreign
government,  the United  Nations,  or any agency or department of the foregoing;
(xi) the  manufacture,  retail  sale,  storage  of  merchandise  or  auction  of
merchandise,  goods or property of any kind to the  general  public  which could
reasonably be expected to create a volume of pedestrian traffic substantially in
excess of that  normally  encountered  in the  Premises;  (xii) the rendering of
medical,  dental or other  therapeutic  or  diagnostic  services;  or (xiii) any
illegal  purposes or any activity  constituting a nuisance.  Landlord agrees and
acknowledges  that Tenant will have an  electronic  verification  lab within the
Premises and a small  shipping and receiving area on the first floor adjacent to
the  Building's  loading  dock,  and  neither  of the same  shall  constitute  a
Prohibited Use.

                  Requirements:  All present  and future  laws,  rules,  orders,
ordinances,  regulations,  statutes,  requirements,  codes and executive orders,
extraordinary  and ordinary of (i) all Governmental  Authorities,  including the
Americans With Disabilities  Act, 42 U.S.C.  ss.12,101 (et seq.), and any law of
like  import,  and all rules,  regulations  and  government  orders with respect
thereto, and any of the foregoing relating to Hazardous Materials, environmental
matters,  public  health and safety  matters,  (ii) any  applicable  fire rating
bureau or other body exercising similar  functions,  affecting the Real Property
or the maintenance, use or occupation thereof, or any street, avenue or sidewalk
comprising  a part of or in front  thereof  or any  vault in or under  the same,
(iii) all requirements of all insurance bodies affecting the Premises,  and (iv)
utility service providers.

                  Rules and  Regulations:  The rules and regulations  annexed to
and made a part of this Lease as Exhibit F, as they may be modified from time to
time by Landlord.

                  Specialty  Alterations:  Alterations  which  are not  standard
office installations such as full-service kitchens,  executive bathrooms, raised
computer floors, computer installations,  safe deposit boxes, vaults,  libraries
or file rooms requiring reinforcement of floors, internal staircases, conveyors,
dumbwaiters,  and other Alterations of a similar character (excluding,  however,
small  kitchens  not  requiring  venting  or  grease  traps  and file  rooms not
requiring the reinforcement of floors).

                  Substantial  Completion:  As to any construction  performed by
any party in the Premises, including the Initial Installations, any Alterations,
or Landlord's Work, "Substantial Completion" or "Substantially  Completed" means
that  such work has been  completed,  as  reasonably  determined  by  Landlord's
architect,  in  accordance  with (a) the  provisions  of this  Lease  applicable
thereto,  (b) the plans and specifications for such work, and (c) all applicable
Requirements,   except  for  minor  details  of  construction,   decoration  and
mechanical  adjustments,  if any, the noncompletion of which does not materially
interfere  with  Tenant's use of the Premises or which in  accordance  with good
construction practices should be completed after the completion of other work in
the Premises or Building.

                  Superior Lease(s):  Any ground or underlying lease of the Real
Property or any part thereof  heretofore  or hereafter  made by Landlord and all
renewals, extensions, supplements,  amendments,  modifications,  consolidations,
and replacements thereof.

                  Tenant  Party:  Tenant and any  subtenants or occupants of the
Premises and their respective agents,  contractors,  subcontractors,  employees,
invitees or licensees.

                  Tenant's  Property:  Tenant's  movable  fixtures  and  movable
partitions,  telephone and other equipment,  computer  systems,  trade fixtures,
furniture, furnishings, and other items of personal property which are removable
without material damage to the Building.

                  Unavoidable Delays:  Landlord's  inability to fulfill or delay
in fulfilling any of its obligations  under this Lease expressly or impliedly to
be performed by Landlord or Landlord's  inability to make or delay in making any
repairs,  additions,  alterations,  improvements  or  decorations  or Landlord's
inability  to  supply  or delay in  supplying  any  equipment  or  fixtures,  if
Landlord's  inability  or delay is due to or arises by reason of strikes,  labor
troubles or by accident, or by any cause whatsoever beyond reasonable Landlord's
control,  including  governmental  preemption  in  connection  with  a  national
emergency,  Requirements or shortages,  or unavailability of labor, fuel, steam,
water,  electricity  or materials,  or delays caused by Tenant or other tenants,
mechanical breakdown,  acts of God, enemy action, civil commotion, fire or other
casualty.


<PAGE>

                                    EXHIBIT C

                                   Work Letter

1.   Proposed and Final Plans.

(a) Tenant shall cause to be prepared and delivered to Landlord,  for Landlord's
approval,   the  following   proposed  drawings   ("Proposed   Plans")  for  all
improvements  Tenant  desires to complete or have completed in the Premises (the
"Initial  Installations"):

          (i) Architectural  drawings  (consisting of floor  construction  plan,
ceiling lighting and layout, power, and telephone plan).

          (ii) Mechanical drawings (consisting of HVAC,  sprinkler,  electrical,
telephone, and plumbing).

          (iii) Finish schedule  (consisting of wall finishes and floor finishes
and miscellaneous details).

(b) All  architectural  drawings shall be prepared at Tenant's sole expense by a
licensed architect  employed by Tenant and approved by Landlord,  which approval
shall not be unreasonably withheld, delayed or conditioned. Tenant shall deliver
two sets of  reproducible  architectural  drawings to Landlord.  All  mechanical
drawings  shall be  prepared  at Tenant's  sole  expense by a licensed  engineer
designated  by  Landlord,  whom Tenant  shall  employ.  Tenant  shall  reimburse
Landlord  for  all  reasonable  out-of-pocket  costs  incurred  by  Landlord  in
reviewing  the  Proposed  Plans  except  for  drawings  prepared  by  Landlord's
designated engineers, consultants or Essential Subs (as hereinafter defined).

(c)  Within 15 days after  Landlord's  receipt  of the  architectural  drawings,
Landlord shall approve or disapprove such drawings, and if disapproved, Landlord
shall advise Tenant of any changes or additional  information required to obtain
Landlord's  approval.

(d) Within 15 days after receipt of mechanical drawings,  Landlord shall approve
or disapprove such drawings, and if disapproved, Landlord shall advise Tenant of
any changes required to obtain Landlord's approval.

(e) If Landlord disapproves of, or requests additional information regarding the
Proposed Plans,  Tenant shall,  within 10 days  thereafter,  revise the Proposed
Plans  disapproved  by Landlord and resubmit such plans to Landlord or otherwise
provide such additional information to Landlord.  Landlord shall, within 15 days
after receipt of Tenant's  revised plans,  approve or disapprove  such drawings,
and if disapproved, Landlord shall advise Tenant of any additional changes which
may be required to obtain  Landlord's  approval.  If  Landlord  disapproves  the
revised plans  specifying the reason therefor,  or requests  further  additional
information,  Tenant  shall,  within 10 days of receipt of  Landlord's  required
changes,  revise such plans and resubmit them to Landlord or deliver to Landlord
such further information as Landlord has requested. Landlord shall, again within
15 days after receipt of Tenant's  revised  plans,  approve or  disapprove  such
drawings,  and if disapproved,  Landlord shall advise Tenant of further changes,
if any,  required for  Landlord's  approval.  This process shall  continue until
Landlord has approved Tenant's revised Proposed Plans.  "Final Plans" shall mean
the Proposed Plans, as revised,  which have been approved by Landlord and Tenant
in writing.  In connection  with the exercise of its approval rights pursuant to
Section 1 hereof,  Landlord  agrees not to withhold  its  approval  unreasonably
withheld or delayed so long as such Initial Installations (i) are non-structural
and do not affect any  Building  Systems,  (ii) affect only the Premises and are
not visible from outside of the Premises, (iii) do not affect the certificate of
occupancy  issued for the Building or the Premises,  and (iv) do not violate any
Requirement.  If Landlord's  approval to any of the Proposed  Plans or the Final
Plans is not approved or disapproved  within 15 days following  Tenant's request
for consent,  and Landlord  fails to so advise  Tenant  within 5 days  following
receipt of a second  notice  labeled in bold letters  "URGENT -- DELAY  NOTICE",
Landlord's consent shall be deemed granted. In addition,  so long as the Initial
Installations as proposed by Tenant are in reasonable conformance with customary
office space in Comparable Buildings, Landlord shall not withhold its consent on
aesthetic grounds.
<PAGE>

(f) All  Proposed  Plans  and  Final  Plans  shall  comply  with all  applicable
Requirements.  Neither review nor approval by Landlord of the Proposed Plans and
resulting Final Plans shall constitute a representation  or warranty by Landlord
that such plans either (i) are complete or suitable for their intended  purpose,
or (ii) comply with applicable Requirements, it being expressly agreed by Tenant
that Landlord assumes no responsibility or liability  whatsoever to Tenant or to
any other person or entity for such  completeness,  suitability  or  compliance.
Tenant shall not make any changes in the Final Plans  without  Landlord's  prior
approval,  which shall not be  unreasonably  withheld or delayed;  provided that
Landlord  may, in the exercise of its sole and absolute  discretion,  disapprove
any proposed  changes  adversely  affecting the Building's  structure,  systems,
equipment or the appearance or value of the Building.  Landlord and Tenant shall
confer and negotiate in good faith to reach  agreement on  modifications  to the
Final Plans.

(g) Tenant  acknowledges that certain portions of the Base Building Work may not
be  Substantially  Complete  at the  time  Landlord  tenders  possession  of the
Premises to Tenant.  For  purposes  of  completing  the  Initial  Installations,
Landlord shall use its commercially  reasonable  efforts to cause the completion
of the Base Building Work in a manner which does not unreasonably interfere with
Tenant's  performance  of its  Initial  Installations.  Landlord  agrees  to use
reasonable efforts to complete all such Base Building Work in the Premises on or
before the  Commencement  Date,  subject to  Unavoidable  Delay.  At the time of
Landlord's  tender of possession of the Premises to Tenant those portions of the
Base  Building  Work which are  necessary  to be  completed  for the orderly and
efficient progress of the Initial Installation shall be Substantially Completed.

2.   Performance of the Initial Installations.
(a) Filing of Final Plans, Permits.  Tenant, at its sole cost and expense, shall
file the Final Plans with the Governmental  Authorities having jurisdiction over
the Initial  Installations.  Tenant shall  furnish  Landlord  with copies of all
documents   submitted  to  all  such  Governmental   Authorities  and  with  the
authorizations  to commence  work and the permits for the Initial  Installations
issued by such Governmental  Authorities.  Tenant shall not commence the Initial
Installations until the required  governmental  authorizations for such work are
obtained and delivered to Landlord.

(b)  Landlord  Approval of  Contractors.  Tenant shall enter into a contract for
construction of the Initial  Installations with a general contractor  reasonably
acceptable  to  Landlord  (the  "General  Contractor").   Tenant's  construction
contract  with the  General  Contractor  shall be  subject to  Landlord's  prior
approval,  which  approval  shall  not be  unreasonably  withheld.  The  General
Contractor  shall be responsible for all required  construction,  management and
supervision.  In addition, Tenant shall only utilize for purposes of mechanical,
electrical, structural, sprinkler, fire and life safety and those contractors as
specifically designated by Landlord (collectively,  the "Essential Subs"), which
list of  Essential  Subs  shall  include 3 names each for those  Essential  Subs
engaged in mechanical,  electrical or structural contracting and 1 Essential Sub
for fire alarm and life safety. Tenant shall submit to Landlord not less than 10
days prior to commencement of construction the following  information and items:

          (i)  The  names  and  addresses  of  the  other  subcontractors,   and
subsubcontractors  (collectively,  together  with  the  General  Contractor  and
Essential  Subs,  the "Tenant's  Contractors")  Tenant  intends to employ in the
construction  of the  Initial  Installations.  Landlord  shall have the right to
approve or disapprove Tenant's Contractors, and Tenant shall employ, as Tenant's
Contractors, only those persons or entities approved by Landlord. Landlord shall
not  unreasonably  withhold  its  approval to any of Tenant's  Contractors.  All
contractors  and  subcontractors  engaged  by or on  behalf  of  Tenant  for the
Premises shall be licensed contractors, possessing good labor relations, capable
of  performing  quality  workmanship  and  working  in harmony  with  Landlord's
contractors and  subcontractors and with other contractors and subcontractors on
the job site. All work shall be coordinated with any general  construction  work
in the Building.


<PAGE>

          (ii) The scheduled  commencement  date of construction,  the estimated
date of completion of construction  work,  fixturing work, and date of occupancy
of the Premises by Tenant.

          (iii) Itemized  statement of estimated  construction  cost,  including
permits and fees, architectural, engineering, and contracting fees.

          (iv)  Certified  copies  of  insurance  policies  or  certificates  of
insurance as hereinafter described. Tenant shall not permit Tenant's Contractors
to commence  work until the required  insurance  has been obtained and certified
copies of policies or certificates have been delivered to Landlord.

(c) Access to  Premises.  Tenant,  its  employees,  designers,  contractors  and
workmen  shall have access to the  Premises  prior to the  Commencement  Date to
construct the Initial  Installations,  provided  that Tenant and its  employees,
agents,  contractors,  and  suppliers  only access the Premises via the Building
freight elevator,  work in reasonable harmony and do not unreasonably  interfere
with the  performance  of other work in the  Building  by  Landlord,  Landlord's
contractors,  other  tenants or occupants  of the  Building  (whether or not the
terms of their respective leases have commenced) or their contractors. If at any
time such entry shall cause, or in Landlord's  reasonable  judgment  threaten to
cause,  such disharmony or interference,  Landlord may terminate such permission
upon 24 hours' notice to Tenant, and thereupon, Tenant or its employees, agents,
contractors,  and  suppliers  causing  such  disharmony  or  interference  shall
immediately   withdraw  from  the  Premises  and  the  Building  until  Landlord
determines such disturbance no longer exists.

(d)  Landlord's  Right to Perform.  Landlord  shall have the right,  but not the
obligation,  to perform, on behalf of and for the account of Tenant,  subject to
reimbursement  by Tenant,  any of the Initial  Installations  which (i) Landlord
reasonably  deems necessary to be done on an emergency  basis,  (ii) pertains to
structural  components or the general Building systems, or (iii) pertains to the
erection of temporary safety barricades or signs during construction.  Except in
case of emergency, Landlord shall give prior reasonable written notice to Tenant
of its intention to perform such work.

(e) Warranties. On completion of the Initial Installations, Tenant shall provide
Landlord with copies of all  warranties of at least one year duration on all the
Initial Installations.  At Landlord's request, Tenant shall enforce, at Tenant's
expense,  all  guarantees and  warranties  made and/or  furnished to Tenant with
respect to the Initial Installations.

(f) Protection of Building. All work performed by Tenant shall be performed with
a minimum of  interference  with other tenants and occupants of the Building and
shall  conform  to the Rules and  Regulations  and those  rules and  regulations
governing  construction  in the  Building as Landlord  or  Landlord's  Agent may
impose.  Tenant will take all  reasonable and customary  precautionary  steps to
protect its  facilities  and the  facilities  of others  affected by the Initial
Installations   and  to  properly   police  same  and  Landlord  shall  have  no
responsibility  for any loss by theft or otherwise.  Construction  equipment and
materials  are to be located  in  confined  areas and  delivery  and  loading of
equipment and materials shall be done at such  reasonable  locations and at such

<PAGE>

time as Landlord shall direct so as not to burden the operation of the Building.
Landlord shall advise Tenant in advance of any special delivery and loading dock
requirements.  Tenant shall at all times keep the  Premises  and adjacent  areas
free from  accumulations  of waste materials or rubbish caused by its suppliers,
contractors or workmen. Landlord may require daily clean-up if required for fire
prevention and life safety reasons or applicable  laws and reserves the right to
do clean-up at the expense of Tenant if Tenant  fails to comply with  Landlord's
cleanup requirements.  At the completion of the Initial Installations,  Tenant's
Contractors  shall  forthwith  remove all rubbish and all tools,  equipment  and
surplus materials from and about the Premises and Building. Any damage caused by
Tenant's  Contractors  to any  portion of the  Building  or to any  property  of
Landlord or other tenants shall be repaired  forthwith after written notice from
Landlord to its condition prior to such damage by Tenant at Tenant's expense.

(g)  Compliance by all Tenant  Contractors.  Tenant shall impose and enforce all
terms  hereof  on  Tenant's  Contractors  and  its  designers,   architects  and
engineers.  Landlord  shall  have the right to order  Tenant or any of  Tenant's
Contractors,  designers,  architects  or  engineers  who  willfully  violate the
provisions of this Workletter to cease work and remove himself or itself and his
or its equipment and employees from the Building.

(h)  Accidents,   Notice  to  Landlord.   Tenant's   Contractors   shall  assume
responsibility  for the  prevention of accidents to its agents and employees and
shall take all  reasonable  safety  precautions  with  respect to the work to be
performed and shall comply with all reasonable safety measures  initiated by the
Landlord  and with all  applicable  Requirements  for the  safety of  persons or
property. Tenant shall advise the Tenant's Contractors to report to Landlord any
injury to any of its agents or employees  and shall  furnish  Landlord a copy of
the  accident  report  filed  with its  insurance  carrier  within 3 days of its
occurrence.

(i) Required Insurance.  Tenant shall cause Tenant's  Contractors to secure, pay
for, and maintain  during the  performance  of the  construction  of the Initial
Installations,  insurance  in the  following  minimum  coverages  and  limits of
liability:

          (i)  Workmen's  Compensation  and  Employer's  Liability  Insurance as
required by Requirements.

          (ii) Commercial  General Liability  Insurance  (including  Owner's and
Contractors'  Protective  Liability) in an amount not less than  $2,000,000  per
occurrence,  whether  involving  bodily  injury  liability  (or death  resulting
therefrom) or property damage liability or a combination  thereof with a minimum
aggregate limit of $2,000,000,  and with umbrella  coverage with limits not less
than  $10,000,000.  Such  insurance  shall  provide for  explosion and collapse,
completed  operations coverage with a two-year extension after completion of the
work,  and broad form blanket  contractual  liability  coverage and shall insure
Tenant's  Contractors  against any and all claims for bodily  injury,  including
death resulting  therefrom and damage to the property of others and arising from
its  operations  under the contracts  whether such  operations  are performed by
Tenant's  Contractors,  or by anyone  directly or indirectly  employed by any of
them.

          (iii)  Business   Automobile   Liability   Insurance,   including  the
ownership, maintenance, and operation of any automotive equipment, owned, hired,
or  non-owned  in an  amount  not less  than  $500,000  for each  person  in one
accident,  and $1,000,000  for injuries  sustained by two or more persons in any
one accident and property damage liability in an amount not less than $1,000,000
for each accident.  Such insurance shall insure Tenant's Contractors against any
and all claims for bodily  injury,  including  death  resulting  therefrom,  and
damage  to the  property  of  others  arising  from  its  operations  under  the
contracts,  whether such operations are performed by Tenant's Contractors, or by
anyone directly or indirectly employed by any of them.
<PAGE>

          (iv)  "All-risk"  builder's  risk  insurance  upon the entire  Initial
Installations to the full insurance value thereof.  Such insurance shall include
the  interest  of  Landlord  and Tenant (and their  respective  contractors  and
subcontractors  of any tier to the extent of any insurable  interest therein) in
the  Initial  Installations  and shall  insure  against  the  perils of fire and
extended  coverage and shall include  "all-risk"  builder's  risk  insurance for
physical  loss or damage  including,  without  duplication  of coverage,  theft,
vandalism,  and malicious mischief. If portions of the Initial Installations are
stored off the site of the  Building  or in transit to such site are not covered
under such  "all-risk"  builder's risk  insurance,  then Tenant shall effect and
maintain   similar   property   insurance  on  such   portions  of  the  Initial
Installations.  Any loss insured under such "all-risk"  builder's risk insurance
is to be  adjusted  with  Landlord  and Tenant and made  payable to  Landlord as
trustee for the insureds, as their interest may appear, subject to the agreement
reached by such  parties in interest,  or in the absence of any such  agreement,
then in  accordance  with a final,  nonappealable  order of a court of competent
jurisdiction.  If  after  such  loss no other  special  agreement  is made,  the
decision to replace or not replace  any such  damaged the Initial  Installations
shall  be  made in  accordance  with  the  terms  and  provisions  of the  Lease
including,  this Workletter.  The waiver of subrogation  provisions contained in
the Lease shall apply to the "all-risk"  builder's  risk insurance  policy to be
obtained by Tenant pursuant to this paragraph (iv).

                  All policies (except the Workmen's  Compensation policy) shall
be endorsed to include as additional  named insureds  Landlord and its officers,
employees,  and agents,  Landlord's contractors,  Landlord's architect,  Tishman
Speyer Properties,  L.P., any Mortgages and Superior Lessors and such additional
persons as Landlord may designate. Such endorsements shall also provide that all
additional  insured  parties shall be given 30 days' prior written notice of any
reduction,  cancellation,  or nonrenewal of coverage by certified  mail,  return
receipt  requested  (except that 10 days' notice shall be sufficient in the case
of cancellation  for nonpayment of premium) and shall provide that the insurance
coverage afforded to the additional  insured parties thereunder shall be primary
to any insurance carried  independently by such additional  insured parties.  At
Tenant's  request,  Landlord  shall  furnish  a list of names and  addresses  of
parties to be named as  additional  insureds.  The insurance  policies  required
hereunder  shall be considered as the primary  insurance and shall not call into
contribution  any insurance  then  maintained by Landlord.  Additionally,  where
applicable,  such policy shall  contain a cross  liability and  severability  of
interest clause.

                  To the fullest extent  permitted by law,  except to the extent
of the gross  negligence  or willful  misconduct  of Landlord or its  employees,
agents or  contractors,  Tenant (and Tenant's  Contractors)  shall indemnify and
hold  harmless  the  Indemnitees  from and  against all Losses  necessitated  by
activities of the indemnifying party's contractors,  bodily injury to persons or
damage to  property of the  Indemnitees  arising  out of or  resulting  from the
performance of work by the indemnifying party or its contractors.  The foregoing
indemnity shall be in addition to the insurance requirements set forth above and
shall not be in discharge or  substitution of the same, and shall not be limited
in any way by any limitations on the amount or type of damages,  compensation or
benefits  payable by or for  Tenant's  Contractors  under  Workers' or Workmen's
Compensation Acts, Disability Benefit Acts or other Employee Benefit Acts.

          (j) Quality of Work. The Initial Installations shall be constructed in
a  first-class  workmanlike  manner  using only good grades of  material  and in
compliance with the Final Plans, all insurance requirements, applicable laws and
ordinances and rules and regulations of governmental departments or agencies and
the rules and regulations  adopted by Landlord for the Building.

          (k) "As-Built"  Plans.  Upon completion of the Initial  Installations,
Tenant shall  furnish  Landlord  with "as built" plans for the  Premises,  final
waivers of lien for the Initial Installations, a detailed breakdown of the costs
of the Initial  Installations (which may be in the form of an owner's affidavit)
and evidence of payment  reasonably  satisfactory to Landlord,  and an occupancy
permit for the Premises.  The  "as-built"  plans shall be prepared on an AutoCAD
Computer  Assisted Drafting and Design System (or such other system or medium as
Landlord may accept),  using naming conventions issued by the American Institute
of Architects in June,  1990 (or such other naming  conventions  as Landlord may
accept) and magnetic  computer media of such record drawings and  specifications
translated in DFX format or another format acceptable to Landlord.

          (l)  Mechanics'  Liens.  Tenant  shall not permit any of the  Tenant's
Contractors to place any lien upon the Building,  and if any such lien is placed
upon the  Building,  Tenant shall within 10 days of notice  thereof,  cause such
lien to be discharged of record,  by bonding or otherwise.  If Tenant shall fail
to cause any such lien to be  discharged,  Landlord shall have the right to have
such  lien  discharged  and  Landlord's  expense  in so  doing,  including  bond
premiums,  reasonable  legal fees and filing fees,  shall be immediately due and
payable by Tenant.

<PAGE>

3.   Payment of Costs of the Initial Installations.

          (a) Subject to Landlord's  Contribution  as provided in Paragraph 3(b)
below, the Initial  Installations  shall be installed by Tenant at Tenant's sole
cost and  expense.  The cost of the Initial  Installations  shall  include,  and
Tenant agrees to pay Landlord for, the following costs ("Landlord's Costs"): (i)
the cost of all work  performed  by  Landlord  on behalf  of Tenant  and for all
materials and labor furnished on Tenant's behalf,  (ii) the cost of any services
provided to Tenant or Tenant's Contractors including but not limited to the cost
for rubbish  removal,  hoisting,  and  utilities  to the extent not  included in
general  conditions charges by the general  contractor,  and (iii) a supervision
fee equal to 3% of Landlord's Contribution.  Landlord may render bills to Tenant
monthly for Landlord's  Costs (provided that the supervision fee shall be billed
based on the cost of the Initial  Installations  performed  during the period in
question).  All bills  shall be due and payable no later than the 30th day after
delivery of such bills to Tenant.  Landlord  shall be  responsible  for,  Tenant
shall have no responsibility for, and Landlord's  Contribution shall not be used
for (a) costs incurred to remove  Hazardous  Materials from the Premises present
within the Premises at the time  possession  thereof is tendered to Tenant,  and
(b)  costs to bring  the Base  Building  Work into  compliance  with  applicable
Requirements applicable to the Base Building Work as of the Effective Date.

          (b)  Landlord  shall pay to Tenant an amount not to exceed  Landlord's
Contribution  toward the cost of the Initial  Installations,  provided as of the
date on which Landlord is required to make payment thereof,  (i) the Lease is in
full force and effect,  and (ii) no Event of Default then  exists.  Tenant shall
pay all costs of the Initial Installations in excess of Landlord's Contribution.
Landlord's  Contribution  shall be payable  solely on account of labor  directly
related to the Initial  Installations and materials delivered to the Premises in
connection  with the Initial  Installations,  except that Tenant may apply up to
10% of Landlord's Contribution to pay "soft costs", consisting of architectural,
consulting,  engineering and legal fees, and furniture and equipment  (exclusive
of computer equipment) acquired for use in the Premises,  incurred in connection
with the  Initial  Installations.  Tenant  shall not be  entitled to receive any
portion  of  Landlord's  Contribution  not  actually  expended  by Tenant in the
performance of the Initial Installations in accordance with this Workletter, nor
shall  Tenant  have any  right to apply any  unexpended  portion  of  Landlord's
Contribution  as a credit  against Rent or any other  obligation of Tenant under
the Lease. Upon the completion of the Initial  Installations and satisfaction of
the  conditions  set forth below,  or upon the  occurrence  of the date which is
twelve  months  after the  Commencement  Date  (which  date shall be extended by
reason of strikes,  labor  trouble or any other  similar  cause beyond  Tenant's
control in performing the Initial  Installations),  whichever first occurs,  any
amount of Landlord's  Contribution which has not been previously disbursed shall
be  retained by  Landlord;  provided,  however,  that  notwithstanding  anything
contained  herein to the contrary,  such retained  amounts shall  continue to be
held for the  benefit  of Tenant by  Landlord  if  Tenant  delivers  a notice to
Landlord prior to  satisfaction  of the conditions set forth below that it is in
dispute  with any  contractors,  subcontractors,  vendors or other  providers of
service and refuses to make  payments at such time or if any  contracts  provide
for retainage which has not then been finally paid.

          (c)  Landlord  shall  make  progress  payments  to Tenant on a monthly
basis, for the work performed during the previous month, less a retainage of 10%
of each progress payment  ("Retainage").  Each of Landlord's  progress  payments
shall be limited to an amount  equal to the  aggregate  amounts  (reduced by the
Retainage)  theretofore paid by Tenant (as certified by an officer of Tenant and
by Tenant's independent  architect) to Tenant's contractors,  subcontractors and
material  suppliers which have not been subject to previous  disbursements  from
Landlord's  Contribution that fraction of the total amount of such payment,  the
numerator of which is the amount of Landlord's Contribution, and the denominator
of which is the total  contract  price (or,  if there is no  specified  or fixed
contract  price  for  the  Initial  Installations,  then  Landlord's  reasonable
estimate thereof) for the performance of all of the Initial  Installations shown
on all plans and  specifications  approved  by  Landlord.  Provided  that Tenant
delivers requisitions to Landlord on or prior to the 10th day of any month, such
progress  payments  shall be made within 30 days next  following the delivery to
Landlord of  requisitions  therefor,  signed by the chief  financial  officer of
Tenant,  which  requisitions  shall set forth the names of each  contractor  and
subcontractor  to whom  payment  is due,  and the amount  thereof,  and shall be
accompanied  by (i) with the  exception  of the  first  requisition,  copies  of

<PAGE>

conditional  waivers  and  releases  of lien upon  progress  payment in the form
prescribed  in  the  Requirements  from  all  contractors,  subcontractors,  and
material  suppliers  covering all work and  materials  which were the subject of
previous progress payments by Landlord and Tenant, (ii) a written  certification
from Tenant's  architect  that the work for which the  requisition is being made
has been completed  substantially  in accordance  with the Final Plans and (iii)
such other  documents  and  information  as  Landlord  may  reasonably  request,
including in connection with title drawdowns and  endorsements.  Any requisition
made  following  the 10th day of any month  shall be paid no later than the last
day of the  month  following  the  month in which  such  requisitions  are made.
Landlord  shall  disburse  the  Retainage  (and  any  portion  of  the  Landlord
Contribution  expended  by Tenant but unpaid by  Landlord)  upon  submission  by
Tenant  to  Landlord  of  Tenant's   requisition  therefor  accompanied  by  all
documentation  required under this Section 3(c),  together with (A) proof of the
satisfactory completion of all required inspections and issuance of any required
approvals,  permits and sign-offs for the Initial  Installation  by Governmental
Authorities  having  jurisdiction  thereover,  (B)  final  "as-built"  plans and
specifications  for the Initial  Installations  as required  pursuant to Section
2(k) and (C) issuance of final,  unconditional  lien waivers and releases in the
form  prescribed by the  Requirements  by all  contractors,  subcontractors  and
material  suppliers covering all of the Initial  Installations.  Notwithstanding
anything to the  contrary  set forth in this  Section  3(c),  if Tenant does not
timely (or otherwise  bond-over  any such lien in  accordance  with Section 2(l)
above) pay any  contractor  or supplier as required by this  provision,  then if
necessary to prevent the  imposition of any mechanics  lien Landlord  shall have
the right, but not the obligation,  to pay,  following 5 Business Days notice to
Tenant,  to such contractor or supplier all sums so due from Tenant,  and Tenant
agrees  the same  shall be  deemed  Additional  Rent and shall be paid by Tenant
within 10 days after Landlord delivers to Tenant an invoice therefor.

4.   Miscellaneous.

          (a) All defined terms as used herein shall have the meanings  ascribed
to them in the Lease.

          (b) Tenant agrees that, in connection  with the Initial  Installations
and its use of the Premises prior to the  commencement of the Term of the Lease,
Tenant shall have those duties and obligations  with respect thereto that it has
pursuant  to the Lease  during the Term,  except the  obligation  for payment of
rent,  and  further  agrees  that  Landlord  shall  not be liable in any way for
injury,  loss, or damage which may occur to any of the Initial  Installations or
installations made in the Premises,  or to any personal property placed therein,
the same being at Tenant's sole risk.

          (c) Except as expressly set forth herein or in the Lease, Landlord has
no other  agreement  with Tenant and Landlord has no other  obligation to do any
other work or pay any amounts  with respect to the  Premises.  Any other work in
the  Premises  which may be  permitted  by  Landlord  pursuant  to the terms and
conditions  of the Lease shall be done at Tenant's  sole cost and expense and in
accordance with the terms and conditions of the Lease.

          (d) This Workletter  shall not be deemed  applicable to any additional
space added to the original  Premises at any time or from time to time,  whether
by any options under the Lease or  otherwise,  or to any portion of the original
Premises or any additions  thereto in the event of a renewal or extension of the
initial term of the Lease,  whether by any options under the Lease or otherwise,
unless  expressly  so  provided  in the  Lease or any  amendment  or  supplement
thereto.

          (e) The failure by Tenant to pay any monies due  Landlord  pursuant to
this  Workletter  within the time period herein stated shall be deemed a default
under the terms of the Lease for which  Landlord  shall be  entitled to exercise
all remedies available to Landlord for nonpayment of Rent (subject,  however, to
applicable notice and cure periods as set forth in the Lease). All late payments
shall bear interest pursuant to Section 15.6 of the Lease.


<PAGE>

                                    EXHIBIT D

                                Design Standards

          (a) HVAC. The Building HVAC System serving the Premises shall maintain
average  temperatures  within the Premises during the hours of 6:00 a.m. to 6:00
p.m.  on Business  Days of (i) not less than 70(0) F. during the heating  season
when the outdoor temperature is 34(0) F. or more and (ii) not more than 75(0) F.
and 50% humidity + 5% during the cooling season,  when the outdoor  temperatures
are at 86(0) F. dry bulb and 68(0) F. wet bulb, with, in the case of clauses (i)
and (ii), a population load per floor of not more than one person per 150 square
feet of useable area, other than in dining and other special use areas per floor
for all  purposes,  and shades  fully drawn and closed,  including  lighting and
power, and to provide at least .15 CFM of outside ventilation per square foot of
rentable area. Use of the Premises,  or any part thereof,  in a manner exceeding
the foregoing  design  conditions or  rearrangement  of  partitioning  after the
initial  preparation of the Premises which  interferes with normal  operation of
the  air-conditioning  service  in  the  Premises  may  require  changes  in the
air-conditioning system serving the Premises at Tenant's expense.

          (b) Electrical.  The Building  Electrical  System serving the Premises
shall provide

               (i) 1 1/2 watts per usable  square foot of high voltage  (480/277
               volt) connected load/lighting to each floor

               (ii) 4 watts  per  usable  square  foot of low  voltage  (120/280
               volts) connected load/convenience power to each floor

               (iii)   4  1/2   watts   per   usable   square   foot   connected
               load/mechanical to each floor


<PAGE>


                                    EXHIBIT E

                             Cleaning Specifications

GENERAL CLEANING

NIGHTLY

     General Offices:

1.   All hard surfaced flooring to be swept using approved dustdown preparation.
2.   Carpet  sweep  all  carpets,  moving  only  light  furniture  (desks,  file
     cabinets, etc. not to be moved).
3.   Hand dust and wipe clean all furniture, fixtures and window sills.
4.   Empty all waste receptacles and remove wastepaper.
5.   Wash clean all Building water fountains and coolers.
6.   Sweep all private stairways.

     Lavatories:

1.   Sweep and wash all floors, using proper disinfectants.
2.   Wash and polish all mirrors, shelves, bright work and enameled surfaces.
3.   Wash and disinfect all basins, bowls and urinals.
4.   Wash all toilet seats.
5.   Hand dust and clean all partitions,  tile walls, dispensers and receptacles
     in lavatories and restrooms.
6.   Empty paper receptacles, fill receptacles and remove wastepaper.
7.   Fill toilet tissue holders.
8.   Empty and clean sanitary disposal receptacles.

WEEKLY

1.   Vacuum all carpeting and rugs.
2.   Dust all door  louvers  and other  ventilating  louvers  within a  person's
     normal reach.
3.   Wipe clean all brass and other bright work.
4.   Wax all hard surface flooring

QUARTERLY

     High dust premises complete including the following:

1.   Dust all  pictures,  frames,  charts,  graphs and similar wall hangings not
     reached in nightly cleaning.
2.   Dust all vertical surfaces, such as walls,  partitions,  doors, door frames
     and other surfaces not reached in nightly cleaning.
3.   Dust all venetian blinds.
4.   Wash all windows.


<PAGE>


                                    EXHIBIT F

                              Rules and Regulations

1. Nothing shall be attached to the outside walls of the Building.  No curtains,
blinds, shades, screens or other obstructions shall be attached to or hung in or
used in  connection  with any  exterior  window or entry  door of the  Premises,
without the prior consent of Landlord.

2. No sign,  advertisement,  notice or other lettering visible from the exterior
of the Premises shall be exhibited, inscribed, painted or affixed to any part of
the Premises  without the prior  written  consent of Landlord.  All lettering on
doors  shall be  inscribed,  painted  or  affixed  in a size,  color  and  style
acceptable to Landlord.

3. The grills, louvers, skylights, windows and doors that reflect or admit light
and/or air into the Premises or Common Areas shall not be covered or  obstructed
by Tenant,  nor shall any articles be placed on the window  sills,  radiators or
convectors.

4.  Landlord  shall have the right to  prohibit  any  advertising  by any Tenant
which,  in Landlord's  opinion,  tends to impair the reputation of the Building,
and upon written notice from Landlord,  Tenant shall refrain from or discontinue
such advertising.

5. The sidewalks, entrances, passages, courts, elevators, vestibules, stairways,
corridors or halls shall not be  obstructed  or encumbered by any Tenant or used
for any  purposes  other than ingress of egress to and from the Premises and for
delivery of merchandise  and equipment in a prompt and efficient  manner,  using
elevators and passageways designated for such delivery by Landlord.

6. Except in those areas designated by Tenant as "security  areas," all locks or
bolts of any kind shall be operable by the Building's Master Key. No locks shall
be placed  upon any of the doors or windows by Tenant,  nor shall any changes be
made in locks or the mechanism thereof which shall make such locks inoperable by
the  Building's  Master Key.  Tenant shall,  upon the  termination of its Lease,
deliver to Landlord all keys of stores, offices and lavatories, either furnished
to or  otherwise  procured  by  Tenant  and in the event of the loss of any keys
furnished by Landlord, Tenant shall pay to Landlord the cost thereof.

7. Tenant shall keep the entrance door to the Premises closed at all times.

8. All movement in or out of any freight,  furniture, boxes, crates or any other
large object or matter of any description  must take place during such times and
in such  elevators as Landlord  may  prescribe.  Landlord  reserves the right to
inspect all  articles to be brought  into the  Building  and to exclude from the
Building all articles  which violate any of these Rules and  Regulations  or the
Lease of which these Rules and Regulations are a part. Landlord may require that
any person leaving the public areas of the Building with any article to submit a
pass, signed by an authorized  person,  listing each article being removed,  but
the  establishment  and  enforcement  of such  requirement  shall not impose any
responsibility  on Landlord for the protection of any Tenant against the removal
of property from the Premises.

9. All hand trucks  shall be equipped  with rubber  tires,  side guards and such
other  safeguards  as Landlord  may  require.  10.  None of Tenant's  employees,
visitors or  contractors  shall be  permitted  to have access to the  Building's
roof,  mechanical,   electrical  or  telephone  rooms  without  permission  from
Landlord.

11. Tenant shall not lay floor tile, or other similar floor covering so that the
same shall come in direct  contact with the concrete  floor of the Premises and,
if such floor  covering  is  desired to be used,  an  interlining  of  builder's
deadening felt shall be first affixed to the floor by a paste or other material,
soluble in water;  the use of cement or other similar  adhesive  material  being
expressly prohibited.

12.  Tenant  shall not permit or suffer the Premises to be occupied or used in a
manner offensive or objectionable to Landlord or other occupants of the Building
by reason of noise, odors, vibrations or interfere in any way with other tenants
or those having business therein.
<PAGE>

13.  Tenant  shall not employ any  person or persons  other than the  janitor of
Landlord for the purpose of cleaning the Premises,  unless otherwise  reasonably
agreed to by Landlord. Tenant shall not cause any unnecessary labor by reason of
such Tenant's carelessness or indifference in the preservation of good order and
cleanliness.

14. Tenant shall store all its trash and  recyclables  within its  Premises.  No
material  shall  be  disposed  of  which  may  result  in  a  violation  of  any
Requirement.  All  refuse  disposal  shall be made only  though  entry  ways and
elevators  provided  for  such  purposes  and at such  times as  Landlord  shall
designate. Tenant shall use the Building's hauler.

15. Except in connection  with  Decorative  Alterations,  Tenant shall not mark,
paint, drill into or in any way deface any part of the Building, except with the
prior  written  consent of Landlord in the case of the  Premises,  which consent
shall not be  unreasonably  withheld.  No boring,  cutting or stringing of wires
shall be permitted,  except with prior  reasonable  consent of Landlord,  and as
Landlord may direct.

16. The water and wash  closets,  electrical  closets,  mechanical  rooms,  fire
stairs and other plumbing fixtures shall not be used for any purposes other than
those for which they were constructed and no sweepings,  rubbish, rags, acids or
other  substances  shall be deposited  therein.  All damages  resulting from any
misuse of the fixtures  shall be borne by Tenant where a Tenant Party caused the
same.

17. Tenant,  before closing and leaving the Premises at any time, shall see that
all lights,  water  faucets,  etc.  are turned off.  All  entrance  doors in the
Premises shall be kept locked by Tenant when the Premises are not in use. 18. No
bicycles,  in-line  roller  skates,  vehicles or animals of any kind (except for
seeing  eye dogs)  shall be  brought  into or kept by any Tenant in or about the
Premises or the Building.

19.  Canvassing or soliciting in the Building is prohibited.

20.  Employees of Landlord or Landlord's  Agent shall not perform any work or do
anything outside of the regular duties,  unless under special  instructions from
the office of Landlord or in response to any emergency condition.

21.  Tenant is  responsible  for the  delivery  and pick up of all mail from the
United States Post Office.

22.  Landlord  reserves the right to exclude from the Building during other than
Ordinary  Business  Hours all persons who do not present a valid  Building pass.
Tenant shall be  responsible  for all persons for whom a pass shall be issued at
the  request  of Tenant  and shall be  liable to  Landlord  for all acts of such
persons.

23.  Landlord  shall not be responsible to Tenant or to any other person for the
non-observance  or violation of these Rules and  Regulations by any other tenant
or other person.  Tenant shall be deemed to have read Rules and  Regulations and
to have agreed to abide by them as a condition to its occupancy of the Premises.


<PAGE>

                                    EXHIBIT G

                           Development Specifications


<PAGE>


                                    EXHIBIT H

                               Base Building Work

BASE BUILDING WORK BY LANDLORD
A.   All site work, including landscaping, parking and site utilities.
B.   Main building lobby including:
     (i) All surfaces finished
     (ii) Lighting
     (iii)    All doors, hardware and glazing installed.
C.   Required  building exit corridors on the first floor complete on the inside
     including all finishes, doors and hardware, glazing and lighting.
D.   Typical elevator vestibule, fire taped.
E.   Elevator  cabs  complete,  including  all  finishes,  doors,  hardware  and
     lighting.
F.   Building stairs complete, including all finishes, doors and lighting.
G.   Building mechanical equipment room, including doors, hardware and lighting.
H.   Building electrical rooms, including doors, hardware and lighting.
I.   Building  telephone  closets  (less  paint and  backboard),  including  all
     finishes, doors, hardware and lighting.
J.   Restrooms complete,  including all finishes, doors and hardware,  lighting,
     plumbing,   fixtures,  life  safety  devices,  partitions  and  accessories
     installed to meet code and ADA.
K.   HVAC ducts and piping distributed to each floor stubbed out of the shafts.
L.   Main power distribution brought to each floor.
M.   Fire  sprinklers and fire protection on each floor as required per code for
     base building installed to an open plan.
N.   Main telecommunications route to each floor.
O.   Provision of one dedicated  4-inch conduit from the main electrical room on
     the first level of the Building to each of the  electrical  closets  within
     the Premises.
P.   Cable TV service and fiber optics brought to the Building.
Q.   120/208  Volt  3-Phase  4-wire power to  electrical  room on each floor.  2
     panels with 84 circuits on each floor;  additional circuits or 277/480 Volt
     power available at Tenant's cost.
R.   Centralized  computer security system monitoring all doors,  service areas,
     elevators, and select building stairwells.
S.   Demising  walls  fire  taped and ready for tenant  finish;  exterior  walls
     insulated.
T.   Exterior windows tinted and equiped with horizontal venetian blinds.
U.   Install  two (2)  four-inch  (4")  conduits  between  Building  One and the
     Building originating,  in each building, in a ground floor telephone closet
     located therein.


<PAGE>

                                    Exhibit I

                      425 LEXINGTON AVENUE, NEW YORK, 10017

                                  June __, 2000

                                                    ISSUE DATE: June ___, 2000

                                                    EXPIRY DATE: June ___, 2001

              IRREVOCABLE STANDBY LETTER OF CREDIT NO. SYN-00-10006

Beneficiary:                                                 Applicant:
------------                                                 ---------

WHTS Freedom Circle Partners II, L.L.C.                      PMC-Sierra, Inc.
c/o Tishman Speyer Properties, L.P.
520 Madison Avenue
New York, NY 10022
ATT:  GENERAL COUNSEL


We hereby establish our Irrevocable Standby Letter of Credit No. SYN-00-10006 in
your favor for a principal  amount of USD  2,000,000.00  (Two Million and 00/100
U.S.  Dollars),  available at Canadian Imperial Bank of Commerce,  425 Lexington
Avenue,  New York, New York 10017,  by payment  against your drafts at sight (in
the form of Exhibit A attached hereto) to be accompanied by:

1.   This Original Letter of Credit and all amendments, if any;

2.   An  affidavit,   purportedly   signed  by  an  authorized  officer  of  the
     Beneficiary, under penalty of perjury stating:

"(1) A default of PMC-Sierra, Inc. beyond applicable notice and cure periods has
occurred and is continuing under that certain lease (the "Lease") dated February
1, 2000  between  PMC-Sierra,  Inc. as Tenant and the  Beneficiary  hereunder as
Landlord ("Landlord"),  and (2) Landlord is entitled under the Lease to draw the
amount being drawn."

                  OR

                  "Notice of non renewal of Canadian  Imperial  Bank of Commerce
                  Irrevocable Letter of Credit SYN-00-10006 has been received by
                  the  Beneficiary  and a  replacement  letter of credit has not
                  been  received by the  Beneficiary  within 15 business days of
                  the  expiry  date.   Beneficiary   hereby  instructs  Canadian
                  Imperial   Bank  of  Commerce  to  pay  the  draft  amount  to
                  _________________ at _________."

This Letter of Credit may be  transferred  upon  presentation  to us of a signed
transfer  form in the form of Annex 1 accompanied  by this Letter of Credit,  in
which the Beneficiary irrevocably transfers to such transferee all of its rights
hereunder,  whereupon we agree to either issue a substitute  letter of credit to
such successor  (which  designates the transferee as  beneficiary,  and with all
references  to "you"  referring  to it and is otherwise in the same form as this
letter of credit and is also  transferable)  or  endorse  such  transfer  on the
reverse of this Letter of Credit.

Partial drawings are permitted.

It is a  condition  of this  Irrevocable  Standby  Letter of  Credit  that it is
automatically extended without amendment for successive periods of one year from
the   then   relevant   expiration   date,   but   in  no   event   later   than
___________________,2011  unless we notify you by  registered  Mail or overnight
courier  at least 30 days  prior to the  then  relevant  expiration  date to the
effect that we elect not to extend this Irrevocable Standby Letter of Credit for
any further periods.  In the event this credit is not extended for an additional
period as provided above, you may draw as provided for above.

                  Except as expressly  stated  herein,  this  undertaking is not
subject to any agreements,  requirements or qualification.  Our obligation under
this letter of credit is our  individual  obligation and is on no way contingent
upon reimbursement with respect thereto or upon our ability to perfect any lien,
security interest or any other reimbursement.
<PAGE>

All correspondence shall be addressed to Canadian Imperial Bank of Commerce, 425
Lexington Avenue, New York, NY 10017, USA, Attention: Agency Services, and shall
mention this Letter of Credit number.

All drafts so drawn must be marked "Drawn under Irrevocable Letter of Credit No.
SYN-00-10006, dated June __31, 2000.

This  Letter of Credit is  subject  to the  Uniform  Customs  and  Practice  for
Documentary   Credits  (1993   Revision)   International   Chamber  of  Commerce
Publication No. 500, and shall be deemed to be a contract made under,  and as to
matters not governed by the UCP,  shall be governed and  construed in accordance
with the laws of the State of New York and applicable U.S. law.

Sincerely,

Canadian Imperial Bank of Commerce

------------------------------------             -------------------------------
Authorized Signatory                             Countersigned

------------------------------------             -------------------------------
Beneficiary's Approval                           Applicant's Approval


<PAGE>



                                     ANNEX 1

Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York  10017

Reference is made to Canadian Imperial Bank of Commerce Letter of Credit
SYN-00-10006.

The undersigned,  as beneficiary  hereby  irrevocably  transfers to ___________,
(the  "Transferee")  all rights of the  undersigned  to draw under the Letter of
Credit.

                                Very truly yours,

                                --------------------------------
                                WHTS Freedom Circle Partners II, L.L.C.


<PAGE>


                                    Exhibit A

FOR VALUE RECEIVED

PAY AT SIGHT BY WIRE TRANSFER IN IMMEDIATELY AVAILABLE FUNDS TO
_____________________ THE SUM OF U.S. $______________ DRAWN UNDER IRREVOCABLE
LETTER OF CREDIT NO. _______________, DATED ___________, 2000___, ISSUED BY
_______________________________.



TO:  [CIBC]


         ----------------------------
         New York, New York


<PAGE>

                  FIRST AMENDMENT TO AMENDED AND RESTATED LEASE

                  THIS FIRST AMENDMENT TO AMENDED AND RESTATED lease (the "First
Amendment") is made as of this 7 day of April, 2000, by and between WHTS freedom
circle partners, l.l.c., a Delaware limited liability company ("Landlord"),  and
PMC--sIERRA, INC., a Delaware corporation ("Tenant").

                                    RECITALS:

                  Landlord  and Tenant are parties to that  certain  Amended and
Restated  Lease,  dated as of April 7,  2000 (the  "Lease"),  under the terms of
which  Landlord  leased to Tenant,  and Tenant  leased  from  Landlord,  certain
premises located at 3975 Freedom Circle Drive, Santa Clara, California. Landlord
and Tenant now desire to amend the Lease in several respects.

                  NOW, THEREFORE, Landlord and Tenant hereby agree as follows:

1.  All  defined  terms  as used in this  First  Amendment  shall  have the same
meanings as set forth in the Lease, unless otherwise expressly set forth herein.

2.   The Basic Lease  Provisions as set forth in Article 1 are hereby amended in
accordance with the following:


      PREMISES      A portion of the first floor and the entire  second,  third,
                    fourth   and  fifth   floors  of  the   Building,   as  more
                    particularly shown on Exhibits A-1, A-2, A-3, A-4 and A-5.

      COMMENCEMENT
      DATE          The later to occur of (a) the Scheduled  Commencement  Date,
                    and  (b)  the  90th  calendar  day  following  the  date  of
                    Landlord's  tender of  possession  of the Premises  with the
                    Base  Building Work at a stage of completion so as to permit
                    Tenant's contractors to commence construction of the Initial
                    Installations without unreasonable delay or interference.

      EXPIRATION    DATE  The date  which is the last day of the  month in which
                    the 11th anniversary of the Commencement Date occurs, or the
                    last day of any  renewal or  extended  term,  if the Term of
                    this  Lease is  extended  in  accordance  with  any  express
                    provision hereof.

      TENANT'S
      PROPORTIONATE
      SHARE          38.3723%

      AREA OF PREMISES     Floor 1:    11,861   rentable   square  feet  (10,676
                                       usable square feet).
                           Floor 2:    21,813   rentable   square  feet  (19,634
                                       usable square feet).
                           Floor 3:    24,856   rentable   square  feet  (22,373
                                       usable square feet).
                           Floor 4:    24,856   rentable   square  feet  (22,373
                                       usable square feet).
                           Floor 5:    24,856   rentable   square  feet  (22,373
                                       usable square feet)
                           Total:      108,242   rentable  square  feet  (97,429
                                       usable square feet).

      FIXED RENT           Period      Per Annum                 Per Month
                           ------      ---------                 ---------
                           Year 1      $3,746,298.92             $312,191.58
                           Year 2      $3,877,419.38             $323,118.28
                           Year 3      $4,013,129.06             $334,427.42
                           Year 4      $4,153,588.57             $346,132.38
                           Year 5      $4,298,964.17             $358,247.01
                           Year 6      $4,449,427.92             $370,785.66
                           Year 7      $4,605,157.90             $383,763.16
                           Year 8      $4,766,338.42             $397,194.87
                           Year 9      $4,933,160.27             $411,096.69
                           Year 10     $5,105,820.88             $425,485.07
                           Year 11     $5,284,524.61             $440,377.05

      Landlord's contribution     $3,247,260.00.
                                    * * * * *
3.     In all other respects,  the Lease remains unchanged and in full force and
effect.

                  IN WITNESS  WHEREOF,  Landlord and Tenant have  executed  this
First  Amendment to Amended and Restated  Lease as of the dates set forth below,
and it shall be effective as of the latter of such dates.

LANDLORD:                                                 TENANT:

WHTS FREEDOM CIRCLE PARTNERS II, L.L.C.,                  PMC - SIERRA, INC.,
a Delaware limited liability company                      a Delaware corporation


By:  Tishman  Speyer/Travelers Real Estate Venture, L.P.,
     a Delaware limited partnership                       By:___________________

     By: Tishman Speyer/Travelers Associates,             Its:__________________
         a Delaware limited partnership
         Its general partner                              By: __________________

         By:  TSCE Venture Corp., a Delaware corporation
              Its general partner                         Its:__________________

              By: ___________________________

                  Its:________________________

and

By:  Whitehall  Street Real Estate Limited  Partnership  IX, a
     Delaware limited partnership, its managing member

     By: Whitehall  Advisors,  L.L.C.  IX,  Inc.,  a  Delaware
         limited liability company, its general partner

         By:  Whitehall  IX/X,  Inc., a Delaware  corporation,
              its managing member

              By: ___________________________

              Its:___________________________