<PAGE>   1
                                                                   EXHIBIT 10.20

                                                          CONFIDENTIAL TREATMENT
                                                                 REQUESTED

[*] Confidential treatment has been requested for certain portions of this
    document pursuant to an application for confidential treatment sent to the
    Securities and Exchange Commission. Such portions are omitted from this
    filing and are filed separately with the Securities and Exchange Commission.


                                 LEASE AGREEMENT

                                  (BUILDING 2)

                                 by and between

                           M-F DOWNTOWN SUNNYVALE, LLC

                                  ("LANDLORD")

                                       and

                                HANDSPRING, INC.

                                   ("TENANT")

                          DATED AS OF FEBRUARY 14, 2001


<PAGE>   2

                                    EXHIBITS



Exhibit "A"          Project Site Plan

Exhibit "B"          Delivery Date Memorandum

Exhibit "C"          Work Letter

Exhibit "D"          Rules and Regulations

Exhibit "E"          Approved Form of Tenant Estoppel Certificate

Exhibit "F"          Approved Form of SNDA



<PAGE>   3

                             BASIC LEASE INFORMATION


Lease Date:             February 14, 2001

Landlord:               M-F Downtown Sunnyvale, LLC,
                        a Delaware limited liability company

Managing Agent:         The Mozart Development Company

Landlord's and
  Managing Agent's
  Address:              c/o The Mozart Development Company
                        1068 East Meadow Circle
                        Palo Alto, CA  94303
                        Facsimile: (650) 493-9050
                        Attn:  James Freitas & John Mozart

Tenant:                 Handspring, Inc., a Delaware corporation

TENANT'S ADDRESS:       FOR NOTICE AND BILLING:
                        Handspring, Inc.
                        189 Bernardo Avenue
                        Mountain View, CA  94043-5203
                        Facsimile (650) 230-5139
                        Attn:  Bernard J. Whitney
                        Chief Financial Officer

                        WITH A COPY TO (FOR NOTICE ONLY):
                        Handspring, Inc.
                        189 Bernardo Avenue
                        Mountain View, CA  94043-5203
                        Facsimile (650) 230-5139
                        Attn:  David Pine
                        Vice President, General Counsel

Land:                   The real property outlined on Exhibit "A" attached
                        hereto.

Building:               A six-story building at the corner of Evelyn and
                        Mathilda Avenues in Sunnyvale, currently in the planning
                        and design stage, to be constructed on a portion of the
                        Land in the general location and configuration
                        designated as "Building 2" on Exhibit "A." A portion of
                        the Project Garage (as defined in Paragraph 1(c)) will
                        be located under the Building but will not be included
                        in the definition of "Building" for purposes of this
                        Lease.

Premises:               All of the Rentable Area located in the Building.

Project:                The Land, the Building, two additional buildings and the
                        Project Garage (as defined below) to be constructed on
                        the Land, and such additional buildings, parking
                        structures and improvements as Landlord may elect to
                        construct on the Land or such additional land as may be
                        acquired by Landlord (or one or more affiliates of
                        Landlord) that Landlord designates as being included in
                        the Project.



                                        i

<PAGE>   4


Rentable Area
  of the Premises:      Approximately 134,544 rentable square feet. The Premises
                        will be measured by Landlord's architect upon completion
                        of the Base Building for the purposes of rentable square
                        footage to the exterior surface of the outside walls or
                        exterior glass lines, with no deductions for vertical
                        penetrations or architectural details. Within thirty
                        (30) days after substantial completion of the Base
                        Building, Landlord will provide to Tenant a
                        certification of Landlord's architect with respect to
                        its calculations of the actual Rentable Area of the
                        Premises, and the Rentable Area shown in such
                        certification shall be conclusive and binding on the
                        parties for purposes of calculating Monthly Base Rent
                        and Tenant's Share hereunder and not subject to
                        remeasurement.

Tenant's                Use of the Premises: General office, sales, research and
                        development, and temporary storage of equipment
                        components (excluding uses that involve the use of
                        Hazardous Substances, as defined in Paragraph 39, beyond
                        levels typical for office use).

Lease Term:             Twelve (12) years (the "Initial Term"), with the right
                        to extend for one (1) additional six (6) year term (the
                        "Extension Term") in accordance with Paragraph 41. The
                        Initial Term and Extension Term (if any) shall
                        collectively be defined as the "Term".

Parking Spaces:         396 parking spaces will be available to Tenant in
                        accordance with Paragraph 33.

Scheduled Delivery
  Date:                 August 1, 2002

Scheduled Commencement
  Date:                 Ninety (90) days after the Delivery Date; provided that
                        such ninety (90) day period shall be extended one day
                        for each day of Contractor Delay or Landlord Delay (both
                        as defined in the Work Letter).

Monthly Base Rent:      Initially, $4.90 per rentable square foot of the
                        Rentable Area of the Premises.

Monthly Base
  Rent Adjustment:      On each anniversary of the Commencement Date, the
                        Monthly Base Rent shall increase in the manner set forth
                        in Paragraph 3(b).

Tenant's Share:         100%

Security Deposit:       Tenant shall provide and maintain a letter of credit in
                        the Required Amount as more specifically provided in
                        Paragraph 43, which amount may be adjusted during the
                        Term in accordance with such paragraph.

Landlord's Broker:      Dennis Chambers and Steve Horton of CPS

Tenant's Broker:        Thomas Snider of BT Commercial

Broker's Fee or
  Commission, if any,
  paid by:              Landlord, pursuant to separate agreement


The foregoing Basic Lease Information is hereby incorporated into and made a
part of this Lease. Each reference in this Lease to any of the Basic Lease
Information shall mean the respective information hereinabove set forth and



                                       ii
<PAGE>   5

shall be construed to incorporate all of the terms provided under the particular
paragraph pertaining to such information. In the event of any conflict between
any Basic Lease Information and the Lease, the latter shall control.


                                   LANDLORD:

                                   M-F Downtown Sunnyvale, LLC,
                                   a Delaware limited liability company

                                   By:  M-D Ventures, Inc., a California
                                        Corporation, its Manager

                                   By:  /s/ John Mozart
                                       ----------------------------------------
                                       John Mozart, its President



                                   TENANT:

                                   HANDSPRING, INC.,
                                   a Delaware corporation

                                   By: /s/ Donna Dubinsky
                                       --------------------------
                                   Its: Chief Executive Officer
                                       --------------------------


                                   By: /s/ Jeff Hawkins
                                       --------------------------
                                   Its: Chief Product Officer
                                       --------------------------



                                      iii

<PAGE>   6

                                 LEASE AGREEMENT


        THIS LEASE AGREEMENT (the "Lease") is made and entered into as of
February 14, 2001, by and between M-F DOWNTOWN SUNNYVALE, LLC, a Delaware
limited liability company (herein called "Landlord"), and HANDSPRING, INC., a
California corporation (herein called "Tenant").

        1. PREMISES AND PROJECT.

           (a) PREMISES. Upon and subject to the terms, covenants and conditions
hereinafter set forth, Landlord hereby leases to Tenant and Tenant hereby hires
from Landlord, the "Premises" (as defined in the Basic Lease Information).

           (b) BUILDING 3 LEASE. Landlord and Tenant have entered into a
separate lease (the "Building 3 Lease") of an additional building ("Building 3")
to be constructed on the Land in the general location and configuration
designated as "Building 3" on Exhibit "A."

           (c) PROJECT. The term "Project" shall mean the Land, the Building,
Building 3, an underground parking garage located under the Building and the
other buildings to be constructed on the Land (the "Project Garage"), an
additional building designated as "Building 1" on "Exhibit "A," and any other
buildings, parking structures and improvements constructed on the Land now or in
the future. In addition, Landlord may expand the land and improvements that are
included in the "Project" to include any other property acquired by Landlord or
its affiliates (as such term is defined at any given time), regardless of
whether any such other property is leased to Tenant or leased to, sold to or
occupied by a third party or third parties, provided that Tenant's costs related
to Project Common Area Expenses shall not materially increase (after taking into
account any additional benefits, rights and/or cost savings to Tenant) as a
result solely of such Project expansion unless Tenant consents to such expansion
in writing in advance, which consent shall not be unreasonably withheld,
conditioned or delayed. Landlord shall deliver written notice to Tenant of
Landlord's intent to expand the Project, identifying the property and
improvements which will be added to the Project and including a new Exhibit "A"
reflecting the addition to the Project, and specifying whether Tenant's consent
to such expansion is required under this Paragraph 1(c) (and, if it is required,
requesting such consent). Failure by Tenant to respond to any written request by
Landlord for such consent within ten (10) business days after receipt of
Landlord's request shall be deemed consent by Tenant to the expansion described
in such notice. Any such Project expansion shall be effective on the date
designated by Landlord in its notice to Tenant.

           (d) DISPOSITION AND DEVELOPMENT AGREEMENT. Landlord has acquired the
Land pursuant to a Disposition and Development Agreement (the "DDA") with the
Sunnyvale Redevelopment Agency ("City"). Tenant acknowledges that Landlord has
not constructed the Building, the Project Garage, Building 1 or Building 3 as of
the date of this Lease. Pursuant to the DDA, Landlord is obligated to build an
underground public parking facility (the "City Garage") under certain adjacent
land owned by the City, which underground parking facility will be connected
physically to the Project Garage, and in addition is obligated to grant the City
the right, pursuant to that certain Declaration of Covenants, Conditions, and
Restrictions and Reciprocal Easement Agreement (Downtown Sunnyvale Parking
Structures) dated as of November 15, 2000 and recorded November 22, 2000, as
Instrument Number 15470449 in the Official Records of Santa Clara County,
California (such document being defined as the "Parking REA"), to use the
Project Garage for parking in up to 320 parking stalls in evening and weekend
hours as specified in the DDA, and also to use the entire Project Garage for
"special events" parking in evening and weekend hours up to eight times per year
as specified by the City (such rights, and any other similar parking rights
granted to the City pursuant to the DDA or the Parking REA, or pursuant to rules
and regulations adopted in connection therewith, are defined collectively herein
as the "City Parking Rights"). The Parking REA also provides for the allocation
of certain shared costs between the City Garage and the Project Garage. All
parking rights of Tenant hereunder, and of the other tenants in the Project, are
subject to the City Parking Rights. Landlord shall have the right to make
reasonable modifications to the Parking Rights, or to create, accept or adopt
additional Parking Rights, provided that (except for modifications and
additional Parking Rights that are required by the City or by applicable
governmental authority, quasi-governmental authority or Laws, which shall not
require Tenant's



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<PAGE>   7

consent) so long as Tenant occupies not less than fifty percent (50%) of the
Building, Landlord shall obtain the prior written consent of Tenant to such
modifications or additional Parking Rights, which consent shall not be
unreasonably withheld, conditioned or delayed so long as they do not materially
adversely affect Tenant's Permitted Use of the Premises, Minimum Parking as
provided in Paragraph 33, or access to the Premises, and do not materially alter
the allocation of Project Costs to the Building or result in Tenant's cost of
occupancy of the Premises being materially increased and/or Tenant's rights
under this Lease being materially diminished. Failure by Tenant to respond to
any written request by Landlord for such consent (which request shall include a
copy or description of the proposed modification and/or additional Parking
Rights) within ten (10) business days after receipt of Landlord's request shall
be deemed consent by Tenant to the proposed modification to the Parking Rights
or additional Parking Rights described in such request. The development of the
Project as contemplated or required by the DDA shall be defined in this Lease as
the "Initial Development", and shall include, without limitation, (i) the
acquisition of the Land, (ii) construction of the Building, the Project Garage,
and all other buildings and improvements (including any necessary demolition) to
be constructed on the Land, (iii) creation, filing and recordation of the
Initial Parcel Map (as defined below), the Parking REA, the Initial CC&Rs (as
defined below), and any other Encumbrances contemplated by the DDA and any
necessary modifications or amendments thereto, and (iv) any and all other
activities, actions, requirements, assessments, approvals, documents,
instruments and similar items that are, in Landlord's reasonable discretion,
necessary or desirable in connection therewith.

           (e) RECONFIGURATION/PARCEL MAP. In connection with the Initial
Development, Landlord has filed a parcel map that causes the airspace to be
occupied by the Building to consist of one legal parcel, and the airspace to be
occupied by each additional building in the Project to consist of a separate
legal parcel, and the Project Garage and Project Common Area collectively to
consist of a separate legal parcel (such parcel map being defined as the
"Initial Parcel Map"). Landlord reserves the right, without incurring any
liability to Tenant and without constituting an eviction (constructive or
otherwise), and without entitling Tenant to any abatement of Rent or to
terminate this Lease or otherwise releasing Tenant from any of Tenant's
obligations under this Lease, to amend the Initial Parcel Map to reconfigure the
parcels, even if such map would cause a reduction in the size of the Land, so
long as the size of the building envelope in which the Building is or will be
located is not materially affected by such action, the Project continues to be
in compliance with all applicable Laws (including, without limitation, city
parking requirements and other development approvals and land use regulatory
requirements), Tenant's Permitted Use of the Premises as allowed by this Lease
is not materially impaired thereby, and the Minimum Parking continues to be
available to Tenant as provided in Paragraph 33. Tenant shall cooperate with
Landlord in connection with any amendment to the Initial Parcel Map and/or any
other subdivision or lot line adjustment process with respect to the Land or
Project generally, provided that Tenant shall not be obligated to incur material
costs in connection with such cooperation. In addition, at any time during the
Term, Landlord may reduce the land and improvements that are included in the
Project, subdivide the Project, or otherwise reconfigure the Project in any way,
so long as in connection with such reconfiguration (other than in connection
with the Initial Development) the size of the building envelope in which the
Building is or will be located is not materially affected by such action, the
Project continues to be in compliance with all applicable Laws (including,
without limitation, city parking requirements and other development approvals
and land use regulatory requirements), Tenant's Permitted Use of the Premises as
allowed by this Lease is not impaired thereby, and the Minimum Parking continues
to be available to Tenant as provided by Paragraph 33, and Tenant's access to
the Premises is not materially impaired. Upon Landlord's request, Tenant shall
execute and deliver any documents or instruments reasonably required in
connection with any amendment to the Initial Parcel Map and/or any other
subdivision or lot line adjustment process in connection with this Paragraph
1(e).

           (f) CONSTRUCTION OF FUTURE PHASES. Landlord shall construct the other
buildings shown on Exhibit "A" and all other on-site and off-site improvements
that are expressly required by the terms and conditions of the DDA, the Parking
REA and/or the CC&Rs, as such documents may be amended from time to time. In
addition, Landlord may construct additional buildings and improvements on the
Land in such locations as Landlord may determine, in its sole discretion. Tenant
acknowledges that during any such construction and development, Landlord, its
tenants, and their respective employees, contractors and agents will require
access across and through the Project Common Area for purposes of construction
and development of additional buildings and improvements in the Project (as it
may exist from time to time) and use of portions of the Project Common Area for
construction staging in connection with such construction and development,
including, without limitation, for the storage of all



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<PAGE>   8

necessary materials, tools and equipment. Landlord shall not be liable to Tenant
for any interference with Tenant's use of the Project Common Area with respect
to such construction and development activities or any noise, vibration, or
other disturbance to Tenant's business at the Premises which may result from
such activities, so long as the Building's structural components and Building
Systems are not materially adversely affected by such activities, the Project
continues to be in compliance with all applicable Laws, Tenant at all times has
reasonable access to the Building and use of the Minimum Parking as provided in
Paragraph 33, and Landlord takes commercially reasonable steps to minimize any
material adverse effect on Tenant's Permitted Use of the Premises arising from
such activities. Tenant shall cooperate with Landlord in connection with any
construction or development activities with respect to any such construction of
buildings or improvements, including, without limitation, by cooperating in any
parking restrictions and limitations during such activities.

           (g) COMMON AREA. The term "Common Area" or "Project Common Area"
shall mean all areas and facilities within the Project that are not designated
by Landlord, from time to time, for the exclusive use of Tenant or any other
tenant or other occupant of the Project, that are located outside the building
envelopes of the Building and of any other buildings now or hereafter located in
the Project. Project Common Areas shall include, without limitation, the Project
Garage, facilities and equipment servicing the Project as a whole or the Project
Garage, access and perimeter roads and ramps, pedestrian sidewalks, landscaped
areas, plaza areas, trash enclosures, recreation areas and the like.

           (h) CC&RS. The operation of the Project Common Area (including the
Project Garage), and access to, from and between various portions of the Project
Common Area, are and shall be governed by that certain Declaration of Covenants,
Conditions and Restrictions and Reciprocal Easement Agreement, dated as of
November 22, 2000, and recorded November 22, 2000 as Instrument Number 15470450
in the Official Records of Santa Clara County, and such additional conditions,
covenants and restrictions and/or reciprocal easements and/or reciprocal
licenses (any of the foregoing being defined herein collectively as "CC&Rs"), as
are required by or pursuant to the DDA, in connection with the Initial Parcel
Map, or as Landlord may otherwise determine in its discretion are necessary or
desirable in connection with the Initial Development (such CC&Rs in connection
with the DDA or Initial Development being defined herein collectively as the
"Initial CC&Rs") between the owners of portions of the Project, including,
without limitation, in order to provide necessary or appropriate access over,
across and from the Common Area (including any ramps between the parking
structures, roadways and drive aisles located thereon) to other portions of the
Common Area and/or to any other property which is included in the Project,
and/or that encumber portions of the Project for the benefit of other portions
of the Project or the adjacent City property (or reciprocally benefit each
other), and/or in order to provide sufficient parking for any portion of the
Project or in connection with the City Parking Rights, and/or that allocate
costs of the operation, maintenance, repair Project and/or Project Common Area
among the owners of portions of the Project in a reasonable and customary
manner. Without limiting the foregoing, the Initial CC&Rs provide for elevator
and stairwell access from the portion of the Project Garage located under each
building in the Project to the exterior Project Common Area through a corridor
located on the ground floor of each such building from the elevator and
stairwell to the exterior Project Common Area in a location and configuration
designated by Landlord, which access right shall burden the applicable building
for the benefit of the remaining portions of the Project; provided that with
respect to such access corridor located on the ground floor of the Building
(defined herein as the "Dedicated Garage Exit Area"), (i) the Dedicated Garage
Exit Area will be shown on Landlord's Plans (as defined in the Work Letter), and
(ii) the Dedicated Garage Exit Area will be physically partitioned from the
remainder of the Premises such that Tenant shall have the right to limit,
prevent or lock any direct access to the remainder of the Premises from the
Dedicated Garage Exit Area. The Initial CC&Rs and all provisions thereof will at
all times be superior in priority to this Lease. Landlord shall have the right
to make reasonable modifications to the Initial CC&Rs during the Term, or to
create additional CC&Rs affecting all or portions of the Project, provided that
(except for modifications and/or additional CC&Rs that are required by
applicable governmental authority, quasi-governmental authority, or Laws, which
shall not require Tenant's consent), so long as Tenant occupies not less than
fifty percent (50%) of the Building, Landlord shall obtain the prior written
consent of Tenant to such modifications or additional CC&Rs, which consent shall
not be unreasonably withheld, conditioned or delayed so long as such
modifications or additional CC&Rs do not materially adversely affect Tenant's
Permitted Use of the Premises, Minimum Parking as provided in Paragraph 33 or
access to the Premises; and do not materially alter the allocation of Project
Costs to the Building or materially affect Common Areas located within the
Building (if any), or result in Tenant's cost of occupancy of the Premises being
materially



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<PAGE>   9

increased and/or Tenant's rights under this Lease being materially diminished.
Failure by Tenant to respond to any written request by Landlord for such consent
(which request shall include a copy of the proposed modification and/or
additional CC&Rs) within ten (10) business days after receipt of Landlord's
request shall be deemed consent by Tenant to the proposed modification to the
Initial CC&Rs or additional CC&Rs described in such request.

           (i) USE OF THE PREMISES AND COMMON AREA. Tenant may use and occupy
the Premises for the purposes specified in the Basic Lease Information
("Permitted Use"), subject to the terms and conditions of this Lease, and for no
other use or purpose without the prior written consent of Landlord. Landlord
shall have the right to grant or withhold consent to a use other than the
Permitted Use in its sole discretion. Tenant shall be entitled to the
nonexclusive use of the Common Area with Landlord and other occupants (if any)
of the Project in accordance with the limitations and restrictions in this Lease
and the Rules and Regulations established by Landlord from time to time;
provided, however, that if Landlord reconfigures the Project or sells a portion
of the Project (including, without limitation, if the Project Garage is owned by
an entity other than Landlord), Landlord shall assure to Tenant that Tenant
shall continue to have reasonable access to the Premises and Tenant's Minimum
Parking as provided in Paragraph 33 through the Initial CC&Rs or subsequent
CC&Rs or other like mechanism. Notwithstanding anything to the contrary in the
Basic Lease Information or in this Lease, Tenant understands and agrees that (a)
the Parking REA, the Initial CC&Rs and such additional CC&Rs as Landlord may
elect to record against the Project as provided in Paragraph 1(h) , and/or (b) a
ground lease, and /or (c) certain other easements, licenses, access agreements
and other encumbrances recorded in the official records of Santa Clara County
(collectively, the Parking REA, the Initial CC&Rs, any additional CC&Rs, any
ground lease and any such encumbrances are sometimes collectively referred to
herein as the "Encumbrances") may encumber the Land and/or Project now or in the
future, and that Tenant's occupancy and use of the Premises and use of the
Project Common Area may be restricted by such Encumbrances. If necessary, Tenant
shall execute such documents as are reasonably necessary to cause this Lease to
become subordinate to any such Encumbrances, provided that Tenant shall have
been provided with a true, correct and complete copy thereof prior to the date
hereof or, with respect to future CC&Rs, ground lease or Encumbrance, prior to
its effective date, and any approval given by Landlord hereunder shall be
limited to the matters covered by such approval with respect to this Lease only
and shall not be interpreted to include any approval or consent in respect of
the CC&Rs, ground lease or Encumbrance. Landlord agrees to use commercially
reasonable efforts to enforce specific provisions of the CC&Rs and/or Parking
REA for the benefit of the Premises upon receipt of written request from Tenant
specifying the specific relevant provisions to be enforced and specific
enforcement efforts that Tenant requests Landlord to take.

        2. TERMS AND POSSESSION.

           (a) TERM. The term of this Lease (the "Term") shall commence on the
Commencement Date (as defined below) and, unless sooner terminated pursuant to
the express provisions of this Lease, shall expire on the date that is one day
prior to the twelfth anniversary of the Commencement Date (subject to extension
in accordance with Paragraph 42 to the date that is one day prior to the sixth
anniversary of the Extension Term, if any) (such date being the "Expiration
Date"). The "Commencement Date" shall be the earlier to occur of the following:
(i) the date that is ninety (90) days after the Delivery Date (as defined in
Paragraph 2(b)); provided that such ninety (90) day period shall be extended one
day for each day of Contractor Delay (as defined in the Work Letter) or Landlord
Delay (as defined in the Work Letter); (ii) the date on which Tenant has
substantially completed the Tenant Improvements (as defined in the Work Letter)
in accordance with the Work Letter; or (iii) the date upon which Tenant actually
commences business in any portion of the Premises.

           (b) DELIVERY DATE. The "Delivery Date" shall be the date on which
Landlord has (i) completed the construction components of the Base Building
required to be completed by Landlord in order for the "Initial Tenant Work Date"
(as defined in the Work Letter) to occur, and (ii) tendered possession of the
Premises to Tenant subject to Landlord's continuing right to access the Premises
and take all steps required to complete the Base Building; provided, however,
that the Delivery Date shall not occur earlier than the Scheduled Delivery Date
shown in the Basic Lease Information without Tenant's prior written consent. All
of the rights and obligations of the parties under this Lease (other than
Tenant's obligation to pay Monthly Base Rent and Additional Charges for Expenses
and Taxes) shall commence on the Delivery Date. Tenant shall be deemed to occupy
the Premises from and after the Delivery Date. Within five (5) business days
after the Delivery Date, the parties shall execute a letter



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<PAGE>   10

confirming the Delivery Date and certifying that Tenant has accepted delivery of
the Premises, in the form attached hereto as Exhibit "B" (the "Delivery Date
Memorandum"). Either party's failure to request execution of, or to execute, the
Delivery Date Memorandum shall not in any way alter the Delivery Date.

           (c) CONSTRUCTION OF IMPROVEMENTS. Completion of the Base Building (as
defined in the Work Letter) by Landlord and the Tenant Improvements by Tenant
shall be governed by the terms and conditions of the Work Letter which is
attached hereto as Exhibit "C". Tenant's obligation to construct the Tenant
Improvements pursuant to the Work Letter is independent of, and in addition to,
Tenant's obligation to pay Rent and Tenant's other obligations under this Lease.
Tenant acknowledges that Landlord has not made any representation or warranty
with respect to the construction of the Base Building or the condition of the
Premises or the Project Common Area (except as may be expressly provided
herein), or with respect to the suitability or fitness of any of the foregoing
for the conduct of Tenant's permitted use or for any other purpose. By occupying
the Premises, Tenant shall be deemed to have accepted the same as suitable for
the purpose herein intended, subject to completion of items on Landlord's
architect's punch list (which shall be approved by Tenant as provided in
Paragraph 8 of the Work Letter, in Tenant's reasonable discretion) with respect
to the Base Building and subject to Landlord's obligations pursuant to Paragraph
7(a). Upon Tenant's request, Landlord shall use reasonable efforts to enforce
any construction warranties Landlord obtains with respect to the Base Building.
If Tenant is not satisfied, in Tenant's reasonable discretion, with Landlord's
actions in enforcing such warranties, Tenant may upon written notice to Landlord
take any actions necessary in Tenant's reasonable judgment to enforce such
warranties directly, and Landlord shall take all commercially reasonable action
to cooperate with Tenant, including assigning to Tenant Landlord's rights with
respect to such warranties.

           (d) CERTIFICATE OF OCCUPANCY. After substantial completion of the
Tenant Improvements, Tenant shall immediately apply for, and use best efforts to
obtain within fifteen (15) business days, a certificate of occupancy (or
equivalent documentation) for the Premises, which may be in the form of a
temporary certificate of occupancy provided that a permanent certificate of
occupancy is issued by the City of Sunnyvale and delivered to Landlord by Tenant
prior to expiration of the temporary certificate of occupancy. Tenant shall
promptly deliver to Landlord copies of the certificate of occupancy, and all
other permits, consents and approvals from the appropriate governmental agencies
which are necessary for occupancy and operation of the Premises as contemplated
by this Lease to the extent they are requested by Landlord. Tenant shall, no
later than ninety (90) days after the date of issuance by the City of Sunnyvale
of a certificate of occupancy or its equivalent concerning the Premises, occupy
a portion of the Premises. This Paragraph 2(d) shall not be construed as an
obligation of Tenant to continuously occupy the Premises.

        3. RENT; RENT ADJUSTMENTS; ADDITIONAL CHARGES FOR EXPENSES AND TAXES.

           (a) MONTHLY BASE RENT AND ADDITIONAL CHARGES. Tenant's obligation to
pay Monthly Base Rent and Additional Charges for Expenses and Taxes hereunder
shall commence on the Commencement Date. Commencing on the Commencement Date and
throughout the Term of this Lease, Tenant shall pay the monthly base rent
specified in the Basic Lease Information, as adjusted pursuant to Paragraph 3(b)
(as so adjusted from time to time, "Monthly Base Rent"), on the first day of
each month, in advance, in lawful money of the United States (without any prior
demand therefor and without deduction or offset whatsoever, except as expressly
provided in this Lease) to Landlord or its Managing Agent at the address
specified in the Basic Lease Information or to such other firm or to such other
place as Landlord or its Managing Agent may from time to time designate in
writing. In addition, Tenant shall pay to Landlord all charges and other amounts
whatsoever as provided in this Lease ("Additional Charges") at the place where
the Monthly Base Rent is payable, and Landlord shall have the same remedies for
a Default in the payment of Additional Charges as for a Default in the payment
of Monthly Base Rent. As used herein, the term "Rent" shall include all Monthly
Base Rent and Additional Charges (including, without limitation, Additional
Charges for Real Estate Taxes and Expenses pursuant to Paragraph 3(c) below, and
Additional Charges pursuant to Paragraphs 5(b), 6, 7(e), 8, 10(d) and (f), 20(c)
and 23). If the Commencement Date occurs on a day other than the first day of a
calendar month, or the Expiration Date occurs on a day other than the last day
of a calendar month, then the Monthly Base Rent and Additional Charges for such
fractional month shall be prorated on a daily basis. If any issues used to
determine the Commencement Date (including issues used to determine the Delivery
Date) are either in dispute or cannot be determined with certainty as of the
date Landlord believes should



                                       5
<PAGE>   11

be the Commencement Date (including, without limitation, as a result of any
actual or alleged Tenant Delay, Landlord Delay or Contractor Delay), Tenant
shall commence to pay Monthly Base Rent and Additional Charges from and after
the Commencement Date as determined by Landlord in Landlord's reasonable
discretion; provided, however, that such payment shall be without prejudice to
the ultimate determination of any issues that are undetermined or in dispute as
of such date, and future Rent payments shall be adjusted by Landlord as
reasonably appropriate after the Commencement Date has been finally determined,
to take into account the actual Commencement Date and any resulting overpayment
or underpayment of Rent.

           (b) ANNUAL ADJUSTMENTS IN MONTHLY BASE RENT. The Monthly Base Rent
under Paragraph 3(a) shall be adjusted on each anniversary of the Commencement
Date throughout the Term, including the Extension Term, if any, (each such date,
an "Adjustment Date") as follows.

                      (i) FIRST ANNIVERSARY: On the Adjustment Date occurring on
           the first anniversary of the Commencement Date (the "First Adjustment
           Date"), the Monthly Base Rent shall be determined by multiplying the
           Rentable Area by the sum of (A) $5.05, plus (B) an amount determined
           by multiplying the CPI Increase (as defined below) for the First
           Adjustment Date by $5.00 (such amount being the "Year One
           Adjustment"); provided, however, that in no event shall the Monthly
           Base Rent be adjusted on the First Adjustment Date to an amount that
           is less than one hundred three and five/tenths percent (103.5%) of
           the amount obtained by multiplying $5.00 by the Rentable Area, nor to
           an amount that is more than one hundred five and five/tenths percent
           (105.5%) of the amount obtained by multiplying $5.00 by the Rentable
           Area.

                      (ii) SECOND ANNIVERSARY: On the Adjustment Date occurring
           on the second anniversary of the Commencement Date (the "Second
           Adjustment Date"), the Monthly Base Rent shall be determined by
           multiplying the Rentable Area by the sum of (A) $5.00, plus (B) the
           Year One Adjustment, plus (C) an amount determined by multiplying the
           CPI Increase for the Second Adjustment Date by the sum of (A) and (B)
           (such amount being the "Year Two Adjustment"), plus (D) $.05;
           provided, however, that in no event shall the Monthly Base Rent be
           adjusted on the Second Adjustment Date to an amount that is less than
           one hundred three and five/tenths percent (103.5%) of the amount
           obtained by multiplying the Rentable Area by the sum of $5.00 plus
           the Year One Adjustment, nor to an amount that is more than one
           hundred five and five/tenths percent (105.5%) of the amount obtained
           by multiplying the Rentable Area by the sum of $5.00 plus the Year
           One Adjustment.

                      (iii) THIRD ANNIVERSARY: On the Adjustment Date occurring
           on the third anniversary of the Commencement Date (the "Third
           Adjustment Date"), the Monthly Base Rent shall be determined by
           multiplying the Rentable Area by the sum of (A) $5.00, plus (B) the
           Year One Adjustment, plus (C) the Year Two Adjustment, plus (D) an
           amount determined by multiplying the CPI Increase for the Third
           Adjustment Date by the sum of (A), (B) and (C); provided , however,
           that in no event shall the Monthly Base Rent be adjusted on the Third
           Adjustment Date to an amount that is less than one hundred three and
           five/tenths percent (103.5%) of the amount obtained by multiplying
           the Rentable Area by the sum of $5.00 plus the Year One Adjustment
           plus the Year Two Adjustment, nor to an amount that is more than one
           hundred five and five/tenths percent (105.5%) of the amount obtained
           by multiplying the Rentable Area by the sum of $5.00 plus the Year
           One Adjustment plus the Year Two Adjustment.

                      (iv) SUBSEQUENT ADJUSTMENT DATES: On the Adjustment Date
           occurring on the fourth anniversary of the Commencement Date, and on
           each Adjustment Date, the Monthly Base Rent shall be increased from
           the Monthly Base Rent as of the date immediately preceding the
           applicable Adjustment Date (with respect to each Adjustment Date,
           such then-existing Monthly Base Rent being defined as the "Existing
           Rent") by adding to the Existing Rent the product obtained by
           multiplying the applicable CPI Increase by the Existing Rent;
           provided, however, that in no event shall the Monthly Base Rent on
           any such Adjustment Date be adjusted to an amount that is less than
           one hundred three and five/tenths percent (103.5%) of the Existing
           Rent, nor to an amount that is more than one hundred five and
           five/tenths percent (105.5%) of the Existing Rent.



                                        6
<PAGE>   12


The "CPI Increase" shall be calculated on each Adjustment Date by comparing the
Consumer Price Index for the San Francisco Bay Area, All Urban Consumers, All
Items, San Francisco/Oakland/San Jose, California (Base Years 1982-84=100) (the
"CPI") for the closest calendar month prior to the immediately preceding
Adjustment Date (or, with respect to the First Adjustment Date, prior to the
Commencement Date) for which the CPI is published, to the CPI for the closest
calendar month prior to the applicable Adjustment Date for which the CPI is
published. The increase in the CPI indicated by such comparison, stated as a
percentage, shall be defined herein with respect to each Adjustment Date as the
"CPI Increase". If, during the Term, the CPI is no longer published, Landlord
shall, for the purposes of computation of any adjustments in Monthly Base Rent,
substitute such other Index as is then generally recognized as most comparable
to the CPI and accepted for similar determinations. If sufficient data is
unavailable for Landlord to make the determination specified in this Paragraph
3(b) on any Adjustment Date, Tenant shall continue to pay the Monthly Base Rent
payable immediately prior to such Adjustment Date. As soon as the necessary data
becomes available, Landlord shall determine the Monthly Base Rent payable from
and after such Adjustment Date and notify Tenant of the adjustment in writing,
and within fifteen days after such notice Tenant shall pay to Landlord the
amount by which the Monthly Base Rent for the period following such Adjustment
Date exceeds the amount previously paid by Tenant as Monthly Base Rent for such
period.

           (c) ADDITIONAL CHARGES FOR EXPENSES AND TAXES.

                      (i) DEFINITIONS OF ADDITIONAL CHARGES: For purposes of
           this Paragraph 3(c), the following terms shall have the meanings
           hereinafter set forth:

                        (A) "TAX YEAR" shall mean each twelve (12) consecutive
                month period commencing January 1st of the calendar year during
                which the Commencement Date of this Lease occurs, provided that
                Landlord, upon notice to Tenant, may change the Tax Year from
                time to time to any other twelve (12) consecutive month period
                and, in the event of any such change, Tenant's Share of Real
                Estate Taxes (as hereinafter defined) shall be equitably
                adjusted for the Tax Years involved in any such change.

                        (B) "TENANT'S SHARE" shall mean the Rentable Area of the
                Premises divided by the total rentable area of the Building.
                Initially, Tenant's Share is estimated to be the percentage
                figure specified in the Basic Lease Information (subject to
                change based on measurement of the actual Rentable Area and
                rentable area of the Building as provided in the Basic Lease
                Information).

                        (C) "REAL ESTATE TAXES" shall mean (i) to the extent the
                Building is assessed separately from any other real property,
                all taxes, assessments and charges levied upon or with respect
                to the Building, plus the Building Share of all taxes,
                assessments and charges levied with respect to the Project
                Common Area not included with the Building assessment or any
                personal property of Landlord used in the operation thereof, or
                (ii) to the extent the Project is assessed as a whole, the
                Building Share of all taxes, assessments and charges levied upon
                or with respect to the Project or any personal property of
                Landlord used in the operation thereof, or Landlord's interest
                in the Project or such personal property. Real Estate Taxes
                shall include, without limitation, all general real property
                taxes and general and special assessments, charges, fees or
                assessments for transit and/or parking (including in connection
                with inclusion of the Building or Project in a parking or
                transit district), housing, police, fire or other governmental
                services or purported benefits to the Building or Project,
                service payments in lieu of taxes, and any tax, fee or excise on
                the act of entering into this Lease, or any other lease of space
                in the Project, or on the use or occupancy of the Project or any
                part thereof, or on the rent payable under any lease or in
                connection with the business of renting space in the Project,
                that are now or hereafter levied or assessed against Landlord by
                the United States of America, the State of California, or any
                political subdivision, public corporation, district or any other
                political or public entity, and shall also include any other
                tax, fee or other excise, however described, that may be levied
                or assessed as a substitute for, or as an addition to, in whole
                or in part, any other Real Estate Taxes, whether or not now
                customary or in the contemplation of the parties on the date of
                this Lease.



                                       7
<PAGE>   13

                Real Estate Taxes shall not include franchise, transfer,
                inheritance or capital stock taxes or income taxes measured by
                the net income of Landlord from all sources unless, due to a
                change in the method of taxation, any of such taxes is levied or
                assessed against Landlord as a substitute for, in whole or in
                part, any other tax that would otherwise constitute a Real
                Estate Tax. Additionally, Real Estate Taxes shall not include
                any assessments or like charges to pay for any remediation of
                contamination from any Hazardous Substance (defined in Paragraph
                39 hereof) existing as of the Commencement Date unless
                introduced in, on, under or about the Premises by Tenant or
                Tenant's employees, agents, contractors or invitees. Real Estate
                Taxes also shall not include any taxes attributable to any new
                construction on the Project (other than the Building) that
                increases the rentable area of the Project, or any increase in
                any Real Estate Taxes directly attributable to such new
                buildings or improvements, until such time as such new buildings
                or improvements are leased and occupied by tenants paying such
                building's share of Real Estate Taxes assessed against the
                Project; provided, however, that Real Estate Taxes shall include
                the Building Share of any new taxes or increases in Real Estate
                Taxes attributable to the Project Garage, the City Garage or
                Parking REA, or similar new construction, buildings or
                improvements that are used for parking or other Common Area uses
                (or the proportionate amount of any such new taxes or increase
                attributable to the portion of any new construction, buildings
                or improvements used for parking or other Common Area uses).
                Real Estate Taxes shall also include reasonable legal fees,
                costs and disbursements incurred in connection with proceedings
                to contest, determine or reduce Real Estate Taxes; provided that
                such fees, costs and disbursements do not exceed the actual
                savings in Real Estate Taxes obtained by Tenant over the Term of
                the Lease. If any assessments are levied on the Building or
                Project, Tenant shall have no obligation to pay more than that
                amount of annual installments of principal and interest that
                would become due during the Term had Landlord elected to pay the
                assessment in installment payments, even if Landlord pays the
                assessment in full.

                        (D) "BUILDING SHARE" shall mean the Rentable Area in the
                Building divided by the total rentable area in the Project, as
                determined by Landlord, in its reasonable discretion, based on
                the same measurement methodology as is used to measure the
                Rentable Area of the Premises as specified in the Basic Lease
                Information.

                        (E) "EXPENSES" shall mean the total costs and expenses
                paid or incurred by Landlord in connection with the management,
                operation, maintenance and repair of the Building and the
                Project Common Area, including, without limitation (i) the cost
                of air conditioning, electricity, steam, heating, mechanical,
                ventilating, elevator systems and all other utilities, to the
                extent provided by Landlord, and the cost of supplies and
                equipment and maintenance and service contracts in connection
                therewith; (ii) the cost of repairs and general maintenance and
                cleaning; (iii) the Building Share of the cost of fire, extended
                coverage, boiler, sprinkler, public liability, property damage,
                rent, earthquake and flood (in each case if Landlord elects to
                obtain it) and other insurance for the Project obtained by
                Landlord, or otherwise obtained by Landlord in connection with
                the Project, all including, without limitation, insurance
                premiums and any deductible amounts paid by Landlord, including,
                without limitation, the insurance required by Paragraph 10(f);
                (iv) fees, charges and other costs directly related to the
                operation of the Project (as distinct from the operation of the
                partnership which owns the Project), including management fees,
                consulting fees, legal fees and accounting fees, fees of all
                independent contractors engaged by Landlord directly related to
                the operation of the Project or reasonably charged by Landlord
                if Landlord performs management services in connection with the
                Project, (though the management fee shall not exceed the cap
                noted in the following paragraph); (v) the cost of any capital
                improvements made to the Building, and the Building Share of the
                cost of any capital improvements made to the Project Common
                Area, after the Commencement Date (a) as a labor saving device
                or to effect other economies in the operation or maintenance of
                the Building or the Project Common Area (from which a reasonable
                person would anticipate that savings would actually result), (b)
                to repair or replace capital items which are no longer capable
                of providing the services required of them (other than in
                connection with a casualty which is addressed by Paragraph 20),
                or (c) that are made to the Building or the Project Common Area
                after the date of this Lease and are required under any Laws



                                       8
<PAGE>   14

                (as defined in Paragraph 5) (excluding, however, any capital
                improvements required by Laws that are Tenant's responsibility
                under Paragraph 5 which shall be paid directly by Tenant
                pursuant to Paragraph 5, where such capital improvements were
                not required under any such Laws to be completed with respect to
                the Project prior to the date the Lease was executed; and the
                costs of capital improvements incurred by Landlord which are the
                responsibility of Tenant pursuant to this Lease shall be
                amortized over the useful life of the capital item in question
                as determined in accordance with generally accepted accounting
                principles ("GAAP"), together with interest on the unamortized
                balance at the greater of (x) the rate paid by Landlord on funds
                borrowed from an institutional lender for the purpose of
                constructing such capital improvements; or (y) 10% per annum;
                provided, however, the amount of the cost of capital
                improvements which may be included within Expenses pursuant to
                this clause (v) shall be the greater of (I) the amount that
                would be payable pursuant to the foregoing amortization or (II)
                $.02 per square foot of the Rentable Area of the Premises per
                month (and to the extent the amount under this clause (II)
                exceeds the amount that would be payable under clause (I), such
                excess shall be credited against the unamortized balance of the
                cost of capital improvements in the inverse order in which they
                would be payable by Tenant under clause (i)); and (vi) any other
                reasonable expenses of any other kind whatsoever reasonably
                incurred in managing, operating, maintaining and repairing the
                Building, including, but not limited to, costs incurred or
                assessed pursuant to the Parking REA, the Initial CC&Rs, any
                other CC&Rs, any ground lease or any Encumbrances, and the
                Building's Share of Project Common Expenses. "Project Common
                Expenses" shall mean any expenses paid or incurred by Landlord
                in connection with the management, operation, maintenance and
                repair of the Project Common Area and any other Expenses paid or
                incurred by Landlord for the benefit of the Project as a whole,
                including, but not limited to, the cost of maintaining any
                traffic improvements, surface parking lots and facilities
                located in the Project Common Area, landscaping, the cost of any
                security Landlord elects to provide for all or any portions of
                the Project Common Area, and any costs allocated to the Project
                Common Area (or the Project as a whole) pursuant to the Parking
                REA. Any "deductible" amounts relating to capital improvements
                required to be paid by Tenant hereunder in connection with any
                property or earthquake insurance policy carried by Landlord
                shall be amortized over the useful life of the restoration work
                to which such deductible amount relates in accordance with GAAP,
                in the same manner as other capital improvements that are
                included in Expenses as provided above.

Notwithstanding anything to the contrary herein contained, Expenses shall not
include, and in no event shall Tenant have any obligation to pay for pursuant to
this Paragraph 3 or Paragraph 7(b), (aa) the acquisition cost of the Land and
the initial construction cost of the Project Garage and of any new buildings or
improvements on the Project that increase the rentable area of the Project (or
any additional operating expenses incurred during the course of construction and
as a direct result of such construction) including, without limitation, any of
the foregoing costs incurred in connection with an expansion of the Project
pursuant to Paragraph 1(c), other than costs in connection with construction of
the Building or other portions of the Project that are otherwise payable by
Tenant hereunder; (bb) the cost of providing tenant improvements to Tenant or
any other tenant and costs of preparing any other premises in the Project for
occupancy by any other tenant, including brokerage commissions, attorneys fees
and other fees incurred in connection with the leasing thereof; (cc) any rent
payable pursuant to a ground lease, and debt service (including, but without
limitation, interest, principal and any impound payments) required to be made on
any mortgage or deed of trust recorded with respect to all or any portion of the
Project other than debt service and financing charges imposed pursuant to
Paragraph 3(c)(1)(E)(v) above; (dd) the cost of special services, goods or
materials provided to any tenant; (ee) depreciation; (ff) the portion of a
management fee in excess of two and five/tenths percent (2.5%) of Monthly Base
Rent and Additional Charges for Expenses and Taxes (excluding the management
fee); (gg) penalties resulting from Landlord's failure to comply with applicable
Laws, to the extent that such compliance is expressly Landlord's responsibility
under this Lease; (hh) costs for which Landlord has a right of and has received
reimbursement from others; (ii) costs to correct any construction or design
defects in the original construction of the Base Building; (jj) repairs,
replacement and upgrades to the structural elements of the Base Building (e.g..
steel frame and slab) and structural components of the roof (not including the
roof membrane above the concrete over metal deck), other than capital
improvements pursuant to Paragraph 3(c)(1)(E)(v) above; (kk) environmental
pollution remediation related costs for which Landlord has indemnified Tenant
pursuant to Paragraph



                                       9
<PAGE>   15

39(c); (ll) advertising or promotional expenditures; (mm) leasing or sales
commissions; (nn) repairs, restoration or other work occasioned by condemnation,
or by fire, wind, the elements or other casualty, to the extent of amounts paid
or payable under any insurance policy maintained by Landlord covering the
Project or any portion thereof; (oo) compensation paid to any employee of
Landlord other than maintenance and property management personnel below the
level of project manager, directly associated with the operation and maintenance
of the Building or Project (it being agreed that the salaries of such management
personnel at or above the level of project manager are covered by the management
fee); (pp) repairs, alterations, additions, improvements or replacements made to
rectify or correct any condition with respect to the Project that is in
violation of applicable Laws on the date of execution of this Lease by Landlord
and Tenant; (qq) Landlord's general overhead expenses in excess of the property
management fee; (rr) legal fees, accountants' fees and other expenses incurred
in connection with disputes with Tenant (except to the extent such expenses are
Tenant's responsibility pursuant to this Lease) or associated with the defense
of Landlord's title to or Landlord's interest in the Project or any part
thereof; (ss) charitable or political contributions of Landlord; (tt) interest,
penalties or other costs arising out of Landlord's failure to make timely
payments of its obligations, to the extent not caused by Tenant's failure to
make such payments when due under this Lease; and (uu) reserves for Expenses or
Real Estate Taxes, except as expressly provided herein. All costs and expenses
shall be determined in accordance with GAAP which shall be consistently applied
(with accruals appropriate to Landlord's business).

                        (F) "EXPENSE YEAR" shall mean each twelve (12)
                consecutive month period commencing January 1 of the calendar
                year during which the Commencement Date of the Lease occurs,
                provided that Landlord, upon notice to Tenant, may change the
                Expense Year from time to time to any other twelve (12)
                consecutive month period, and, in the event of any such change,
                Tenant's Share of Expenses shall be equitably adjusted for the
                Expense Years involved in any such change.

                      (ii) PAYMENT OF REAL ESTATE TAXES: Commencing on the
           Commencement Date, Tenant shall pay to Landlord as Additional Charges
           one-twelfth (1/12th) of Tenant's Share of Real Estate Taxes for each
           Tax Year on or before the first day of each month during such Tax
           Year, in advance, in an amount reasonably estimated by Landlord and
           billed by Landlord to Tenant, and Landlord shall have the right
           initially to determine monthly estimates and to revise such estimates
           from time to time. With reasonable promptness after Landlord has
           received the tax bills for any Tax Year, Landlord shall furnish
           Tenant with a statement (herein called "Landlord's Tax Statement")
           setting forth the amount of Real Estate Taxes for such Tax Year and
           Tenant's Share thereof. If the actual Tenant's Share of Real Estate
           Taxes for such Tax Year exceed the estimated Tenant's Share of Real
           Estate Taxes paid by Tenant for such Tax Year, Tenant shall pay to
           Landlord the difference between the amount paid by Tenant and the
           actual Tenant's Share of Real Estate Taxes on or before the earlier
           of thirty (30) days after the receipt of Landlord's Tax Statement or
           fifteen (15) days prior to the delinquency date for the Real Estate
           Tax payment reflected in the applicable Landlord's Tax Statement, and
           if the total amount paid by Tenant for any such Tax Year shall exceed
           the actual Tenant's Share of Real Estate Taxes for such Tax Year,
           such excess shall be credited against the next installment of Real
           Estate Taxes due from Tenant to Landlord hereunder or if the Term has
           ended it shall be returned to Tenant within thirty (30) days. If it
           has been determined that Tenant has overpaid Real Estate Taxes during
           the last year of the Lease Term, then Landlord shall reimburse Tenant
           for such overage on or before the thirtieth (30th) day following the
           Expiration Date. No delay by Landlord in providing Landlord's Tax
           Statement shall be deemed a default by Landlord or a waiver of
           Landlord's right to require payment of the actual or estimated sums
           of Tenant's Share of Real Estate Taxes, provided that Landlord may
           not require payment of Tenant's Share of Real Estate Taxes with
           respect to any Real Estate Taxes later than twelve (12) months after
           the end of the calendar year in which such Real Estate Taxes were
           paid or incurred by Landlord. To the extent that Landlord receives
           refunds of any portion of Real Estate Taxes paid by Tenant during the
           Term, such refunds shall be credited against Tenant's further
           obligation to pay Real Estate Taxes during the Term or refunded to
           Tenant if received by Landlord within one year after the Expiration
           Date.

                      (iii) PAYMENT OF EXPENSES: Commencing on the Commencement
           Date, Tenant shall pay to Landlord as Additional Charges one-twelfth
           (1/12th) of Tenant's Share of the Expenses for each Expense Year on
           or before the first day of each month of such Expense Year, in
           advance, in an amount



                                       10
<PAGE>   16

           reasonably estimated by Landlord and billed by Landlord to Tenant,
           and Landlord shall have the right initially to determine monthly
           estimates and to revise such estimates from time to time. With
           reasonable promptness after the expiration of each Expense Year,
           Landlord shall furnish Tenant with a statement (herein called
           "Landlord's Expense Statement"), setting forth in reasonable detail
           the Expenses for such Expense Year and Tenant's Share thereof. If the
           actual Tenant's Share of Expenses for such Expense Year exceed the
           estimated Tenant's Share of Expenses paid by Tenant for such Expense
           Year, Tenant shall pay to Landlord the difference between the amount
           paid by Tenant and the actual Tenant's Share of Expenses within
           thirty (30) days after the receipt of Landlord's Expense Statement,
           and if the total amount paid by Tenant for any such Expense Year
           shall exceed the actual Tenant's Share of Expenses for such Expense
           Year, such excess shall be credited against the next installment of
           the estimated Expenses due from Tenant to Landlord hereunder or if
           the Term has ended it shall be returned to Tenant within thirty (30)
           days. Any utility rebates for the Project which Landlord receives for
           payments made by Tenant shall be forwarded to Tenant so long as such
           rebate is received within one year following the Expiration Date or
           sooner termination of the Lease. If it has been determined that
           Tenant has overpaid Expenses during the last year of the Lease Term
           (including rebates of utilities applicable to Tenant), then Landlord
           shall reimburse Tenant for such overage on or before the thirtieth
           (30th) day following the Expiration Date.

                      (iv) OTHER: To the extent any item of Real Estate Taxes or
           Expenses is payable by Landlord in advance of the period to which it
           is applicable (e.g. insurance and tax escrows required by Landlord's
           Lender), or to the extent that prepayment is customary for the
           service or matter, Landlord may (i) include such items in Landlord's
           estimate for periods prior to the date such item is to be paid by
           Landlord and (ii) to the extent Landlord has not collected the full
           amount of such item prior to the date such item is to be paid by
           Landlord, Landlord may include the balance of such full amount in a
           revised monthly estimate for Additional Charges. If the Commencement
           Date or Expiration Date shall occur on a date other than the first
           day of a Tax Year and/or Expense Year, Tenant's Share of Real Estate
           Taxes and Expenses, for the Tax Year and/or Expense Year in which the
           Commencement Date occurs shall be prorated.

                      (v) AUDIT: Within ninety (90) days after receipt of any
           Expense Statement or Tax Statement from Landlord, Tenant shall have
           the right to examine and copy Landlord's books and records relating
           to such Expense Statements and Tax Statements, and/or commence to
           cause an independent audit thereof to be conducted by an accounting
           firm to be selected by Tenant and subject to the reasonable approval
           of Landlord. If the audit indicates that Tenant has overpaid either
           Expenses or Real Estate Taxes, Tenant shall notify Landlord within
           one hundred twenty (120) days after the date the applicable Expense
           Statement or Tax Statement was received by Tenant. If Landlord
           disputes the results of such audit, Landlord and Tenant shall work
           together in good faith to resolve the discrepancy between the
           applicable Expense Statement and/or Tax Statement and Tenant's audit.
           If it is finally determined that Tenant has overpaid either Expenses
           or Real Estate Taxes, then Landlord shall reimburse Tenant for such
           overage within thirty (30) days after receipt of such notice,
           provided that if such overage exceeds five percent (5%) of the actual
           amount of Expenses or Real Estate Taxes paid by Landlord for the Tax
           or Expense Year covered by such audit, then Landlord shall bear the
           reasonable cost of such audit, up to a maximum cost of $5,000
           (adjusted annually by the CPI Increase). If Tenant fails to object to
           any such Expense Statement or Tax Statement, or to request and
           commence an independent audit thereof, within ninety (90) days after
           receipt of the applicable statement, or if Tenant objects to any
           statement or requests an audit but then fails to complete the audit
           within one hundred twenty (120) days after receipt of the applicable
           statement, such Expense Statement and/or Tax Statement shall be final
           and shall not be subject to any audit, challenge or adjustment. All
           of the information obtained through any audit by Tenant and any
           compromise, settlement or adjustment reached between Landlord and
           Tenant relative to the results of such audit shall be held in strict
           confidence by the Tenant, except to the extent disclosure is required
           or reasonably necessary in connection with litigation with respect to
           such audit or as required by Law as a result of Tenant's status as a
           publicly-traded corporation. Tenant shall continue to make all Rent
           payments hereunder (including without limitation payments of
           Additional Charges for Expenses and Real Estate Taxes) during any
           such audit period and pending resolution of any dispute between
           Landlord and Tenant.



                                       11
<PAGE>   17

           (d) LATE CHARGES. Tenant recognizes that late payment of any Monthly
Base Rent and/or Additional Charges will result in administrative expenses to
Landlord, the extent of which additional expense is extremely difficult and
economically impractical to ascertain. Tenant therefore agrees that if Tenant is
in Default in the payment of any Monthly Base Rent and/or Additional Charges,
the amount of such unpaid Monthly Base Rent and/or Additional Charges shall be
increased by a late charge to be paid to Landlord by Tenant in an amount equal
to four percent (4%) of the amount of the delinquent Monthly Base Rent and/or
Additional Charges. In addition, any outstanding Monthly Base Rent, Additional
Charges, late charges and other outstanding Rent amounts shall accrue interest
at an annualized rate of the lesser of (i) the greater of 10% or The Federal
Reserve Discount Rate plus 5% until paid to Landlord, or (ii) the maximum rate
permitted by law (the "Default Rate"). Tenant agrees that such amount is a
reasonable estimate of the loss and expense to be suffered by Landlord as a
result of such late payment by Tenant and may be charged by Landlord to defray
such loss and expense. The provisions of this Paragraph 3(d) in no way relieve
Tenant of the obligation to pay Monthly Base Rent or Additional Charges on or
before the date on which they are due, nor do the terms of this Paragraph 3(d)
in any way affect Landlord's remedies pursuant to Paragraph 19 in the event any
Monthly Base Rent or Additional Charges are unpaid after the date due.

        4. RESTRICTIONS ON USE.

           (a) NO INTERFERENCE OR WASTE. Tenant shall not do or permit anything
to be done in or about the Premises which will obstruct, or materially or
unreasonably interfere with, the rights of other tenants or occupants of the
Building or the Project, or injure or annoy them, nor use or allow the Premises
to be used for any unlawful purpose, nor shall Tenant cause or maintain or
permit any nuisance in, on or about the Premises or Project. Tenant shall not
commit or suffer the commission of any waste in, on or about the Premises.

           (b) USE OF COURTYARD. Tenant shall have the right to use the
courtyard areas of the Project Common Areas for Tenant's social and/or business
functions with no additional rent for such use payable by Tenant, on the terms
and conditions set forth in this Paragraph 4(b). Tenant shall deliver written
notice to Landlord requesting to reserve particular space in the Project Common
Areas for such functions at least five (5) days, and no earlier than thirty (30)
days, prior to such proposed function. Landlord may grant similar rights to
other tenants and occupants of the Project, and Tenant's rights under this
paragraph shall be subject to the rights of such other tenants and occupants and
any reasonable, non-discriminatory system Landlord incorporates to address
conflicting reservations of the same space by more than one tenant or occupant
of the Project. Tenant's use of the courtyard areas pursuant to this paragraph
shall be on the following terms and conditions: (i) Tenant may conduct up to
twelve (12) such functions within any calendar year; (ii) such functions shall
be limited to a reasonable number of people consistent with applicable fire,
health and safety laws, and shall comply with any applicable requirements of the
DDA, REA, CC&Rs and/or other Encumbrances; (iii) the insurance, indemnity and
nonliability obligations and provisions contained herein and in the Rules and
Regulations, respectively (including Tenant's obligations to carry liquor law
liability insurance if alcoholic beverages are served or consumed during such
functions), shall apply to and govern any claims, liabilities, costs or expenses
arising from any such function, (iv) no such proposed functions shall, in
Landlord's reasonable determination, unreasonably disrupt either other tenants
of the Project, or the operation or maintenance of the Common Areas, (v) Tenant
shall comply with the obligations of the Rules and Regulations of Exhibit "D"
attached hereto relating to such use, and (v) Tenant shall pay any and all of
Landlord's reasonable costs of preparation for, supervision of and/or clean-up
in connection with, such functions.

        5. COMPLIANCE WITH LAWS.

           (a) TENANT'S COMPLIANCE OBLIGATIONS. Tenant shall not use the Project
or permit anything to be done in or about the Project which will in any way
conflict with any present and future laws, statutes, ordinances, resolutions,
regulations, proclamations, orders or decrees of any municipal, county, state or
federal government or other governmental or regulatory authority with
jurisdiction over the Project, or any portion thereof, whether currently in
effect or adopted in the future and whether or not in the contemplation of the
parties hereto (collectively, "Laws"), and Tenant shall promptly, at its sole
expense, maintain the Premises, any Alterations (as defined in Paragraph 6
below) permitted hereunder and Tenant's use and operations thereon in strict
compliance at all times with all Laws. "Laws" shall include, without limitation,
all Laws relating to health and safety (including, without limitation, the
California Occupational Safety and Health Act of 1973 and the California Safe
Drinking



                                       12
<PAGE>   18

Water and Toxic Enforcement Act of 1986, including posting and delivery of
notices required by such Laws with respect to the Premises), disabled
accessibility (including, without limitation, the Americans with Disabilities
Act, 42 U.S.C. section 12101 et seq.), Hazardous Substances, and all present and
future life safety, fire, sprinkler, seismic retrofit, transportation demand
management plan, building code and municipal code requirements; provided
however, that Tenant's obligation to comply with Laws relating to Hazardous
Substances is subject to the terms and conditions of Paragraph 39, and Tenant
shall not be responsible for compliance with clean-up provisions of any Laws
with respect to Hazardous Substances except to the extent of any release caused
by the Tenant or any of its servants, employees, contractors, agents, licensees
or invitees (collectively, including Tenant, the "Tenant Parties") or otherwise
included in Tenant's indemnity contained in Paragraph 39. Notwithstanding the
foregoing, Landlord, and not Tenant, shall be responsible for correcting any
condition with respect to the Common Area, or the exterior or structural
portions of the Building (but not with respect to the interior of the Premises),
which is in violation of applicable Laws (subject to Tenant's obligation to pay
such costs to the extent they are included as Expenses under Paragraph
3(c)(i)(E), except (subject to Paragraph 11 hereof) to the extent such condition
is caused by the negligent or intentional acts or omissions of the Tenant
Parties, or such violation results from Tenant's particular use of the Premises,
or such condition is caused by, or will be or has been altered in connection
with, the installation of the Tenant Improvements or any Alterations. Tenant
shall be responsible for compliance of the Tenant Improvements with all Laws.
Notwithstanding the first sentence of this Paragraph 5(a), Tenant shall not be
required to make any structural alterations to the Premises in order to comply
with Laws unless the requirement that such alterations be made is triggered by
any of the following (or, if such requirement results from the cumulative effect
of any of the following when added to other negligent or intentional acts,
omissions or events attributable to the Tenant Parties, to the extent such
alterations are required by any of the following): (i) the installation, use or
operation of the Tenant Improvements, any Alterations, or any of Tenant's trade
fixtures or personal property; (ii) the negligent or intentional acts or
omissions of any of the Tenant Parties; or (iii) the particular use or
particular occupancy or manner of use or occupancy of the Premises by the Tenant
Parties. Any alterations that are Tenant's responsibility pursuant to this
Paragraph 5 shall be made in accordance with Paragraph 6 below, at Tenant's sole
cost. The parties acknowledge and agree that Tenant's obligation to comply with
all Laws as provided in this paragraph (subject to the limitations contained
herein) is a material part of the bargained-for consideration under this Lease.
Tenant's obligations under this Paragraph and under Paragraph 7(c) below shall
include, without limitation, the responsibility of Tenant to make substantial or
structural repairs and alterations to the Premises to the extent provided above,
regardless of, among other factors, the relationship of the cost of curative
action to the Rent under this Lease, the length of the then remaining Term
hereof, the relative benefit of the repairs to Tenant or Landlord, the degree to
which the curative action may interfere with Tenant's use or enjoyment of the
Premises, and the likelihood that the parties contemplated the particular Law
involved.

           (b) TRAFFIC MITIGATION. As a condition to approval of the Initial
Development, the City and/or other governmental agencies or quasi-governmental
agencies will require the implementation of a transportation demand management
plan and/or one or more similar programs to reduce the traffic generated by the
Project and to facilitate the use of public transportation (any such program, a
"TDM"). A TDM may apply to (and measure required alternative transportation use
based on) the Project as a whole, or be based on each building included in the
Project, or be based on the Premises occupied by each or certain tenant(s) in
the Project. Tenant hereby agrees to designate one of its employees to act as a
liaison with Landlord or with the City or other entity enforcing the TDM, as
appropriate, to facilitate and coordinate any TDM. Tenant shall comply with the
requirements of any TDM that applies in whole or in part to the Premises, at
Tenant's cost with respect to both compliance costs and any penalties resulting
from Tenant's failure to comply with program requirements. If any TDM applies to
the Project as a whole, or to a portion of the Project that includes more than
the Premises, (i) Tenant shall pay as Expenses the Tenant's Share of the
Building Share of any compliance costs with respect to such TDM, and (ii) Tenant
shall pay Landlord on demand, as an Additional Charge, any penalties that are
imposed under any such TDM to the extent such penalties result from Tenant's
failure to comply with the requirements of such TDM, including, without
limitation, by failure to timely comply with any reporting requirements or by
failure of Tenant to meet any thresholds or other standards imposed by such TDM
with respect to traffic, public transportation or other similar matters included
in such TDM. If any TDM is imposed that applies only to Tenant or only to the
Premises, Tenant shall be solely responsible for compliance with such TDM,
including, without limitation, by satisfying any survey or reporting
requirements thereunder directly to the entity enforcing such TDM, and by paying
any penalties or costs imposed thereunder directly to the entity enforcing such
TDM, and Tenant shall indemnify, defend and hold



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<PAGE>   19

harmless Landlord against any claims, suits, costs (including reasonable
attorneys' fees), damage, liability, and losses, whether foreseeable or
unforeseeable, by reason of Tenant's failure to comply with, or violation of,
any such TDM that applies solely to Tenant or the Premises.

           (c) INSURANCE REQUIREMENTS. Tenant shall not do or permit anything to
be done in or about the Premises or bring or keep anything therein which will in
any way increase the rate of any insurance upon the Project or any of its
contents (unless Tenant agrees to pay for such increase) or cause a cancellation
of any insurance on the Project or otherwise violate any requirements,
guidelines, conditions, rules or orders with respect to such insurance. Tenant
shall at its sole cost and expense promptly comply with the requirements of the
Insurance Services Office (ISO), board of fire underwriters, or other similar
body now or hereafter constituted relating to or affecting Tenant's use or
occupancy of the Project (other than in situations where compliance involves
repair, maintenance or replacement of items that Landlord is expressly required
to repair, maintain or replace under this Lease).

           (d) NO LIMITATION ON OBLIGATIONS. The provisions of this Paragraph 5
shall in no way limit Tenant's maintenance, repair and replacement obligations
under Paragraph 7 or Tenant's obligation to pay Expenses under Paragraph 3(c).
The judgment of any court of competent jurisdiction or the admission of Tenant
in an action against Tenant, whether Landlord is a party thereto or not, that
Tenant has so violated any such Law shall be conclusive of such violation as
between Landlord and Tenant.

        6. ALTERATIONS.

           (a) LANDLORD CONSENT. After completion of the Warm Shell Improvements
and the Tenant Improvements (which shall be governed by the Work Letter), Tenant
shall not make or suffer to be made any additional alterations, additions or
improvements (herein referred to individually as an "Alteration," and
collectively as the "Alterations") in, on or to the Premises or any part thereof
without the prior written consent of Landlord. Tenant's request for approval of
any such proposed Alterations shall be accompanied by a full set of complete
plans and specifications for such proposed Alterations for Landlord's review. If
Landlord fails to approve or disapprove any proposed Alterations within ten (10)
business days after receipt of Tenant's written request for approval, Tenant
shall deliver to Landlord a second request for Landlord's consent to such
Alterations, and failure of Landlord to give its disapproval within five (5)
business days after receipt of Tenant's second written request for approval
shall constitute approval by Landlord of such Alterations so long as Tenant's
request includes the following statement in capitalized and boldfaced letters:
BY FAILING TO RESPOND TO THIS REQUEST, YOU WILL BE DEEMED TO HAVE APPROVED THE
ALTERATIONS DESCRIBED HEREIN. Alterations in, on or to the Premises, except for
Tenant's trade fixtures and movable furniture and equipment, shall be the
property of Tenant during the Term and shall become Landlord's property at the
end of the Term without compensation to Tenant. Landlord shall exercise good
faith business judgment in reviewing any request by Tenant for Landlord's
consent to Alterations, and shall not unreasonably withhold or delay its consent
to Alterations that (i) do not materially affect the structure of the Building
or its electrical, plumbing, HVAC, security or other systems, (ii) are not
visible from the exterior of the Premises and do not otherwise affect the
exterior appearance of the Building, (iii) are consistent with Tenant's
Permitted Use hereunder; (iv) do not require any application to a political
jurisdiction for rezoning, general plan amendment, variance, conditional use
permit or architectural review approval, (v) will not interfere with the use and
occupancy of any other portion of the Project by Landlord or by any other
tenants or occupants or their invitees, or by any other party with the right to
use any portion of the Project, (vi) comply with any ground lease, the Parking
REA, the Initial CC&Rs, any other CC&Rs, any other Encumbrances, and any
Mortgages, and (vii) do not adversely affect the value or marketability of
Landlord's reversionary interest upon termination or expiration of this Lease.

           (b) PERMITTED ALTERATIONS. Notwithstanding Paragraph 6(a), Tenant may
make Alterations to the Premises without Landlord's prior consent so long as (x)
such Alterations comply with items (i) through (vii) in Paragraph 6(a), and (y)
the cost of each such Alteration (or group of Alterations, if occurring
substantially at the same time and as part of a single project) does not exceed
One Hundred Thousand Dollars ($100,000) (any such Alterations being defined
herein as "Permitted Alterations"). Tenant shall be required to notify Landlord
in writing



                                       14
<PAGE>   20

before making any Permitted Alterations and within thirty (30) days after
completion of such Permitted Alterations, and at Landlord's request shall
provide Landlord with accurate as-built drawings of any Permitted Alterations.

           (c) CONSTRUCTION OF ALTERATIONS. Any Alterations consented to by
Landlord pursuant to Paragraph 6(a), and any Permitted Alterations, shall be
made by Tenant, at Tenant's sole cost and expense, in accordance with plans and
specifications reasonably approved by Landlord, and any contractor or person
selected by Tenant to make the same must first be reasonably approved in writing
by Landlord. With respect to any Alterations that affect the structure of the
Building, the Building Systems, or any portion of the Project outside the
Premises, at Landlord's option the Alterations shall be made by Landlord, or by
a contractor specified by Landlord, for Tenant's account and Tenant shall
reimburse Landlord for actual third-party costs incurred by Landlord in
connection therewith as an Additional Charge, within twenty (20) days after
receipt of a statement from Landlord therefor.

           (d) LANDLORD REVIEW. Tenant shall reimburse Landlord upon demand for
any reasonable out-of-pocket expenses incurred by Landlord in the review of any
Alterations made by Tenant, including fees charged by Landlord's contractors or
consultants to review plans and specifications, and such obligation shall be an
Additional Charge. Landlord's consent to any Alterations shall not obligate
Landlord to repair, maintain, insure or otherwise assume any responsibility or
liability with respect to any such Alteration. In addition, notwithstanding
Landlord's review, Tenant and not Landlord shall be responsible for compliance
of the Alterations, and plans and specifications therefor, with all applicable
Laws, and Landlord shall not be responsible for any omissions or errors therein.

           (e) REMOVAL OF ALTERATIONS. Upon the expiration or sooner termination
of the Term, Tenant shall upon demand by Landlord do either of the following, at
Landlord's sole election: (i) at Tenant's sole cost and expense, forthwith and
with all due diligence remove any Alterations made by or for the account of
Tenant, designated by Landlord to be removed (provided, however, that upon the
written request of Tenant prior to installation of such Alterations, Landlord
shall advise Tenant at that time whether or not such specific Alterations must
be removed upon the expiration or sooner termination of this Lease, and to the
extent Landlord has so agreed to allow any specific Alterations to remain in the
Premises, Tenant shall not be obligated to remove such Alterations or to pay
Landlord the cost of removal of such Alterations pursuant to this Paragraph
6(e)), and restore the Premises to substantially its original condition as of
the Commencement Date (but including Tenant Modifications, Warm Shell
Improvements and/or Tenant Improvements that are not removed pursuant to
Paragraph 24), subject to normal wear and tear and the rights and obligations of
Tenant concerning casualty damage pursuant to Paragraph 20, or (ii) pay Landlord
the reasonable estimated cost thereof.

           (f) FIXTURES. All wiring, conduit and fiberoptic cabling and similar
infrastructure related to telephone, telecommunications, or similar
communications systems, and all other wiring, circuit breakers, transformers,
cabling, plumbing, heating and sprinkling systems, fixtures and outlets, vaults,
paneling, molding, shelving, radiator enclosures, flooring, HVAC equipment and
HVAC ducts, shall be deemed to be real estate fixtures and at all times after
installation be and remain Landlord's property, whether or not attached to or
built into the Premises. Any trade fixtures, furniture and trade equipment
installed by the Tenant which may be removed from the Premises without injury
thereto (including, without limitation, demountable partitions, refrigerators
and other kitchen appliances, computer racking and similar demountable fixtures)
(collectively, "Trade Fixtures") shall remain the property of the Tenant and
shall be removed by the Tenant, at the Tenant's sole cost and expense, from the
Premises upon the expiration or earlier termination of this Lease.

        7. REPAIR AND MAINTENANCE.

           (a) LANDLORD'S OBLIGATIONS. Landlord shall maintain, repair and
replace, to the extent necessary to maintain the Building and Project in good
operating order and first-class condition, the following:

                      (i) Landlord shall maintain, repair and replace, at its
           sole cost and expense, except as provided in Paragraph 7(c), the
           exterior, roof structure (but not the roof membrane) and structural
           portions of the Building (including load bearing walls and
           foundations).



                                       15
<PAGE>   21

                      (ii) Landlord shall maintain, repair and replace the
           parking areas, courtyards, sidewalks, entryways, lawns, fountains,
           landscaping and other similar facilities located in the Project
           Common Area, including, without limitation, such maintenance, repair
           and replacement with respect to the Project Common Area as may be
           expressly required by the terms and conditions of the DDA, the
           Parking REA and/or the CC&Rs.

All costs incurred by Landlord in connection with the foregoing obligations
shall be payable by Tenant as Additional Charges in accordance with Paragraph
3(c) to the extent they are properly included in Expenses thereunder. Landlord
shall use commercially reasonable efforts to minimize any material interference
with Tenant's business conducted at the Premises resulting from the performance
of Landlord's obligations under this Paragraph 7(a). Landlord's obligations
under this Paragraph 7(a) with respect to any particular repair, replacement or
maintenance requirement, shall not commence until Tenant notifies Landlord in
writing of any circumstances which Tenant believes may trigger Landlord's
obligations. If Landlord fails after thirty (30) days' written notice by Tenant
(or such lesser period as may be reasonable if such failure materially
interferes with Tenant's use or occupancy of the Premises or threatens material
damage to Tenant's property or material harm to Tenant's employees, even if such
shorter period of time is less than the cure period provided in Paragraph 19(c)
before such failure would be a "default" by Landlord under this Lease) to
proceed with due diligence to make repairs required to be made by Landlord under
this Paragraph 7(a), the same may be made by Tenant at the expense of Landlord,
so long as Tenant first provides Landlord with an additional notice and an
additional five (5) business days (or, in the event of an emergency that
threatens material damage to Tenant's property or material harm to Tenant's
employees, one (1) business day) to either (i) dispute Landlord's obligation and
submit such dispute to arbitration pursuant to Paragraph 44, (ii) commence cure,
or (iii) by written notice to Tenant within such five (5) business day period
after receipt of such notice, designate the contractor Tenant shall use in
connection with any such repair by Tenant in which event Tenant shall only make
such repairs using such designated contractor. If Landlord fails to dispute such
obligation, commence cure or to so designate a contractor, Tenant may proceed
with an experienced, duly licensed and adequately insured contractor selected by
Tenant. Any expenses incurred by Tenant in connection with the preceding
sentence shall be reimbursed (with interest at the rate of 8.5% from the date on
which Tenant incurs such costs) within thirty (30) days after submission of a
bill or statement therefor to Landlord. Tenant shall have no right to offset any
such amounts against Rent hereunder. If Landlord disputes Tenant's right to cure
Landlord's default or the reasonableness of the costs incurred by Tenant,
Landlord shall submit such dispute to binding arbitration pursuant to Paragraph
44 below within thirty (30) business days after Tenant's demand. If Landlord
fails to either reimburse Tenant or dispute Tenant's demand pursuant to the
previous sentence within thirty (30) business days after Tenant's demand, Tenant
may submit such dispute to binding arbitration pursuant to Paragraph 44.

           (b) TENANT'S OBLIGATIONS. Tenant shall maintain, repair and replace,
to the extent necessary to maintain the Building in good operating order and
first-class condition, at its sole cost and expense, all portions of the
Premises which are not Landlord's obligations under Paragraph 7(a), including,
without limitation, (i) the roof membrane; (ii) the building systems serving the
Premises for electrical, mechanical, HVAC and plumbing and all controls
appurtenant thereto, and any elevators in the Building (collectively, including
elevators, "Building Systems"); and (iii) the interior portion of the Building,
the Warm Shell Improvements, the Tenant Improvements, the Alterations, and any
additional tenant improvements, alterations or additions installed by or on
behalf of Tenant within the Premises. If Tenant exercises its right to extend
the Term for the Extension Term, at Tenant's election Tenant may, by written
notice to Landlord delivered at any time at least thirty (30) days prior to
expiration of the Initial Term, cause Landlord to assume Tenant's maintenance
obligations with respect to the Building Systems under clause (ii) above, which
assumption by Landlord shall be effective during the Extension Term. If Landlord
assumes such obligations, all costs incurred by Landlord in connection therewith
shall be deemed Additional Charges payable by Tenant in accordance with
Paragraph 3(c). Tenant shall be responsible for the expense of installation,
operation, and maintenance of its telephone and other communications cabling
from the public right-of-way to the point of entry into the Building (except
that Landlord shall install two underground telephone conduits from the public
right-of-way to the Project Garage as part of the Base Building, as provided in
the Work Letter) and throughout the Premises; although Landlord shall have the
right, at Landlord's sole election, to perform such work on behalf of Tenant in
Common Areas, provided Landlord performs such work in coordination with Tenant
and its contractors in such a manner as will accommodate Tenant's reasonable
objectives with respect thereto. The Premises shall at all times be maintained
by Tenant in the condition of a first-class office building. Tenant's


                                       16
<PAGE>   22

obligations under this Paragraph 7 include, without limitation, the replacement,
at Tenant's sole cost and expense, of any portions of the Premises or Building
Systems which are not Landlord's express responsibility under Paragraph 7(a), if
it would be commercially prudent to replace, rather than repair, such portions
of the Premises, regardless of whether such replacement would be considered a
capital expenditure; provided, however, that if Landlord has assumed Tenant's
maintenance obligations for Building Systems pursuant to this Paragraph 7(b),
(x) any replacement of any portion of the Building Systems which would be
considered a capital expenditure and which is made at least one (1) year after
Landlord assumes such obligations shall be amortized in accordance with
Paragraph 3(c)(i)(E)(v) ; and (y) with respect to replacement of any components
of the Building's HVAC system during such one year period after Landlord assumes
such obligations, so long as (I) Tenant has complied with the provisions of
Paragraph 7(d) below throughout the Term, and (II) Landlord is able to obtain a
maintenance service contract during such one year period, on customary terms and
conditions and from a contractor reasonably acceptable to Landlord, Tenant shall
pay both the amortized portion of such replacement (pursuant to Paragraph
3(c)(i)(E)(v)) attributable to the remaining Term (including the Extension Term,
if Tenant exercises its option to extend) plus an additional three years'
amortization payable within twenty (20) days after receipt of invoice from
Landlord (to give Landlord the benefit of the expected fifteen year useful life
of the original HVAC System). Tenant hereby waives and releases its right to
make repairs at Landlord's expense under Sections 1941 and 1942 of the
California Civil Code or under any similar law, statute or ordinance now or
hereafter in effect. In addition, Tenant hereby waives and releases its right to
terminate this Lease under Section 1932(1) of the California Civil Code or under
any similar law, statute or ordinance now or hereafter in effect.

           (c) ADDITIONAL OBLIGATIONS OF TENANT. The purpose of Paragraph 7(a)
and 7(b) is to define the obligations of Landlord and Tenant to perform various
repair and maintenance functions; the allocation of the costs therefor are
covered under this Paragraph 7(c) and Paragraph 3. Tenant shall bear the full
cost of repairs or maintenance, interior or exterior, structural or otherwise,
to preserve the Premises and the Building in good working order and first-class
condition, arising out of (i) the existence, installation, use or operation of
any Tenant Improvements, Alterations, or any of Tenant's Trade Fixtures or
personal property; (ii) the moving of Tenant's property or fixtures in or out of
the Building or Project or in and about the Premises; (iii) the particular use
or particular occupancy or manner of use or occupancy of the Premises by any
Tenant Party; or (iv) except to the extent any claims arising from any of the
foregoing are reimbursed by insurance carried by Landlord, are covered by the
waiver of subrogation in Paragraph 11 or are otherwise provided for in Paragraph
20, the acts, omissions or negligence of any Tenant Parties.

           (d) MAINTENANCE SERVICE CONTRACTS. In connection with Tenant's
maintenance and repair obligations contained in this Paragraph 7, Tenant shall,
at its own cost and expense, enter into regularly scheduled preventive
maintenance service contracts with maintenance contractors approved by Landlord,
in its reasonable discretion, for servicing the HVAC system serving the Premises
and the elevators within the Building, and shall provide copies of such
contracts and periodic maintenance reports to Landlord. At Landlord's option at
any time in which Tenant is in Default hereunder, maintenance service contracts
shall be prepaid on an annual basis. Each maintenance service contract shall
specifically name Landlord as a third party beneficiary, with the right to
receive copies of all notices delivered under such contract and the ability to
exercise Tenant's rights thereunder, at Landlord's election, in connection with
any cure of Tenant's default by Landlord, or any assumption by Landlord of
Tenant's maintenance obligations with respect to Building Systems, pursuant to
Paragraph 7(b), 7(e) or 9(d)(v).

           (e) CURE RIGHTS. Tenant shall be in Default hereunder if Tenant
fails, within a period of thirty (30) days from the date of written notice from
Landlord, to cure any failure to fulfill any of its obligations under this
Paragraph 7; provided, however, that if such failure is curable but cannot be
cured within such thirty (30) day period, Tenant shall have such additional time
as may be reasonably required to cure (not to exceed sixty (60) additional days)
before such failure becomes a Default hereunder, so long as Tenant commences
such cure within such (30) day period and diligently prosecutes such cure to
completion. In addition, Landlord may elect, by delivery of written notice to
Tenant, to assume Tenant's maintenance obligations with respect to the Building
Systems under Paragraph 7(b)(ii) if Tenant Defaults with respect to any of its
obligations under this Paragraph 7, or if Tenant has failed to perform any of
its obligations under this Paragraph 7 more than once in any twelve month period
(without benefit of cure periods) upon the second such failure. If Landlord
assumes such obligations, all costs incurred by Landlord in connection therewith
shall be included in Expenses payable by Tenant as Additional Charges in




                                       17
<PAGE>   23

accordance with Paragraph 4(c). In addition to Landlord's rights set forth in
this Paragraph 7(e), Landlord shall have the rights set forth in Paragraph 23
with respect to any failure of Tenant to perform its obligations under Paragraph
7(b), (c) or (d). The remedies described in this paragraph are cumulative and in
addition to any other remedies Landlord may have at law or under this Lease.

           (f) NO ABATEMENT. Except to the extent any claims arising from any of
the foregoing are reimbursed by rental abatement insurance proceeds actually
received by Landlord and/or any Mortgagee, are covered by the waiver of
subrogation in Paragraph 11 or are otherwise provided for in Paragraph 20, there
shall be no abatement of Rent with respect to, and except for Landlord's active
negligence or willful misconduct Landlord shall not be liable for, any injury to
or interference with Tenant's business arising from, any repairs, maintenance,
alteration or improvement in or to any portion of the Project, including the
Premises, or in or to the fixtures, appurtenances and equipment therein.

        8. LIENS. Tenant shall keep the Premises and Project free from any liens
arising out of any work performed, material furnished or obligations incurred by
Tenant. In the event that Tenant shall not, within ten (10) days following the
imposition of any such lien, cause the same to be released of record by payment
or posting of a proper bond, Landlord shall have, in addition to all other
remedies provided herein and by law, the right, but not the obligation, to cause
the same to be released by such means as it shall deem proper, including without
limitation by the payment of the claim giving rise to such lien or by the
posting of a bond. All such sums paid by Landlord and all expenses incurred by
Landlord in connection therewith shall be considered Additional Charges and
shall be payable to Landlord by Tenant on demand with interest from the date
incurred by Landlord at the Default Rate. Landlord shall have the right at all
times to post and keep posted on the Premises any notices permitted or required
by law, or which Landlord shall deem proper, for the protection of Landlord, the
Premises, the Project and any other party having an interest therein, from
mechanics' and materialmen's liens, and Tenant shall give written notice to
Landlord at least fifteen (15) business days' prior to commencement of any
construction on the Premises.

        9. ASSIGNMENT AND SUBLETTING.

           (a) LANDLORD'S CONSENT REQUIRED. Except as otherwise provided in this
Paragraph 9, Tenant shall not directly or indirectly, voluntarily or by
operation of law, sell, assign, encumber, pledge or otherwise transfer or
hypothecate all or any part of the Premises or Tenant's leasehold estate
hereunder (collectively, "Assignment"), or permit the Premises to be occupied by
anyone other than Tenant or sublet the Premises or any portion thereof (the
foregoing, including without limitation any license or use agreement, any
sub-sublease or subsequent subletting by any subtenant, sub-subtenant or other
occupant of any portion of the Premises, and similar occupancy rights,
collectively, "Sublease"), without Landlord's prior written consent in each
instance, which consent shall not be unreasonably withheld. Without otherwise
limiting the criteria upon which Landlord may withhold its consent to any
proposed Sublease or Assignment, if Landlord withholds its consent where either
(i) the creditworthiness of the proposed Sublessee or Assignee is not acceptable
to Landlord, in Landlord's reasonable discretion, or to any Mortgagee, or (ii)
the proposed Sublessee's or Assignee's use of the Premises is not in compliance
with the Permitted Use as described in the Basic Lease Information, such
withholding of consent shall be presumptively reasonable. If Landlord consents
to the Sublease or Assignment, Tenant may thereafter enter into a valid Sublease
or Assignment upon the terms and conditions set forth in this Paragraph 9.

           (b) REQUEST FOR CONSENT. If Tenant desires at any time to enter into
an Assignment of this Lease or a Sublease of the Premises or any portion thereof
for which Landlord's consent is required, it shall first give written notice to
Landlord of its desire to do so, which notice shall contain (i) the name of the
proposed assignee, subtenant or occupant; (ii) the name of the proposed
assignee's, subtenant's, or occupant's business to be carried on in the
Premises; (iii) the terms and provisions of the proposed Assignment or Sublease;
and (iv) such financial information as Landlord may reasonably request
concerning the proposed assignee, subtenant or occupant. In any Sublease
undertaken by Tenant that is not subject to Landlord's termination right
pursuant to Paragraph 9(c) (including, without limitation, any Sublease entered
into after delivery of an Availability Notice), Tenant shall diligently seek to
obtain not less than fair market rent for the space so sublet (taking into
account the affect, if any, that the lack of a recognition and/or
non-disturbance agreement from Landlord [as provided in Paragraph 9(i)] would
have on the fair market rent for such Sublease), and Landlord may consider such
market factors in its



                                       18
<PAGE>   24

determination of whether to consent to such proposed Sublease. Any improvements,
additions, or alterations to the Building or the Project that are required by
applicable Laws or are deemed necessary or appropriate by Landlord, in
Landlord's reasonable judgment, as a result of any such Sublease or Assignment,
shall be installed and provided by Tenant (or, at Landlord's sole option, by
Landlord but at Tenant's expense), without cost or expense to Landlord, and
without effect on the Bonus Rent received by Landlord except to the extent
provided in Paragraph 9(f)(2), and Landlord may condition its consent to any
proposed Sublease or Assignment on the construction of improvements required by
applicable Laws or deemed necessary or appropriate by Landlord in its reasonable
discretion, by reason of the Sublease or Assignment.

           (c) LANDLORD'S RESPONSE. At any time within fifteen (15) days after
Landlord's receipt of the notice specified in Paragraph 9(b), Landlord may by
written notice to Tenant elect to (i) consent to the Sublease or Assignment; or
(ii) disapprove the Sublease or Assignment. In addition, Landlord may elect to
terminate this Lease as to the portion of the Premises that is specified in such
notice, with a proportionate abatement in Monthly Base Rent and Additional
Charges for Expenses and Taxes, if such notice is with respect to (x) any
proposed Assignment, except in conjunction with a Permitted Transfer, or (y) any
proposed Sublease and either (I) the term of the Sublease commences on or after
the sixth (6th) anniversary of the Commencement Date, and after giving effect to
such Sublease the original Tenant will occupy less than fifty percent (50%) of
the Rentable Area of the Premises, or (II) such Sublease has a term (including
any renewal or extension options) that either is coterminous with the Initial
Term (or Extension Term if the Exercise Notice has been delivered prior to the
commencement of such Sublease) or expires within the last eighteen (18) months
of the Initial Term (or Extension Term if the Exercise Notice has been delivered
prior to the commencement of such Sublease). Failure by Landlord to either
consent to or disapprove a proposed Assignment or Sublease within the fifteen
(15) day time period specified above shall be deemed to be Landlord's
disapproval thereof.

           (d) RECAPTURE. If Landlord elects to terminate the Lease as to a
portion of the Premises pursuant to Paragraph 9(c), the following terms and
conditions shall apply:

                      (i) Tenant shall at all times provide reasonable and
           appropriate access to such portion of the Premises and use of any
           common facilities within the Building (including, at Landlord's
           election and as reasonable under the circumstances, by the
           designation of "building common areas" as appropriate for the use of
           and access to the recaptured space, including provision of any
           utilities and services for such recaptured space).

                      (ii) Tenant's Share shall be modified based on the
           remaining Rentable Area of the Premises divided by the total rentable
           area in the Building, as determined by Landlord in its reasonable
           discretion.

                      (iii) Tenant's Minimum Parking shall be reduced by
           multiplying the number of parking spaces included in Tenant's Minimum
           Parking by a fraction, the numerator of which shall be the remaining
           Rentable Area of the Premises and the denominator of which shall be
           the Rentable Area of the entire Premises as of the Delivery Date
           (determined as provided in the Basic Lease Information),

                      (iv) If after giving effect to such termination Tenant
           continues to lease seventy-five percent (75%) or less of the
           Building, Tenant's rights with respect to any monument or other
           Project signage and the roof space (for Satellite Antennae) shall be
           reduced in the same proportion as the Minimum Parking.

                      (v) At any time after Landlord elects to recapture any
           portion of the Premises, Landlord may elect, by delivery of written
           notice to Tenant, to assume Tenant's maintenance obligations for the
           Building Systems under Paragraph 7(b)(ii). In addition, at any time
           after Landlord has elected to recapture, in the aggregate, more than
           fifty percent (50%) of the Premises, Tenant may elect, by delivery of
           written notice to Landlord, to cause Landlord to assume Tenant's
           maintenance obligations for the Building Systems under Paragraph
           7(b)(ii). If Landlord assumes Tenant's maintenance obligations for
           the Building



                                       19
<PAGE>   25

           Systems pursuant to this clause (v), all costs incurred by Landlord
           in connection therewith shall be deemed Additional Charges payable by
           Tenant in accordance with Paragraph 3(c). If Landlord does not elect
           to assume Tenant's maintenance obligations for the Building Systems,
           and Tenant does not elect to cause Landlord to assume Tenant's
           maintenance obligations for the Building Systems, during any period
           of time after Landlord has recaptured any portion of the Premises,
           Landlord shall pay to Tenant "Landlord's Share" (as defined below) of
           any costs incurred by Tenant with respect to Tenant's maintenance
           obligations for Building Systems under Paragraph 7(b)(ii) as such
           costs are incurred by Tenant, within thirty (30) days after receipt
           of an invoice and such back-up documentation of such costs as
           Landlord may reasonably request. "Landlord's Share" shall mean the
           rentable area of the portion of the Premises recaptured by Landlord
           at any given time, divided by the total Rentable Area of the Premises
           as it exists on the Commencement Date.

Promptly after request from Landlord, Tenant shall enter into any amendment to
this Lease or other documentation reasonably requested by Landlord in connection
with any such termination of this Lease as to a portion of the Premises (which
may include, without limitation, provisions regarding the modifications set
forth in this Paragraph 9(d)).

           (e) AVAILABILITY NOTICE. At Tenant's option, Tenant may notify
Landlord in writing if Tenant wishes to Assign or Sublease any portion of the
Premises, prior to commencing negotiations for an Assignment or Sublease with
another party, if such Assignment or Sublease would be subject to Landlord's
termination right provided in Paragraph 9(c) (such notice being the
"Availability Notice"), and Landlord shall have the option, by written notice to
Tenant within fifteen (15) days after receiving any Availability Notice, to
terminate this Lease with respect to the portion of the Premises specified in
the Availability Notice in accordance with Paragraph 9(c) and (d). If Landlord
declines or fails timely to elect to terminate this Lease with respect to such
portion of the Premises, Tenant shall have the right, within one hundred twenty
(120) days after the expiration of such fifteen (15) day period, to enter into
an Assignment or Sublease with respect to the portion of the Premises designated
in the Availability Notice, subject to Landlord's consent and the other
provisions of this Paragraph 9 (including, without limitation, the provisions
with respect to payment of Landlord's Share of Bonus Rent pursuant to Paragraph
9(f)), except that Landlord shall not have the further right to terminate with
respect to such Assignment or Sublease. If Tenant fails to enter into an
Assignment or Sublease within such one hundred twenty (120) day period, or upon
expiration of any Sublease entered into within such one hundred twenty (120) day
period, Landlord's rights under this Paragraph 9 to terminate the Lease with
respect to the portion of the Premises upon any future proposed Sublease or
Assignment shall revive.

           (f) BONUS RENT. If Landlord consents to the Sublease or Assignment
within fifteen (15) days after receipt of Tenant's notice pursuant to Paragraph
9(b), Tenant may thereafter within one hundred twenty (120) days after
Landlord's consent, but not later than the expiration of said one hundred twenty
(120) days, enter into such Assignment or Sublease of the Premises or portion
thereof upon the terms and conditions set forth in the notice furnished by
Tenant to Landlord pursuant to Paragraph 9(b). However, Tenant shall pay to
Landlord seventy percent (70%) of the "Bonus Rent" (as defined below)
attributable to such Sublease or Assignment. Tenant shall pay Bonus Rent to
Landlord as and when it is received by Tenant, regardless of the time period to
which it is attributable. "Bonus Rent" shall mean any rent or other
consideration realized by Tenant under any and all Subleases and/or Assignments
that is in excess of the Monthly Base Rent and Additional Charges payable
hereunder (or the amount thereof proportionate to the portion of the Premises
subject to such Sublease(s) and/or Assignment(s)), including, without
limitation, any sums paid for the sale or rental of the Warm Shell Improvements
and/or the Tenant Improvements, after first deducting from such excess the
following:

                      (i) the unamortized costs of the lesser of (A) the portion
           of the Warm Shell Improvements and/or Tenant Improvements that are
           installed in the portion of the Premises subject to such Sublease(s)
           or Assignment(s), and (B) the total cost of Tenant Improvements and
           Warm Shell Improvements made to the entire Premises by Tenant
           multiplied by a fraction, the numerator of which is the rentable
           square feet included in the portion of the Premises subject to
           Sublease(s) and/or Assignment(s), and the denominator of which is the
           rentable square feet included in the Rentable Area of the entire
           Premises as of the Commencement Date, which costs in either case
           shall be amortized on a straight line



                                       20
<PAGE>   26

           basis (without interest) over the period of time prescribed by the
           Internal Revenue Service in equal monthly installments; and

                      (ii) costs reasonably incurred for tenant improvements
           and/or alterations installed by Tenant (commensurate with a standard
           office build-out, and including without limitation any improvements,
           additions or alterations required by Laws or by Landlord as provided
           in Paragraph 9(b)) to obtain the Sublease(s) and/or Assignment(s),
           which costs shall not exceed ten dollars per rentable square foot
           (adjusted by the CPI Increase) of the portion of the Premises being
           sublet or assigned, and which costs shall be amortized on a straight
           line basis (without interest) over the term of the applicable
           Sublease or Assignment in equal monthly installments; and

                      (iii) any costs payable by Tenant to Landlord pursuant to
           express provisions of this Lease in connection with Landlord's review
           of Tenant's request for consent to such Sublease(s) or Assignment(s),
           any reasonable legal fees and costs (up to a maximum of $10,000,
           adjusted by the CPI Increase), and any customary brokers' commissions
           that Tenant has incurred in connection with such Sublease or
           Assignment, all amortized on a straight line basis (without interest)
           over the term of the Sublease or Assignment in equal monthly
           installments.

           (g) NO RELEASE OR DEEMED APPROVAL. No consent by Landlord to any
Assignment or Sublease by Tenant shall relieve Tenant of any obligation to be
performed by Tenant under this Lease, whether arising before or after the
Assignment or Sublease. The consent by Landlord to any Assignment or Sublease
shall not relieve Tenant from the obligation to obtain Landlord's express
written consent to any other Assignment or Sublease. Any Assignment or Sublease
that is not in compliance with this Paragraph 9 shall be void and, at the option
of Landlord, shall constitute a material Default by Tenant under this Lease. The
acceptance of Monthly Base Rent or Additional Charges by Landlord from a
proposed assignee or sublessee shall not constitute the consent to such
Assignment or Sublease by Landlord.

           (h) REORGANIZATION; PERMITTED TRANSFERS. The following shall be
deemed a voluntary assignment of Tenant's interest in this Lease: (i) any
dissolution, merger, consolidation, or other reorganization of Tenant; and (ii)
if the capital stock of Tenant is not publicly traded, the sale or transfer to
one person or entity stock possessing more than fifty percent (50%) of the total
combined voting power of all classes of Tenant's stock issued, outstanding and
entitled to vote for the election of directors. Notwithstanding anything to the
contrary contained in this Paragraph 9, Tenant may enter into any of the
following transfers (a "Permitted Transfer") without Landlord's prior written
consent: (1) Tenant may assign its interest in the Lease to a corporation,
partnership, professional corporation, limited liability company, or limited
liability partnership ("Transfer Entity") which results from a stock sale,
merger, consolidation or other reorganization, so long as the surviving Transfer
Entity has a net worth immediately following such transaction that is equal to
or greater than the net worth of Tenant as of the date immediately prior to such
transaction; and (2) Tenant may assign this Lease to a Transfer Entity which
purchases or otherwise acquires all or substantially all of the assets of
Tenant, so long as such acquiring Transfer Entity has a net worth immediately
following such transaction that is equal to or greater than the net worth of
Tenant as of the date immediately prior to such transaction.

           (i) ASSUMPTION BY ASSIGNEE. Each assignee pursuant to an Assignment
as provided in this Paragraph 9 shall assume all obligations of Tenant under
this Lease that arise or accrue from and after the effective date of such
Assignment, and shall be and remain liable jointly and severally with Tenant for
the payment of Monthly Base Rent and Additional Charges, and for the performance
of all the terms, covenants, conditions and agreements herein contained on
Tenant's part to be performed for the Term. No Assignment shall be binding on
Landlord unless the assignee or Tenant shall deliver to Landlord a counterpart
of the Assignment and an instrument in recordable form that contains a covenant
of assumption by the assignee satisfactory in substance and form to Landlord,
consistent with the requirements of this Paragraph 9(i), but the failure or
refusal of the assignee to execute such instrument of assumption shall not
release or discharge the assignee from its liability as set forth above.
Notwithstanding anything to the contrary in this Lease, no Sublease shall be
binding on Landlord unless and until Landlord shall agree in writing following
termination of this Lease to recognize such sublessee and such sublessee agrees
in writing to attorn to Landlord on the terms and conditions of the sublease
(including the obligations under



                                       21
<PAGE>   27

this Lease to the extent that they relate to the portion of the Premises
subleased), and any Sublease entered into by Tenant hereunder shall include an
obligation by the sublessee to so attorn to Landlord if Landlord, in Landlord's
sole discretion, elects to recognize such Sublease upon any termination of this
Lease and agrees to not disturb subtenant's rights or possession under the
Sublease being recognized.

           (j) AFFILIATE TRANSFERS. Tenant shall have the right, without
Landlord's consent and without triggering Landlord's rights under Paragraph
9(c), (d) and (f), but with written notice to Landlord at least ten (10) days
prior thereto, to enter into an Assignment of Tenant's interest in the Lease or
a Sublease of all or any portion of the Premises to an Affiliate (as defined
below) of Tenant, provided that (i) in connection with an Assignment that is not
a Sublease, the Affiliate delivers to Landlord concurrent with such Assignment a
written notice of the Assignment and an assumption agreement whereby the
Affiliate assumes and agrees to perform, observe and abide by the terms,
conditions, obligations, and provisions of this Lease arising from and after the
effective date of the assignment; and (ii) the assignee or sublessee remains an
Affiliate throughout the term of this Lease (and, in connection with an
Assignment that is not a Sublease, the assumption agreement shall contain
provisions consistent with the provisions of this subparagraph allowing Landlord
to terminate this Lease at such time as the entity is no longer an Affiliate of
the original Tenant). If this Lease is assigned or sublet to an Affiliate and
thereafter any circumstance occurs which causes such assignee or sublessee to no
longer be an Affiliate of the assigning or subleasing Tenant, Tenant shall give
written notice thereof to Landlord, which notice, to become effective, shall
refer to Landlord's right to terminate this Lease pursuant to this subparagraph,
in the event of an Assignment, or to cause Tenant to terminate the Sublease, in
the event of a Sublease ("Affiliation Termination Notice"). Following occurrence
of the circumstance giving rise to the discontinuation of such assignee or
sublessee being an Affiliate ("Affiliate Termination") of the assigning or
subleasing Tenant, Landlord shall be entitled to terminate this Lease in the
event of an Assignment, or to cause Tenant to terminate the Sublease in the
event of a Sublease, unless Landlord has given its prior written consent to such
circumstance, which consent shall not be unreasonably withheld by Landlord so
long as, in the event of an Assignment, such assignee (after giving effect to
such circumstance) has financial strength (as demonstrated by audited financial
statements) equal to or greater than the assigning or subleasing Tenant
(including its net worth) as of the date of execution of this Lease, or the
assigning or subleasing Tenant executes a guaranty in usual form reasonably
acceptable to Landlord (however, this does not imply that Tenant would be
released without such guaranty). No Sublease or Assignment by Tenant made
pursuant to this Paragraph shall relieve Tenant of Tenant's obligations under
this Lease. As used in this paragraph, the term "Affiliate" shall mean and
collectively refer to a corporation or other entity which controls, is
controlled by or is under common control with Tenant, by means of an ownership
of either (aa) more than fifty percent (50%) of the outstanding voting shares of
stock or partnership or other ownership interests, or (bb) stock, or partnership
or other ownership interests, which provide the right to control the operations,
transactions and activities of the applicable entity.

           (k) PERMITTED SPACE SHARING. Landlord acknowledges that Tenant's
business in the Premises may require that certain project-specific independent
contractors ("Independent Contractors") of Tenant are located on-site at the
Premises, which may involve the use by such Independent Contractors and/or their
employees of a portion of the Premises, without payment of rent, for temporary
offices. Tenant shall have the right, without Landlord's consent and without
triggering Landlord's rights under Paragraphs 9(c),(d) or (f), to allow use of
portions of the Premises by Independent Contractors and their employees, so long
as (I) such Independent Contractors are not granted possessory rights to any
portion of the Premises (whether as assignees, sublessees, licensees, or in any
other capacity) and do not pay rent; (II) Tenant causes such Independent
Contractors, and Independent Contractors' use of the Premises to be conducted in
a manner in compliance with all of the terms and conditions of this Lease; (III)
such Independent Contractors and their employees are "Tenant's Agents" for
purposes of the indemnification, insurance and other provisions of this Lease;
(IV) Independent Contracts shall not use more than ten percent (10%) of the
Rentable Area of the Premises collectively at any given time, (V) no Independent
Contractor shall be on-site in the Premises for more than six consecutive
months, or for more than six months in any twelve month period; and (VI) neither
Landlord nor Tenant shall install any demising walls or hard wall office
partitions in connection with any use of the Premises by an Independent
Contractor.

        10. INSURANCE AND INDEMNIFICATION.




                                       22
<PAGE>   28

           (a) LANDLORD INDEMNITY. Except to the extent caused by the negligence
or willful misconduct of Tenant Parties or Tenant's breach of this Lease,
Landlord shall indemnify and hold Tenant harmless from and defend Tenant against
any and all claims or liability for any injury or damage to any person or
property including any reasonable attorney's fees (but excluding any
consequential damages or loss of business) occurring in, on, or about the
Project to the extent such injury or damage is caused by the active negligence
or willful misconduct of Landlord, its agents, servants, contractors or
employees (collectively, including Landlord, "Landlord Parties").

           (b) TENANT RELEASE. Landlord shall not be liable to Tenant, and
Tenant hereby waives all claims against Landlord Parties, for any injury or
damage to any person or property in or about the Premises by or from any cause
whatsoever (other than the active negligence or willful misconduct of Landlord
Parties), and without limiting the generality of the foregoing, whether caused
by water leakage of any character from the roof, walls, basement, or other
portion of the Premises or the Building, or caused by gas, fire, oil,
electricity, or any cause whatsoever, in, on, or about the Premises, the Project
or any part thereof (other than that caused by the active negligence or willful
misconduct of Landlord Parties). Tenant acknowledges that any casualty insurance
carried by Landlord will not cover loss of income to Tenant or damage to the
Alterations in the Premises installed by Tenant or Tenant's Trade Fixtures or
personal property located within the Premises (except as provided in Paragraph
10(f) below). Tenant shall be required to maintain the insurance described in
Paragraph 10(d) below during the Term and during the construction period for the
Warm Shell Improvements and the Tenant Improvements.

           (c) TENANT INDEMNITY. Except to the extent caused by the active
negligence or willful misconduct of Landlord Parties, Tenant shall indemnify and
hold Landlord harmless from and defend Landlord against any and all claims or
liability for any injury or damage to any person or property whatsoever: (i)
occurring in or on the Premises; or (ii) occurring in, on, or about any other
portion of the Project to the extent such injury or damage is caused by the
negligence or willful misconduct of the Tenant Parties. Tenant further agrees to
indemnify and hold Landlord harmless from, and defend Landlord against, any and
all claims, losses, or liabilities (including damage to Landlord's property)
arising from (x) any breach of this Lease by Tenant, (y) any matter referred to
in Paragraph 10(g), and/or (z) the conduct of any activities, work or business
of Tenant Parties in or about the Project, including, but not limited to any
release, discharge, storage or use of any Hazardous Substance. In the event of a
discrepancy between the terms of this paragraph and the terms of Paragraph 39 of
the Lease concerning Hazardous Substance liability, the latter shall control.

           (d) TENANT INSURANCE REQUIREMENTS. Tenant shall procure at its cost
and expense and keep in effect during the Term (and during the construction
period for the Warm Shell Improvements and/or the Tenant Improvements) the
following insurance:

                      (i) Commercial general liability insurance on an
           occurrence form, including contractual liability, with a minimum
           combined single limit of liability of Three Million Dollars
           ($3,000,000) per occurrence. Such insurance shall name Landlord, any
           Mortgagee, any ground lessor, and such other parties as Landlord may
           request as additional insureds, shall specifically include the
           liability assumed hereunder by Tenant, and shall provide that it is
           primary insurance, and not excess over or contributory with any other
           valid, existing and applicable insurance in force for or on behalf of
           Landlord, and shall provide that Landlord shall receive thirty (30)
           days' written notice from the insurer prior to any cancellation or
           change of coverage. The limits of such insurance shall not limit the
           liability of Tenant hereunder, and Tenant is responsible for ensuring
           that the amount of liability insurance carried by Tenant is
           sufficient for Tenant's purposes.

                      (ii) Business interruption insurance, insuring Tenant for
           a period of twelve (12) months against losses arising from the
           interruption of Tenant's business, and for lost profits, and charges
           and expenses which continue but would have been earned if the
           business had gone on without interruption, insuring against such
           perils, in such form and with such deductible amounts as are
           commercially reasonable;



                                       23
<PAGE>   29

                      (iii) "Special" (also known as "all risk") property
           insurance (including, without limitation, boiler and machinery (if
           applicable); sprinkler damage, vandalism and malicious mischief) on
           all of Tenant's Trade Fixtures and personal property. Such insurance
           shall be in an amount equal to full replacement cost of the aggregate
           of the foregoing and shall provide coverage comparable to the
           coverage in the standard ISO All Risk form, when such form is
           supplemented with the coverages required above.

                      (iv) Worker's compensation insurance with limits as may be
           required by law.

                      (v) Such other insurance as may be required by Laws, or by
           Landlord to the extent it is commercially reasonable for tenants to
           be required to carry such other insurance under similar leases with
           respect to similar property in similar locations.

Insurance required under this Paragraph 10(d) shall be in companies licensed to
do business in California and rated "A" IX or better in "Best's Insurance
Guide." Tenant shall deliver copies of policies of such insurance and
certificates naming the additional insureds thereof to Landlord on or before the
date Tenant commences work on the Tenant Improvements, and thereafter at least
thirty (30) days before the expiration dates of expiring policies; and, in the
event Tenant shall fail to procure such insurance, or to deliver such policies
or certificates, Landlord may, at its option, procure same for the account of
Tenant, and the cost thereof shall be paid to Landlord as Additional Charges
within five (5) days after delivery to Tenant of bills therefor.

           (e) SURVIVAL. The provisions of this paragraph 10 shall survive the
expiration or termination of this Lease with respect to any claims or liability
occurring prior to such expiration or termination.

           (f) LANDLORD INSURANCE. Landlord shall maintain insurance on the
Project, including the Base Building, the Warm Shell Improvements, the Tenant
Improvements and any Alterations installed in the Premises by Tenant at its
expense to the extent Tenant provides Landlord with all information reasonably
required by Landlord or its insurer in connection therewith (with the entire
cost of any such insurance on Tenant Improvements and Alterations to be payable
directly by Tenant to Landlord as an Additional Charge, including the
incremental cost to add such insurance to Landlord's policies and any
deductibles payable with respect to such Tenant Improvements and Alterations),
against fire and risks covered by "special" coverage (also known as "all risk")
(excluding earthquake and flood, though Landlord, at its sole option, may
include this coverage, and Tenant acknowledges that Landlord intends to
initially carry such coverage) on a 100% of "replacement cost" basis (though
reasonable deductibles may be included under such coverage). Landlord's
insurance shall also cover the improvements installed by Landlord prior to the
commencement of the Term, and the Warm Shell Improvements and the Tenant
Improvements installed by Tenant pursuant to the Work Letter, shall have a
building ordinance provision, and shall provide for rental interruption
insurance covering a period of twelve (12) full months. In no event shall
Landlord be deemed a co-insurer under such policy. Landlord shall also maintain
commercial general liability insurance on an occurrence basis in amounts not
less than Three Million Dollars ($3,000,000) per occurrence with respect to
bodily injury or death and property damage in the Project. Notwithstanding the
foregoing obligations of Landlord to carry insurance, Landlord may modify the
foregoing coverages if and to the extent it is commercially reasonable to do so.
Landlord agrees to provide Tenant, upon written request, with certificates of
insurance evidencing the foregoing coverages. Tenant acknowledges that,
notwithstanding any provision of this Paragraph 10(f) or this Lease, Landlord
currently intends to carry earthquake insurance on the Project during the Term
of this Lease.

           (g) DISCLAIMER REGARDING SECURITY. Tenant acknowledges that even if
Landlord installs and operates security cameras or other security equipment
and/or provides any other services that could be construed as being intended to
enhance security, Landlord shall have no obligation to Tenant or to any Tenant
Party for any damage, claim, loss or liability related to any claim that
Landlord had a duty to provide security or that the equipment or services
provided by Landlord were inadequate, inoperative or otherwise failed to provide
adequate security. Any such claim made against Landlord by any employee,
customer or invitee of Tenant shall be included within Tenant's obligation of
indemnity and defense set forth in subparagraph (c) above.



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<PAGE>   30

        11. WAIVER OF SUBROGATION. Notwithstanding anything to the contrary in
this Lease, the parties hereto release each other (including Landlord Parties
and Tenant Parties) and their respective agents, employees, successors,
assignees and subtenants from all liability for injury to any person or damage
to any property that is caused by or results from a risk (i) which is actually
insured against, to the extent of receipt of payment under such policy (unless
the failure to receive payment under any such policy results from a failure of
the insured party to comply with or observe the terms and conditions of the
insurance policy covering such liability, in which event, such release shall not
be so limited), (ii) which is required to be insured against under this Lease,
without regard to the negligence or willful misconduct of the entity so
released, or (iii) which would normally be covered by the standard form of
"special" or "all risk" coverage property insurance. Landlord and Tenant shall
each obtain from their respective insurers under all policies of fire, theft,
and other property insurance maintained by either of them at any time during the
Term insuring or covering the Building, the Premises, or the Project or any
portion thereof of its contents therein, a waiver of all rights of subrogation
which the insurer of one party might otherwise, if at all, have against the
other party and Landlord and Tenant shall each indemnify the other against any
loss or expense, including reasonable attorneys' fees, resulting from the
failure to obtain such waiver.

        12. SERVICES AND UTILITIES.

            (a) LANDLORD RESPONSIBILITIES. Landlord shall provide the
maintenance and repairs described in Paragraph 7(a), except for damage
occasioned by the act or omission of Tenant or for which Tenant is responsible
pursuant to Paragraph 7(c), which damage shall be repaired by Landlord at
Tenant's expense. Landlord shall provide necessary utilities and services to the
Common Areas, as determined by Landlord in Landlord's reasonable discretion, and
in any event to the extent expressly required by the terms and conditions of the
DDA, the Parking REA and/or the CC&Rs.

            (b) TENANT RESPONSIBILITIES. Subject to the provisions elsewhere
herein contained and to the Rules and Regulations, Tenant shall be responsible
for arranging for, and direct payment of any and all cost of, garbage pickup,
recycling, janitorial, security, transportation management and mitigation
programs, water, electricity, gas, telephone, cable and digital services, and
Tenant shall provide the maintenance, repair and replacement of Building Systems
in connection with such utilities and services, and Tenant shall provide the
maintenance, repair and services as described in Section 7(b). Landlord shall
cooperate with Tenant's efforts to arrange all such services. If Landlord
assumes Tenant's maintenance obligations with respect to the Building Systems
pursuant to Paragraph 7(b), 7(e) or 9(d)(v), Tenant shall cooperate fully with
Landlord and abide by all the reasonable regulations and requirements that
Landlord may prescribe for the proper functioning and protection of the Building
Systems.

            (c) NO EXCESSIVE LOAD. Tenant will not without the written consent
of Landlord, which consent shall not be unreasonably withheld or delayed, use
any apparatus or device in the Premises which, when used, puts an excessive load
on the Building or its structure or systems, including, without limitation,
electronic data processing machines, punch card machines and machines using
excess lighting or voltage in excess of the amount for which the Building is
designed.

            (d) NO LIABILITY. Landlord shall not be in default hereunder, nor be
deemed to have evicted Tenant, nor be liable for any damages directly or
indirectly resulting from, nor shall the rental herein reserved be abated,
except as expressly provided for in the second to last sentence of this
paragraph, by reason of (i) the installation, use or interruption of use of any
equipment in connection with the foregoing utilities and services; (ii) failure
to furnish or delay in furnishing any services to be provided by Landlord when
such failure or delay is caused by Acts of God or the elements, labor
disturbances of any character, any other accidents or other conditions beyond
the reasonable control of Landlord (any of the foregoing, "Force Majeure"), or
by the making of repairs or improvements to the Premises or to the Building
(except in the case of Landlord's active negligence or willful misconduct); or
(iii) the limitation, curtailment, rationing or restriction on use of water or
electricity, gas or any other form of energy or any other service or utility
whatsoever serving the Premises or the Project. Furthermore, Landlord shall be
entitled to cooperate with the mandatory requirements of national, state or
local governmental agencies or utilities suppliers in connection with reducing
energy or other resources consumption. If the Premises or any portion thereof
become unsuitable for Tenant's use as a consequence of cessation of gas and
electric utilities or



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<PAGE>   31

other services provided to the Premises resulting from a casualty covered by
Landlord's insurance, then Tenant's Monthly Base Rent and Additional Charges
shall abate during the period of time in which Tenant cannot occupy the Premises
(or shall proportionately abate during the period of time in which Tenant cannot
occupy a portion of the Premises) for the Permitted Uses, but only to the extent
of rental abatement insurance proceeds received by Landlord and/or any Mortgagee
(or, if Landlord fails to carry such insurance as required by Paragraph 10(f),
or fails to pay premiums for such insurance and such failure does not result
from Tenant's failure to perform Tenant's obligations hereunder, proceeds that
would have been payable to Landlord in the absence of such failure). In no event
shall any mortgagee or beneficiary under any mortgage or deed of trust on all or
any portion of the Project, the Building, or the Land (any such mortgagee or
beneficiary, a "Mortgagee") be or become liable for any default of Landlord
under this Paragraph 12.

        13. TENANT'S CERTIFICATES. Tenant, at any time and from time to time,
within ten (10) days from receipt of written notice from Landlord, will execute,
acknowledge and deliver to Landlord and, at Landlord's request, to any
prospective purchaser, ground or underlying lessor or mortgagee of any part of
the Project any other party acquiring an interest in Landlord, a certificate of
Tenant in a form reasonably acceptable to Tenant and containing such information
as is customary or as may reasonably be required by any of such persons. Tenant
has approved the form of tenant certificate attached as Exhibit "E" without
limiting Tenant's future approval of any additional or substitute certificate.
It is intended that any such certificate of Tenant delivered pursuant to this
Paragraph 13 may be relied upon by Landlord and any prospective purchaser,
ground or underlying lessor or Mortgagee, or such other party. Landlord will
execute, acknowledge and deliver to Tenant a substantially similar, customary
and reasonable certificate within ten (10) days from receipt of written request
from Tenant, in form reasonably acceptable to Landlord.

        14. HOLDING OVER.

            (a) LIMITED HOLDOVER TERM. Provided no Default is then continuing
under this Lease, Tenant shall have the right to extend the Term for a period of
up to six months (the "Holdover Term") after the expiration of the Initial Term,
in lieu of exercising Tenant's right to the Extension Term, by giving written
notice to Landlord at least eighteen (18) months prior to expiration of the
Initial Term (the "Holdover Notice"). The Holdover Notice shall specify the
period of the Holdover Term. Any such Holdover Term shall be on all of the terms
and conditions of this Lease, except that the Monthly Base Rent payable shall be
one hundred twenty-five (125%) of the Monthly Base Rent payable in the last full
month prior to the Holdover Term. If Tenant remains in possession of all or any
portion of the Premises after expiration of the Holdover Term (if any), or if
Tenant fails to exercise its right to the Holdover Term in accordance with this
Paragraph 14(a) and Tenant nevertheless remains in possession of all or any
portion of the Premises after expiration of the Term, then such holdover shall
be governed by Paragraph 14(b).

            (b) NO HOLDOVER. If Tenant (directly or through any
successor-in-interest of Tenant) remains in possession of all or any portion of
the Premises after the expiration or termination of this Lease with the written
consent of Landlord, such continued possession shall be construed to be a
tenancy from month to month at one hundred twenty-five percent (125%) of the
Monthly Base Rent payable in the last full month prior to such termination or
expiration (and shall be increased in accordance with Paragraph 3(b)), together
with an amount estimated by Landlord for the monthly Additional Charges for
Expenses and Taxes payable under this Lease, and shall otherwise be on the terms
and conditions herein specified so far as applicable. If Tenant (directly or
through any successor-in-interest of Tenant) remains in possession of all or any
portion of the Premises after the expiration or termination of this Lease
without the written consent of Landlord, Tenant's continued possession shall be
on the basis of a tenancy at the sufferance of Landlord. In such event, Tenant
shall continue to comply with or perform all the terms and obligations of Tenant
under this Lease, except that the Monthly Base Rent during Tenant's holding over
shall be the greater of the then-fair market rent for the Premises (as
reasonably determined by Landlord) or two hundred percent (200%) of the Monthly
Base Rent and Additional Charges for Expenses and Taxes payable in the last full
month prior to the termination or expiration of this Lease (and shall be
increased in accordance with Paragraph 3(b)). In addition to Rent, Tenant shall
pay Landlord for all damages proximately caused by reason of the Tenant's
retention of possession. Landlord shall use commercially reasonable efforts to
notify Tenant if and when (a) a new lease, or a letter of intent for a new
lease, has been entered into for any portion of the Premises, (b) a loan


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<PAGE>   32

application has been submitted by Landlord or a loan commitment issued to
Landlord in connection with the Premises at a time when Tenant is then holding
over or Landlord in its reasonable judgment believes a Tenant holdover is likely
prior to the contemplated loan being fully funded, or (c) a sale contract or
letter of intent for a sale of the Premises to a third party has been entered
into for the Premises at a time when Tenant is then holding over or Landlord in
its reasonable judgment believes a Tenant holdover is likely prior to the
contemplated sale being consummated. Landlord's acceptance of Rent after the
termination of this Lease shall not constitute a renewal of this Lease, and
nothing contained in this provision shall be deemed to waive Landlord's right of
re-entry or any other right hereunder or at law. Tenant acknowledges that, in
Landlord's marketing and re-leasing efforts for the Premises, Landlord is
relying on Tenant's vacation of the Premises on the Expiration Date.
Accordingly, Tenant shall indemnify, defend and hold Landlord harmless from and
against all claims, liabilities, losses, costs, expenses and damages arising or
resulting directly or indirectly from Tenant's failure to timely surrender the
Premises, including, without limitation, (i) any loss, cost or damages suffered
by any prospective tenant of all or any part of the Premises, and (ii)
Landlord's damages as a result of such prospective tenant rescinding or refusing
to enter into the prospective lease of all or any portion of the Premises by
reason of such failure of Tenant to timely surrender the Premises.

        15. SUBORDINATION. Without the necessity of any additional document
being executed by Tenant for the purpose of effecting a subordination, this
Lease shall be subject and subordinate at all times to: (i) all ground leases or
underlying leases which may now exist or hereafter be executed affecting all or
any portion of the Project, (ii) the Parking REA, the Initial CC&Rs, any other
CC&Rs or other Encumbrances currently in effect or that Landlord may enter into
in the future, and (iii) the lien of any mortgage or deed of trust which may now
exist or hereafter be executed in any amount for which all or any portion of the
Project, ground leases or underlying leases, or Landlord's interest or estate in
any of said items, is specified as security (any of the foregoing, a "Mortgage",
and the beneficiary or mortgagee under any of the foregoing, a "Mortgagee")
provided that this Lease shall not be subject or subordinate to any ground or
underlying lease or to any Mortgage, unless the ground lessor or Mortgagee
executes a reasonable recognition and non-disturbance agreement which provides
that neither this Lease, nor Tenant's rights nor Tenant's possession of the
Premises on the terms and conditions of this Lease will be disturbed during the
Term (including any Extension Term or Holdover Term) so long as Tenant is not in
Default under any of the terms, covenants, conditions or agreements of this
Lease. Notwithstanding the foregoing, Landlord shall have the right to
subordinate or cause to be subordinated any such ground leases or underlying
leases or any such Mortgages to this Lease. In the event that any ground lease
or underlying lease terminates for any reason or any Mortgage is foreclosed or a
conveyance in lieu of foreclosure is made for any reason, Tenant shall,
notwithstanding any subordination but conditioned upon the recognition and
non-disturbance agreement from Mortgagee described above, attorn to and become
the Tenant of the successor in interest to Landlord at the option of such
successor in interest. Tenant covenants and agrees to execute and deliver upon
demand by Landlord and in the form requested by Landlord and reasonably
acceptable to Tenant, any customary additional documents evidencing the priority
or subordination of this Lease with respect to any such ground leases or
underlying leases or the lien of any such Mortgage, which documents may, at any
ground lessor's or Mortgagee's request, provide, without limitation, that the
ground lessor, Mortgagee and/or any person acquiring title by reason of a
foreclosure sale or an exercise of a power of sale or by deed expressly in lieu
of foreclosure shall not: (i) have any liability for any act, omission, default
or breach by Landlord under this Lease occurring prior to the time of such
acquisition by such Mortgagee or person; (ii) be subject to any claim or offset
which Tenant may have had against Landlord which arose prior to such
foreclosure, trustee sale or deed-in-lieu; (iii) be bound by any payment of Rent
or any part thereof more than one month in advance; (iv) be bound by any
amendment or modification to this Lease made after Tenant enters into any such
subordination and non-disturbance agreement with such Mortgagee and without the
written consent of such Mortgagee; (v) be obligated for the return of any
security deposit or other thing of value now or hereafter given to Landlord to
secure the performance by Tenant of its obligations under this Lease or any one
or more of such obligations, except to the extent such security deposit or thing
of value has been received by such Mortgagee or person; (vi) be required to
perform, or liable for the failure to perform, the obligations of Landlord with
respect to the construction of the Base Building; and (vii) be obligated to
perform any repair or restoration of the Project required as a result of any
damage, destruction or condemnation, except to the extent that such Mortgagee or
other person owns the portion of the Project damaged or condemned and insurance
proceeds or condemnation awards received by such Mortgagee or person are
sufficient to fully pay the cost of such repair or restoration.. Tenant has
approved the form of the subordination, non-disturbance and attornment agreement
attached as Exhibit "F", without



                                       27
<PAGE>   33

limiting Tenant's future approval of any additional or substitute form or the
provisions of this Paragraph 15. Tenant shall execute, deliver and record any
such documents within ten (10) days after Landlord's written request.

        16. RULES AND REGULATIONS. Tenant shall faithfully observe and comply
with the rules and regulations attached to this Lease as Exhibit "D" and all
reasonable modifications thereof and additions thereto from time to time put
into effect by Landlord. Landlord shall not be responsible for the
nonperformance by any other Tenant or occupant of the Building or the Project of
any said rules and regulations. Landlord shall enforce the Rules and Regulations
against all tenants in the Building or Project (as applicable) in a
non-discriminatory manner. In the event of an express and direct conflict
between the terms, covenants, agreements and conditions of this Lease and those
set forth in the rules and regulations, as modified and amended from time to
time by Landlord, this Lease shall control.

        17. RE-ENTRY BY LANDLORD. Landlord reserves and shall at all reasonable
times, upon reasonable prior notice (except in the case of an emergency), and
subject to Tenant's reasonable security precautions and the right of Tenant to
accompany Landlord at all times, have the right to re-enter the Premises to
inspect the Premises, to supply any service to be provided by Landlord to Tenant
hereunder (unless Tenant is supplying such service), to post notices of
nonresponsibility or as otherwise required or allowed by this Lease or by law,
and to alter, improve or repair the Premises and any portion of the Building
(and may for that purpose erect, use, and maintain scaffolding, pipes, conduits,
and other necessary structures in and through the Premises where reasonably
required by the character of the work to be performed), and, during normal
business hours only, to show the Premises to prospective purchasers, Mortgagees
or tenants (as to prospective tenants, only during the last eighteen (18) months
of the Term). Landlord shall not be liable in any manner for any inconvenience,
disturbance, loss of business, nuisance or other damage arising from Landlord's
entry and acts pursuant to this Paragraph and Tenant shall not be entitled to an
abatement or reduction of Monthly Base Rent or Additional Charges if Landlord
exercises any rights reserved in this paragraph. Tenant hereby waives any claim
for damages for any injury or inconvenience to or interference with Tenant's
business, any loss of occupancy or quiet enjoyment of the Premises, and any
other loss occasioned thereby, except for Landlord's active negligence or
willful misconduct. For each of the aforesaid purposes, Landlord shall at all
times have and retain a key with which to unlock all of the doors in, upon and
about the Premises, excluding Tenant's vaults and safes, or special security
areas (designated in advance), and Landlord shall have the right to use any and
all means which Landlord may deem necessary or proper to open said doors in an
emergency, in order to obtain entry to any portion of the Premises, and any
entry to the Premises, or portion thereof obtained by Landlord by any of said
means, or otherwise, shall not under any emergency circumstances be construed or
deemed to be a forcible or unlawful entry into, or a detainer of, the Premises,
or an eviction, actual or constructive, of Tenant from the Premises or any
portions thereof. Landlord shall use commercially reasonable efforts during
re-entry to minimize any material, unreasonable interference with Tenant's use
of the Premises or its business conducted therein.

        18. INSOLVENCY OR BANKRUPTCY. The appointment of a receiver to take
possession of all or substantially all of the assets of Tenant, or an assignment
of Tenant for the benefit of creditors, or any action taken or suffered by
Tenant under any insolvency, bankruptcy, reorganization or other debtor relief
proceedings, whether now existing or hereafter amended or enacted, shall at
Landlord's option constitute a breach of this Lease by Tenant (provided that,
with respect to a petition in bankruptcy, or receiver attachment, or other
remedy pursued by a third party, such event shall not constitute a breach of
this Lease so long as it is discharged within sixty (60) days). Upon the
happening of any such event or at any time thereafter, this Lease shall
terminate five (5) days after written notice of termination from Landlord to
Tenant. In no event shall this Lease be assigned or assignable by operation of
law or by voluntary or involuntary bankruptcy proceedings or otherwise and in no
event shall this Lease or any rights or privileges hereunder be an asset of
Tenant under any bankruptcy, insolvency, reorganization or other debtor relief
proceedings.

        19. DEFAULT.

            (a) TENANT DEFAULT. The failure to perform or honor any covenant,
condition or representation made under this Lease or the Work Letter shall
constitute a "Default" hereunder by Tenant upon expiration of the appropriate
grace or cure period provided in this Paragraph 19(a). Tenant shall have a
period of



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<PAGE>   34

three (3) days from the date of written notice from Landlord within which to
cure any failure to pay Monthly Base Rent or Additional Charges; provided,
however, that Landlord shall not be required to provide such notice more than
two (2) times during any two (2) year period during the Term with respect to
non-payment of Monthly Base Rent or Additional Charges, the third such
non-payment constituting Default without requirement of notice. Tenant shall
have a period of thirty (30) days from the date of receipt of written notice
from Landlord within which to cure any other curable Default under this Lease;
provided, however, that with respect to any curable Default other than the
payment of Monthly Base Rent or Additional Charges that cannot reasonably be
cured within thirty (30) days, the cure period shall be extended for an
additional period of time reasonably required to cause such cure if Tenant
commences to cure within thirty (30) days from Landlord's notice and continues
to prosecute diligently the curing thereof, provided that such cure period shall
in no event extend beyond ninety (90) days after Landlord's notice.
Notwithstanding the foregoing, (i) if a specific time for performance or a
different cure period is specified elsewhere in this Lease or the Work Letter
with respect to any specific obligation of Tenant, such specific performance or
cure period shall apply with respect to a failure of such obligation in lieu of,
and not in addition to, the cure period provided in this Paragraph 19(a); (ii)
the cure periods specified in Paragraphs 7(e) and 23 shall apply with respect to
Landlord's rights to cure Tenant's failure to perform pursuant to Paragraphs
7(e) and 23, respectively, and (iii) the cure rights provided in this Paragraph
19(a) shall not extend the specific time for compliance with any required
delivery, approval or performance obligation under Paragraph 13 or 15 of the
Lease or under the Work Letter.

           (b) LANDLORD REMEDIES. Upon a Default of this Lease by Tenant,
Landlord shall have the following rights and remedies in addition to any other
rights or remedies available to Landlord at law or in equity:

                      (i) The rights and remedies provided by California Civil
           Code, Section 1951.2, including but not limited to, recovery of the
           worth at the time of award of the amount by which the unpaid Monthly
           Base Rent and Additional Charges for the balance of the Term after
           the time of award exceeds the amount of rental loss for the same
           period that the Tenant proves could be reasonably avoided, as
           computed pursuant to subsection (b) of said Section 1951.2;

                      (ii) The rights and remedies provided by California Civil
           Code, Section 1951.4, that allows Landlord to continue this Lease in
           effect and to enforce all of its rights and remedies under this
           Lease, including the right to recover Monthly Base Rent and
           Additional Charges as they become due, for so long as Landlord does
           not terminate Tenant's right to possession; provided, however, if
           Landlord elects to exercise its remedies described in this Paragraph
           19(a)(ii) and Landlord does not terminate this Lease, and if Tenant
           requests Landlord's consent to an assignment of this Lease or a
           sublease of the Premises at such time as Tenant is in Default,
           Landlord shall not unreasonably withhold its consent to such
           assignment or sublease. Acts of maintenance or preservation, efforts
           to relet the Premises or the appointment of a receiver upon
           Landlord's initiative to protect its interest under this Lease shall
           not constitute a termination of Tenant's rights to possession;

                      (iii) The right to terminate this Lease by giving notice
           to Tenant in accordance with applicable law;

                      (iv) If Landlord elects to terminate this Lease, the right
           and power to enter the Premises and remove therefrom all persons and
           property and, to store such property in a public warehouse or
           elsewhere at the cost of and for the account of Tenant, and to sell
           such property and apply such proceeds therefrom pursuant to
           applicable California law.

           (c) LANDLORD DEFAULT. Landlord shall have a period of thirty (30)
days from the date of written notice from Tenant within which to cure any
default of Landlord under this Lease; provided, however, that with respect to
any default that cannot reasonably be cured within thirty (30) days, the default
shall not be deemed to be uncured if Landlord commences to cure within thirty
(30) days from Tenant's notice and continues to prosecute diligently the curing
thereof. Tenant agrees to deliver to any Mortgagee a copy of any Notice of
Default served upon the Landlord in the manner prescribed by Paragraph 26
hereof, provided that prior to such notice Tenant has been notified in writing
(by way of Notice of Assignment of Rents and Leases, or otherwise) of the
address of such



                                       29
<PAGE>   35

Mortgagee. Tenant further agrees that if Landlord shall have failed to cure such
default within the time provided for in this Lease, then the Mortgagee shall
have an additional thirty (30) days (provided that Tenant notifies Mortgagee
concurrently with Tenant's notice to Landlord at the beginning of Landlord's
thirty (30) day period; otherwise Mortgagee shall have sixty (60) days from the
date on which it is noticed) within which to cure such default or if such
default cannot be cured within that time, then such additional time as may be
reasonably necessary to cure such default shall be granted if within such
applicable period Mortgagee has commenced and is diligently pursuing the
remedies necessary to cure such default (including, but not limited to,
commencement of foreclosure proceedings, if necessary to effect such cure), in
which event the Lease shall not be terminated while such remedies are being so
diligently pursued.

            (d) CROSS-DEFAULT WITH BUILDING 3 LEASE. Any Default under the
Building 3 Lease by Tenant, or by a subtenant or assignee of Tenant, shall
constitute a Default under this Lease by Tenant. Any default under the Building
3 Lease by Landlord that is not cured within the applicable cure period
thereunder shall constitute a default under this Lease by Landlord. If Tenant
assigns its entire interest under either this Lease or the Building 3 Lease (but
not both) to an entity other than an Affiliate of Tenant, Tenant may delete this
Paragraph 19(d) from this Lease by delivering written notice thereof to
Landlord, provided that (i) such Assignment is not a Permitted Transfer or an
Assignment to an Affiliate of Tenant, (ii) Landlord consents to such Assignment
pursuant to the terms and conditions of Paragraph 9 of this Lease, and (iii)
Tenant is not then in Default (and no event has occurred which, with the passage
of time or giving of notice or both, would constitute a Default) hereunder or
under the Building 3 Lease; and (iv) as of the date of such written notice to
Landlord, Landlord has not delivered a notice of Tenant's failure to perform any
of its obligations hereunder or under the Building 3 Lease, nor assessed a late
charge pursuant to Paragraph 3(d) of this Lease or under any comparable
provision of the Building 3 Lease, at any time during the previous six months,
or more than two (2) times during the previous twenty-four (24) months,
regardless in each case of whether such failure was cured by Tenant within any
applicable grace or cure period; provided, however, that any such notice of
failure to perform relating to a non-monetary failure to perform which was
disputed, in good faith, by Tenant and ultimately determined (by agreement of
the parties, arbitration or judicial action) not to be a violation of this Lease
shall not be considered for purposes of determining whether such condition has
been met. At any time during the term of this Lease (provided that Landlord is
not then in default under this Lease), Landlord, in its sole discretion, may
delete this Paragraph 19(d) from this Lease by delivering written notice thereof
to Tenant, without any further action required by Tenant. Upon request by either
party, the parties shall execute and deliver an amendment to this Lease
documenting any such deletion of this Paragraph by Landlord.

        20. DAMAGE BY FIRE, ETC.

            (a) RESTORATION OR TERMINATION. If the Premises or the Building
(including the Warm Shell Improvements and the Tenant Improvements) are damaged
by fire or other casualty, Landlord shall forthwith repair the same, provided
that such repairs can be made within two hundred seventy (270) days after the
date of such damage under the laws and regulations of the federal, state and
local governmental authorities having jurisdiction thereof. In such event, this
Lease shall remain in full force and effect except that Tenant shall be entitled
to a proportionate reduction of Monthly Base Rent and Additional Charges for
Expenses and Taxes for the period of time during which such repairs to be made
hereunder by Landlord are being made. Such reduction of Monthly Base Rent and
Additional Charges for Expenses and Taxes, if any, shall be based upon the
greater of (i) the proportion that the area of the Premises rendered
untenantable by such damage bears to the total area of the Premises; or (ii) the
extent to which such damage and the making of such repairs by Landlord shall
interfere with the business carried on by Tenant in the Premises, and shall be
limited to the extent of rental abatement insurance proceeds actually received
by Landlord or a Mortgagee under Landlord's casualty insurance policy (or, if
Landlord fails to carry such insurance as required by Paragraph 10(f), or fails
to pay premiums for such insurance and such failure does not result from
Tenant's failure to perform Tenant's obligations hereunder, proceeds that would
have been payable to Landlord in the absence of such failure). Within thirty
(30) days after the date of such damage, Landlord shall notify Tenant whether or
not, in Landlord's reasonable opinion, such repairs can be made within two
hundred and seventy (270) days after the date of such damage and Landlord's
reasonable estimate of the time needed for such repairs. If such repairs cannot
be made within two hundred and seventy (270) days from the date of such damage,
Landlord shall have the option within thirty (30) days after the date of such
damage to elect either to: (i) notify Tenant of Landlord's intention to repair
such damage and diligently prosecute such repairs, in which event this



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<PAGE>   36

Lease shall continue in full force and effect and the Monthly Base Rent and
Additional Charges for Expenses and Taxes shall be reduced as provided herein;
or (ii) notify Tenant of Landlord's election to terminate this Lease as of a
date specified in such notice, which date shall not be less than thirty (30)
days nor more than sixty (60) days after such notice is given and this Lease
shall terminate on the date specified in such notice. If Landlord notifies
Tenant that restoration or repair of the Premises will take more than two
hundred and seventy (270) days, Tenant shall have a right to terminate the Lease
within fifteen (15) days following receipt of Landlord's notice, by providing
Landlord with written notice of its election to do so. In such event (and also
in the event Landlord terminates the Lease pursuant to the immediately preceding
sentence), Tenant shall have no liability for payment of the deductible under
Landlord's insurance relating to such damage. In case of termination by either
event, the Monthly Base Rent and Additional Charges for Expenses and Taxes shall
be reduced by a proportionate amount based upon the extent to which such damage
interfered with the business carried on by Tenant in the Premises, and Tenant
shall pay such reduced Monthly Base Rent and Additional Charges for Expenses and
Taxes up to the effective date of such termination. Landlord agrees to refund to
Tenant any Monthly Base Rent and Additional Charges previously paid for any
period of time subsequent to such date of termination. The repairs to be made
hereunder by Landlord shall not include, and Landlord shall not be required to
repair, any damage by fire or other cause to the property of Tenant or any
repairs or replacements of any paneling, decorations, railings, floor coverings
or any alterations, additions, fixtures or improvements installed on the
Premises by or at the expense of Tenant other than Warm Shell Improvements
and/or Tenant Improvements to the extent they are covered by Landlord's
insurance policies; provided, however, that to the extent Landlord's insurance
policies cover any Alterations pursuant to Paragraph 10(f), Landlord shall make
available to Tenant any available insurance proceeds with respect to any damage
or destruction that affects such Alterations, after deducting therefrom the
cost, if any, to Landlord for the recovery of such proceeds and/or of any repair
to the Building or Premises or Project for which Landlord is responsible
hereunder, in order for Tenant to repair and restore such Alterations, pursuant
to disbursement procedures established by Landlord and/or any Mortgagee. Tenant
hereby waives the provisions of Section 1932.2, and Section 1933.4, of the Civil
Code of California.

            (b) CASUALTY AT END OF TERM. Notwithstanding anything to the
contrary contained in this Lease, if during the twelve (12) months prior to the
expiration of the Term (including any Extension Term, if Tenant then has
exercised its option to extend pursuant to Paragraph 41), the Building or a
substantial portion thereof is damaged or destroyed by fire or other casualty,
either Tenant or Landlord shall have the option to terminate this Lease as of
the date of such damage or destruction by written notice to the other party
given within thirty (30) days after such damage or destruction, in which event
Landlord shall make a proportionate refund to Tenant of such Monthly Base Rent
and Additional Charges for Expenses and Taxes as may have been paid in advance.
For purposes of this paragraph, a "substantial portion" shall mean fifty percent
(50%) of the Building.

            (c) UNINSURED CASUALTY. Notwithstanding Paragraph 20(a), and subject
to the termination right in Paragraph 20(b), in the event of a total or partial
destruction of the Building (i) by a casualty both of a type not required to be
insured against by Landlord under the terms of this Lease and not actually
insured against by Landlord, or (ii) under circumstances where the net insurance
proceeds (plus applicable deductibles that are included in Expenses) obtained as
a result of such casualty (or, if Landlord fails to carry any specific insurance
that Landlord is obligated to carry under this Lease, or fails to pay premiums
for such insurance and such failure does not result from Tenant's failure to
perform its obligations hereunder, proceeds that would have been payable to
Landlord in the absence of such failure) are ninety percent (90%) or a lesser
percentage of the cost of restoration, rebuilding or replacement (including
without limitation if such circumstances result from a requirement by any
Mortgagee that Landlord utilize insurance proceeds to pay down the Mortgage),
which destruction exceeds five percent (5%) of the replacement cost of the
Building, Landlord may elect, in its sole discretion by written notice to Tenant
within thirty (30) days after the date of such damage, to either (x) terminate
this Lease, or (y) if the damage can be reconstruct the Base Building (not
including the Warm Shell Improvements or the Tenant Improvements), in which
event this Lease shall continue in full force and effect. However,
notwithstanding the foregoing, if Landlord elects not to reconstruct, Tenant may
by written notice to Landlord within ten (10) days after Landlord notifies
Tenant of Landlord's election, request that Landlord undertakes such
reconstruction on the condition that (A) Tenant provides Landlord with
reasonably acceptable assurance that Tenant will complete and pay for the
reconstruction of all Warm Shell Improvements (in the form of a cash deposit,
letter of credit or other financial assurance as Landlord may reasonably
require) and (B) either (I) Tenant agrees in such written request to pay the
entire cost for reconstruction of the Base



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<PAGE>   37

Building (as determined by Landlord in its reasonable discretion), which shall
be paid (in lump sum or in progress payments, at Landlord's election) to
Landlord within thirty (30) days after receipt of an invoice or invoices from
Landlord; or (II) if Tenant does not agree to pay the entire reconstruction
cost, then both of the following: (aa) Landlord is able, using commercially
reasonable efforts, to obtain construction financing for the entire cost of such
reconstruction (less any insurance proceeds actually received by Landlord and
available to Landlord for application to such reconstruction) from a lender, and
on terms and conditions, that are substantially similar to the Mortgagee and the
Mortgage that exists on the date of this Lease and that are otherwise acceptable
to Landlord in its commercially reasonable discretion; and (bb) the cost
incurred by Landlord for such reconstruction (less any insurance proceeds
actually received by Landlord and available to Landlord for application to such
reconstruction) shall be amortized over the useful life of the Building (except
that the cost for reconstruction of any Warm Shell Improvements and Tenant
Improvements, if made by Landlord, shall be paid by Tenant in its entirety
within thirty (30) days after receipt of an invoice therefore) and shall be
reimbursed monthly by Tenant to Landlord as an Additional Charge, together with
interest at the Default Rate, commencing on the date Landlord substantially
completes restoration of the Base Building; provided, however, that Tenant shall
not be obligated to pay for any portion of the useful life of the Base Building
which extends beyond the Expiration Date (as it may be extended by the Extension
Term, if any). If either (a) the remaining Term of the Lease at the time of such
destruction is less than ten (10) years (which Term will include the Extension
Term if Tenant delivers its Extension Notice prior to or together with Tenant's
reconstruction request), or (b) the restoration or repair of the Premises
(including any period of time necessary to obtain construction financing, if
Tenant does not agree to fund such construction) will take more than two hundred
and seventy (270) days to complete, then Landlord shall not be obligated to
reconstruct the Base Building in response to Tenant's request but, rather,
Landlord shall consider Tenant's request in Landlord's sole discretion. Landlord
shall respond to Tenant's written request within thirty (30) days after receipt
thereof. If Landlord reconstructs the Base Building pursuant to this Paragraph
20(c), Tenant shall be obligated to reconstruct the Warm Shell Improvements and
Tenant Improvements, at Tenant's cost, or at Landlord's sole option Landlord may
elect to reconstruct all or any portion of the Warm Shell Improvements and/or
Tenant Improvements, at Tenant's cost.

        21. EMINENT DOMAIN.

            (a) ENTIRE BUILDING. If the entire Premises are taken or
appropriated under the power of eminent domain or conveyed in lieu thereof (any
such event, a "Taking"), (i) this Lease and all right, title and interest of the
Tenant hereunder shall cease and come to an end on the date of vesting of title
pursuant to such Taking, and (ii) the Monthly Base Rent and Additional Charges
payable shall be apportioned as of the date of such vesting.

            (b) PARTIAL BUILDING; TERMINATION. If there is a Taking of less than
the entire Premises, this Lease shall terminate as to the portion of the
Premises so taken upon vesting of title pursuant to such Taking, and if, but
only if, such Taking is so extensive that it renders the remaining portion of
the Premises unsuitable for the use being made of the Premises on the date
immediately preceding such Taking, either the Tenant or the Landlord may
terminate this Lease by written notice to the other party not later than thirty
(30) days after the date of such vesting, specifying as the date for termination
a date not later than thirty (30) days after such notice. On the date specified
in such notice, (i) the term of this Lease and all right, title and interest of
Tenant hereunder shall cease, and (ii) the Monthly Base Rent and Additional
Charges shall be apportioned as of the date of such termination

            (c) PARTIAL BUILDING; RESTORATION. If there is a Taking of less than
the entire Premises and this Lease is not terminated as provided in Paragraph
21(b) above, this Lease shall terminate as to the portion of the Premises so
taken upon vesting of title pursuant to such Taking. In any such case, if the
Premises have been damaged as a consequence of such partial Taking, Landlord
shall restore the Base Building (to the extent of Landlord's obligations under
the Work Letter) for the portion of the Premises continuing under this Lease at
Landlord's cost and expense; provided, however, that Landlord shall not be
required to repair or restore any injury or damage to the property of Tenant or
to make any repairs or restoration of any Alterations or any Tenant Improvements
or Warm Shell Improvements installed on the Premises by or at the expense of
Tenant. Tenant shall, at Tenant's sole cost and expense, promptly and pursuant
to the provisions of the Work Letter and this Lease, restore those portions of
the Warm Shell Improvements, Tenant Improvements and Alterations not so taken.
Thereafter, the



                                       32
<PAGE>   38

Monthly Base Rent and Additional Charges for Expenses and Taxes to be paid under
this Lease for the remainder of the Term shall be proportionately reduced, such
that thereafter the amounts to be paid by Tenant shall be in the ratio that the
portion of the Premises not so taken bears to the total area of the Premises
prior to such Taking.

            (d) TAKING OF COMMON AREA. If there is a Taking of any portion of
the Common Area which causes the Premises to violate parking requirements,
building setbacks or access requirements under any applicable Laws, Landlord
shall cure such non-compliance by any reasonable means. If Landlord determines
that such violation is not curable by reasonable means, both Landlord and Tenant
shall have the option, exercisable by written notice to the other party, of
terminating this Lease. If Landlord determines that such violation is curable,
but then fails to commence such cure within sixty (60) days after such Taking,
the Tenant shall have the option, exercisable by written notice to Landlord, of
terminating this Lease. Any termination of this Lease pursuant to this Paragraph
21(d) shall be effective as of the date of vesting of title pursuant to the
Taking, and Landlord shall make a proportionate refund to Tenant of any Monthly
Base Rent and Additional Rent that has been paid in advance.

            (e) AWARD. Landlord shall receive (and Tenant shall assign to
Landlord upon demand from Landlord) any income, rent, award or any interest
therein which may be paid in connection with any Taking, whether partial or
total, and whether or not either Landlord or Tenant exercises any right it may
have to terminate this Lease. Tenant shall have no claim against Landlord for
any part of such sum paid by virtue of the Taking, whether or not attributable
to the value of the unexpired term of this Lease, except that Tenant shall be
entitled to petition the condemning authority for the following: (i) the then
unamortized cost of any Tenant Improvements or Alterations paid for by Tenant
from its own funds; (ii) the value of Tenant's trade fixtures; (iii) Tenant's
relocation costs; and (iv) Tenant's goodwill, loss of business and business
interruption.

            (f) TEMPORARY TAKING. Notwithstanding anything to the contrary
contained in this Paragraph 21, if there is a Taking of the temporary use or
occupancy of any part of the Premises during the Term, this Lease shall be and
remain unaffected by such Taking and Tenant shall continue to pay in full all
Monthly Base Rent and Additional Charges payable hereunder by Tenant during the
Term. In such event, Tenant shall be entitled to receive that portion of any
award which represents compensation for the use or occupancy of the Premises
during the Term, and Landlord shall be entitled to receive that portion of any
award which represents the cost of restoration of the Premises and the use and
occupancy of the Premises after the end of the Term. If such temporary taking is
for a period longer than two hundred and seventy (270) days and unreasonably
interferes with Tenant's use of the Premises or the Common Area, then Tenant
shall have the right to terminate the Lease, and Landlord shall be entitled to
receive the entire award for the Taking, except for that portion which
represents compensation for the use or occupancy of the Premises during the
period of time prior to such termination.

            (g) WAIVER OF STATUTORY PROVISIONS. Landlord and Tenant understand
and agree that the provisions of this Paragraph 21 are intended to govern fully
the rights and obligations of the parties in the event of a Taking of all or any
portion of the Premises. Accordingly, the parties each hereby waives any right
to terminate this Lease in whole or in part under Sections 1265.120 and 1265.130
of the California Code of Civil Procedure or under any similar Law now or
hereafter in effect.

        22. SALE BY LANDLORD. If Landlord sells or otherwise conveys its
interest in the Premises, Landlord shall be relieved of its obligations under
the Lease from and after the date of sale or conveyance (including the
obligations of Landlord under Paragraph 39), only when the successor assumes in
writing the obligations to be performed by Landlord on and after the effective
date of the transfer, whereupon Tenant shall attorn to such successor.

        23. RIGHT OF LANDLORD TO PERFORM. All covenants and agreements to be
performed by Tenant under any of the terms of this Lease shall be performed by
Tenant at Tenant's sole cost and expense and without any abatement of Monthly
Base Rent or Additional Charges. If Tenant fails to pay any sum of money, other
than Monthly Base Rent or Additional Charges for Expenses or Real Estate Taxes,
required to be paid by it hereunder or fails to perform any other act on its
part to be performed hereunder (including, without limitation, Tenant's
obligation to maintain and repair the Premises and Building Systems pursuant to
Paragraph 7(b)),



                                       33
<PAGE>   39

regardless of whether such failure has become a Default hereunder and either (i)
such failure continues, and Tenant does not commence cure of such failure, for
ten (10) days after notice thereof by Landlord as provided in Paragraph 19(a)
(except in the event of emergency, when no notice or cure period shall be
required but Landlord shall make reasonable good faith efforts to notify Tenant
prior to commencing such emergency cure), or (ii) having commenced such cure
Tenant does not diligently prosecute the curing thereof, or (iii) if Landlord
is, in Landlord's reasonable business judgment, in a better position to
accomplish such cure or can accomplish such cure in a more efficient or
cost-effective manner than Tenant, or (iv) if a default under the DAA, Parking
REA, any CC&Rs, any other Encumbrance, or any Mortgage is, in Landlord's
reasonable judgment, likely to occur due to Tenant's failure to cure such
failure in a timely manner, then in any such situation Landlord may, but shall
not be obligated so to do, and without waiving or releasing Tenant from any
obligations of Tenant, make any such payment or perform any such act on Tenant's
part to be made or performed as provided in this Lease. All sums so paid and
costs so incurred by Landlord, together with interest thereon at the Default
Rate from the date Landlord makes such payment or incurs such cost, shall be
payable as Additional Charges to Landlord within thirty (30) days after receipt
by Tenant of a bill or statement therefor.

        24. SURRENDER OF PREMISES.

            (a) DELIVERY OF PREMISES. At the end of the Term or any renewal
thereof or other sooner termination of this Lease, Tenant will peaceably deliver
to Landlord possession of the Premises, together with all improvements or
additions upon or belonging to Landlord, by whomsoever made, in substantially
the same condition as received, or first installed, subject to the terms of
Paragraphs 6, 21 and 39, subject to normal wear and tear and the rights and
obligations of the parties concerning casualty damage pursuant to Paragraph 20.
Tenant may, upon the termination of this Lease, remove all movable furniture and
equipment belonging to Tenant, at Tenant's sole cost, provided that Tenant
repairs any damage caused by such removal. Property not so removed by the
Expiration Date (or in the event of an earlier termination, within five (5) days
of such earlier termination date) shall be deemed abandoned by Tenant, and title
to the same shall thereupon pass to Landlord. Upon such expiration or sooner
termination of the Term, Tenant shall upon demand by Landlord, at Landlord's
election either (i) at Tenant's sole cost and expense, forthwith and with all
due diligence remove any Tenant Modifications (as defined in the Work Letter),
Tenant Improvements or Alterations made by or for the account of Tenant,
designated by Landlord to be removed (provided, however, that upon the written
request of Tenant prior to installation of such Tenant Modifications, Tenant
Improvements or Alterations, Landlord shall advise Tenant at that time whether
or not such specific Tenant Modification, Tenant Improvement or Alteration must
be removed upon the expiration or sooner termination of this Lease, and to the
extent Landlord has so agreed to allow any specific Tenant Modification, Tenant
Improvement or Alteration to remain in the Premises, Tenant shall not be
obligated to remove such Tenant Modification, Tenant Improvement or Alteration
or to pay Landlord the cost of removal thereof pursuant to this Paragraph 24),
and restore the Premises to its original condition as of the Delivery Date but
with the Warm Shell Improvements in place (or with respect to Tenant
Modifications, restore the Base Building to its condition prior to such Tenant
Modifications being made), subject to the foregoing; or (ii) pay Landlord the
reasonable estimated cost thereof.

            (b) NO MERGER. The voluntary or other surrender of this Lease by
Tenant, or a mutual cancellation thereof, shall not work a merger, and shall, at
the option of Landlord, terminate all or any existing subleases or subtenancies,
or may, at the option of Landlord, operate as an assignment to it of any or all
such subleases or subtenancies.

        25. WAIVER. If either Landlord or Tenant waives the performance of any
term, covenant or condition contained in this Lease, such waiver shall not be
deemed to be a waiver of any subsequent breach of the same or any other term,
covenant or condition contained herein. Furthermore, the acceptance of Rent or
Additional Charges by Landlord shall not constitute a waiver of any preceding
breach by Tenant of any term, covenant or condition of this Lease, regardless of
Landlord's knowledge of such preceding breach at the time Landlord accepted such
Monthly Base Rent or Additional Charges. Failure by Landlord to enforce any of
the terms, covenants or conditions of this Lease for any length of time shall
not be deemed to waive or to decrease the right of Landlord to insist thereafter
upon strict performance by Tenant. Waiver by Landlord or Tenant of any term,
covenant or condition contained in this Lease may only be made by a written
document signed by Landlord or Tenant, as applicable.



                                       34
<PAGE>   40

        26. NOTICES. Except as otherwise expressly provided in this Lease, any
bills, statements, notices, demands, requests or other communications given or
required to be given under this Lease shall be effective only if rendered or
given in writing, sent by certified mail, return receipt requested, reputable
overnight carrier, or delivered personally, (i) to Tenant, (A) at Tenant's
address set forth in the Basic Lease Information, if sent prior to Tenant's
taking possession of the Premises, or (B) at the Premises if sent subsequent to
Tenant's taking possession of the Premises, or (C) at any place where Tenant may
be found if sent subsequent to Tenant's vacating, deserting, abandoning or
surrendering the Premises; or (ii) to Landlord at Landlord's address set forth
in the Basic Lease Information; or (iii) to such other address as either
Landlord or Tenant may designate as its new address for such purpose by notice
given to the other in accordance with the provisions of this Paragraph 26. Any
such bill, statement, notice, demand, request or other communication shall be
deemed to have been rendered or given on the date the return receipt indicates
delivery of or refusal of delivery if sent by certified mail, the day upon which
recipient accepts and signs for delivery from a reputable overnight carrier, or
on the date a reputable overnight carrier indicates refusal of delivery, or upon
the date personal delivery is made. If Tenant is notified in writing of the
identity and address of any Mortgagee or ground or underlying lessor, Tenant
shall give to such Mortgagee or ground or underlying lessor notice of any
Default by Landlord under the terms of this Lease in writing sent by registered
or certified mail, and such Mortgagee or ground or underlying lessor shall be
given the opportunity to cure such Default prior to Tenant exercising any remedy
available to it.

        27. TAXES PAYABLE BY TENANT. Prior to delinquency Tenant shall pay all
taxes levied or assessed upon Tenant's equipment, furniture, fixtures and other
personal property located in or about the Premises. If the assessed value of
Landlord's property is increased by the inclusion therein of a value placed upon
Tenant's equipment, furniture, fixtures or other personal property, Tenant shall
pay to Landlord, upon written demand, the taxes so levied against Landlord, or
the proportion thereof resulting from said increase in assessment.

        28. ABANDONMENT. Tenant shall not abandon the Premises and/or cease
performing its financial and maintenance obligations under this Lease at any
time during the Term, and if Tenant shall abandon and/or cease performing its
financial and maintenance obligations under this Lease, or surrender the
Premises or be dispossessed by process of law, or otherwise, any personal
property belonging to Tenant and left on the Premises shall, at the option of
Landlord, be deemed to be abandoned and title thereto shall thereupon pass to
Landlord. Notwithstanding anything to the contrary contained herein, Tenant
shall not be allowed to vacate the Premises for any period of time unless either
(a) such vacation would not result in a termination of, limitation on, or other
adverse effect on, Landlord's insurance policies, or (b) Tenant pays the
incremental premium costs, and assumes responsibility for any increased
deductible amounts, to the extent required to cause Landlord's insurance
policies to not be terminated, limited or adversely affected as a result of such
vacation. For purposes of this Paragraph 28, the Tenant shall not be deemed to
have abandoned the Premises solely because the Tenant is not occupying the
Premises.

        29. SUCCESSORS AND ASSIGNS. Subject to the provisions of Paragraph 9,
the terms, covenants and conditions contained herein shall be binding upon and
inure to the benefit of the parties hereto and their respective legal and
personal representatives, successors and assigns.

        30. ATTORNEYS' FEES. If Tenant or Landlord brings any action for any
relief against the other, declaratory or otherwise, arising out of this Lease,
including any suit by Landlord for the recovery of Rent or possession of the
Premises, the losing party shall pay to the prevailing party a reasonable sum
for attorneys' fees and costs, which shall be deemed to have accrued on the
commencement of such action and shall be paid whether or not the action is
prosecuted to judgment.

        31. LIGHT AND AIR. Tenant covenants and agrees that no diminution of
light, air or view by any structure which may hereafter be lawfully erected
(whether or not by Landlord) shall entitle Tenant to any reduction of rent under
this Lease, result in any liability of Landlord to Tenant, or in any other way
affect this Lease or Tenant's obligations hereunder. Landlord has informed
Tenant that it has no intention of constructing additional facilities at the
Project except those facilities needed to service the Project.



                                       35
<PAGE>   41

        32. CORPORATE AUTHORITY; FINANCIAL INFORMATION. If Tenant signs as a
corporation each of the persons executing this Lease on behalf of Tenant does
hereby covenant and warrant that Tenant is a duly authorized and existing
corporation, that Tenant has and is qualified to do business in California, that
the corporation has full right and authority to enter into this Lease, and that
each and both of the persons signing on behalf of the corporation were
authorized to do so. If Tenant signs as a partnership or limited liability
company, each of the persons executing this Lease on behalf of Tenant does
hereby covenant and warrant that Tenant is a duly authorized and existing
partnership or limited liability company, as applicable, that Tenant has and is
qualified to do business in California, that Tenant has full right and authority
to enter into this Lease, and that each and both of the persons signing on
behalf of the Tenant were authorized to do so and by their signatures bind the
Tenant. Upon Landlord's request, Tenant shall provide Landlord with evidence
reasonably satisfactory to Landlord confirming the foregoing covenants and
warranties. Upon Landlord's request, Tenant shall provide Landlord with evidence
reasonably satisfactory to Landlord confirming the foregoing covenants and
warranties. Tenant hereby further covenants and warrants to Landlord that all
financial information and other descriptive information regarding Tenant's
business, which has been or shall be furnished to Landlord, is and shall be
accurate and complete at the time of delivery to Landlord. If Landlord signs as
a corporation each of the persons executing this Lease on behalf of Landlord
does hereby covenant and warrant that Landlord is a duly authorized and existing
corporation, that Landlord has and is qualified to do business in California,
that the corporation has full right and authority to enter into this Lease, and
that each and both of the persons signing on behalf of the corporation were
authorized to do so. Upon Tenant's request, Landlord shall provide Tenant with
evidence reasonably satisfactory to Tenant confirming the foregoing covenants
and warranties.

        33. PARKING. Tenant shall have the right to use the number of parking
spaces located in the Project Garage as specified in the Basic Lease Information
(which number of required parking spaces [subject to all limitations,
restrictions and requirements set forth in this Paragraph 33] shall be defined
as the "Minimum Parking") in common with other tenants or occupants of the
Project, if any, subject to (i) the City Parking Rights, (ii) the Parking REA,
(iii) the Initial CC&Rs, and (iv) any other CC&Rs, other Encumbrances and rules
and regulations of Landlord for the Project Garage which may be established or
altered by Landlord at any time or from time to time during the Term. Landlord
represents and warrants to Tenant that the number of parking spaces constructed
by Landlord in connection with the Initial Development of the Project shall be
equal to or greater than the minimum number required by the City of Sunnyvale
for the Project, and that Landlord will not thereafter voluntarily reduce the
number of parking spaces available to the Project below such minimum number
except as may be required by Law, development or land use requirements of the
City, or in connection with condemnation. A portion of Tenant's Minimum Parking
shall consist of fifty (50) reserved parking spaces located in the portion of
the Project Garage in the area closest to the elevator and stairs leading to the
Building, provided that other than marking and striping the appropriate number
of parking spaces as designated for Tenant's use, Landlord shall not be
obligated to enforce Tenant's exclusive right to the Minimum Parking provided in
this Paragraph 33. Landlord shall deliver any required notice pursuant to the
CC&Rs with respect to the designation of such reserved parking spaces. Landlord
may, at its option, install a security gate and/or other access devices for the
Project Garage (although Landlord shall not be obligated to do so and may
discontinue it at any time during the Term), and Landlord shall provide parking
passes and/or access keys or cards for the number of parking spaces included in
Tenant's Minimum Parking; provided that such items are provided to Tenant solely
for use by Tenant, and may not be transferred, assigned (except in connection
with an assignment of this Lease), or subleased (except in connection with a
sublease of this Lease and then in proportion to the space sublet) without
Landlord's prior written approval. No charge or fee (other than the Rent payable
hereunder) shall be imposed in exchange for the right of Tenant and its agents,
employees, contractors and invitees to have access to or from, or to park in,
the Minimum Parking (except for Tenant's liability for Expenses, as set forth in
Subparagraph 3(c)) for the Term; provided that Landlord, at its sole election,
may charge for the use of parking spaces in the Project Garage in excess of the
Minimum Parking, provided that any funds collected by Landlord for parking in
the Project (other than pursuant to the Parking REA and/or leases with respect
to the Project except to the extent such costs were included previously in
Expenses already paid by Tenant pursuant to Paragraph 3(c)) shall be applied to
reduce the Project Common Expenses attributable to operation of the Parking
Garage. Tenant shall comply, and shall use best efforts to cause Tenant's
employees, visitors and invitees to comply, with all rules and regulations
prescribed by Landlord from time to time for the Project Garage and any other
parking, including any rules, regulations, restrictions, limitations and/or
requirements in connection with the City Parking Rights.



                                       36
<PAGE>   42

        34. MISCELLANEOUS.

            (a) DEFINED TERMS. The term "Premises" wherever it appears herein
includes and shall be deemed or taken to include (except where such meaning
would be clearly repugnant to the context) the space demised and improvements
now or at any time hereafter comprising or built in the space hereby demised.
The paragraph headings herein are for convenience of reference and shall in no
way define, increase, limit or describe the scope or intent of any provision of
this Lease. The term "Landlord" shall include Landlord and its successors and
assigns. In any case where this Lease is signed by more than one person, the
obligations hereunder shall be joint and several. The term "Tenant" or any
pronoun used in place thereof shall indicate and include the masculine or
feminine, the singular or plural number, individuals, firms or corporations, and
their and each of their respective successors, executors, administrators, and
permitted assigns, according to the context hereof.

            (b) GENERAL PROVISIONS. Time is of the essence of this Lease and all
of its provisions. This Lease shall in all respects be governed by the laws of
the State of California. This Lease, together with its exhibits, contains all
the agreements of the parties hereto and supersedes any previous negotiations.
There have been no representations made by the Landlord or Tenant or
understandings made between the parties other than those set forth in this Lease
and its exhibits. This Lease may not be modified except by a written instrument
by the parties hereto.

            (c) SEVERABILITY. If for any reason whatsoever any of the provisions
hereof shall be unenforceable or ineffective, all of the other provisions shall
be and remain in full force and effect.

            (d) QUIET ENJOYMENT. Upon Tenant paying the Monthly Base Rent and
Additional Charges and performing all of Tenant's obligations under this Lease,
Tenant shall have quiet and peaceful enjoyment of the Premises during the Term
as against all persons or entities lawfully claiming by, through or under
Landlord; subject, however, to the provisions of this Lease.

        35. TENANT'S REMEDIES. If any default hereunder by Landlord is not cured
within the applicable cure period provided in Paragraph 19(c) (including any
Mortgagee's additional cure period), Tenant's exclusive remedies shall be (i) an
action for specific performance, or (ii) an action for actual damages. Tenant
shall look solely to Landlord's interest in the Building (including, but not
limited to, net proceeds obtained by Landlord from any sale of any portion of
the Building) for the recovery of any judgment from Landlord. Landlord, or if
Landlord is a partnership its partners whether general or limited, or if
Landlord is a corporation its directors, officers or shareholders, or if
Landlord is a limited liability company its members or managers, shall never be
personally liable for any such judgment. Any lien obtained to enforce such
judgment and any levy of execution thereon shall be subject and subordinate to
any Mortgage (excluding any Mortgage which was created as part of an effort to
defraud creditors, i.e., a fraudulent conveyance); provided, however that any
such judgement and any such levy of execution thereon shall not be subject or
subordinated to any Mortgage that is created or recorded in the official records
of the county in which the Project is located after the date of the judgement
giving rise to such lien. Landlord's interest in the Project shall include any
insurance proceeds received by Landlord which are not controlled by any
Mortgagee or other lender. Tenant hereby waives the benefit of any Laws granting
it (A) the right to perform Landlord's obligations, or (B) the right to
terminate this Lease or withhold Rent on account of any Landlord default,
including, without limitation, Sections 1932(1), 1941 and 1942 of the California
Civil Code.

        36. REAL ESTATE BROKERS. Each party represents that it has not had
dealings with any real estate broker, finder or other person with respect to
this Lease in any manner, except for any broker named in the Basic Lease
Information, whose fees or commission, if earned, shall be paid as provided in
the Basic Lease Information. Each party shall hold harmless the other party from
all damages resulting from any claims that may be asserted against the other
party by any other broker, finder or other person with whom the other party has
or purportedly has dealt.



                                       37
<PAGE>   43

        37. LEASE EFFECTIVE DATE. Submission of this instrument for examination
or signature by Tenant does not constitute a reservation of or option for lease,
and it is not effective as a lease or otherwise until execution and delivery by
both Landlord and Tenant.

        38. SIGNAGE. To the extent approved by the City of Sunnyvale and other
applicable governmental authorities, Tenant shall be allowed to use a
proportionate share (based on Tenant's Share) of the Building's share of any
Project monument signage, and to install exterior signage and signage in the
lobby of the Building, subject to this Paragraph 38. Tenant shall have exclusive
rights to exterior Building signage so long as Tenant leases more than
seventy-five percent (75%) of the Building. Tenant shall be responsible for the
costs related to such signage. All such signage shall be in conformity with
standards provided by Landlord. All such signage shall be subject to further
approval from Landlord of the exact number, size, location and materials
therefor (which consent shall not be unreasonably withheld, delayed or
conditioned), approval from the City of Sunnyvale (which shall be Tenant's
responsibility to obtain, at Tenant's cost) and compliance with applicable
governmental restrictions, including but not limited to, ordinances of the
applicable city (at Tenant's cost).

        39. HAZARDOUS SUBSTANCE LIABILITY. Tenant has received from Landlord a
copy of the Phase I and Screening Level Phase II Environmental Assessment of the
4.5 Acre Parking Lot Located at South Mathilda Avenue and West Washington
Avenue, Sunnyvale, California, dated August 13, 1999, prepared by McLaren /Hart
Inc. (the "Environmental Report").

            (a) DEFINITION OF HAZARDOUS SUBSTANCES. For the purpose of this
Lease, "Hazardous Substances" shall be defined, collectively, as oil, flammable
explosives, asbestos, radioactive materials, hazardous wastes, toxic or
contaminated substances or similar materials, including, without limitation, any
substances which are "hazardous substances," "hazardous wastes," "hazardous
materials" or "toxic substances" under applicable environmental laws, ordinance
or regulation.

            (b) TENANT INDEMNITY. Tenant releases Landlord from any liability
for, waives all claims against Landlord and shall indemnify, defend and hold
harmless Landlord, its employees, partners, agents, subsidiaries and affiliate
organizations against any and all claims, suits, loss, costs (including costs of
investigation, clean up, monitoring, restoration and reasonable attorneys'
fees), damage or liability, whether foreseeable or unforeseeable, by reason of
property damage (including diminution in the value of the property of Landlord),
personal injury or death directly arising from or related to Hazardous
Substances released, manufactured, discharged, disposed, used or stored on, in,
or under the Project or Premises during the Term by any Tenant Parties. The
provisions of this Tenant Indemnity regarding Hazardous Substances shall survive
the termination of the Lease.

            (c) LANDLORD INDEMNITY. Landlord releases Tenant from any liability
for, waives all claims against Tenant and shall indemnify, defend and hold
harmless Tenant, its officers, employees, and agents to the extent of Landlord's
interest in the Project, against any and all actions by any governmental agency
for clean up of Hazardous Substances on or under the Project, including costs of
legal proceedings, investigation, clean up, monitoring, and restoration,
including reasonable attorney fees, if, and to the extent, arising from the
presence of Hazardous Substances on, in or under the Project or Premises, except
to the extent caused by the release, disposal, use or storage of Hazardous
Substances in, on or about the Premises by any Tenant Parties. The provisions of
this Landlord Indemnity regarding Hazardous Substances shall survive the
termination of the Lease.

            (d) LIMITED USE. Tenant has informed Landlord that, except for very
immaterial amounts of toxic materials incidental to its office use (e.g.. copier
toner), Tenant will not use any Hazardous Substances in material amounts within
the Building and shall comply with any applicable laws to the extent that it
does. Tenant shall not use any other Hazardous Substances within the Building or
Project without the prior written consent of Landlord and any Mortgagee;
provided that Landlord shall not unreasonably withhold its consent to such use
of other Hazardous Substances if the type of Hazardous Substances and level of
use of Hazardous Substances is consistent with typical office uses; provided
further, however, that Landlord may withhold its consent in its sole discretion
if such use could, in Landlord's reasonable discretion, result in (I) a
violation of Laws, the DDA, the CC&Rs, the Parking REA, any other Encumbrance,
or any Mortgage, or (II) diminution in the value of the Project



                                       38
<PAGE>   44

or the Building, or (III) increased liability of Landlord, its affiliates,
principals, employees or other tenants under any Laws, any Mortgage, any lease
or otherwise.

        40. SATELLITE ANTENNAE. During the Term of this Lease, Tenant shall have
the right, subject to relevant regulatory approvals, availability of space
within the roofscreen (provided that Tenant's share of the space available
within the roofscreen and allocated by Landlord for installation of Antennae
shall be in the same proportion to other tenants within the Building as the
Rentable Area bears to the total rentable area in the Building), and Landlord's
consent (with Landlord's consent not to be unreasonably withheld, conditioned or
delayed), to install satellite antennae and similar telecommunications systems
and equipment ("Antennae") on the roof of the Building in a location
satisfactory to both Landlord and Tenant. Without otherwise limiting the
criteria upon which Landlord may withhold its consent to any proposed Antennae,
if Landlord withholds its consent due to concerns regarding the appearance of
the Antennae or the impact on structural aspects of the Building, such
withholding of consent shall be presumptively reasonable. Tenant shall not be
charged additional rent for roof space. Prior to submitting any plans to the
City of Sunnyvale or proceeding with any installation of the Antennae, Tenant
shall submit to Landlord elevations and specifications for the Antennae. Tenant
shall install the Antennae at its sole expense and shall be responsible for any
damage caused by the installation of the Antennae or related to the Antennae. At
the end of the Term, Tenant shall remove the Antennae from their locations and
repair any damage caused by such removal.

        41. OPTION TO RENEW. Upon condition that (i) no Default is continuing
under this Lease at the time of exercise or at the commencement of the option
term, and (ii) Tenant continues to physically occupy more than fifty percent
(50%) of the Rentable Area of the Premises, then Tenant shall have the right to
extend the Term for one (1) period of six (6) years (the "Extension Term")
following the initial Expiration Date, by giving written notice ("Exercise
Notice") to Landlord at least eighteen (18) months prior to the Expiration of
the Initial Term.

        42. RENT DURING EXTENSION TERM. The initial Monthly Base Rent (subject
to Paragraph 3(b)) during the six (6) year Extension Term shall be the greater
of the Base Rent paid during the last month of the Initial Term or the Fair
Market Rental Value for the Premises as of the commencement of the option term,
as determined below:

            (a) Within thirty (30) days after receipt of Tenant's Exercise
Notice, Landlord shall notify Tenant of Landlord's estimate of the Fair Market
Rental Value for the Premises, as determined below, for determining Monthly Base
Rent during the Extension Term; provided, however, if Tenant's Exercise Notice
is given more than eighteen (18) months before the Expiration Date, Landlord's
estimate of Fair Market Rental Value may, but need not be given more than
eighteen (18) months before the Expiration Date. Within ten (10) business days
after receipt of such notice from Landlord, Tenant shall notify Landlord in
writing that it (i) agrees with such rental rate or (ii) disagrees with such
rental rate. If Tenant fails to respond within such ten (10) business day
period, Landlord shall deliver to Tenant a second notice setting forth
Landlord's estimate of Fair Market Rental Value, and failure of Tenant to
respond within five (5) business days after receipt of Landlord's second notice
shall constitute Tenant's agreement with Landlord's estimate of Fair Market
Rental Value. In the event that Tenant disagrees with Landlord's estimate of
Fair Market Rental Value for the Premises, then the parties shall meet and
endeavor to agree within fifteen (15) days after Landlord receives Tenant's
notice described in the immediately preceding sentence. If the parties cannot
agree upon the Fair Market Rental Value within said fifteen (15) day period,
then the parties shall submit the matter to binding appraisal in accordance with
the following procedure except that in any event neither party shall be
obligated to start such procedure sooner than eighteen (18) months before the
expiration of the Lease Term. Within fifteen (15) days of the conclusion of the
period during which the two parties fail to agree (but not sooner than eighteen
(18) months before the expiration of the Lease Term), the parties shall either
(i) jointly appoint an appraiser for this purpose or (ii) failing this joint
action, each separately designate a disinterested appraiser. No person shall be
appointed or designated an appraiser unless such person has at least five (5)
years experience in appraising major commercial property in Santa Clara County
and is a member of a recognized society of real estate appraisers. If within
thirty (30) days after the appointment, the two appraisers reach agreement on
the Fair Market Rental Value for the Premises, that value shall be binding and
conclusive upon the parties. If the two appraisers thus appointed cannot reach
agreement on the Fair Market Rental Value for the Premises within thirty (30)
days after their appointment, then the appraisers thus appointed shall appoint a
third disinterested appraiser having like qualifications within five (5) days.
If within thirty (30) days after the appointment of the third appraiser a
majority




                                       39
<PAGE>   45


of the appraisers agree on the Fair Market Rental Value of the Premises, that
value shall be binding and conclusive upon the parties. If within thirty (30)
days after the appointment of the third appraiser a majority of the appraisers
cannot reach agreement on the Fair Market Rental Value for the Premises, then
the three appraisers shall each simultaneously submit their independent
appraisal to the parties, the appraisal farthest from the median of the three
appraisals shall be disregarded, and the mean average of the remaining two
appraisals shall be deemed to be the Fair Market Rental Value for the Premises
and shall be binding and conclusive upon the parties. Each party shall pay the
fees and expenses of the appraiser appointed by it and shall share equally the
fees and expenses of the third appraiser. If the two appraisers appointed by the
parties cannot agree on the appointment of the third appraiser, they or either
of them shall give notice of such failure to agree to the parties and if the
parties fail to agree upon the selection of such third appraiser within ten (10)
days after the appraisers appointed by the parties give such notice, then either
of the parties, upon notice to the other party, may request such appointment by
the American Arbitration Association or, on it failure, refusal or inability to
act, may apply for such appointment to the presiding judge of the Superior Court
of Santa Clara County, California.

            (b) Wherever used throughout this Paragraph (Rent during Extension
Term) the term "Fair Market Rental Value" shall mean the fair market rental
value of the Premises, using as a guide the rate of monthly base rent which
would be charged during the Extension Term in the Mid-Peninsula area for
comparable high image, Class A office space in comparable condition, of
comparable quality, as of the time that the Extension Term commences, with
appropriate adjustments regarding taxes, insurance and operating expenses as
necessary to insure comparability to this Lease, as the case may be, and also
taking into consideration amount and type of parking, location, the existence of
any leasehold improvements (regardless of who paid for them and with the
assumption, for purposes of determining the Fair Market Rental Value, that they
are fully usable by Tenant), proposed term of lease, amount of space leased,
extent of service provided or to be provided, and any other relevant terms or
conditions (including consideration of whether or not the monthly base rent is
fixed).

            (c) In the event of a failure, refusal or inability of any appraiser
to act, his successor shall be appointed by the party who originally appointed
him, but in the case of the third appraiser, his successor shall be appointed in
the same manner as provided for appointment of the third appraiser.

            (d) The appraisers shall render their appraisals in writing with
counterpart copies to Landlord and Tenant. The appraisers shall have no power to
modify the provisions of this Lease.

            (e) To the extent that a binding appraisal has not been completed
prior to the expiration of any preceding period for which Monthly Base Rent has
been determined, Tenant shall pay Monthly Base Rent at the rate estimated by
Landlord, with an adjustment to be made once Fair Market Rental Value is
ultimately determined by binding appraisal. In no event shall any such
adjustment result in a decrease of the Monthly Base Rent for the Premises below
the amount payable by Tenant as of the period immediately preceding the ensuing
Extension Term.

            (f) From and after the commencement of the Extension Term, all of
the other terms, covenants and conditions of the Lease shall also apply.

        43. SECURITY DEPOSIT.

            (a) OBLIGATIONS SECURED. Simultaneously with Tenant's execution of
this Lease, Tenant shall deliver to Landlord an unconditional, irrevocable,
transferable letter of credit (the "Letter of Credit"), in an amount equal to
the "Required Amount" (defined in Paragraph 43(d) below) and satisfying the
requirements set forth in Paragraph 43(b) below. The Letter of Credit shall
secure the Tenant's obligations under this Lease.

            (b) REQUIREMENTS OF LETTER OF CREDIT. The Letter of Credit shall be
issued by a financial institution acceptable to Landlord and any Mortgagee, in
their respective sole discretion, and in form and substance acceptable to
Landlord and any Mortgagee, in the reasonable exercise of their respective
discretion, with an original term of no less than one year and automatic
extensions through the end of the Initial Term of this Lease and sixty (60) days
thereafter (the "Letter of Credit"). Landlord shall not unreasonably withhold
its approval of such a



                                       40
<PAGE>   46

financial institution if it is a national bank, or a bank branch located in the
United States (with an office in the United States allowing the Letter of Credit
to be presented to and paid by such office pursuant to procedures acceptable to
Landlord in its reasonable discretion) with assets of the issuing bank or bank
branch in excess of Twenty Billion Dollars ($20,000,000,000). If Landlord
determines at any time, in good faith, that either (I) the issuing bank or bank
branch has assets of less than Twenty Billion Dollars ($20,000,000,000), or (II)
the issuing bank or bank branch has or intends to close or cease operations from
the issuing bank branch, then Landlord may require that Tenant replace the
Letter of Credit with a Letter of Credit from a different financial institution
acceptable to Landlord, in the reasonable exercise of its discretion, within ten
(10) business days after Tenant's receipt of notice of such requirement from
Landlord. The Letter of Credit shall (i) be a stand-by, at-sight, irrevocable
letter of credit; (ii) be payable to Landlord, its Mortgagee or their assignees
(any of the foregoing, the "Beneficiary"); (iii) require that any draw on the
Letter of Credit shall be made only upon receipt by the issuer of a letter
signed by a purported authorized representative of the Beneficiary certifying
that the Beneficiary is entitled to draw on the Letter of Credit pursuant to
this Lease; (iv) allow partial draws; and (v) provide that it is governed by the
Uniform Customs and Practice for Documentary Credits (1993 revisions) or the
International Standby Practices (ISP 98). Tenant shall keep the Letter of
Credit, at its expense, in full force and effect until the sixtieth (60th) day
after the Expiration Date or other termination of this Lease, to insure the
faithful performance by Tenant of all of the covenants, terms and conditions of
this Lease, including, without limitation, Tenant's obligations to repair,
replace or maintain the Premises. The Letter of Credit shall provide at least
thirty (30) days' prior written notice to Landlord and the Beneficiary of
cancellation or material change thereof.

        (c) DRAWS ON LETTER OF CREDIT.

                (i) PARTIAL DRAW. At any time after a Default occurs under the
        Lease, and provided that no "Draw Event" (as defined below) has then
        occurred, the Beneficiary may present its written demand for payment of
        a portion of the amount of the Letter of Credit as is required to
        compensate Landlord for damages incurred as a result of such Default,
        and the funds so obtained from the Letter of Credit shall become due and
        payable to the Beneficiary.

                (ii) FULL DRAW. At any time after a Draw Event occur, the
        Beneficiary may present its written demand for payment of the entire
        face amount of the Letter of Credit (or, at the Beneficiary's sole
        election, for payment of a portion of the amount of the Letter of Credit
        as is required to compensate Landlord for damages incurred, with
        subsequent demands at the Beneficiary's sole election as Landlord incurs
        further damages) and the funds so obtained shall become due and payable
        to the Beneficiary. The Beneficiary may retain such funds to the extent
        required to compensate Landlord for damages incurred, or to reimburse
        Landlord as provided herein, in connection with any such Default or
        other Draw Event, and any remaining funds shall be held as a cash
        security deposit.

                (iii) "DRAW EVENT" DEFINED. A "Draw Event" shall mean any of the
        following: (I) Tenant does not replace the Letter of Credit with a new
        Letter of Credit in the full Required Amount within ten (10) days after
        Landlord makes a partial draw thereon in connection with a Default
        pursuant to Paragraph 43(c)(i); (II) Tenant is the subject of an
        Insolvency Proceeding; (III) the Lease is terminated by Landlord due to
        a Tenant Default; (IV) the Letter of Credit is not replaced with a
        Letter of Credit from a different financial institution if and when
        required by Paragraph 43(b); (V) the Letter of Credit is not extended
        within thirty (30) days prior to its expiration; and (VI) a Default
        occurs under this Lease at a time when Tenant is in "Chronic Default"
        (as defined below). Tenant shall be in "Chronic Default" under this
        Lease at any time that Landlord has delivered a notice of Tenant's
        failure to perform any of its obligations hereunder and/or assessed a
        late charge pursuant to Paragraph 3(d) during the previous six months,
        or more than two (2) times during the previous twenty-four (24) months,
        regardless in each case of whether such failure was cured by Tenant
        within any applicable grace or cure period; provided, however, that any
        such notice of failure to perform relating to a non-monetary failure to
        perform which was disputed, in good faith, by Tenant and ultimately
        determined (by agreement of the parties, arbitration or judicial action)
        not to be a violation of this Lease shall not be considered for purposes
        of determining whether such condition has been met.



                                       41
<PAGE>   47

                (iv) REPLACEMENT AFTER DRAW. If Landlord or the Beneficiary uses
        any portion of the Letter of Credit, or the cash security deposit
        resulting from a draw on the Letter of Credit, to cure any Default by
        Tenant hereunder and/or for any other reason permitted or contemplated
        by this Paragraph 43, Tenant shall provide a replacement Letter of
        Credit in the Required Amount within ten (10) days of notice from
        Landlord or the Beneficiary, and Tenant's failure to do so shall be a
        Default hereunder without benefit of grace or cure periods. Any unused
        portion of the funds so obtained by Landlord or the Beneficiary shall be
        returned to Tenant upon replacement of the Letter of Credit in the full
        Required Amount.

            (d) REQUIRED AMOUNT. The term "Required Amount" initially shall mean
Nine Million Five Hundred Fifty-Seven Thousand Dollars ($9,557,000); provided,
however, that if the TI Required Amount (as defined in the Work Letter) is
decreased as provided in Paragraph 13(e) of the Work Letter, the amount of such
decrease shall be added to the Required Amount of the Letter of Credit, and
Tenant shall deliver to the Beneficiary either an amendment to the Letter of
Credit or a replacement Letter of Credit in the increased Required Amount
simultaneously with delivery of the amendment or replacement with respect to the
reduced TI Letter of Credit. The Required Amount of the Letter of Credit may be
reduced under the following circumstances:

                (i) AFTER FIRST ANNIVERSARY. Tenant shall be entitled to reduce
        the Letter of Credit to Seven Million One Hundred Sixty-Eight Thousand
        Dollars ($7,168,000), and such reduced amount shall be the "Required
        Amount" under this Paragraph 43 if, at any time after the first
        anniversary of the Commencement Date, (A) Tenant can establish to
        Landlord's reasonable satisfaction that Tenant has met or exceeded the
        "First Anniversary Performance Hurdles" (as defined below) for six (6)
        consecutive quarters, all as determined in accordance with GAAP and as
        reflected on certified, audited financial statements; (b) Tenant is not
        in Default (and no event has occurred which, with the passage of time or
        giving of notice or both, would constitute a Default) under this Lease
        as of the date the Letter of Credit is reduced, and (c) Tenant is not in
        Chronic Default under this Lease as of the date the Letter of Credit is
        reduced. The "First Anniversary Performance Hurdles" shall be defined as
        all of the following: (I) Minimum quarterly revenue of [*] (excluding
        Extraordinary One Time Charges, Stock Compensation Expenses and
        Goodwill), with an annual increase of [*]; (II) Minimum Pre-tax Profit
        equal to [*] of sales per quarter (excluding Extraordinary One Time
        Charges, Stock Compensation Expenses and Goodwill); (III) Minimum cash
        balances of [*], which include an unrestricted amount of [*]; and (IV)
        Minimum Net Equity of [*] (excluding Extraordinary One Time Charges,
        Stock Compensation Expenses and Goodwill), with an annual increase of
        [*].

                (ii) AFTER SECOND ANNIVERSARY. Tenant shall be entitled to
        reduce the Required Amount of the Letter of Credit to Four Million Seven
        Hundred Seventy-Eight Thousand Dollars ($4,778,000), and such reduced
        amount shall be the "Required Amount" under this Paragraph 43, if, at
        any time after the second anniversary of the Commencement Date, (A)
        Tenant can establish to Landlord's reasonable satisfaction that Tenant
        has met or exceeded the "First Anniversary Performance Hurdles" (as
        defined below) for two (2) consecutive years, all as determined in
        accordance with GAAP and as reflected on certified, audited financial
        statements; (b) Tenant is not in Default (and no event has occurred
        which, with the passage of time or giving of notice or both, would
        constitute a default) under this Lease as of the date the Letter of
        Credit is reduced, and (c) Tenant is not in Chronic Default under this
        Lease as of the date the Letter of Credit is reduced.

                (iii) ANNUALLY ON OR AFTER SEVENTH ANNIVERSARY. Tenant shall be
        entitled to reduce the Required Amount of the Letter of Credit on each
        of the seventh through eleventh anniversaries of the Commencement Date
        in the amount of one-sixth (1/6th) of the Required Amount (as it exists
        as of the sixth anniversary of the Commencement Date) on each such
        anniversary, and such reduced amount from time to time shall be the
        "Required Amount" under this Paragraph 43, so long as (i) Tenant is not
        in Default (and no event has occurred which, with the passage of time or
        giving of notice or both, would constitute a Default) under this Lease
        on such anniversary date, and (ii) Tenant is not in Chronic Default
        under this Lease on such anniversary date.


[*] Confidential treatment has been requested for certain portions of this
    document pursuant to an application for confidential treatment sent to the
    Securities and Exchange Commission. Such portions are omitted from this
    filing and are filed separately with the Securities and Exchange Commission.

                                       42
<PAGE>   48

           (e) RETURN OF LETTER OF CREDIT.

                      (i) REQUIREMENT FOR RETURN. The Letter of Credit shall be
           returned to Tenant if, at any time after the third anniversary of the
           Commencement Date, Tenant (A) can establish to Landlord's reasonable
           satisfaction that Tenant has met or exceeded the "Third Anniversary
           Performance Hurdles" (as defined below) for three (3) consecutive
           years, all as determined in accordance with GAAP and as reflected on
           certified, audited financial statements; (b) is not in Default (and
           no event has occurred which, with the passage of time or giving of
           notice or both, would constitute a default) under this Lease as of
           the date the Letter of Credit is returned to Tenant; and (c) is not
           in Chronic Default under this Lease as of the date the Letter of
           Credit is returned to Tenant. The "Third Anniversary Performance
           Hurdles" shall be defined as all of the following: (I) Minimum annual
           revenue of [*] (excluding Extraordinary One Time Charges, Stock
           Compensation Expenses and Goodwill), with an annual increase of [*];
           (II) Minimum Pre-tax Profit of [*] of annual revenue (excluding
           Extraordinary One Time Charges, Stock Compensation Expenses and
           Goodwill); (III) Minimum cash balances of [*], which include an
           unrestricted amount of [*]; and (IV) Minimum Net Equity of [*]
           (excluding Extraordinary One Time Charges, Stock Compensation
           Expenses and Goodwill), with an annual increase of [*]. After return
           of the Letter of Credit, Tenant shall provide Landlord with
           certified, audited quarterly financial statements, no later than
           thirty (30) days after the expiration of each fiscal quarter, that
           set forth Tenant's quarterly revenues, quarterly pre-tax profit, cash
           balance at the end of such quarter, and net equity at the end of such
           quarter. Failure by Tenant to timely deliver any such quarterly
           financial statement shall be a Default without benefit of grace or
           cure periods.

                      (ii) REVIVAL OF LETTER OF CREDIT REQUIREMENT. Following
           any return of the Letter of Credit pursuant to Paragraph 43(e)(i), if
           any quarterly financial statement delivered to Landlord pursuant to
           Paragraph 43(e)(i) reveals a "Deterioration in Financial Performance"
           (as defined below) by Tenant, within ten (10) days after delivery of
           such financial statement Tenant shall deliver to Landlord a Letter of
           Credit in the Required Amount equal to Monthly Base Rent plus
           Additional Rent for Expenses for the previous three months, and
           notwithstanding any other provisions of this Paragraph 43, such
           Letter of Credit shall not be reduced or released during the Term of
           this Lease. "Deterioration in Financial Performance" shall be
           evidenced by two consecutive quarterly financial statements that
           report any two of the following four items: (I) Quarterly Revenues of
           less than [*] (excluding Extraordinary One Time Charges, Stock
           Compensation Expenses and Goodwill); (II) Quarterly Pre-Tax Profit of
           less than [*] (excluding Extraordinary One Time Charges, Stock
           Compensation Expenses and Goodwill); (III) a Cash balance of less
           than [*], or including an unrestricted amount of less than [*]; and
           (IV) Net Equity of less than [*] (excluding Extraordinary One Time
           Charges, Stock Compensation Expenses and Goodwill).

           (f) ASSIGNMENT OF LETTER OF CREDIT/MORTGAGEE. Landlord shall be
entitled to assign the Letter of Credit and its rights thereto from time to time
in connection with an assignment of this Lease to a Mortgagee as security for
the obligations of Landlord to such Mortgagee, or in connection with a sale or
other transfer of Landlord's interest in all or a portion of the Project
(provided that, in each instance, Landlord pays any bank fees associated with
any transfer of the Letter of Credit). Tenant shall cooperate with Landlord in
connection with any modifications of or amendments to the Letter of Credit that
may be reasonably requested by any Mortgagee and/or in connection with any such
assignment. At Landlord's sole election, Landlord may also direct Tenant to
cause the Letter of Credit to directly name a Mortgagee as the sole beneficiary
thereunder.

           (g) CONVERSION OF DEPOSIT TO LOAN. Landlord and Tenant acknowledge
and agree that, if Tenant defaults under this Lease and fails to fully cure such
default within the applicable cure period and Landlord elects to pursue its
remedies under California Civil Code Section 1951.2 or under this Lease to
terminate this Lease (any such event, a "Landlord Action"), (i) Landlord will
incur certain damages, costs and expenses, including,


[*] Confidential treatment has been requested for certain portions of this
    document pursuant to an application for confidential treatment sent to the
    Securities and Exchange Commission. Such portions are omitted from this
    filing and are filed separately with the Securities and Exchange Commission.

                                       43
<PAGE>   49

without limitation, marketing costs, commissions, relocation costs, tenant
improvement costs, and carrying costs in connection with releasing the Premises,
in addition to the other damages, costs and expenses Landlord may incur as a
result of such default and/or other defaults under this Lease (all of the
foregoing collectively, "Default Damages"); (ii) Landlord has no assurance of a
source of funds to cover such Default Damages other than the proceeds of the
Letter of Credit (or cash collateral); and (iii) the proceeds of the Letter of
Credit (or cash collateral) should be available to Landlord to apply to Default
Damages, even if the amount thereof exceeds that amount to which Landlord is
ultimately determined to be entitled under this Lease and pursuant to applicable
law. Accordingly, at the sole election of the Beneficiary, the Beneficiary shall
be entitled to draw the full amount of the Letter of Credit (or the full amount
of cash collateral shall be released to the Beneficiary) which is then existing
(after any previous application of funds by Landlord or the Beneficiary and/or
replenishment by Tenant pursuant to this Paragraph 43), simultaneously with
commencement of a Landlord Action or at any time thereafter. All proceeds
thereof in excess of amounts applied (pursuant to Paragraph 43(c)) to Default
Damages incurred by Landlord prior to commencement of the Landlord Action shall
be deemed a loan from Tenant to Landlord (the "Default Loan"). The Default Loan
shall be unsecured and shall not bear interest, and repayment thereof shall be
limited to the terms and conditions set forth in this paragraph. Any sums to
which Landlord from time to time becomes entitled hereunder and pursuant to law
as a result of Tenant's Default and any previous Defaults of the Lease, to which
the Letter of Credit (or cash collateral) has not previously been applied
pursuant to Paragraph 43(c), shall be offset against the principal balance of
the Loan. The amount of the Default Loan remaining, if any, after such offset
shall be referred to herein as the "Excess Amount." The Excess Amount shall be
payable by Landlord to Tenant from, and only from, first any proceeds from the
Letter of Credit (or cash collateral) which have not been applied to Default
Damages incurred by Landlord after the same are finally determined (the
"Remaining Proceeds"), and then Excess Rent. The Remaining Proceeds shall be
paid by Landlord to Tenant promptly upon final determination after the entire
Premises are leased to a third party or parties "Excess Rent" shall mean the
amount by which (x) rent received by Landlord (from the tenant or tenants
leasing all or any portion of the Premises after Tenant's default) in any month
exceeds (y) the amount of rent that would have been payable under this Lease for
such month if this Lease had not been terminated. Landlord shall pay Tenant
one-half of the Excess Rent until the earlier of (A) the date the Excess Amount
is fully repaid or (B) the date that would have been the Expiration Date of this
Lease. Any remaining balance of the Default Loan on such date shall be deemed
forgiven. If the Default Loan is insufficient to cover all Default Damages,
Tenant shall pay Landlord any such shortfall immediately upon demand by
Landlord, and Landlord shall have all rights and remedies available at law or
elsewhere in the Lease with respect to such shortfall.

        44. ARBITRATION. ANY CONTROVERSY OR CLAIM ARISING OUT OF THE MATTERS
EXPRESSLY MADE SUBJECT TO ARBITRATION PURSUANT TO THIS LEASE SHALL BE SETTLED BY
ARBITRATION CONDUCTED IN SAN MATEO OR SANTA CLARA COUNTY, CALIFORNIA, IN
ACCORDANCE WITH THE COMMERCIAL RULES OF THE AMERICAN ARBITRATION ASSOCIATION,
AND JUDGMENT ON THE AWARD RENDERED BY THE ARBITRATOR(S) MAY BE ENTERED IN ANY
COURT HAVING JURISDICTION. THE PREVAILING PARTY IN SUCH ARBITRATION SHALL BE
ENTITLED TO ATTORNEYS' FEES AND COSTS. "PREVAILING PARTY" SHALL MEAN THAT PARTY
WHO RECEIVES SUBSTANTIALLY THE RELIEF REQUESTED, WHETHER BY SETTLEMENT OR
JUDGMENT.

NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE
ARISING OUT OF MATTERS EXPRESSLY MADE SUBJECT TO ARBITRATION PURSUANT TO THIS
LEASE DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE
GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT
OR JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL
RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN
THE "ARBITRATION OF DISPUTES" PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION
AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE
AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS
ARBITRATION PROVISION IS VOLUNTARY.



                                       44
<PAGE>   50

WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING
OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION TO
NEUTRAL ARBITRATION.

Consent to neutral arbitration by:      /s/ JM Landlord        /s/ DD,JH Tenant

        45. EXECUTION BY LANDLORD. Landlord shall have thirty (30) days after
the execution of this Lease by Tenant and delivery thereof to Landlord to both
(a) obtain the current Mortgagee's consent to this Lease, and (b) obtain from
Broadcom Corporation a waiver of its right of first offer with respect to the
Premises, and if such consent and waiver are not obtained within such thirty
(30) day period (as it may be extended by mutual agreement of Landlord and
Tenant) either Landlord or Tenant may terminate this Lease by written notice to
the other party, and Landlord shall immediately thereafter return the Letter of
Credit and the TI Letter of Credit to Tenant. Satisfaction of this condition
shall be evidenced by Landlord's execution of this Lease and delivery thereof to
Tenant, without any independent verification by Tenant being required.

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



                                   LANDLORD:


                                   M-F Downtown Sunnyvale, LLC,
                                   a Delaware limited liability company


                                   By: M-D Ventures, Inc., a California
                                       Corporation, its Manager


                                       By: /s/ John Mozart
                                           John Mozart, its President


                                   TENANT:


                                   HANDSPRING, INC.,
                                   a Delaware corporation


                                   By: /s/  Donna Dubinsky
                                   Its: Chief Executive Officer


                                   By:  /s/ Jeff Hawkins
                                   Its: Chief Products Officer




                                       45

<PAGE>   51
                                  EXHIBIT "A"

                               PROJECT SITE PLAN

                            [MAP SHOWING SITE PLAN]

<PAGE>   52
                                  EXHIBIT "A"

                                 EXCLUDED SPACE

                   [MAP SHOWING SPACE DESIGNATED FOR RETAIL]

<PAGE>   53
                                   EXHIBIT "B"

                            DELIVERY DATE MEMORANDUM


[[DATE]

Handspring, Inc.
__________________________

__________________________

Attn: ____________________

        Re:     Confirmation of Delivery Date under the Lease Agreement by and
                between M-F Downtown Sunnyvale, LLC, and Handspring, Inc., dated
                as of January __, 2001 (the "Lease")

Dear Sirs:

        This letter will confirm that the "Delivery Date" under the referenced
Lease is _______________.

        Please acknowledge your receipt of this letter and confirmation of the
Delivery Date by signing and returning a copy to the undersigned; provided,
however, that your failure to so sign and return this letter is not required in
order for the Delivery Date to occur pursuant to the terms of the Lease.

                                            Very truly yours,

                                            M-F Downtown Sunnyvale, LLC,
                                            a Delaware limited liability company

                                            By: M-D Ventures, Inc., a California
                                                Corporation, its Manager


                                                By: ____________________________
                                                    John Mozart, its President



Acknowledged and Agreed:

Handspring, Inc.,
a Delaware corporation

By: __________________________
Its: _________________________
Date: ________________________

<PAGE>   54
                                   EXHIBIT "C"


                                   WORK LETTER

                                  (BUILDING 2)

        1. LANDLORD'S WORK: Landlord shall furnish and install the Base Building
provided for in Paragraph 2 below at Landlord's expense ("Landlord's Work"). The
quantities, character and manner of installation of all of the foregoing work
shall be subject to the limitations imposed by any applicable regulations, laws,
ordinances, codes and rules (collectively, "Legal Requirements").

        2. DEFINITION OF BASE BUILDING:

              (a) BASE BUILDING: Landlord shall furnish a cold shell building
("Base Building") which exterior shall substantially comply with the
architectural drawings by Korth Sunseri Hagey (the "Base Building Architectural
Drawings") and shall have the additional finishes and improvements as follows:

                    (i) Building Structure

                        (A) Twelve inch (12") reinforced structural podium slab
              suspended over Project Garage;

                        (B) Complete structural framing system comprised of
              rolled steel beams, columns, and braced-frame steel construction
              with corrugated metal deck and concrete fill, all members required
              by code to be fireproofed (2-hour). Upper floor systems provide a
              minimum of 3" deck with concrete fill and are designed for an 80
              pound live load plus 20 pound partition load. Structural framing
              will include intermediate beams as designed by Landlord's Plans,
              for HVAC units at the roof and for major shafts on each floor.

                        (C) Performance glass with Precast, aluminum and steel
              exterior building skin. All exterior doors, door closer and
              locking devices as necessary.

                        (D) Four (4) ply (3-ply plus base sheet) built up
              roofing by Owens-Corning, John Manville, or equal and all
              flashings over a perlite board and corrugated metal deck roof
              assembly. Title 24 code required roof insulation R30 is included.

                        (E) Exterior painting of all non-finished metals and
              caulking of all exterior joints.

                        (F) Two (2) unfinished concrete pan-filled stairs.

                        (G) Riser for building sprinkler system (no sprinkler
              grid or drops).

                    (ii) Sitework

                        (A) All work outside the Building perimeter walls shall
              be considered site work for the Base Building and shall include
              asphalt concrete paving, Project Garage parking structure,
              landscaping, landscape irrigation, storm drainage, utility service
              laterals, curbs, gutters, sidewalks, retaining walls, planters,
              landscape lighting and other exterior lighting per code.

                        (B) Paving sections for automobile and truck access
              shall be according to the Geologic Soils Report.


                                       1
<PAGE>   55

                        (C) All parking lot striping to include handicap spaces
              and signage.

                        (D) Underground site storm drainage system shall be
              connected to the city storm system main.

                    (iii) Plumbing

                        (A) Underground sanitary sewer laterals connected to the
              city sewer main in the street and stubbed to the Project Garage.

                        (B) Domestic water mains connected to the city water
              main in the street and stubbed to the Parking Garage.

                        (C) Roof drain leaders and downspouts piped and
              connected to the Project storm drainage system.

                        (D) Gas lines connected to the city or public utility
              mains and run to gas meter locations adjacent to, and in close
              proximity to, the Building. Meter supplied by utility company at
              Tenant's cost.

                    (iv) Electrical

                        (A) A primary and secondary electrical service from the
              street to the garage electrical room limited to underground
              conduit, pull-string and transformer pad. Transformer supplied by
              utility company at Tenant's cost.

                        (B) Two 4" underground conduits from the street to the
              Project Garage for telephone trunk lines by Pacific Bell.

                        (C) An electrically operated landscape irrigation
              system, with controller that is a complete and functioning system.

                        (D) Underground conduit with pull-string from the
              Project Garage to the main fire protection system post indicated
              valve (PIV) for installation of supervisory alarm wiring.

                    (v) General

                        (A) All construction shall conform to State and Local
              Building Codes, Title 24 Regulations, and shall be ADA Compliant.

              (b) SPECIFIC EXCLUSIONS FROM BASE BUILDING: Specific exclusions
from Base Building include, but are not limited to, (a) sprinklers beyond riser,
(b) window coverings, (c) fire alarms or security systems, (d) interior walls,
(e) HVAC systems, (f) electrical service in the Building, (g) restrooms, (h)
elevators, (i) lobby, (j) electrical, telephone, janitorial and similar
rooms/closets, (k) building cabling, (l) roof screens or penthouse, (m) signage,
(n) building insulation, and (o) preparing, priming and finishing of steel
members.

        3. LANDLORD'S PLANS AND WARM SHELL PLANS.

              (a) LANDLORD'S PLANS. Landlord has, or shall, provide Tenant with
preliminary drawings, specifications and information for the Base Building
(which may include other portions of the Project) prior to final approval by
applicable governmental entities. When they have been fully and finally approved
by all applicable governmental entities, Landlord shall provide Tenant with such
approved drawings, specifications and information for the Base Building (as so
approved, the "Landlord's Plans") to the extent reasonably necessary for the
preparation


                                       2
<PAGE>   56

of Tenant's plans and specifications for the Tenant Improvements. Landlord's
Plans may include other portions of the Project that are located outside the
building envelope for the Building, and the inclusion of such other portions of
the Project shall not cause such portions to be included in the definition of
"Base Building" hereunder . Landlord's Plans shall be substantially in
accordance with Base Building Architectural Drawings, together with and
including the specifications described for the Base Building in Paragraph 2(a),
but shall specifically exclude the items noted in Paragraph 2(b) as specific
exclusions from the Base Building. Landlord shall have the right to change
Landlord's Plans after submission to Tenant as needed to satisfy any
requirements of the City of Sunnyvale, the DDA, the Parking REA or Legal
Requirements, provided that any changes to Landlord's Plans after submission to
Tenant that are made for reasons other than the satisfaction of requirements of
the City of Sunnyvale, the DDA, the Parking REA or Legal Requirements (the
foregoing changes, "Discretionary Changes") shall be subject to Tenant's prior
approval, which shall not be unreasonably withheld, conditioned or delayed, and
failure of Tenant to respond to Landlord's request for approval within five (5)
business days after receipt of written notice from Landlord shall be deemed
approval of the Discretionary Changes described in such notice. In addition,
with respect to any material Discretionary Changes that occur after Landlord's
final approval of Tenant's Plans pursuant to Paragraph 5(a), within ten (10)
days after Tenant's receipt of Landlord's request for Tenant's consent to such
Discretionary Change, Tenant shall provide to Landlord an itemized estimate of
such incremental cost increase resulting from any Discretionary Change prepared
by Tenant's Contractor or architect for the Tenant Improvements, as applicable,
and if Landlord makes the Discretionary Change after receipt of such cost
estimate, the incremental cost incurred by Tenant with respect to the design
and/or construction of the Warm Shell Improvements and/or the Tenant
Improvements as a direct result of such Discretionary Change shall be paid by
Landlord to Tenant within twenty (20) days of receipt of invoices therefor.

              (b) WARM SHELL. In addition to Landlord's Plans, when they have
been prepared, Landlord shall provide Tenant with drawings, plans and
specifications for the lobby and building core (not including finishes) (the
"Warm Shell Plans"), which shall be prepared by Korth Sunseri Hagey pursuant to
a contract with Landlord that may cover other portions of the Project, at
Landlord's cost. The improvements covered by the Warm Shell Plans (the "Warm
Shell Improvements") shall be completed by Tenant, at Tenant's sole cost, and in
the same manner and subject to the same terms and conditions as applicable to
the Tenant Improvements hereunder, except that Tenant shall contract with Devcon
Construction ("Warm Shell Contractor") for the construction of the Warm Shell
Improvements. Within ten (10) business days after receipt of the Warm Shell
Plans, Tenant shall submit them to the appropriate municipal authorities for all
applicable building permits necessary to allow the Warm Shell Contractor to
commence and fully complete the construction of the Warm Shell Improvements.
Tenant shall enter into a contract with Warm Shell Contractor for construction
of the Warm Shell Improvements (the "Warm Shell Contract"), which shall conform
to the requirements for the Tenant Improvement Contract as set forth in
Paragraph 6 and shall provide for a contractor's fee calculated on a "cost plus
a fee" basis where the fee for overhead and profit is three and one-half percent
(3.5%) of cost and the amount charged for general conditions and supervision is
an additional three percent (3%) of cost. The Warm Shell Contractor shall secure
independent sealed bids from three (3) subcontractors mutually acceptable to
Landlord and Tenant for each trade whose costs are in excess of five percent
(5%) of the total cost estimate. All bids shall be submitted to Landlord and
Tenant. Tenant may assist in negotiating subcontractor fees and bid costs for
labor and materials, and may designate that the lowest bidding subcontractor be
selected.

              (c) TENANT MODIFICATIONS. Any revisions, changes or additions to
Landlord's Plans, to the Warm Shell Plans or to the Base Building that are
required or requested by Tenant (or necessitated by applicable Legal
Requirements due to Tenant's Plans) shall be subject to the prior written
approval of Landlord, in its reasonable discretion, provided that Landlord shall
have no obligation to approve any Tenant Modifications that are not approved or
otherwise acceptable to any Mortgagee. Any such changes approved by Landlord
shall be a "Tenant Modification" hereunder. Before any Tenant Modifications are
made, the incremental cost thereof, including architectural, engineering and
special testing and/or inspection charges, any special permits or fees, and any
added construction costs (including, without limitation, the Landlord's
contractor's percentage mark-up for overhead and profit for such Tenant
Modifications) without additional mark-up from Landlord, shall be paid by Tenant
to Landlord within twenty (20) days of receipt of invoices therefor as an
Additional Charge. Landlord's contractor for the Base Building or architect for
the Warm Shell Plans, as applicable, shall provide to Tenant a cost estimate to
complete any Tenant Modification, together with any anticipated schedule change
(which shall constitute Tenant Delay), and an itemized breakdown of costs and
unit prices within ten (10) days after receipt of Tenant's request for Tenant
Modifications, and Tenant shall approve or disapprove such estimates within five
(5) days of


                                       3
<PAGE>   57

receipt of same. At Tenant's election, Tenant may submit a revised request for
the proposed Tenant Modification within such five (5) day response period, in
which event Landlord shall provide a revised anticipated schedule change and
itemized breakdown of costs and unit prices within five (5) days after receipt
of Tenant's revised request for Tenant Modifications, and Tenant shall approve
or disapprove such revised estimates with five (5) days of receipt of same. This
process may be repeated at Tenant's election, provided that any delay in
completion of the Base Building, Warm Shell and/or Tenant Improvements as a
result of such process (regardless of whether it ultimately results in a Tenant
Modification) shall constitute Tenant Delay. Tenant's failure to respond to any
cost estimate for a requested Tenant Modification within any five (5) day period
after receipt thereof shall constitute Tenant's withdrawal of its request for
such Tenant Modification. If Tenant fails to inform Landlord within any such
5-day period that Tenant desires to proceed with such Tenant Modification,
Landlord shall not make such Tenant Modification. All requests for Tenant
Modifications shall be in writing and shall be on such AIA change order form as
required by Landlord and/or Landlord's contractor. At Landlord's sole option,
Tenant Modifications shall be made by change order to Landlord's construction
contract, or included in Tenant's construction contract for either Warm Shell
Improvements or Tenant Improvements.

        4. TENANT'S WORK: Tenant shall furnish and install, at Tenant's sole
expense, the following: (a) all of the Warm Shell Improvements, and (b) all of
the interior improvements to complete the Premises that are not included in the
Base Building or Warm Shell Improvements (such interior improvements being
defined herein as the "Tenant Improvements") in accordance with plans and
specifications approved by Landlord pursuant to this Work Letter. Unless
otherwise approved by Landlord in its sole discretion, the aggregate cost of the
Tenant Improvements and Warm Shell Improvements (as reflected in the Tenant
Improvement Contract and the Warm Shell Contract, respectively, and including
all costs described in Paragraph 12(a) of this Work Letter) must equal or exceed
an amount equal to $69 per rentable square foot of the Premises, and the Tenant
Improvements must be spread, and the costs allocated, throughout the entire
Premises in a typical and appropriate manner. Additionally, cable TV
connections, telephone equipment and wiring and office equipment wiring, shall
be installed by Tenant. The cost of space planning and preparing the working
drawings (including the drawings noted below) for Tenant Improvements or any
changes to the original instruction and/or plans and specifications shall be
paid by Tenant.

        5. DESIGN OF TENANT IMPROVEMENTS:

              (a) TENANT'S PLANS. Tenant shall diligently pursue the preparation
of all drawings, plans and specifications for Tenant Improvements in accordance
with this Paragraph 5(a). All such plans, drawings and specifications shall be
performed by architects, engineers and/or consultants mutually acceptable to
Landlord and Tenant, and shall include the following: (i) a space plan for the
Premises; (ii) complete architectural, engineering and other plans for the
Tenant Improvements (except as included in the Warm Shell Plans); and (iii) a
list of tenant improvement building standards for interior design, including a
schedule of all finishes. Items (ii) and (iii) above are collectively referred
to herein as "Working Drawings". The space plan and Working Drawings shall
provide for high quality generic office space, with open cubicles and perimeter
private offices, and with corridors, lobbies, bathrooms, mechanical and
electrical systems, and fire exits in a design reasonably acceptable to
Landlord. The space plan and Working Drawings also shall (x) comply with all
applicable Legal Requirements, (y) comply and be consistent with the DDA, and
(z) comply with Landlord's Plans and the Warm Shell Plans. Within thirty (20)
days after Landlord has delivered Landlord's Plans and the Warm Shell Plans and
obtained the building permit for construction of the Base Building, Tenant shall
submit its space plan to Landlord, for Landlord's review and approval, which
approval shall not be unreasonably withheld so long as the Tenant Improvements
contemplated thereby (I) are consistent with the immediately preceding two
sentences; (II) are generally generic, spread throughout the entire Premises in
a typical and appropriate manner, and with drop ceilings throughout the
Premises; (III) comply with applicable Laws; (IV) do not adversely affect the
structure of the Building; (V) do not put an undue burden on or otherwise
adversely affect the Building Systems; (VI) are typically found in a high
quality office build-out; and (VII) are approved by any Mortgagee (if such
approval is required). Within five (5) business days after such submission,
Landlord shall either approve or disapprove the space plan. Tenant shall make
any changes necessary in order to correct any item identified by Landlord as
grounds for its disapproval, and shall resubmit the corrected space plan to
Landlord within five (5) business days after Landlord's disapproval. Within five
(5) business days after Landlord receives the revised space plan, Landlord shall
approve or disapprove it. This procedure shall be repeated until the space plan
is finally approved by Landlord and written approval has been delivered to
Tenant. Within thirty (30) days after Landlord has finally approved Tenant's
space plan, Tenant shall submit its Working Drawings and a pallet of interior
colors and finishes to Landlord for Landlord's review and


                                       4
<PAGE>   58

approval in Landlord's reasonable discretion, provided that Landlord shall not
be obligated to approve any Tenant Improvement which either (A) does not satisfy
the requirements set forth above with respect to the space plan, or (B) are of a
nature or character that, in Landlord's reasonable judgment, would not enhance
the value of the Premises, or would have a negative effect on the value of the
Premises, to a future tenant. Landlord's approval or disapproval of such Working
Drawings and pallet, and Tenant's response thereto, shall follow the procedure
described above with respect to the space plan, except that each time period
shall be changed from five (5) business days to ten (10) business days. All
items finally approved by Landlord pursuant to this Paragraph 5(a) are referred
to herein collectively as "Tenant's Plans". Once approved by Landlord, no
changes, modifications or alterations shall be made to Tenant's Plans without
the prior written approval of Landlord, in Landlord's reasonable discretion but
on the same terms, conditions, requirements and standards for approval set forth
in this Paragraph 5(a) with respect to the Space Plan, Working Drawings and
pallet.

              (b) PERMITS FOR TENANT IMPROVEMENTS. Within ten (10) business days
after receipt of Landlord's final approval of the Working Drawings, Tenant's
Architect shall submit them to the appropriate municipal authorities for all
applicable building permits necessary to allow the Tenant Improvement Contractor
(as defined below) to commence and fully complete the construction of the Tenant
Improvements. Tenant shall be responsible for obtaining any building permit or
certificate of occupancy for the Premises; provided that Landlord shall
cooperate with Tenant in executing permit applications and performing other
ministerial acts reasonably necessary to enable Tenant to obtain any such permit
or certificate of occupancy.

        6. CONSTRUCTION OF TENANT IMPROVEMENTS. After receipt of Landlord's
approval of Tenant's Plans and receipt of any necessary building permits, Tenant
shall administer and diligently prosecute the construction of Tenant
Improvements in accordance with the Warm Shell Plans and Tenant's Plans. Tenant
shall contract with either Devcon Construction, Rudolph and Sletten, DPR or
Webcor Builders, to act as general contractor for the Tenant Improvements. The
general contractor selected to complete the Tenant Improvements in accordance
with the preceding sentence shall be defined herein as the "Tenant Improvement
Contractor". If Devcon Construction is not selected, Tenant shall ensure that
the selected general contractor will work harmoniously with Landlord's
contractor for the Base Building and with the Warm Shall Contractor and to
ensure no interference with completion of the Base Building or Warm Shell
Improvements, and any such interference shall constitute "Tenant Delay"
hereunder. All Tenant Improvements shall be constructed using union labor for
all trades. The construction contract for the Tenant Improvements (the "Tenant
Improvement Contract") shall be in form and substance acceptable to Tenant and
approved by Landlord in its reasonable discretion, and shall include, without
limitation, requirements (i) that Tenant's Contractor carry such insurance as
Landlord may reasonably require, and (ii) that Landlord, at Landlord's sole
option, may succeed Tenant and enforce the Construction Contract in the event of
a termination of the Lease. Both Landlord and Tenant shall have the full benefit
of all contractor warranties in connection with the Warm Shell Improvements and
the Tenant Improvements. Tenant shall direct and authorize Tenant's Contractors
for the Warm Shell Improvements and for the Tenant Improvements to keep Landlord
fully informed of the construction process for the Tenant Improvements by
inviting Landlord to all project design and construction meetings and delivering
to Landlord the minutes of all such meetings, and to provide Landlord with
access to all documentation and other information in Tenant's Contractor's
possession or control regarding construction of the Warm Shell Improvements and
Tenant Improvements, as applicable, provided that Landlord shall not be
obligated to monitor or inspect construction of the Warm Shell Improvements
and/or Tenant Improvements or any information in connection therewith. All Warm
Shell Improvements shall be constructed by Devcon Construction pursuant to the
Warm Shell Contract, and all Tenant Improvements shall be constructed by the
Tenant Improvement Contractor pursuant to the Tenant Improvement Contract, and
Tenant shall be responsible for project management with respect to construction
of the Warm Shell Improvements and the Tenant Improvements. Tenant shall not, at
any time prior to or during the Term, directly or indirectly employ, or permit
the employment of, any contractor, mechanic or laborer in the Premises, whether
in connection with the Warm Shell Improvements, the Tenant Improvements, any
Alterations made pursuant to the Lease, or otherwise, if it is reasonably
foreseeable that such employment will materially interfere or cause any material
conflict with other contractors, mechanics or laborers engaged in the
construction, maintenance or operation of the Project by Landlord, Tenant or
others. In the event of any such interference or conflict, Tenant, upon demand
of Landlord, shall cause all contractors, mechanics or laborers causing such
interference or conflict to immediately cease and desist from such interference
or conflict. Installation of all Warm Shell Improvements and Tenant Improvements
shall be coordinated with Landlord's contractor's schedule for the Base
Building, and shall be handled in such a manner as to not interfere with or
delay construction or completion of the Base Building.


                                       5
<PAGE>   59

        7. TENANT'S ACCESS TO BASE BUILDING

              (a) INITIAL TENANT WORK DATE. Subject to the provisions of
Paragraph 8, Landlord shall provide the Tenant Improvement Contractor with
access to the Building for purposes of constructing the Tenant Improvements from
and after the "Initial Tenant Work Date". To be deemed the "Initial Tenant Work
Date" the following construction components of the Base Building need to be
completed substantially in accordance with Landlord's Plans: (i) slab and
footings in place; (ii) steel fully erected; (iii) upper floor decks and roof
poured; (iv) roof membrane installed; (v) access to the Building provided to
Tenant's contractors along with location for the construction trailers for
Tenant's contractors; (vi) electrical power lines installed in conduit to the
main electrical room in the Project Garage (the lines will be connected by the
Tenant to the panel supplied by the Tenant); (vii) automatic fire sprinkler main
riser installed; (viii) roof drain lines installed; (ix) water stubbed to the
Project Garage from the city water main in the street; (x) underground conduit
provided from the street to the Project Garage's primary electrical room
(provided that Tenant, and not Landlord, will be responsible to pull the wire or
cable as applicable); and (xi) the Building in water-tight condition, except
that the glass and glazing for the Premises will not need to be completed in
order for the Initial Tenant Work Date to occur. The glass and glazing for the
Premises will be completed within forty-five days after the Initial Tenant Work
Date, except for components of the glass and glazing that are dependent on
completion of components of the Warm Shell Improvements and/or Tenant
Improvements or that would interfere with the progress of the Warm Shell
Improvements and/or Tenant Improvements, as reasonably determined by the Warm
Shell Contractor and/or the Tenant Improvement Contractor, as applicable.

              (b) EARLY ACCESS START DATE. Subject to the provisions of
Paragraph 8, Landlord shall provide the Warm Shell Contractor with access to the
Building for purposes of constructing the Warm Shell Improvements prior to the
Initial Tenant Work Date, at such times and under such terms and conditions as
may be determined by Landlord's contractor for the Base Building. The date on
which Tenant commences construction of the Warm Shell Improvements (which date
shall be certified by the Warm Shell Contractor at the request of Landlord or
Tenant) shall be defined herein as the "Start Date".

        8. SITE SUPERVISION AGREEMENT: While proceeding with Landlord's and
Tenant's Work, all contractors hired by Landlord and Tenant shall conform with
Landlord's contractor's schedule and work and shall be handled in such a manner
as to maintain harmonious labor relations and as not to interfere with or delay
the work of the other party's contractors. All Warm Shell Improvements and
Tenant Improvements furnished and installed by Tenant shall not cause Landlord's
contractor to be dependent upon Tenant's work in order for Landlord's contractor
to complete his work on the Base Building. Tenant's contractors, subcontractors
and labor shall be subject to approval by Landlord which approval shall not be
unreasonably withheld or delayed and shall be subject to the reasonable
administrative coordination by Landlord's general contractor and reasonable
rules of the site. Contractors and subcontractors engaged by Landlord and Tenant
shall employ men and means to insure, so far as may be possible, the progress of
the work without interruption on account of strikes, work stoppage or similar
causes for delay. Landlord shall give access and entry to the Premises to
Tenant, the Warm Shell Contractor and the Tenant Improvement Contractor as and
when provided in this Work Letter; provided, however, that if such entry is
prior to the first day of the Term, such entry shall be subject to all of the
terms and conditions of the Lease except payment of Base Rent and Additional
Charges for Expenses and Taxes. Landlord and Tenant shall jointly prepare a
punch list for the Base Building, Warm Shell Improvements and Tenant
Improvements. Landlord and Tenant shall engage reputable contractors who will
complete the work in a good and workmanlike manner and in accordance with
relevant laws and codes. Both Landlord and Tenant shall have the full benefit of
all contractor warranties.

        9. LANDLORD'S RIGHT TO INSPECT AND STOP WORK: Landlord and its agents
may inspect the Tenant Improvements and the Warm Shell Improvements in the
course of construction and on completion of the Tenant Improvements and/or Warm
Shell Improvements, provided, however, that Landlord's failure to inspect the
Tenant Improvements and/or Warm Shell Improvements shall in no event constitute
a waiver of any of Landlord's rights hereunder nor shall Landlord's inspection
of the Tenant Improvements and/or Warm Shell Improvements constitute Landlord's
approval of the same. Landlord shall have the right to object to any material
deviation from the Warm Shell Plans or Tenant's Plans not approved by Landlord
in accordance with this Work Letter. Tenant shall cause such deviation to be
corrected. If the deviation is material in the Landlord's reasonable judgment
and may have an adverse affect on the Base Building, and if the deviation is not
promptly corrected by Tenant, Landlord may cause such deviation to be remedied,
at Tenant's expense and without liability to Tenant.


                                       6
<PAGE>   60

        10. COMPLIANCE WITH LAWS AND DDA. All of the Base Building improvements,
Warm Shell Improvements and Tenant Improvements shall be installed in compliance
with all applicable Laws, including, without limitation, and as applicable, the
Americans with Disabilities Act and all Legal Requirements, and in compliance
with the DDA and all requirements therein. All costs of such compliance shall be
paid in the same manner as the improvements (i.e. Landlord shall pay all costs
related to compliance by the Base Building improvements, and Tenant shall pay
all costs related to compliance by the Warm Shell Improvements and the Tenant
Improvements). Landlord's review and approval of Tenant's Plans shall not imply
Landlord's review of the quality, design, code compliance or similar matters
with respect to the Tenant Improvements; accordingly, notwithstanding that
Tenant's Plans are reviewed by Landlord or its agents and notwithstanding any
advice or assistance that may be rendered to Tenant by Landlord or Landlord's
agents, Landlord shall have no liability whatsoever in connection therewith and
shall not be responsible for any omissions or errors contained in Tenant's
Plans, except to the extent caused by material omissions or errors contained in
Landlord's Plans for the Base Building or in the Warm Shell Plans.

        11. SUBSTANTIAL COMPLETION:

              (a) "SUBSTANTIAL COMPLETION" DEFINED. For purposes of this Work
Letter and the Lease, (A) the Base Building shall be deemed "substantially
complete" at such time as Landlord has completed work in accordance with
Landlord's Plans subject to completion and correction of items on Landlord's
architect's punch list, and certain other items which will not be completed
until substantial completion of the Warm Shell Improvements and/or the Tenant
Improvements (such as certain landscaping, and certain glass and glazing), (B)
the Warm Shell Improvements shall be deemed "substantially complete" at such
time as Tenant has completed work in accordance with the Warm Shell Plans, as
certified by Tenant's architect (which certification shall be obtained promptly
by Tenant upon such substantial completion), and (C) the Tenant Improvements
shall be deemed "substantially complete" at such time as the Warm Shell
Improvements are substantially complete, Tenant has completed work in accordance
with the Tenant's Plans, as certified by Tenant's architect (which certification
shall be obtained promptly by Tenant upon such substantial completion), and
Tenant has obtained a certificate of occupancy from the City of Sunnyvale,
subject only to the completion or correction of items on Tenant's architect's
punch list (and exclusive of the installation of all telephone and other
communications facilities and equipment and other finish work or decorating work
to be performed by or for Tenant).

              (b) TENANT DELAY. If substantial completion of the Tenant
Improvements, Warm Shell Improvements or Base Building is delayed due to any of
the following (collectively, "Tenant Delays"), then the Delivery Date and/or
Commencement Date, as applicable, shall be adjusted to reflect what the
substantial completion date would have been if there had been no delay: (i)
Tenant's failure to timely submit any items required by this Work Letter,
including, without limitation, Tenant's Plans; (ii) Tenant Modifications; (iii)
Tenant's failure to comply with Landlord's contractor's schedule; (iv) Tenant's
or Tenant's Contractor's failure to comply with Paragraph 8, (v) Tenant's
requested changes to the Tenant's Plans after they are approved by Landlord;
(vi) Tenant's request for materials, finishes or installations which require
longer than thirty (30) days to complete; (vii) delays caused by Tenant in
construction of the Warm Shell Improvements or the Tenant Improvements; or
(viii) any other event expressly constituting "Tenant Delay" pursuant to any
provision of this Work Letter. Landlord shall give Tenant at least five (5) days
prior notice if Landlord becomes aware that Tenant is in danger of causing a
Tenant Delay, and if Tenant takes appropriate measures to prevent such delay
within such five (5) day period, no adjustment to the Delivery Date or
Commencement Date shall be made on account of such Tenant Delay; provided,
however, that if such delay was not reasonably foreseeable by Landlord, the five
(5) day period for prior notice and opportunity to mitigate provided above shall
be changed to forty-eight (48) hours after Landlord becomes aware of such delay
or potential delay; and provided further, that no such notice shall be required
if Tenant Delay results from Tenant's failure to perform any obligation within a
specific date or time period (including, without limitation, any delay in
delivery of Tenant's space plan or Working Drawings or non-compliance with
Landlord's contractor's schedule), or from schedule changes resulting from
Tenant Modifications of which Tenant is advised by Landlord's architect or
contractor as provided in Paragraph 4, or from causes that, due to the parties'
relative positions with respect to the construction process, are more likely to
be foreseeable by Tenant than by Landlord.

              (c) CONTRACTOR DELAY. "Contractor Delay" shall occur if
substantial completion of the Warm Shell Improvements is delayed directly as a
result of unreasonable delay by Devcon Construction in completion of the Warm
Shell Improvements, which delay occurs after the Delivery Date and before the


                                       7
<PAGE>   61

Commencement Date and does not result from Tenant's interference or delay in
connection with completion of the Tenant Improvements or failure to make payment
when due under the Warm Shell Contract, and provided that such delay in
substantial completion could not have been mitigated by Tenant using
commercially reasonable measures. Tenant shall give Landlord at least five (5)
days prior notice if Tenant becomes aware that Landlord's Contractor is in
danger of causing a Contractor Delay, and if Landlord takes appropriate measures
to prevent such delay within such five (5) day period, no adjustment to the
Commencement Date shall be made on account of such Contractor Delay; provided,
however, that if such delay was not reasonably foreseeable by Tenant, the five
(5) day period for prior notice and opportunity to mitigate provided above shall
be changed to forty-eight (48) hours after Tenant becomes aware of such delay or
potential delay.

              (d) LANDLORD DELAY. "Landlord Delay" shall occur if either: (i)
Landlord fails to complete the Base Building and/or other improvements on the
Project that are required by the DDA, the Parking REA and/or the CC&Rs, and as a
direct result of such failure Tenant is unable to obtain a temporary or
permanent certificate of occupancy for the Premises upon substantial completion
of the Tenant Improvements; or (ii) substantial completion of the Warm Shell
Improvements or Tenant Improvements is delayed directly and solely as a result
of any of the following and such delay could not have been mitigated by Tenant
using commercially reasonable measures, which delay occurs after the Delivery
Date and before the Commencement Date and does not result from Tenant's
interference or delay in connection with completion of the Tenant Improvements
or after a Tenant Default or Work Letter Draw Event: (a) subject to Paragraph 8
above, unreasonable interference by Landlord or Landlord's Contractor with the
construction of the Warm Shell Improvements or the Tenant Improvements; (b)
Landlord's failure to comply with any deadlines for response to, or submissions
from, Tenant as required by this Work Letter; (c) any material Discretionary
Changes to Landlord's Plans or the Warm Shell Plans after their final approval
by applicable governmental entities (other than Tenant Modifications) that
directly affect Tenant's Plans or the Tenant Improvements; and/or (d) Landlord
failure to complete portions of the Base Building and/or other improvements on
the Project that are Landlord's obligation to complete hereunder, and as a
direct result of such failure Tenant and Tenant's contractors do not have access
to the Premises to the extent required to complete the Warm Shell Improvements
and/or Tenant Improvements. Tenant shall give Landlord at least five (5) days
prior notice if Tenant becomes aware that Landlord is in danger of causing a
Landlord Delay, and if Landlord takes appropriate measures to prevent such delay
within such five (5) day period, no adjustment to the Commencement Date shall be
made on account of such Landlord; provided, however, that if such delay was not
reasonably foreseeable by Tenant, the five (5) day period for prior notice and
opportunity to mitigate provided above shall be changed to forty-eight (48)
hours after Tenant becomes aware of such delay or potential delay.

        12. COSTS.

              (a) WARM SHELL AND TENANT IMPROVEMENT COSTS. Tenant shall bear the
cost of Tenant Improvements and Warm Shell Improvements, including, without
limitation, costs in connection with space planning, preparing Tenant's Plans,
engineering, plan checking, special inspections and testing, any consultants,
and related permits and fees for Warm Shell Improvements and Tenant
Improvements, but excluding costs for preparing the Warm Shell Plans. Landlord
shall not be obligated to pay any portion of the cost of the Tenant
Improvements, and Tenant shall be obligated to keep the Project free of all
liens and claims relating to the design and construction of the Warm Shell
Improvements and the Tenant Improvements

              (b) INSURANCE COSTS. Landlord has purchased Comprehensive
Builder's Risk/Course of Construction insurance with respect to the Base
Building, Warm Shell Improvements and Tenant Improvements, and Landlord shall
keep such insurance in force during the course of construction of the Base
Building, Warm Shell Improvements and/or the Tenant Improvements, with the same
requirements as policies described in Paragraph 10(f) of the Lease for insurance
to be carried by Landlord, but with appropriate adjustments to reflect that the
Project is under construction. Tenant shall reimburse Landlord for the portion
of the cost of such insurance that is attributable to the Warm Shell
Improvements and the Tenant Improvements within twenty (20) days of receipt from
Landlord of an invoice therefor as an Additional Charge.

        13. INDEPENDENT OBLIGATIONS/SECURITY FOR COMPLETION.

              (a) INDEPENDENT OBLIGATIONS. The parties acknowledge and agree as
follows:


                                       8
<PAGE>   62

                    (i) Although tenant's business plan and prospects for
        financial success look promising, Tenant's creditworthiness as a
        long-term tenant is significantly less substantial than the standard
        established by Landlord for the Project and for other tenants of
        affiliates of Landlord, especially taking into account the amount of
        space Tenant is leasing at the Project and the financial obligations and
        risks Landlord and the current Mortgagee are assuming and undertaking in
        reliance upon Tenant's performance of all of the obligations under the
        Lease and this Work Letter. By entering into the Lease with Tenant at
        this time, rather than with a more creditworthy tenant or tenants now or
        at a future date, Landlord's increased risks include, without
        limitation, increased risks related to (i) a potential Insolvency
        Proceeding or Tenant Default prior to completion of and/or full payment
        by Tenant for the Warm Shell Improvements and/or Tenant Improvements,
        (ii) potential lien claims by the Warm Shell Contractor, the Tenant
        Contractor, and/or subcontractors, laborers, materialmen and/or
        suppliers used for labor rendered and/or materials delivered with
        respect to the Warm Shell Improvements and/or Tenant Improvements (all
        of the foregoing collectively, "Tenant's Agents"), (iii) re-leasing
        costs (including, without limitation, tenant improvement costs,
        brokerage commissions, marketing costs, legal fees, and carrying costs
        during a re-leasing and/or tenant improvement build-out period) if
        Tenant Defaults prior to expiration of the Lease Term, (iv) loan
        defaults and/or difficulties in obtaining construction financing for the
        Building and/or permanent financing upon maturity of the existing loan
        and/or any additional construction financing, (v) personal liability of
        Landlord's principals under guaranties supporting existing and/or future
        construction or permanent loans, and (vi) loss of the investment made by
        Landlord's investors. In addition, in the event of a rejection of the
        Lease in an Insolvency Proceeding, the parties acknowledge that certain
        elements of Landlord's damages could be limited by Section 502(b)(6) of
        the Bankruptcy Code, to Rent reserved by the Lease for the greater of
        one year, or fifteen percent (not to exceed three years) of the
        remaining Term of the Lease, and that as a result of such limitation
        Landlord might not be adequately compensated, by recovery of damages
        under the Lease, for the risk incurred by Landlord and for Landlord's
        actual damages in the event of a Default in Tenant's obligations under
        this Work Letter.

                    (ii) Landlord has previously obtained a loan, secured by an
        existing Mortgage, to finance, among other things, the acquisition of
        the Land and the construction of the Building and the Project Garage and
        other Project Common Area improvements. The Landlord cannot enter into
        the Lease without the prior consent of the existing Mortgagee.

                    (iii) Landlord would not enter into the Lease and the
        current Mortgagee would not approve the Lease without absolute assurance
        (I) that the Tenant Improvements and Warm Shell Improvements will be
        completed at Tenant's sole cost and expense, with no right of Tenant to
        payment of any kind in the event of Lease termination; (II) that the
        Tenant Improvements and Warm Shell Improvements will be of an aggregate
        value of at least Sixty-Nine Dollars ($69) per square foot of the
        Premises; and (III) that the Tenant Improvements and Warm Shell
        Improvements will be of a nature and character as to enhance the value
        of the Premises to a new tenant if Landlord re-leases all or a portion
        of the Premises after Lease termination, rejection or expiration, or
        Landlord recapture pursuant to Paragraph 9(d) of the Lease, or any other
        termination of the Lease. A permanent lender would not make a loan
        secured by the Project on customary terms and conditions without
        lien-free completion of the Warm Shell Improvements and Tenant
        Improvements (or substantially similar credit or value enhancement) and
        occupancy by Tenant or other tenant(s) in a substantial portion of the
        Building prior to funding.

                    (iv) In consideration of Landlord's acceptance of the
        increased risks inherent in Landlord's agreement to enter into the Lease
        at this time with Tenant, rather than with a more creditworthy tenant
        now or at some future time, and with the understanding of the
        limitations on damages under the Lease as a result of the Bankruptcy
        Code and of the requirements of the existing Mortgagee and future
        construction lenders and permanent lenders with respect to the Project,
        Tenant has agreed that Tenant's obligations under this Work Letter,
        including the completion of the Tenant Improvements and Warm Shell
        Improvements and payment of all costs thereof, shall be independent of,
        and in addition to, Tenant's obligations under the Lease. Tenant has
        further agreed to provide the TI Letter of Credit, in accordance with
        this Paragraph 13, to secure Tenant's independent obligations under this
        Work Letter, including the completion of the Tenant Improvements and
        Warm Shell Improvements and payment of all costs therefor.


                                       9
<PAGE>   63

              (b) OBLIGATIONS SECURED. Simultaneously with Tenant's execution of
the Lease, Tenant shall deliver to Landlord one or more (but not to exceed a
total of four, and in equal amounts) unconditional, irrevocable, transferable
letter(s) of credit (collectively, the "TI Letter of Credit"), in an aggregate
amount equal to the "TI Required Amount" (defined in Paragraph 13(e) below) and
satisfying the requirements set forth in Paragraph 13(c) below. The TI Letter of
Credit shall secure and insure the faithful performance by Tenant of all of the
covenants, terms and conditions of this Work Letter, including, without
limitation, Tenant's obligations to timely construct and pay for the Tenant
Improvements and Warm Shell Improvements pursuant to, and in accordance with the
terms of, this Work Letter.

              (c) REQUIREMENTS OF TI LETTER OF CREDIT. The TI Letter of Credit
shall be issued by a financial institution acceptable to Landlord and any
Mortgagee, in their respective sole discretion, and in form and substance
acceptable to Landlord and any Mortgagee, in the reasonable exercise of their
respective discretion, with an original term of no less than one year and
automatic extensions through at least January 30, 2004 (the "TI Letter of
Credit"). Landlord and any Mortgagee shall not unreasonably withhold their
approval of such a financial institution if it is a national bank, or a bank
branch located in the United States (with an office in the United States
allowing the TI Letter of Credit to be presented to and paid by such office
pursuant to procedures acceptable to Landlord in its reasonable discretion) with
assets of the issuing bank or bank branch in excess of Twenty Billion Dollars
($20,000,000,000). If Landlord determines at any time, in good faith, either (I)
that the issuing bank or bank branch has assets of less than Twenty Billion
Dollars ($20,000,000,000), or (II) that the issuing bank or bank branch has or
intends to close or cease operations from the issuing bank branch, then Landlord
may require that Tenant replace the TI Letter of Credit with a TI Letter of
Credit from a different financial institution acceptable to Landlord, in the
reasonable exercise of its discretion, within ten (10) business days after
Tenant's receipt of notice of such requirement from Landlord. The TI Letter of
Credit shall (i) be a stand-by, at-sight, irrevocable letter of credit; (ii) be
payable to Landlord, its Mortgagee or their assignees (any of the foregoing, the
"Beneficiary"); (iii) require that any draw on the TI Letter of Credit shall be
made only upon receipt by the issuer of a letter signed by a purported
authorized representative of the Beneficiary certifying that the Beneficiary is
entitled to draw on the TI Letter of Credit pursuant to this Work Letter; (iv)
allow partial draws; and (v) provide that it is governed by the Uniform Customs
and Practice for Documentary Credits (1993 revisions) or the International
Standby Practices (ISP 98). Tenant shall keep the TI Letter of Credit, at its
expense, in full force and effect until the later of January 30, 2004, or the
sixtieth (60th) day after Tenant's satisfaction of all of its obligations under
this Work Letter. The TI Letter of Credit shall provide at least thirty (30)
days' prior written notice to Landlord and the Beneficiary of cancellation or
material change thereof.

              (d) WORK LETTER DRAW EVENTS.

                    (i) "WORK LETTER DRAW EVENT" DEFINED. A "Work Letter Draw
        Event" shall mean any of the following: (I) Tenant is the subject of an
        Insolvency Proceeding; (II) a Default occurs under the Lease or this
        Work Letter when Tenant is in Chronic Default under the Lease or in Work
        Letter Chronic Default (as defined below); (III) the TI Letter of Credit
        is not replaced with a TI Letter of Credit from a different financial
        institution if and when required by Paragraph 13(c); (IV) the TI Letter
        of Credit is not extended within thirty (30) days prior to its
        expiration; (V) A Default occurs under the Lease or this Work Letter;
        (VI) Tenant terminates either the Warm Shell Contract or the Tenant
        Improvement Contract without Landlord's prior consent, or defaults under
        either such contract or any substitute thereof and does not cure such
        default within the longer of the applicable cure period under such
        contract or five (5) days after such default occurs; (VII) Tenant fails
        to deliver Tenant's space plan, Working Drawings, or any other item
        required to be delivered pursuant to Paragraph 5 of this Work Letter on
        or before the date specified for such delivery; (VIII) Tenant fails to
        commence construction of the Warm Shell Improvements within thirty (30)
        days after the date specified in Landlord's Contractor's schedule
        (subject to delay, not to exceed thirty (30) additional days, caused by
        Force Majeure Events); (IX) Tenant fails to commence construction of the
        Tenant Improvements within thirty (30) days after the Delivery Date
        (subject to delay, not to exceed thirty (30) additional days, caused by
        Force Majeure Events); (X) and (X) Tenant fails to complete the Tenant
        Improvements and Warm Shell Improvements within the later of (A) one
        hundred eighty (180) days after the Delivery Date, and (B) two hundred
        forty (240) days after the first to occur of the Delivery Date or the
        Start Date (as defined in Paragraph 7(b) below), in either case subject
        to delay, not to exceed ninety (90) additional days, caused by Force
        Majeure Events, provided that if Landlord reasonably determines that
        Tenant is diligently pursuing construction of the Tenant Improvements
        and Warm Shell Improvements,


                                       10
<PAGE>   64

        Landlord shall allow Tenant an additional thirty (30) days to complete
        the Tenant Improvements and Warm Shell Improvements. Tenant shall be in
        "Work Letter Chronic Default" under this Work Letter at any time that
        Landlord has delivered a notice of Tenant's failure to perform any of
        its obligations under this Work Letter more than two (2) times,
        regardless in each case of whether such failure was cured by Tenant
        within any applicable grace or cure period; provided, however, that any
        such notice of failure to perform relating to a non-monetary failure to
        perform which was disputed, in good faith, by Tenant and ultimately
        determined (by agreement of the parties, arbitration or judicial action)
        not to be a violation of this Work Letter shall not be considered for
        purposes of determining whether such condition has been met.

                    (ii) LANDLORD OPTIONS. If a "Work Letter Draw Event" occurs,
        Landlord shall have the following rights and remedies, any of which
        Landlord may elect to pursue in Landlord's sole discretion at any time
        after such Draw Event (subject to the limitations set forth in (B)
        below):

                        (A) Landlord may, at Landlord's sole option and without
              any obligation to do so, and without waiving or releasing Tenant
              from any obligations of Tenant under this Work Letter or under the
              Lease, perform any of Tenant's obligations under this Work Letter,
              at Tenant's cost and expense. At any time after a Work Letter Draw
              Event occurs, Landlord or the Beneficiary, at its option, may
              present its written demand for payment of the entire face amount
              of the TI Letter of Credit and the funds so obtained shall become
              due and payable to the Beneficiary, and funds so obtained may be
              used, at Landlord's sole option, (A) to reimburse Landlord for
              costs incurred by Landlord in connection with performance of
              Tenant's obligations pursuant to this Paragraph 13(d)(ii)(A);
              and/or (B) to complete all, or such portion as Landlord may elect,
              of the Tenant Improvements and/or Warm Shell Improvements
              contemplated by this Work Letter or, in lieu of all or any portion
              thereof, any other improvements or alterations to the Premises;
              and/or (C) to compensate Landlord for damages incurred, or to
              reimburse Landlord as provided herein, in connection with or as a
              result of any Work Letter Draw Event. Landlord or the Beneficiary
              may make partial draws on the TI Letter of Credit as needed to pay
              for the Tenant Improvements and/or Warm Shell Improvements or any
              other improvements or alterations to the Premises, and/or to
              reimburse Landlord for costs incurred with respect to performance
              of Tenant's obligations under this Work Letter, and/or to
              compensate Landlord for damages incurred with respect to or as a
              result of any Work Letter Draw Event.

                        (B) Subsequent to, in addition to and/or in lieu of
              Landlord's remedy set forth in Paragraph 13(d)(ii)(A) above and
              any other remedies available to Landlord under this Work Letter,
              the Lease and/or applicable Laws, Landlord may terminate the Lease
              and this Work Letter, and present (or cause the Beneficiary to
              present) its written demand for payment of the entire face amount
              of the TI Letter of Credit at any time after either (I) a Work
              Letter Draw Event set forth in clause (I), (II), (III) or (IV)
              occurs; or (II) any other Work Letter Draw Event has occurred,
              Landlord has delivered written notice to Tenant of such Work
              Letter Draw Event, and Tenant has not cured the circumstances
              underlying such Work Letter Draw Event within twenty (20) days
              after receipt of such written notice from Landlord. The funds so
              obtained shall be due and payable to Landlord (or the Beneficiary)
              as liquidated damages for Tenant's failure to perform its
              obligations under this Work Letter; provided that, at Tenant's
              request, Landlord shall reimburse Tenant, from the TI Letter of
              Credit proceeds only, for any costs incurred by Tenant prior to
              the Draw Event for construction of the Tenant Improvements and/or
              Warm Shell Improvements, to the extent Tenant provides Landlord
              with reasonable documentation of the payment of such costs and
              appropriate lien waivers from parties paid.

              IF LANDLORD TERMINATES THE LEASE AND THIS WORK LETTER PRIOR TO
              COMPLETION OF TENANT'S OBLIGATIONS UNDER THIS WORK LETTER,
              LANDLORD SHALL RETAIN THE NET PROCEEDS OF THE TI LETTER OF CREDIT
              AFTER REIMBURSEMENT TO TENANT FOR CERTAIN COSTS PREVIOUSLY
              INCURRED BY TENANT AS PROVIDED IN THE PRECEDING SENTENCE (THE "NET
              PROCEEDS") AS LIQUIDATED DAMAGES. THE PARTIES AGREE THAT
              LANDLORD'S ACTUAL DAMAGES WOULD BE DIFFICULT OR IMPOSSIBLE TO
              DETERMINE IF TENANT


                                       11
<PAGE>   65

              DEFAULTS IN ITS OBLIGATIONS UNDER THIS WORK LETTER, AND THE AMOUNT
              OF THE NET PROCEEDS IS THE BEST ESTIMATE OF THE AMOUNT OF DAMAGES
              LANDLORD WOULD SUFFER FOR FAILURE OF TENANT TO COMPLETE ITS
              OBLIGATIONS UNDER THIS WORK LETTER. THE PROVISIONS OF THIS
              PARAGRAPH 13(d)(ii)(B) SHALL NOT AFFECT ANY OTHER RIGHTS OR
              REMEDIES OF LANDLORD WITH RESPECT TO ANY DEFAULT OR FAILURE OF
              TENANT TO PERFORM ANY OTHER OBLIGATIONS UNDER THE LEASE. THE
              PARTIES WITNESS THEIR AGREEMENT TO THIS LIQUIDATED DAMAGES
              PROVISION AND THIS LIMITATION OF REMEDIES PROVISION BY INITIALLING
              BELOW:

              LANDLORD: /s/ JM                            TENANT: /s/ DD, JH

                    (iii) REPLACEMENT. If Landlord or the Beneficiary uses any
        portion of the TI Letter of Credit, or the cash security deposit
        resulting from a draw on the TI Letter of Credit, to cure any failure of
        performance by Tenant hereunder, to complete the Tenant Improvements
        and/or Warm Shell Improvements and/or other improvements, and/or for any
        other reason permitted or contemplated by this Paragraph 13, Tenant
        shall provide a replacement TI Letter of Credit in the TI Required
        Amount within ten (10) days of notice from Landlord or the Beneficiary,
        and Tenant's failure to do so shall be a Default hereunder and under the
        Lease without benefit of grace or cure periods. Any unused portion of
        the funds so obtained by Landlord or the Beneficiary shall be returned
        to Tenant upon replacement of the TI Letter of Credit in the full TI
        Required Amount.

              (e) TI REQUIRED AMOUNT. The term "TI Required Amount" initially
shall mean Nine Million Two Hundred Eighty-Four Thousand Dollars ($9,284,000),
provided, however, that at such time as Tenant enters into construction
contracts for both the Warm Shell Improvements and the Tenant Improvements, if
the total aggregate cost of the Warm Shell Improvements and the Tenant
Improvements (as reflected in such contracts) is less than Sixty-Nine Dollars
per rentable square foot of the Rentable Area ($69/RSF) (the "Minimum Value"),
and if Landlord has previously approved such reduced cost in Landlord's sole
discretion in accordance with Paragraph 4 of this Work Letter, the TI Required
Amount shall be decreased by the difference between the Minimum Value and the
aggregate cost of the Warm Shell Improvements and the Tenant Improvements as
reflected in Tenant's construction contract, and the amount of such decrease
shall be added to the Required Amount of the Letter of Credit required by
Paragraph 43 of the Lease. Tenant shall deliver to Landlord or the Beneficiary
either an amendment to the Letter of Credit, or a replacement Letter of Credit,
in the increased TI Required Amount within ten (10) days after Tenant enters
into the last of the Warm Shell Contract and the Tenant Improvement Contract.

              (f) RETURN OF LETTER OF CREDIT.

                    (i) MULTIPLE TI LETTERS OF CREDIT. If Tenant provides
        multiple letters of credit to collectively serve as the TI Letter of
        Credit, so long as no Work Letter Draw Event has occurred each such
        letter of credit shall be returned to Tenant at such time as Landlord
        has determined that all of the following have occurred with respect to
        such letter of credit: (A) Tenant has spent an amount on the Warm Shell
        Improvements and/or Tenant Improvements that is at least equal to the
        aggregate of the face amount of the letter of credit being returned plus
        the face amount of any letter(s) of credit previously returned to
        Tenant; (B) the remaining letter(s) of credit constituting the TI Letter
        of Credit that Landlord or the Beneficiary continue to hold are in an
        aggregate amount that is not less than the remaining cost (as determined
        by Landlord in its reasonable discretion) to complete the Warm Shell
        Improvements and/or Tenant Improvements (including retention amounts);
        (C) Tenant has provided Landlord with paid receipts and/or such other
        evidence of payment as Landlord may request from all of Tenant's Agents
        in an aggregate amount of not less than the aggregate amount of all
        letters of credit constituting the TI Letter of Credit (including the
        letter of credit then being returned) that have been returned to Tenant
        at such time; and (D) Tenant has provided Landlord with executed
        unconditional mechanic's lien releases from all of Tenant's Agents, in
        the statutory form, with respect to all sums paid to date by Tenant and
        in an amount of not less than the aggregate amount of all letters of
        credit constituting the TI Letter of Credit (including the letter of
        credit then being returned) that have been returned to Tenant at such
        time.


                                       12
<PAGE>   66

                    (ii) FINAL TI LETTER OF CREDIT. The TI Letter of Credit (or,
        if Tenant provides multiple letters of credit, the final letter of
        credit) shall be returned to Tenant, and Tenant's obligations under this
        Paragraph 13 shall terminate, at such time as all of the following have
        occurred: (A) Tenant has spent at least the TI Required Amount on the
        Warm Shell Improvements and/or Tenant Improvements; (B) Tenant has
        completed and/or paid for all Tenant Modifications (including any
        retention amounts); and (C) Tenant has provided Landlord with the
        following items with respect to all of the Warm Shell Improvements and
        Tenant Improvements, and all of the Tenant Modifications which are made
        by or on behalf of Tenant: (I) "as-built" drawings signed by either
        Tenant's architect or contractor; (II) final punch list signed off by
        both Tenant and Landlord and/or their architects; (III) written
        certification from Tenant's architect and/or contractor that the Warm
        Shell Improvements, Tenant Improvements and Tenant Modifications are
        substantially complete in accordance with the Warm Shell Plans and/or
        Tenant's Plans, as applicable, and a copy of the certificate of
        occupancy; (IV) evidence satisfactory to Landlord and any Mortgagee that
        all potential lien claimants have been fully paid (including retention
        amounts) and release their lien claims, which evidence shall be
        sufficient for any Mortgagee to obtain an acceptable endorsement to its
        title insurance policy insuring lien-free completion of the Warm Shell
        Improvements, the Tenant Improvements and any Tenant Modifications, and
        (V) a certificate of occupancy for the entire Premises from the City of
        Sunnyvale. Landlord shall return the remaining TI Letter of Credit to
        Tenant within sixty (60) days after all of the conditions set forth in
        this clause (v) have been satisfied to the reasonable satisfaction of
        Landlord and any Mortgagee(s).

              (g) ASSIGNMENT OF LETTER OF CREDIT/MORTGAGEE. Landlord shall be
entitled to assign the TI Letter of Credit and its rights thereto from time to
time in connection with an assignment of this Lease to a Mortgagee as security
for the obligations of Landlord to such Mortgagee, or in connection with a sale
or other transfer of Landlord's interest in all or a portion of the Project
(provided that, in each instance, Landlord pays any bank fees associated with
any transfer of the TI Letter of Credit). Tenant shall cooperate with Landlord
in connection with any modifications of or amendments to the TI Letter of Credit
that may be reasonably requested by any Mortgagee and/or in connection with any
such assignment. At Landlord's sole election, Landlord may also direct Tenant to
cause the TI Letter of Credit to directly name a Mortgagee as the sole
beneficiary thereunder.

              (h) THREE PARTY AGREEMENT. Simultaneously with Tenant's execution
of the Tenant Improvement Contract and the Warm Shell Contract, Tenant shall
enter into, and shall cause each of the Warm Shell Contractor and the Tenant
Improvement Contractor to enter into, an agreement with Landlord and Tenant, in
form and substance reasonably satisfactory to Landlord (the "Three Party
Agreement"). The Three Party Agreement shall provide that, if a Work Letter Draw
Event occurs, Landlord shall have the option to either (I) terminate the
existing Tenant Improvement Contract and/or Warm Shell Contract, as applicable,
after paying the applicable general contractor for all completed work from the
proceeds of the TI Letter of Credit, to the extent they are available to
Landlord; or (II) assume Tenant's obligations under the existing Tenant
Improvement Contract and/or Warm Shell Contract, as applicable; or (III)
terminate the existing Tenant Improvement Contract and/or Warm Shell Contract,
as applicable, as provided in (I) above and enter into a new contract with the
applicable general contractor for completion of the Tenant Improvements, Warm
Shell Improvements, and/or any other alterations or improvements to the
Premises. In addition, the Three Party Agreement shall provide for notice to
Landlord of any amendment, termination, default or failure to perform under the
applicable contract, and grant Landlord the right to cure any default or failure
to perform by Tenant, at Landlord's sole option.

              (i) ADDITIONAL OBLIGATIONS. The TI Letter of Credit described in
this Paragraph 13, and Tenant's obligations and Landlord's rights with respect
thereto, shall be in addition to any Letter of Credit or other security deposit
provided by Tenant under the Lease pursuant to Paragraph 43 of the Lease to
secure Tenant's obligations under the Lease. The amount of the TI Letter of
Credit shall not limit Tenant's obligations under this Work Letter.

        14. TENANT'S DELIVERIES: Within sixty (60) days following substantial
completion of the Tenant Improvements, Tenant shall provide to Landlord the
following: (x) "as-built" drawings signed by either Tenant's architect or
Tenant's Contractor; (y) final punch list signed off by both Tenant and Landlord
and/or their architects; and (z) written certification from Tenant's architect
and/or Tenant's Contractor that the work is complete and meets all applicable
building codes, and a copy of the certificate of occupancy.


                                       13
<PAGE>   67

        15. DEFAULT BY TENANT: Notwithstanding any provision to the contrary
contained in the Lease, if a Default occurs prior to completion of the Tenant
Improvements, then all obligations of Landlord under the terms of this Work
Letter shall be forborne until such time as such Default is cured pursuant to
the terms of the Lease. Any delay in construction resulting from Landlord's
exercise of its rights under this Paragraph 15 shall constitute "Tenant Delay".

        16. DISPUTE RESOLUTION. If Landlord and Tenant disagree concerning any
issues used to determine the Delivery Date or the Commencement Date, and the
parties are unable to resolve that dispute within thirty (30) days after Tenant
occupies the Premises, the dispute shall be submitted for resolution pursuant to
this Paragraph 16. Notwithstanding the foregoing, during the pendency period of
any arbitration initiated pursuant to this Paragraph 16, Tenant shall pay
Monthly Base Rent and Additional Charges from and after the Commencement Date as
determined by Landlord; provided, however, that such payment shall be without
prejudice to the ultimate determination of that issue.


        ANY CONTROVERSY OR CLAIM ARISING OUT OF THE MATTERS EXPRESSLY MADE
        SUBJECT TO ARBITRATION PURSUANT TO THIS WORK LETTER SHALL BE SETTLED BY
        ARBITRATION CONDUCTED IN SAN MATEO OR SANTA CLARA COUNTY, CALIFORNIA, IN
        ACCORDANCE WITH THE COMMERCIAL RULES OF THE AMERICAN ARBITRATION
        ASSOCIATION, AND JUDGMENT ON THE AWARD RENDERED BY THE ARBITRATOR(S) MAY
        BE ENTERED IN ANY COURT HAVING JURISDICTION. THE PREVAILING PARTY IN
        SUCH ARBITRATION SHALL BE ENTITLED TO ATTORNEYS' FEES AND COSTS.

        NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY
        DISPUTE ARISING OUT OF THIS WORK LETTER DECIDED BY NEUTRAL ARBITRATION
        AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT
        POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY
        INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO
        DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN
        THE "ARBITRATION OF DISPUTES" PROVISION. IF YOU REFUSE TO SUBMIT TO
        ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO
        ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE.
        YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY.

        WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES
        ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES"
        PROVISION TO NEUTRAL ARBITRATION.

        Consent to neutral arbitration by: /s/ JM Landlord     /s/ DD, JH Tenant


        17. DEFINED TERMS. All capitalized terms not defined in this Work Letter
shall have the meanings given them in the Lease.



                                       14
<PAGE>   68
                                  EXHIBIT "D"


                              RULES AND REGULATIONS

        1. No sign, placard, picture, name, advertisement or notice visible from
the exterior of the Premises shall be inscribed, painted, affixed, installed or
otherwise displayed by Tenant either on the Premises or any part of the Building
or Project without the prior written consent of Landlord, and Landlord shall
have the right to remove any such sign, placard, picture, name, advertisement or
notice without notice to and at the expense of Tenant. If Landlord shall have
given such consent to Tenant at any time, whether before or after the execution
of the Lease, such consent shall not in any way operate as a waiver or release
of any of the provisions hereof or of the Lease, and shall be deemed to relate
only to the particular sign, placard, picture, name, advertisement or notice so
consented to by Landlord and shall not be construed as dispensing with the
necessity of obtaining the specific written consent of Landlord with respect to
any other such sign, placard, picture, name, advertisement or notice. All
approved signs or lettering on doors and walls shall be printed, painted,
affixed or inscribed at the expense of Tenant by a person approved by Landlord.

        2. No curtains, draperies, blinds, shutters, shades, screens or other
coverings, awnings, hangings or decorations shall be attached to, hung or placed
in, or used in connection with, any window, door or patio on the Premises
without the prior written consent of Landlord. In any event with the prior
written consent of Landlord, all such items shall be installed inboard of
Landlord's window coverings and shall not in any way be visible from the
exterior of the Building. No articles shall be placed or kept on the window
sills so as to be visible from the exterior of the Building. No articles shall
be placed against glass partitions or doors which might appear unsightly from
outside the Building.

        3. During the continuance of any invasion, mob, riot, public excitement
or other circumstance rendering such action advisable in Landlord's opinion,
Landlord reserves the right to prevent access to the Building by closing the
doors, or otherwise, for the safety of tenants and protection of the Building
and property in the Building.

        4. Tenant shall see that the doors of the Premises are closed and
securely locked and must observe strict care and caution that all water faucets
or water apparatus are entirely shut off before Tenant or its employees leave
such Premises, and that all utility switches over which Tenant has control shall
likewise be carefully shut off (other than as required for security or safety
purposes), so as to prevent waste or damage, and for any default or carelessness
the Tenant shall make good all injuries sustained by other tenants or occupants
of the Building or Project or Landlord. On multiple-tenancy floors, all tenants
shall keep the door or doors to the Building corridors closed at all times
except for ingress and egress.

        5. Tenant shall keep and cause to be kept closed all window coverings
when necessary because of the sun's position.

        6. Tenant shall not alter any lock or access device or install a new or
additional lock or access device or any bolt on any door of the Premises without
prior written notice to Landlord, and shall immediately provide Landlord with
new keys or other access devises upon such alteration or installation.

        7. Tenant shall not make or have made additional copies of any keys or
access devices provided by Landlord but shall instead obtain any necessary
additional keys or devices from Landlord.. Tenant, upon the termination of the
tenancy, shall deliver to Landlord all the keys or access devices for the
Building, offices, rooms and toilet rooms which shall have been furnished to
Tenant or which Tenant shall have had made. In the event of the loss of any keys
or access devices so furnished by Landlord, Tenant shall pay Landlord the actual
cost (including rekeying if necessary) therefor.

        8. The toilet rooms, toilets, urinals, wash bowls and other apparatus
shall not be used for any purpose other than that for which they were
constructed and no foreign substance of any kind whatsoever shall be thrown
therein, and the expense of any breakage, stoppage or damage resulting from the
violation of this rule by Tenant or Tenant's employees or invitees shall be
borne by Tenant.


                                       1
<PAGE>   69

        9. Tenant shall not use or keep in the Premises or the Building any
kerosene, gasoline or inflammable or combustible fluid or material other than
limited quantities necessary for the operation or maintenance of office or
office equipment, and Tenant's emergency diesel generator. Tenant shall not use
any method of heating or air conditioning other than supplied or approved by
Landlord.

        10. Tenant shall not use, keep or permit to be used or kept in the
Premises any foul or noxious gas or substance or 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 and/or vibrations or
interfere in any way with other tenants or those having business therein, nor
shall any animals or birds be brought or kept in or about the Premises or the
Building.

        11. Except as provided in Paragraph 7 or consented to by Landlord, no
cooking shall be done or permitted by Tenant on the Premises (except that use by
the Tenant of Underwriter's Laboratory approved equipment for the preparation of
coffee, tea, hot chocolate and similar beverages for Tenant and its employees
shall be permitted, provided that such equipment and use are in accordance with
all applicable federal, state and city laws, codes, ordinances, rules and
regulations), nor shall Premises be used for lodging.

        12. The Premises shall not be used for lodging. Landlord will allow
cooking with UL approved cooking equipment, approved by Landlord, which approval
shall not be unreasonably withheld.

        13. If Tenant requires telegraphic, telephonic, burglar alarm or similar
services, it shall first obtain and comply with Landlord's reasonable
instructions in their installation.

        14. Except as allowed by, and then in accordance with, the express
provisions of the Lease, Tenant shall not install any radio or television
antenna, loudspeaker or any other device on the exterior walls or the roof of
the Building. Tenant shall not interfere with radio or television broadcasting
or reception from or in the Building or elsewhere.

        15. Tenant shall not lay linoleum, tile, carpet or any other floor
covering so that the same shall be affixed to the floor of the Premises in any
manner except as approved in writing by Landlord. The expense of repairing any
damage resulting from a violation of this rule by Tenant or Tenant's
contractors, employees or invitees or the removal of any floor covering shall be
borne by Tenant. Tenant shall use chair pads if needed to avoid excess wear and
tear to the floor coverings.

        16. Landlord shall have the right to prescribe the weight, size, and
position of all safes, furniture or other heavy equipment brought into the
Building. Safes or other heavy objects shall, if considered necessary by
Landlord, stand on wood strips of such thickness as determined by Landlord to be
necessary to properly distribute the weight thereof. Landlord will not be
responsible for loss of or damage to any such safe, equipment or property from
any cause, and all damage done to the Building by moving or maintaining any such
safe, equipment or other property shall be repaired at the expense of Tenant.

        17. Business machines and mechanical equipment belonging to Tenant which
cause noise or vibration that may be transmitted to the structure of the
Building or to any space therein to such a degree as to be objectionable to
Landlord or to any tenants in the Building shall be placed and maintained by
Tenant, at Tenant's expense, on vibration eliminators or other devices
sufficient to eliminate noise or vibration. The persons employed to move such
equipment in or out of the Building must be acceptable to Landlord.

        18. Tenant shall not place a load upon any floor of the Premises which
exceeds the load per square foot which such floor was designed to carry and
which is allowed by law. Tenant shall not deface the Premises or any part
thereof. Tenant may hang pictures on walls in the Premises. Any damage to the
walls caused by molley bolts, or like hanging materials, will be repaired by
Tenant.

        19. There shall not be used in any space, or in the public areas of the
Building or Project, either by Tenant or others, any hand trucks except those
equipped with rubber tires and side guards or such other


                                       2
<PAGE>   70

material-handling equipment as Landlord may approve. No other vehicles of any
kind shall be brought by Tenant into or kept in or about the Premises.

        20. Tenant shall store all trash and garbage within either the interior
of the Premises or within any trash enclosures in the Project Common Area that
are designated by, and constructed by, Landlord. No material shall be placed in
the trash boxes or receptacles if such material is of such nature that it may
not be disposed of in the ordinary and customary manner of removing and
disposing of trash and garbage in the jurisdiction in which the Premises is
located, without violation of any law or ordinance governing such disposal. All
trash, garbage and refuse disposal shall be made only through entryways and
elevators provided for such purposes and at such times as Landlord shall
designate.

        21. Canvassing, soliciting, distribution of handbills or any other
written material and peddling in the Building or Project are prohibited, and
Tenant shall cooperate to prevent the same. Tenant shall not make room-to-room
solicitation of business from other tenants in the Building or Project.

        22. Landlord shall have the right, exercisable upon reasonable advance
notice and without liability to Tenant, to change the name and address of the
Building or Project.

        23. Landlord reserves the right to exclude or expel from the Building or
Project any person who, in Landlord's judgment, is intoxicated or under the
influence of liquor or drugs or who is in violation of any of the rules or
regulations of the Building.

        24. Without the prior written consent of Landlord, Tenant shall not use
the name of the Building or Project in connection with or in promoting or
advertising the business of Tenant except as Tenant's address. Tenant may use
Project's name on its stationery and business cards.

        25. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental agency.

        26. Tenant assumes any and all responsibility for protecting the
Premises from theft, robbery and pilferage, which includes keeping doors locked
and other means of entry to the Premises closed, unless caused by the gross
negligence or willful misconduct of Landlord, its agents, servants, or employees
("Landlord Parties").

        27. The requirements of Tenant will be attended to only upon application
at the office of the Building or Project by an authorized individual. Employees
of Landlord shall not perform any work or do anything outside of their regular
duties unless under special instructions from Landlord.

        28. Landlord may waive any one or more of these Rules and Regulations
for the benefit of any particular tenant or tenants, but no such waiver by
Landlord shall be construed as a waiver of such Rules and Regulations in favor
of any other tenant or tenants, nor prevent Landlord from thereafter enforcing
any such Rules and Regulations against any or all tenants of the Building or
Project.

        29. Landlord reserves the right to make such other and reasonable rules
and regulations as in its judgment may from time to time be needed for safety
and security, for care and cleanliness of the Building and Project and for the
preservation of good order therein. Tenant agrees to abide by all such Rules and
Regulations hereinafter stated and any additional rules and regulations which
are adopted and which are not contrary to Tenant's rights under the Lease. No
new Rule or Regulation shall be designed to discriminate solely against Tenant.

        30. Tenant shall be responsible for the observance of all of the
foregoing Rules and Regulations by Tenant's employees, agents, clients,
customers, invitees and guests.

        31. Tenant shall not use the Project Common Areas for any gathering,
party, picnic or similar functions without Landlord's prior written consent, not
to be unreasonably withheld or delayed. Any such consent shall be conditioned
upon Tenant indemnifying, defending and holding Landlord harmless against any
personal injury, death or damages to the Project or any portion thereof or any
other property of Landlord or any other tenants in the building or any other
party as a result of the function, and to paying to Landlord as an Additional
Charge any


                                       3
<PAGE>   71

costs incurred by Landlord in connection with such event. Prior to any such
gathering, party, picnic or similar function, Tenant shall provide Landlord with
evidence of insurance, in the form and liability amounts reasonably required by
Landlord, covering the foregoing indemnification obligations.

        32. Unless otherwise defined, terms used in these Rules and Regulations
shall have the same meaning as in the Lease.

        33. Wherever Landlord's consent, approval, agreement or authorization is
required under these Rules and Regulations, Landlord shall not unreasonably
withhold, delay or condition such consent, approval, agreement or authorization.
Wherever Landlord's judgment, opinion or discretion is exercised with respect to
any of these Rules and Regulations, Landlord shall exercise reasonable judgment,
opinion or discretion.


                                       4
<PAGE>   72
                                   EXHIBIT "E"

                           TENANT ESTOPPEL CERTIFICATE


To:
   -------------------------------

   -------------------------------

   -------------------------------
   Attention:
             ---------------------

Re:
   -------------------------------

1. The undersigned, as Tenant of approximately _______ square feet of space (the
"Premises") under that certain Lease dated ____________________, ______ (the
"Lease") made with ____________________________, Landlord, covering space in
Landlord's building (the "Building") in __________________ County,
___________________, known as _________________________________________, hereby
certifies as follows:

        (a) That attached hereto as Exhibit "A" is a true, correct and complete
copy of the Lease, together with all amendments thereto;

        (b) That the Lease is in full force and effect and has not been
modified, supplemented or amended in any way except as set forth in Exhibit "A."
The interest of the undersigned in the Lease has not been assigned or
encumbered;

        (c) That the Lease, as amended as indicated in Exhibit "A," represents
the entire agreement between the parties as to said leasing, and that there are
no other agreements, written or oral, which affect the occupancy of the Premises
by the undersigned;

        (d) That all insurance required of the undersigned under the Lease has
been provided by the undersigned and all premiums have been paid;

        (e) That the commencement date of the term of the Lease [was
________________, _____][PRE-OCCUPANCY: will be determined as follows:
____________________________________];

        (f) That the expiration date of the term of the Lease [is
__________________, _____, including any presently exercised option or renewal
term][PRE-OCCUPANCY: will be determined as follows: _________________], and that
the undersigned has no rights to renew, extend or cancel the Lease or to lease
additional space in the Premises or the Building, except as expressly set forth
in the Lease;

        (g) That in addition to the Premises, the undersigned has the right to
use or rent _______ parking spaces in or near the Building during the term of
the Lease;

        (h) That the undersigned has no option or preferential right to purchase
all or any part of the Premises (or the land or Building of which the Premises
are a part), and has no right or interest with respect to the Premises or the
Building other than as Tenant under the Lease (except as specified in
____________, a copy of which is attached hereto).

        (i) That all conditions of the Lease to be performed by Landlord and
necessary to the enforceability of the Lease have been satisfied.
[PRE-OCCUPANCY: The following conditions to commencement of the Lease Term
remain to be satisfied by Landlord and/or Tenant:
___________________________________.] On this date there are no existing
defenses, offsets, claims or credits which the undersigned has against the
enforcement of the Lease except for prepaid rent through ____________ (not to
exceed one month);


                                      -1-

<PAGE>   73

        (j) That all contributions required by the Lease to be paid by Landlord
to date for improvements to the Premises have been paid in full. All
improvements or work required under the Lease to be made by Landlord to date, if
any, have been completed to the satisfaction of the undersigned. Charges for all
labor and materials used or furnished in connection with improvements and/or
alterations made for the account of the undersigned in the Building have been
paid in full. The undersigned has accepted the Premises, subject to no
conditions other than those set forth in the Lease. The undersigned has entered
into occupancy of the Premises;

        (k) That the annual minimum rent currently payable under the Lease is
$________________ and such rent has been paid through _______________________;

        (l) That additional rent is payable under the Lease for (i) operating,
maintenance or repair expenses, (ii) property taxes, and (iii) consumer price
index cost of living adjustments (subject to minimum and maximum annual
adjustments as provided in the Lease). The base year amounts for additional
rental based on the consumer price index are as follows: __________________
(indicate base year CPI level). Tenant's share of operating, maintenance, repair
and insurance costs is computed as follows: _______. Tenant's share of property
taxes is computed as follows: ________.

        (m) That the undersigned has made no agreement with Landlord or any
agent, representative or employee of Landlord concerning free rent, partial
rent, rebate of rental payments or any other similar rent concession (except as
expressly set forth in _______________________________, a copy of which is
attached hereto). No rents have been prepaid more than one (1) month in advance
and full rental, including basic minimum rent, if any, has commenced to accrue;

        (n) That there are no defaults by the undersigned or Landlord under the
Lease, and no event has occurred or situation exists that would, with the
passage of time, constitute a default under the Lease;

        (o) That the undersigned has paid to Landlord a security deposit in the
amount of $_______________________;

        (p) That the undersigned has all governmental permits, licenses and
consents required for the activities and operations being conducted or to be
conducted by it in or around the Building;

        (q) That as of this date there are no actions, whether voluntary or
otherwise, pending against the undersigned or any guarantor of the Lease under
the bankruptcy or insolvency laws of the United States or any state thereof.

2. The undersigned represents and warrants that it has not used, generated,
released, discharged, stored or disposed of any Hazardous Material on, under, in
or about the Building or the land on which the Building is located, except for
such substances of a type and only in a quantity normally used in connection
with the ordinary and commercially reasonable occupancy or operation of
buildings (such as non-flammable cleaning fluids and supplies normally used in
the day-to-day operation of first class establishments similar to the
Improvements), which substances are being held, stored, and used in strict
compliance with federal, state, and local laws. Except for any such legal and
commercially reasonable use by the undersigned, to the best of the undersigned's
knowledge, no Hazardous Material is present or has been used, generated,
released, discharged, stored or disposed of by any party, on, under, in or about
such Building or land. To the best of the undersigned's knowledge, the use,
maintenance and operation of the Premises complies with, and will at all times
comply with, all applicable federal, state, county or local statues, laws, rules
and regulations of any governmental authorities relating to Hazardous Materials
and/or other environmental, health or safety matters (being hereinafter
collectively referred to as "Environmental Laws"). Tenant has not received any
notices, written or oral, of violation of any Environmental Law or of any
allegation which, if true, would contradict anything contained herein and there
are not writs, injunctions, decrees, orders or judgments outstanding, no
lawsuits, claims, proceedings or investigations pending or threatened, relating
to the use, maintenance or operation of the Premises, nor is Tenant aware of a
basis for any such proceeding. As used herein, "Hazardous Material" means any
substance, material or waste (including petroleum and petroleum products) which
is designated, classified or regulated as being "toxic" or "hazardous" or a
"pollutant" or which is similarly designated, classified or regulated under any
federal, state or local law or ordinance.


                                      -2-

<PAGE>   74

3. The undersigned hereby agrees:

        (a) To send a copy of any notice or demand given or made to Landlord
pursuant to the provisions of the Lease to ___________ ("Lender"), who is or
will be the owner and holder of a mortgage or deed of trust on the demised
premises, or its assignee upon being notified in writing of such assignee's name
and address. Lender's copy of said notice or demand shall be sent by certified
mail at the same time the notice or demand is sent to Landlord, to
_________________, Attention: _______________.

        (b) To give to the holder of said mortgage or deed of trust a reasonable
period of time, but in no event less than sixty (60) days or such longer period
of time as may be provided in the Lease, to cure any default complained of in
said notice or demand;

        (c) That no consent of Landlord to any modification or assignment of the
Lease, or any release of any party having liability under the Lease, or any
termination of the Lease (other than in accordance with the express terms of the
Lease), shall be effective without the prior written consent of the holder of
said mortgage or deed of trust; and

        (c) That in the event that the holder of said mortgage or deed of trust
acquires title to the property encumbered by the mortgage or deed of trust, such
holder will not be liable for any security deposit that the undersigned may have
given to any previous landlord (including Landlord) which has not, as such, been
transferred to such holder.

4. The undersigned acknowledges the right of Lender to rely upon the
certifications and agreements in this Certificate in making a loan to Landlord.
The undersigned hereby agrees to furnish Lender with such other and further
estoppel certificates as Lender may reasonably request. The undersigned
understands that in connection with such loan, Landlord's interest in the
rentals due under the Lease will be assigned to Lender pursuant to an assignment
of leases by Landlord in favor of Lender. The undersigned agrees that if Lender
shall notify the undersigned that a default has occurred under the documents
evidencing such loan and shall demand that the undersigned pay rentals and other
amounts due under the Lease to Lender, the undersigned will honor such demand
notwithstanding any contrary instructions from Landlord. The undersigned agrees
that neither Lender, nor its successors or assigns, assumes any duty, liability
or obligation whatsoever under the Lease or any extension or renewal thereof by
reason of Lender's loan to the Landlord and Landlord's assignment of leases in
favor of Lender.

        EXECUTED this _____ day of _________________, _____.


                                      ------------------------------------------

                                      By:
                                         ---------------------------------------
                                      Name:
                                           -------------------------------------
                                      Title:
                                            ------------------------------------


                                      -3-
<PAGE>   75
                                   EXHIBIT "F"


RECORDING REQUESTED BY                   )
AND WHEN RECORDED MAIL TO:               )
---------------------------------      )
                                         )
                                         )
Attn.:                                   )
       --------------------------------
Loan No.:                                )
          -----------------------------
                                         )
--------------------------------------------------------------------------------
                                              Space above for Recorder's Use

             SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT


        NOTICE: THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT
RESULTS IN YOUR LEASEHOLD ESTATE BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN
THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT.

        THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT (this
"Agreement") dated _______________, ________, is made among
__________________________________ ("Tenant"),
_______________________________________________ ("Landlord"), and
____________________, a national banking association ("Lender").

        WHEREAS, Lender is the owner of a promissory or deed of trust note
(herein, as it may have been or may be from time to time renewed, extended,
amended, supplemented or restated, called the "Note") dated
___________________________, executed by Landlord payable to the order of
Lender, in the face principal amount of $____________, bearing interest and
payable as therein provided, secured by, among other things, a [CONSTRUCTION]
Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture
Filing (herein, as it may have been or may be from time to time renewed,
extended, amended or supplemented, called the "Deed of Trust"), recorded or to
be recorded in the real property records of ___________________ County,
_____________________, covering, among other property, the land (the "Land")
described in Exhibit "A" which is attached hereto and incorporated herein by
reference, and the improvements ("Improvements") thereon (such Land and
Improvements being herein together called the "Property");

        WHEREAS, Tenant is the tenant under a lease from Landlord dated
________________, as amended on _____________________________, ______ (herein,
as it may from time to time be renewed, extended, amended or supplemented,
called the "Lease"), covering a portion of the Property (said portion being
herein referred to as the "Premises"); and

        WHEREAS, the term "Landlord" as used herein means the present landlord
under the Lease or, if the landlord's interest is transferred in any manner, the
successor(s) or assign(s) occupying the position of landlord under the Lease at
the time in question.

        NOW, THEREFORE, in consideration of the mutual agreements herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:

        1. Subordination. Tenant agrees and covenants that the Lease and the
rights of Tenant thereunder, all of Tenant's right, title and interest in and to
the property covered by the Lease, and any lease thereafter executed by Tenant
covering any part of the Property, are and shall be subject, subordinate and
inferior to (a) the Deed of Trust and the rights of Lender thereunder, and all
right, title and interest of Lender in the Property, and (b) all other security
documents now or hereafter securing payment of any indebtedness of Landlord (or
any prior landlord) to Lender which cover or affect the Property (the "Security
Documents"). This Agreement is not intended and shall


                                      -1-

<PAGE>   76

not be construed to subordinate the Lease to any mortgage, deed of trust or
other security document other than those referred to in the preceding sentence,
securing the indebtedness to Lender.

        2. Nondisturbance. Lender agrees that so long as the Lease is in full
force and effect and Tenant is not in default in the payment of rent, additional
rent or other payments or in the performance of any of the other terms,
covenants or conditions of the Lease on Tenant's part to be performed (beyond
the period, if any, specified in the Lease within which Tenant may cure such
default),

           (a) Tenant's possession of the Premises under the Lease shall not be
disturbed or interfered with by Lender in the exercise of any of its foreclosure
rights under the Deed of Trust or in connection with any conveyance in lieu of
foreclosure, and

           (b) Lender will not join Tenant as a party defendant for the purpose
of terminating Tenant's interest and estate under the Lease in any proceeding
for foreclosure of the Deed of Trust.

        3. Attornment.

           (a) Tenant covenants and agrees that in the event of foreclosure of
the Deed of Trust, whether by power of sale or by court action, or upon a
transfer of the Property by conveyance in lieu of foreclosure (the purchaser at
foreclosure or the transferee in lieu of foreclosure, including Lender if it is
such purchaser or transferee, being herein called "New Owner"), Tenant shall
attorn to New Owner as Tenant's new landlord, and agrees that the Lease shall
continue in full force and effect as a direct lease between Tenant and New Owner
upon all of the terms, covenants, conditions and agreements set forth in the
Lease and this Agreement, except for provisions which are impossible for New
Owner to perform; provided, however, that in no event shall New Owner be:

               (i)    liable for any act, omission, default, misrepresentation
        or breach of warranty of any previous landlord (including Landlord) or
        obligations accruing prior to New Owner's actual ownership of the
        Property or any act or failure to act by any party other than New Owner;

               (ii)   subject to any credit, offset, defense, claim or
        counterclaim which Tenant might be entitled to assert against any
        previous landlord (including Landlord);

               (iii)  bound by, or required to credit Tenant with, any payment
        of rent, additional rent or other payments made by Tenant to any
        previous landlord (including Landlord) for more than one (1) month in
        advance;

               (iv)   bound by any amendment, modification, renewal or extension
        of the Lease hereafter made, or consent or acquiescence by any previous
        landlord (including Landlord) under the Lease to any assignment or
        sublease hereafter granted, without the written consent of Lender;

               (v)    liable for, or required to credit Tenant with, any deposit
        (including, without limitation, any security deposit) that Tenant may
        have given to any previous landlord (including Landlord) which has not,
        as such, been transferred to New Owner;

               (vi)   bound by any amendment, renewal or extension of the Lease
        that is inconsistent with the terms of this Agreement or is not in
        writing and signed both by Tenant and Landlord;

               (vii)  bound by any reduction of any rent or additional rent
        payable under the Lease, unless the reduction is in connection with an
        extension or renewal of the Lease at prevailing market terms or was made
        with Lender's prior consent;

               (viii) bound by any reduction of the term of the Lease or any
        termination, cancellation or surrender of the Lease unless the
        reduction, termination, cancellation or surrender occurred during the
        last six months of the Term of the Lease or was made with Lender's prior
        consent; or


                                      -2-

<PAGE>   77

               (ix) bound by any obligation to make improvements to the
        Property, including the Premises, to make any payment or give any credit
        or allowance to Tenant provided for in the Lease or pay any leasing
        commissions arising out of the Lease, except that new Owner will be:

                    (A) bound by any such obligations provided for in the
        Lender-approved form Lease;

                    (B) bound by any such obligations if the overall economic
        terms of the Lease (including the economic terms of any renewal options)
        represented market terms for similar space in properties comparable to
        the Property when the Lease was executed; and

                    (C) bound to comply with the casualty and condemnation
        restoration provisions included in the Lease provided (and to the
        extent) that New Owner received the insurance or condemnation proceeds;
        or

                    (D) liable for obligations under the Lease with respect to
        any off-site property or facilities for the use of Tenant (such as
        off-site leased space or parking) unless New Owner acquires in the same
        foreclosure action the right, title or interest to the off-site
        property.

           (b) The provisions of this Agreement regarding attornment by Tenant
shall be self-operative and effective without the necessity of execution of any
new lease or other document on the part of any party hereto or the respective
heirs, legal representatives, successors or assigns of any such party. Tenant
agrees, however, to execute and deliver upon the request of New Owner, any
instrument or certificate which in the reasonable judgment of New Owner may be
necessary or appropriate to evidence such attornment, including a new lease of
the Premises on the same terms and conditions as the Lease for the unexpired
term of the Lease.

        4. Estoppel Certificate. Tenant agrees to execute and deliver from time
to time, upon the request of Landlord or of any holder(s) of any of the
indebtedness or obligations secured by the Deed of Trust, a certificate
regarding the status of the Lease, certifying (a) that the Lease is in full
force and effect, (b) the date through which rentals have been paid, (c) the
date of the commencement of the term of the Lease, (d) the nature of any
amendments or modifications of the Lease, (e) that to the best of Tenant's
knowledge no default, or state of facts which with the passage of time or notice
(or both) would constitute a default, exists under the Lease, (f) that to the
best of Tenant's knowledge, no setoffs, recoupments, estoppels, claims or
counterclaims exist against Landlord, and (g) such other matters as may be
reasonably requested. If any of the foregoing statements are untrue, Tenant's
certificate shall state the reasons therefor.

        5. Acknowledgment and Agreement by Tenant. Tenant acknowledges and
agrees as follows:

           (a) Tenant acknowledges that in connection with the financing of the
Property, Landlord is executing and delivering to Lender the Deed of Trust which
contains an assignment of leases and rents. Tenant hereby expressly consents to
such assignment and agrees that such assignment shall, in all respects, be
superior to any interest Tenant has in the Lease or the Property, subject to the
provisions of this Agreement. Tenant will not amend, alter or waive any
provision of, or consent to the amendment, alteration or waiver of, any
provision of the Lease without the prior written consent of Lender. Tenant shall
not prepay any rents or other sums due under the Lease for more than one (1)
month in advance of the due date therefor. Tenant acknowledges that Lender will
rely upon this instrument in connection with such financing.

           (b) Lender, in making any disbursements to Landlord, is under no
obligation or duty to oversee or direct the application of the proceeds of such
disbursements, and such proceeds may be used by Landlord for purposes other than
improvement of the Property.

           (c) From and after the date hereof, in the event of any act or
omission by Landlord which would give Tenant the right, either immediately or
after the lapse of time, to terminate the Lease or to claim a partial or total
eviction, Tenant will not exercise any such right (i) until it has given written
notice of such act or omission to Lender, and (ii) until the same period of time
as is given to Landlord under the Lease to cure such act or omission shall have
elapsed following such giving of notice to Lender and following the time when
Lender shall have become


                                      -3-

<PAGE>   78

entitled under the Deed of Trust to remedy the same. In no event will Tenant
exercise any such right less than 60 days after receipt of such notice or prior
to the passage of such longer period of time as may be necessary to cure or
remedy such default, act or omission including such period of time necessary to
obtain possession of the Property and thereafter cure such default, act or
omission, during which period of time Lender shall be permitted to cure or
remedy such default, act or omission. Notwithstanding the foregoing, Lender
shall have no duty or obligation to cure or remedy any breach or default. It is
specifically agreed that Tenant shall not, as to Lender, require cure of any
such default which is personal to Landlord and therefore not susceptible to cure
by Lender.

           (d) In the event that Lender notifies Tenant of a default under the
Deed of Trust, Note or Security Documents and demands that Tenant pay its rent
and all other sums due under the Lease directly to Lender, Tenant shall honor
such demand and pay the full amount of its rent and all other sums due under the
Lease directly to Lender, without offset, or as otherwise required pursuant to
such notice beginning with the payment next due after such notice of default,
without inquiry as to whether a default actually exists under the Deed of Trust,
Security Documents or otherwise in connection with the Note, and notwithstanding
any contrary instructions of or demands from Landlord.

           (e) Tenant shall send a copy of any notice or statement under the
Lease to Lender at the same time such notice or statement is sent to Landlord if
such notice or statement has a material impact on the economic terms, operating
covenants or duration of the Lease.

           (f) Tenant has no right or option of any nature whatsoever, whether
pursuant to the Lease or otherwise, to purchase the Premises or the Property, or
any portion thereof or any interest therein, and to the extent that Tenant has
had, or hereafter acquires, any such right or option, the same is hereby
acknowledged to be subject and subordinate to the Deed of Trust and is hereby
waived and released as against Lender and New Owner.

           (g) This Agreement satisfies any condition or requirement in the
Lease relating to the granting of a nondisturbance agreement and Tenant waives
any requirement to the contrary in the Lease.

           (h) Lender and any New Owner shall have no liability to Tenant or any
other party for any conflict between the provisions of the Lease and the
provisions of any other lease affecting the Property, including any provisions
relating to exclusive or non-conforming uses or rights, renewal options and
options to expand, and in the event of such a conflict, Tenant shall have no
right to cancel the Lease or take any other remedial action against Lender, New
Owner or any other party.

           (i) Lender and any New Owner shall have no obligation nor shall they
incur any liability with respect to the erection or completion of the
improvements in which the Premises are located or for completion of the Premises
or any improvements for Tenant's use and occupancy, either at the commencement
of the term of the Lease, upon any renewal or extension thereof, or upon the
addition of additional space pursuant to any expansion rights contained in the
Lease.

           (j) Lender and any New Owner shall have no obligation nor shall they
incur any liability with respect to any warranties of any nature whatsoever,
whether pursuant to the Lease or otherwise, including any warranties respecting
use, compliance with zoning, Landlord's title, Landlord's authority,
habitability, fitness for purpose or possession.

           (k) In the event that Lender or any New Owner shall acquire title to
the Premises or the Property, Lender or such New Owner shall have no obligation,
nor shall it incur any liability, beyond Lender's or New Owner's then-equity
interest, if any, in the Property or the Premises, and Tenant shall look
exclusively to such equity interest of Lender or New Owner, if any, for the
payment and discharge of any obligations imposed upon Lender or New Owner
hereunder or under the Lease or for recovery of any judgment from Lender or New
Owner, and in no event shall Lender, New Owner, or any of their respective
officers, directors, shareholders, agents, representatives, servants, employees
or partners ever be personally liable for such judgment.

           (l) Tenant has never permitted, and will not permit, the generation,
treatment, storage or disposal of any hazardous substance as defined under
federal, state, or local law, on the Premises or Property except for such
substances of a type and only in a quantity normally used in connection with the
occupancy or operation of


                                      -4-

<PAGE>   79

buildings (such as non-flammable cleaning fluids and supplies normally used in
the day-to-day operation of first class establishments similar to the
Improvements), which substances are being held, stored, and used in strict
compliance with federal, state, and local laws. Tenant shall be solely
responsible for and shall reimburse and indemnify Landlord, New Owner or Lender,
as applicable, for any loss, liability, claim or expense, including cleanup and
all other expenses, including legal fees that Landlord, New Owner or Lender, as
applicable, may incur by reason of Tenant's violation of the requirements of
this Section 5(l).

        6. Acknowledgment and Agreement by Landlord. Landlord, as landlord under
the Lease and trustor under the Deed of Trust, acknowledges and agrees for
itself and its heirs, representatives, successors and assigns, that: (a) this
Agreement does not constitute a waiver by Lender of any of its rights under the
Deed of Trust, Note or Security Documents, nor does this Agreement in any way
release Landlord from its obligations to comply with the terms, provisions,
conditions, covenants, agreements and clauses of the Deed of Trust, Note and
Security Documents; (b) the provisions of the Deed of Trust, Note and Security
Documents remain in full force and effect and must be complied with by Landlord;
and (c) Tenant is hereby authorized to pay its rent and all other sums due under
the Lease directly to Lender upon receipt of a notice as set forth in Section
5(d) above from Lender and that Tenant is not obligated to inquire as to whether
a default actually exists under the Deed of Trust or the Security Documents or
otherwise in connection with the Note. Landlord hereby releases and discharges
Tenant of and from any liability to Landlord resulting from Tenant's payment to
Lender in accordance with this Agreement. Landlord represents and warrants to
Lender that a true and complete copy of the Lease has been delivered by Landlord
to Lender.

        7. Lease Status. Landlord and Tenant certify to Lender that neither
Landlord nor Tenant has knowledge of any default on the part of the other under
the Lease, that the Lease is bona fide and contains all of the agreements of the
parties thereto with respect to the letting of the Premises and that all of the
agreements and provisions therein contained are in full force and effect.

        8. Notices. All notices, requests, consents, demands and other
communications required or which any party desires to give hereunder shall be in
writing and shall be deemed sufficiently given or furnished if delivered by
personal delivery, by telegram, telex, or facsimile, by expedited delivery
service with proof of delivery, or by registered or certified United States
mail, postage prepaid, at the addresses specified at the end of this Agreement
(unless changed by similar notice in writing given by the particular party whose
address is to be changed). Any such notice or communication shall be deemed to
have been given either at the time of personal delivery or, in the case of
delivery service or mail, as of the date of first attempted delivery at the
address and in the manner provided herein, or, in the case of telegram, telex or
facsimile, upon receipt. Notwithstanding the foregoing, no notice of change of
address shall be effective except upon receipt. This Section 8 shall not be
construed in any way to affect or impair any waiver of notice or demand provided
in this Agreement or in the Lease or in any document evidencing, securing or
pertaining to the loan evidenced by the Note or to require giving of notice or
demand to or upon any person in any situation or for any reason.

        9. Miscellaneous.

           (a) This Agreement supersedes any inconsistent provision of the
Lease.

           (b) Nothing contained in this Agreement shall be construed to
derogate from or in any way impair or affect the lien, security interest or
provisions of the Deed of Trust, Note or Security Documents.

           (c) This Agreement shall inure to the benefit of the parties hereto,
their respective successors and permitted assigns, and any New Owner, and its
heirs, personal representatives, successors and assigns; provided, however, that
in the event of the assignment or transfer of the interest of Lender, all
obligations and liabilities of the assigning Lender under this Agreement shall
terminate, and thereupon all such obligations and liabilities shall be the
responsibility of the party to whom Lender's interest is assigned or
transferred; and provided further that the interest of Tenant under this
Agreement may not be assigned or transferred without the prior written consent
of Lender.

           (d) THIS AGREEMENT AND ITS VALIDITY, ENFORCEMENT AND INTERPRETATION
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA AND APPLICABLE UNITED
STATES FEDERAL LAW EXCEPT ONLY TO THE EXTENT, IF ANY, THAT THE


                                      -5-

<PAGE>   80

LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED NECESSARILY CONTROL.

           (e) The words "herein," "hereof," "hereunder" and other similar
compounds of the word "here" as used in this Agreement refer to this entire
Agreement and not to any particular section or provision. The terms "include"
and "including" shall be interpreted as if followed by the words "without
limitation."

           (f) This Agreement may not be modified orally or in any manner other
than by an agreement in writing signed by the parties hereto or their respective
successors in interest.

           (g) If any provision of this Agreement shall be held to be invalid,
illegal, or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not apply to or affect any other provision hereof, but
this Agreement shall be construed as if such invalidity, illegality or
unenforceability did not exist.

           [(H) THIS AGREEMENT WILL BE RECORDED IN THE REAL PROPERTY RECORDS OF
_____________ COUNTY, _______________.]


                    [SIGNATURES APPEAR ON THE FOLLOWING PAGE]


                                      -6-

<PAGE>   81

        NOTICE: THIS AGREEMENT CONTAINS A PROVISION WHICH ALLOWS THE PERSON
OBLIGATED ON YOUR LEASE TO OBTAIN A LOAN, A PORTION OF WHICH MAY BE EXPENDED FOR
PURPOSES OTHER THAN IMPROVEMENT OF THE PROPERTY.

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.



ADDRESS OF LENDER:                            LENDER:

-------------------------------               ----------------------------------

-------------------------------

                                              By:
Attention:                                       -------------------------------
         ----------------------               Name:
                                                   -----------------------------
                                              Title:
                                                    ----------------------------


ADDRESS OF TENANT:                            TENANT:

-------------------------------               ----------------------------------

-------------------------------

-------------------------------

                                              By:
Attention:                                       -------------------------------
         ----------------------               Name:
                                                   -----------------------------
                                              Title:
                                                    ----------------------------


ADDRESS OF LANDLORD:                          LANDLORD:

-------------------------------               ----------------------------------

-------------------------------

-------------------------------

                                              By:
Attention:                                       -------------------------------
         ----------------------               Name:
                                                   -----------------------------
                                              Title:
                                                    ----------------------------


                                      -7-