<PAGE>

                                                                   Exhibit 10.54

                            BASIC LEASE INFORMATION
                                 INDUSTRIAL NET



LEASE DATE:                       February 22, 1998
(same as date in first 
paragraph of Lease)

TENANT:                           Concentric Network Corporation, Inc.

TENANT'S NOTICE ADDRESS:          10590 N. Tantau Avenue, Cupertino, California

TENANT'S BILLING ADDRESS:         10590 N. Tantau Avenue, Cupertino, California

TENANT CONTACT:  Peter Bergeron   PHONE NUMBER:  408-342-2812

LANDLORD:                         Spieker Properties, L.P., a California 
                                  limited partnership

LANDLORD'S NOTICE ADDRESS:        2180 Sand Hill Road, Suite 100, Menlo Park
                                  California

LANDLORD'S REMITTANCE ADDRESS:    P.O. Box 45587, Department 10161, 
                                  San Francisco, California

PROJECT
DESCRIPTION:                      That two (2) building complex totaling
                                  approximately 64,680 square feet situated on
                                  4.46 acres of land commonly known as the
                                  Cupertino Business Center, Cupertino,
                                  California. The Project is outlined in green
                                  on Exhibit "A"

BUILDING
DESCRIPTION:                      That approximate 41,151 square foot one story
                                  building commonly known as 10590 N. Tantau
                                  Avenue. The building is outlined in blue on
                                  Exhibit "A".

PREMISES:                         That entire approximate 41,151 square foot
                                  building commonly known as 10590 N. Tantau
                                  Avenue. The Premises are outlined in red on
                                  Exhibit "A"

PERMITTED USE:                    General office use.

PARKING DENSITY:                  Non-exclusive use of 164 parking spaces.
 
SCHEDULED TERM COMMENCEMENT DATE: May 1, 1998
 
LENGTH OF TERM:                   Sixty (60) months
                                  -----------------
RENT:
 
  BASE RENT:                      $ 94,647.30  PER MONTH
                                  -----------
                                  (subject to adjustment as provided in
                                  Paragraph 38.A. hereof)
 
  ESTIMATED FIRST YEAR 
  OPERATING EXPENSES:             $   8075.00  PER MONTH
                                  -----------
 
SECURITY DEPOSIT:                 $110,723.95
                                  -----------

TENANT'S PROPORTIONATE SHARE:
  OF BUILDING:                    100.0%

  OF PROJECT:                     63.62%




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


INDUSTRIAL NET LEASE
<PAGE>
 
                               TABLE OF CONTENTS
 
                                                                            Page
     Basic Lease Information..................................................1
     Table of Contents........................................................2
1.   Premises.................................................................3
2.   Possession and Lease Commencement........................................3
3.   Term.....................................................................3
4.   Use......................................................................3
5.   Rules and Regulations....................................................4
6.   Rent.....................................................................4
7.   Operating Expenses.......................................................4
8.   Insurance and Indemnification............................................6
9.   Waiver of Rights.........................................................7
10.  Landlord's Repairs and Maintenance.......................................7
11.  Tenant's Repairs and Maintenance.........................................7
12.  Alterations..............................................................8
13.  Signs....................................................................8
14.  Inspection/Posting Notices...............................................8
15.  Utilities................................................................8
16.  Subordination............................................................8
17.  Financial Statements.....................................................9
18.  Estoppel Certificate.....................................................9
19.  Security Deposit.........................................................9
20.  Tenant's Remedies........................................................9
21.  Assignment and Subletting................................................9
22.  Authority of Tenant......................................................10
23.  Condemnation.............................................................10
24.  Casualty Damage..........................................................10
25.  Holding Over.............................................................11
26.  Default..................................................................11
27.  Liens....................................................................12
28.  Substitution.............................................................12
29.  Transfers by Landlord....................................................13
30.  Right of Landlord to Perform Tenant's Covenants..........................13
31.  Waiver...................................................................13
32.  Notices..................................................................13
33.  Attorney's Fees..........................................................13
34.  Successors and Assigns...................................................13
35.  Force Majeure............................................................13
36.  Surrender of Premises....................................................14
37.  Miscellaneous............................................................14
38.  Additional Provisions....................................................14
     Signatures...............................................................15

Exhibits:
  Exhibit A..................................... Site Plan, Property Description
  Exhibit B...............................Tenant Improvements and Specifications
  Additional Exhibits as Required

                                       2
<PAGE>
 
                                     LEASE

THIS LEASE is made as of the 22st day of February, 1998, by and between Spieker
Properties, L.P., a California limited partnership (hereinafter called
"LANDLORD"), and Concentric Network Corporation, Inc. (hereinafter called
"TENANT").

                                 1.  PREMISES

  Landlord leases to Tenant and Tenant leases from Landlord, upon the terms and
conditions hereinafter set forth, those premises (the "PREMISES") outlined in
red on EXHIBIT A and described in the Basic Lease Information.  The Premises
shall be all or part of a building (the "BUILDING") and of a project (the
"PROJECT") which may consist of more than one building, as described in the
Basic Lease Information.  The Building and Project are outlined in blue and
green respectively on EXHIBIT A.  Additionally, the number of buildings which
constitute the Project may change from time to time.  Tenant accepts the area of
the Premises as specified in this Lease as the approximate area of the Premises,
and acknowledges and agrees that Tenant shall in no event be entitled to a
recalculation of the square footage of the Premises and that no such
recalculation shall reduce Tenant's obligations under this Lease in any manner,
including without limitation the amount of Base Rent payable by Tenant or
Tenant's Proportionate Share of the Building and of the Project.

                     2.  POSSESSION AND LEASE COMMENCEMENT

A.  EXISTING IMPROVEMENTS. Tenant acknowledges that Tenant has inspected and
accepts the Premises in their present condition, broom clean, "as is," and as
suitable for the purpose for which the Premises are leased and for Tenant's
intended use of the Premises.  Tenant agrees that the Premises and other
improvements are in good and satisfactory condition as of when possession was
taken.  Tenant further acknowledges that no representations as to the condition
or repair of the Premises nor promises to alter, remodel or improve the Premises
have been made by Landlord or any agents of Landlord unless such are expressly
set forth in this Lease.

B. [CROSSED OUT]

                                   3.  TERM

  The term of this Lease (the "TERM") shall commence on May 1, 1998 ("Term
Commencement Date") and continue in full force and effect for the number of
months specified as the Length of Term in the Basic Lease Information or until
this Lease is terminated as otherwise provided herein.  If the Term Commencement
Date is a date other than the first day of the calendar month, the Term shall be
the number of months of the Length of Term in addition to the remainder of the
calendar month following the Term Commencement Date.

                                    4.  USE

A.  GENERAL.  Tenant shall use the Premises for the permitted use specified in
the Basic Lease Information ("PERMITTED USE") and for no other use or purpose.
Tenant shall control Tenant's employees, agents, customers, visitors, invitees,
licensees, contractors, assignees and subtenants (collectively, "TENANT'S
PARTIES") in such a manner that Tenant and Tenant's Parties cumulatively do not
exceed the parking density specified in the Basic Lease Information (the
"PARKING DENSITY") at any time.  Tenant and Tenant's Parties shall have the
nonexclusive right to use, in common with other parties occupying the Building
or Project, the parking areas, driveways and other common areas of the Building
and Project, subject to such rules and regulations as Landlord may from time to
time prescribe.

B.  LIMITATIONS.  Tenant shall not permit any odors, smoke, dust, gas,
substances, noise or vibrations to emanate from the Premises or from any portion
of the common areas as a result of Tenant's or any Tenant's Party's use thereof,
nor take any action which would constitute a nuisance or would disturb, obstruct
or endanger any other tenants or occupants of the Building or Project or
interfere with their use of their respective premises or common areas.  Storage
outside the Premises of materials, vehicles or any other items is prohibited.
Tenant shall not use or allow the Premises to be used for any immoral, improper
or unlawful purpose, nor shall Tenant cause or maintain or permit any nuisance
in, on or about the Premises.  Tenant shall not commit or suffer the commission
of any waste in, on or about the Premises.  Tenant shall not allow any sale by
auction upon the Premises, or place any loads upon the floors, walls or ceilings
which endanger the structure, or place any harmful substances in the drainage
system of the Building or Project.  No waste, materials or refuse shall be
dumped upon or permitted to remain outside the Premises except in trash
containers placed inside exterior enclosures designated for that purpose by
Landlord.  Landlord shall not be responsible to Tenant for the non-compliance by
any other tenant or occupant of the Building or Project with any of the above-
referenced rules or any other terms or provisions of such tenant's or occupant's
lease or other contract.

                                       3
<PAGE>
 
C.  COMPLIANCE WITH REGULATIONS.  By entering the Premises, Tenant accepts the
Premises in the condition existing as of the date of such entry.  Tenant shall
at its sole cost and expense strictly comply with all existing or future
applicable municipal, state and federal and other governmental statutes, rules,
requirements, regulations, laws and ordinances, including zoning ordinances and
regulations, and covenants, easements and restrictions of record governing and
relating to the use, occupancy or possession of the Premises, to Tenant's use of
the common areas, or to the use, storage, generation or disposal of Hazardous
Materials (hereinafter defined) (collectively "REGULATIONS").  Tenant shall at
its sole cost and expense obtain any and all licenses or permits necessary for
Tenant's use of the Premises.  Tenant shall at its sole cost and expense
promptly comply with the requirements of any board of fire underwriters or other
similar body now or hereafter constituted.  Tenant shall not do or permit
anything to be done in, on, under or about the Project or bring or keep anything
which will in any way increase the rate of any insurance upon the Premises,
Building or Project or upon any contents therein or cause a cancellation of said
insurance or otherwise affect said insurance in any manner.  Tenant shall
indemnify, defend, protect and hold Landlord harmless from and against any loss,
cost, expense, damage, attorneys' fees or liability arising out of the failure
of Tenant to comply with any Regulation.  Tenant's obligations pursuant to the
foregoing indemnity shall survive the expiration or earlier termination of this
Lease.

D.  HAZARDOUS MATERIALS.  As used in this Lease, "HAZARDOUS MATERIALS" shall
include, but not be limited to, hazardous, toxic and radioactive materials and
those substances defined as "hazardous substances," "hazardous materials,"
"hazardous wastes," "toxic substances," or other similar designations in any
Regulation.  Tenant shall not cause, or allow any of Tenant's Parties to cause,
any Hazardous Materials to be used, generated, stored or disposed of on or about
the Premises, the Building or the Project or surrounding land or environment in
violation of any Regulations.  Tenant must obtain Landlord's written consent
prior to the introduction of any Hazardous Materials onto the Project.
Notwithstanding the foregoing, Tenant may handle, store, use and dispose of
products containing small quantities of Hazardous Materials for "general office
purposes" (such as toner for copiers) to the extent customary and necessary for
the Permitted Use of the Premises; provided that Tenant shall always handle,
store, use, and dispose of any such Hazardous Materials in a safe and lawful
manner and never allow such Hazardous Materials to contaminate the Premises,
Building, or Project or surrounding land or environment.  Tenant shall
immediately notify Landlord of any Hazardous Materials' contamination of any
portion of the Project of which Tenant becomes aware, whether or not caused by
Tenant.  Landlord shall have the right at all reasonable times to inspect the
Premises and to conduct tests and investigations to determine whether Tenant is
in compliance with the foregoing provisions, the costs of all such inspections,
tests and investigations to be borne by Tenant.  Tenant shall indemnify, defend,
protect and hold Landlord harmless from and against all liabilities, losses,
costs and expenses (including attorneys' and consultants' fees), demands, causes
of action, claims or judgments directly or indirectly arising out of the use,
generation, storage, release, or disposal of Hazardous Materials by Tenant or
any of Tenant's Parties in, on or about the Premises, the Building or the
Project or surrounding land or environment, excluding any contamination which
                                            ---------------------------------
may have been caused by any prior tenants.  The foregoing indemnity shall
---------------------------------------------------------
include, without limitation, damages for personal or bodily injury, property
damage, damage to the environment or natural resources occurring on or off the
Premises, losses attributable to diminution in value or adverse effects on
marketability, the cost of any investigation, monitoring, government oversight,
repair, removal, remediation, restoration, abatement, and disposal, and the
preparation of any closure or other required plans, whether such action is
required or necessary prior to or following the expiration or earlier
termination of this Lease.  Neither the consent by Landlord to the use,
generation, storage, release or disposal of Hazardous Materials nor the strict
compliance by Tenant with all laws pertaining to Hazardous Materials shall
excuse Tenant from Tenant's obligation of indemnification pursuant to this
Paragraph 4.D.  Tenant's obligations pursuant to the foregoing indemnity shall
survive the expiration or earlier termination of this Lease

                           5.  RULES AND REGULATIONS

  Tenant shall faithfully observe and comply with any rules and regulations and
any modifications or additions thereto which Landlord may from time to time
prescribe in writing for the purpose of maintaining the proper care,
cleanliness, safety, traffic flow and general order of the Premises or the
Building or Project.  Tenant shall cause Tenant's Parties to comply with such
rules and regulations.  Landlord shall not be responsible to Tenant for the non-
compliance by any other tenant or occupant of the Building or Project with any
of such rules and regulations, any other tenant's or occupant's lease or any
Regulations.

                                   6.  RENT

A.  BASE RENT.  Tenant shall pay to Landlord and Landlord shall receive, without
notice or demand throughout the Term, Base Rent as specified in the Basic Lease
Information, payable in monthly installments in advance on or before the first
day of each calendar month, in lawful money of the United States, without
deduction or offset whatsoever, at the Remittance Address specified in the Basic
Lease Information or to such other place as Landlord may from time to time
designate in writing.  Base Rent for the first full month of the Term shall be
paid by Tenant upon Tenant's execution of this Lease.  If the obligation for
payment of Base Rent commences on other than the first day of a month, then Base
Rent shall be prorated and the prorated installment shall be paid on the first
day of the calendar month next succeeding the Term Commencement Date.  The Base
Rent payable by Tenant hereunder is subject to adjustment as provided in addenda
appended to this Lease (if referred to in Paragraph 38.A.).  As used herein, the
term "Base Rent" shall mean the Base Rent specified in the Basic Lease
Information as it may be so adjusted from time to time.  See Addendum 1.
                                                         --------------

B.  ADDITIONAL RENT.  All monies other than Base Rent required to be paid by
Tenant hereunder, including, but not limited to, Tenant's Proportionate Share of
Operating Expenses, as specified in Paragraph 7 of this Lease, the interest and
late charge described in Paragraphs 26.C. and D., and any monies spent by
Landlord pursuant to Paragraph 30, shall be considered additional rent
("ADDITIONAL RENT").  "RENT" shall mean Base Rent and Additional Rent.

                            7.  OPERATING EXPENSES

A.  OPERATING EXPENSES.  In addition to the Base Rent required to be paid
hereunder, Tenant shall pay as Additional Rent, Tenant's Proportionate Share, as
defined in the Basic Lease Information, of Operating Expenses (defined below) in
the manner set forth below.  Tenant shall pay the applicable Tenant's
Proportionate Share of each such Operating Expenses.  Landlord and Tenant
acknowledge that if the number of buildings which constitute the Project
increases or decreases, Landlord shall reasonably adjust Tenant's Proportionate
Share of the Project to reflect the change.  Landlord's determination of
Tenant's Proportionate Share of the Building and of the Project shall be
conclusive so long as it is reasonably and consistently applied.  "OPERATING
EXPENSES" shall mean all expenses and costs of every kind and nature which
Landlord shall pay or become obligated to pay, because of or in connection with
the ownership, management, maintenance, repair, preservation, replacement and
operation of the Building or Project and its supporting facilities (as
determined in a reasonable manner) other than those expenses and costs which are
specifically attributable to Tenant or which are expressly made the financial
responsibility of Landlord pursuant to this Lease.  Operating Expenses shall
include, but are not limited to, the following:

     (1) TAXES. All real property taxes and assessments, possessory interest
     taxes, sales taxes, personal property taxes, business or license taxes or
     fees, gross receipts taxes, service payments in lieu of such taxes or fees,
     annual or periodic license or use fees, excises, transit charges, and other
     impositions, general and special, ordinary and extraordinary, unforeseen as
     well as foreseen, of any kind (including fees "in-lieu" of any such tax or
     assessment) which are now or hereafter assessed, levied, charged,
     confirmed, or imposed by any public authority upon the Building or Project,
     its operations or the Rent (or any portion or component thereof), or any
     tax, assessment or fee imposed in substitution, partially or totally, of
     any of the above. Operating Expenses shall also include any taxes,
     assessments, or other fees or impositions with respect to the development,
     leasing,  

                                       4
<PAGE>
 
     management, maintenance, alteration, repair, use or occupancy by
     Tenant of the Premises or any portion thereof, or upon this transaction or
     any document creating or transferring an interest in the Premises.  Taxes
                                                                         -----
     shall not include any estate or inheritance tax.  In the event that it
     -----------------------------------------------
     shall not be lawful for Tenant to reimburse Landlord for all or any part of
     such taxes, the monthly rental payable to Landlord under this Lease shall
     be revised to net Landlord the same net rental after imposition of any such
     taxes by Landlord as would have been payable to Landlord prior to the
     payment of any such taxes.

     (2) INSURANCE. All insurance premiums and costs, including, but not limited
     to, any deductible amounts, premiums and other costs of insurance incurred
     by Landlord, including for the insurance coverage set forth in Paragraph
     8.A. herein.

     (3)  COMMON AREA MAINTENANCE

          (a) Repairs, replacements, and general maintenance of and for the
          Building and Project and public and common areas of the Building and
          Project, including, but not limited to, the roof, pest extermination,
          landscaped areas, parking and service areas, driveways, truck staging
          areas, rail spur areas, fire sprinkler systems, sanitary and storm
          sewer lines, utility services, electric and telephone equipment and
          wiring servicing, exterior lighting, and any other items or areas
          which affect the operation or exterior appearance of the Building or
          Project, which determination shall be at Landlord's discretion, except
          for: those items expressly made the financial responsibility of
          Landlord pursuant to Paragraph 10 hereof; those items to the extent
          paid for by the proceeds of insurance; and those items attributable
          solely or jointly to specific tenants of the Building or Project.

          (b) Repairs, replacements, and general maintenance shall include the
          cost of any capital improvements made to or capital assets acquired
          for the Project or Building that in Landlord's discretion may reduce
          any other Operating Expenses, including present or future repair work,
          are reasonably necessary for the health and safety of the occupants of
          the Building or Project, or are required under any governmental law or
          regulation, such costs or allocable portions thereof to be amortized
          over such reasonable period as Landlord shall determine, together with
          interest on the unamortized balance at the "prime rate" charged by
          Wells Fargo Bank, N.A. (San Francisco) or its successor at the time
          such improvements or capital assets are constructed or acquired, plus
          two (2) percentage points, but in no event more than the maximum rate
          permitted by law.

          (c) Payment under or for any easement, license, permit, operating
          agreement, declaration, restrictive covenant or instrument relating to
          the Building or Project.

          (d) All expenses related to services and costs of supplies and
          equipment used in maintaining the Premises, Building and Project, the
          equipment therein and the adjacent sidewalks, driveways, parking and
          service areas, including, without limitation, expenses related to
          service agreements regarding security and fire and other alarm
          systems, janitorial services to the extent not addressed in Paragraph
          11 hereof, window cleaning, elevator maintenance, Building exterior
          maintenance, landscaping and expenses related to the administration,
          management and operation of the Project, including without limitation
          salaries, wages and benefits.

     (4)  UTILITIES.  The cost of supplying any utilities which benefit all or a
     portion of the Premises, Building or Project to the extent not addressed in
     Paragraph 15 hereof.

     (5) MANAGEMENT FEE. A management and accounting cost recovery fee equal to
     three percent (3%) of the sum of Base Rent.

      In the event that the Building and/or Project is not fully occupied during
any fiscal year of the Term as determined by Landlord, an adjustment shall be
made in computing the Operating Expenses for such year so that Tenant pays its
                                                                           ---
proportionate share of all variable items (i.e. component expenses that are
-------------------
affected by variations in occupancy levels) of Operating Expenses, as reasonably
determined by Landlord; provided, however, that in no event shall Landlord be
entitled to collect in excess of one hundred percent (100%) of the total
Operating Expenses from all of the tenants in the Building or Project, as the
case may be.

      Operating Expenses shall not include specific costs incurred for the
account of, separately billed to and paid by specific tenants. Notwithstanding
anything herein to the contrary, in any instance wherein Landlord, in Landlord's
reasonable discretion, deems Tenant to be responsible for any amounts greater
----------
than Tenant's Proportionate Share, Landlord shall have the right to allocate
costs in any manner Landlord deems appropriate.

      The above enumeration of services and facilities shall not be deemed to
impose an obligation on Landlord to make available or provide such services or
facilities except to the extent Landlord has specifically agreed elsewhere in
this Lease to make the same available or provide the same. Without limiting the
generality of the foregoing, Tenant acknowledges and agrees that it shall be
responsible for providing adequate security for its use of the Premises and
Project and that Landlord shall have no obligation or liability with respect
thereto, except to the extent Landlord has specifically agreed elsewhere in this
Lease to provide the same.

B.  PAYMENT OF ESTIMATED OPERATING EXPENSES.  "ESTIMATED OPERATING EXPENSES" for
any particular year shall mean Landlord's estimate of the Operating Expenses for
such fiscal year made with respect to such fiscal year as hereinafter provided.
Landlord shall have the right from time to time to revise its fiscal year and
interim accounting periods so long as the periods as so revised are reconciled
with prior periods in a reasonable manner.  During the last month of each fiscal
year during the Term, or as soon thereafter as practicable, Landlord shall give
Tenant written notice of the Estimated Operating Expenses for the ensuing fiscal
year.  Tenant shall pay Tenant's Proportionate Share of the Estimated Operating
Expenses with installments of Base Rent for the fiscal year to which the
Estimated Operating Expenses applies in monthly installments on the first day of
each calendar month during such year, in advance.  If at any time during the
course of the fiscal year, Landlord determines that Operating Expenses are
projected to vary from the then Estimated Operating Expenses by more than ten
percent (10%), Landlord may, by written notice to Tenant, revise the Estimated
Operating Expenses for the balance of such fiscal year, and Tenant's monthly
installments for the remainder of such year shall be adjusted so that by the end
of such fiscal year Tenant has paid to Landlord Tenant's Proportionate Share of
the revised Estimated Operating Expenses for such year.

C.  COMPUTATION OF OPERATING EXPENSE ADJUSTMENT.  "OPERATING EXPENSE ADJUSTMENT"
shall mean the difference between Estimated Operating Expenses and actual
Operating Expenses for any fiscal year determined as hereinafter provided.
Within one hundred twenty (120) days after the end of each fiscal year, as
determined by Landlord, or as soon thereafter as practicable, Landlord shall
deliver to Tenant a statement of actual Operating Expenses for the fiscal year
just ended, accompanied by a computation of Operating Expense Adjustment.  If
such statement shows that Tenant's payment based upon Estimated Operating
Expenses is less than Tenant's Proportionate Share of Operating Expenses, then
Tenant shall pay to Landlord the difference within twenty (20) days after
receipt of such statement.  If such statement shows that Tenant's payments of
Estimated Operating Expenses exceed Tenant's Proportionate Share of Operating
Expenses, then (provided that Tenant is not in default under this Lease)
Landlord shall pay to Tenant the difference within twenty (20) days after
delivery of such statement to Tenant.  If this Lease has been terminated or the
Term hereof has expired prior to the date of such statement, then the Operating
Expense Adjustment shall be paid by the appropriate party within twenty (20)
days after the date of delivery 

                                       5
<PAGE>
 
of the statement. Should this Lease commence or terminate at any time other than
the first day of the fiscal year, Tenant's Proportionate Share of the Operating
Expense Adjustment shall be prorated by reference to the exact number of
calendar days during such fiscal year that this Lease is in effect.

D.  NET LEASE.  This shall be a triple net Lease and Base Rent shall be paid to
Landlord absolutely net of all costs and expenses, except as specifically
provided to the contrary in this Lease.  The provisions for payment of Operating
Expenses and the Operating Expense Adjustment are intended to pass on to Tenant
and reimburse Landlord for all costs and expenses of the nature described in
Paragraph 7.A. incurred in connection with the ownership, management,
maintenance, repair, preservation, replacement and operation of the Building
and/or Project and such additional facilities now and in subsequent years as may
be determined by Landlord to be necessary to the Building and/or Project.

E.  TENANT AUDIT.  In the event that Tenant shall dispute the amount set forth
in any statement provided by Landlord under Paragraph 7.B. or 7.C. above, Tenant
shall have the right, not later than twenty (20) days following receipt of such
statement and upon the condition that Tenant shall first deposit with Landlord
the full amount in dispute, to cause Landlord's books and records with respect
to Operating Expenses for such fiscal year to be audited by certified public
accountants selected by Tenant and subject to Landlord's reasonable right of
approval.  The Operating Expense Adjustment shall be appropriately adjusted on
the basis of such audit.  If such audit discloses a liability for a refund in
excess of ten percent (10%) of Tenant's Proportionate Share of the Operating
Expense Adjustment previously reported, the cost of such audit shall be borne by
Landlord; otherwise the cost of such audit shall be paid by Tenant.  If Tenant
shall not request an audit in accordance with the provisions of this Paragraph
7.E. within twenty (20) days after receipt of Landlord's statement provided
pursuant to Paragraph 7.B. or 7.C., such statement shall be final and binding
for all purposes hereof.

                       8.  INSURANCE AND INDEMNIFICATION

A.  LANDLORD'S INSURANCE.  All insurance maintained by Landlord shall be for the
sole benefit of Landlord and under Landlord's sole control.

     (1)  PROPERTY INSURANCE.  Landlord agrees to maintain property insurance
     insuring the Building against damage or destruction due to risks including
     fire, vandalism, and malicious mischief in an amount not less than the
     replacement cost thereof, in the form and with deductibles and endorsements
     as selected by Landlord.  At its election, Landlord may instead obtain "All
     Risk" coverage, and may also obtain earthquake, pollution, and/or flood
     insurance in amounts selected by Landlord.

     (2)  OPTIONAL INSURANCE.  Landlord, at Landlord's option, may also carry
     insurance against loss of rent, in an amount equal to the amount of Base
     Rent and Additional Rent that Landlord could be required to abate to all
     Building tenants in the event of condemnation or casualty damage for a
     period of twelve (12) months.  Landlord may also carry such other insurance
     as Landlord may deem prudent or advisable, including, without limitation,
     liability insurance in such amounts and on such terms as Landlord shall
     determine.  Landlord shall not be obligated to insure any furniture,
     machinery, goods, inventory or supplies, or other personal property or
     fixtures which Tenant may keep or maintain in the Premises, or any
     leasehold improvements, additions or alterations within the Premises.

B.  TENANT'S INSURANCE.

     (1) PROPERTY INSURANCE. Tenant shall procure at Tenant's sole cost and
     expense and keep in effect from the date of this Lease and at all times
     until the end of the Term, insurance on all personal property and fixtures
     of Tenant and all improvements, additions or alterations made by or for
     Tenant to the Premises on an "All Risk" basis, insuring such property for
     the full replacement value of such property.

     (2)  LIABILITY INSURANCE.  Tenant shall procure at Tenant's sole cost and
     expense and keep in effect from the date of this Lease and at all times
     until the end of the Term Commercial General Liability insurance applying
     to the use and occupancy of the Premises and the Project, and any part of
     either, and any areas adjacent thereto, and the business operated by Tenant
     or by any other occupant of the Premises.  Such insurance shall include
     Broad Form Contractual Liability insurance coverage insuring all of
     Tenant's indemnity obligations under this Lease.  Such coverage shall have
     a minimum combined single limit of liability of at least Two Million
     Dollars ($2,000,000.00), and a minimum general aggregate limit of Three
     Million Dollars ($3,000,000.00), with an "Additional Insured  Managers or
     Lessors of Premises Endorsement" and the "Amendment of the Pollution
     Exclusion Endorsement."  All such policies shall be written to apply to all
     bodily injury, property damage or loss, personal injury and other covered
     loss, however occasioned, occurring during the policy term, shall be
     endorsed to add Landlord and any party holding an interest to which this
     Lease may be subordinated as an additional insured, and shall provide that
     such coverage shall be "PRIMARY" and non-contributing with any insurance
     maintained by Landlord, which shall be excess insurance only.  Such
     coverage shall also contain endorsements: (i) deleting any employee
     exclusion on personal injury coverage; (ii) including employees as
     additional insureds; and (iii) providing for coverage of employer's
     automobile non-ownership liability.  All such insurance shall provide for
     the severability of interests of insureds; and shall be written on an
     "OCCURRENCE" basis, which shall afford coverage for all claims based on
     acts, omissions, injury and damage, which occurred or arose (or the onset
     of which occurred or arose) in whole or in part during the policy period.
     Tenant shall also procure at Tenant's sole cost and expense and keep in
     effect during the Term of this Lease, Legal Liability Insurance covering
     direct physical damage and loss of use of the Building for which Tenant is
     legally obligated in an amount of the full replacement value of the
     Building.

     (3) WORKERS' COMPENSATION AND EMPLOYERS' LIABILITY INSURANCE. Tenant shall
     carry Workers' Compensation Insurance as required by any Regulation,
     throughout the Term at Tenant's sole cost and expense. Tenant shall also
     carry Employers' Liability Insurance in amounts not less than One Million
     Dollars ($1,000,000) each accident for bodily injury by accident; One
     Million Dollars ($1,000,000) policy limit for bodily injury by disease; and
     One Million Dollars ($1,000,000) each employee for bodily injury by
     disease, throughout the Term at Tenant's sole cost and expense. (4)
     COMMERCIAL AUTO LIABILITY INSURANCE. Tenant shall procure at Tenant's sole
     cost and expense and keep in effect from the date of this Lease and at all
     times until the end of the Term commercial auto liability insurance with a
     combined limit of not less than One Million Dollars ($1,000,000) for bodily
     injury and property damage for each accident. Such insurance shall cover
     liability relating to any auto (including owned, hired and non-owned
     autos).

     (5) GENERAL INSURANCE REQUIREMENTS. All coverages described in this
     Paragraph 8.B. shall be endorsed to (i) provide Landlord with thirty (30)
     days' notice of cancellation or change in terms; and (ii) waive all rights
     of subrogation by the insurance carrier against Landlord. If at any time
     during the Term the amount or coverage of insurance which Tenant is
     required to carry under this Paragraph 8.B. is, in Landlord's reasonable
     judgment, materially less than the amount or type of insurance coverage
     typically carried by owners or tenants of properties located in the general
     area in which the Premises are located which are similar to and operated
     for similar purposes as the Premises or if Tenant's use of the Premises
     should change with or without Landlord's consent, Landlord shall have the
     right to require Tenant to increase the amount or change the types of
     insurance coverage required under this Paragraph 8.B. All insurance
     policies required to be carried under this Lease shall be written by

                                       6
<PAGE>
 
     companies rated A VIII or better in "Best's Insurance Guide" and authorized
     to do business in the State of California. In any event deductible amounts
     shall not exceed Five Thousand Dollars ($5,000.00). Tenant shall deliver to
     Landlord on or before the Term Commencement Date, and thereafter at least
     thirty (30) days before the expiration dates of the expired policies,
     certified copies of Tenant's insurance policies, or a certificate
     evidencing the same issued by the insurer thereunder; and, in the event
     Tenant shall fail to procure such insurance, or to deliver such policies or
     certificates, Landlord may, at Landlord's option and in addition to
     Landlord's other remedies in the event of a default by Tenant hereunder,
     procure the same for the account of Tenant, and the cost thereof shall be
     paid to Landlord as Additional Rent.

     (6) INDEMNIFICATION. Landlord shall indemnify, defend by counsel reasonably
     acceptable to Tenant, protect and hold Tenant harmless from and against any
     and all claims, liabilities, losses, costs, damages, injuries or expenses,
     including reasonable attorneys' fees and court costs, arising out of or
     related to the gross negligence or willful misconduct of Landlord (or its
                    -----                                               ------
     agents, employees or contractors) or Landlord's breach of this Lease.
     --------------------------------------------------------------------
     Notwithstanding the foregoing or anything to the contrary contained in this
     Lease, Landlord shall in no event be liable and Tenant hereby waives all
     claims against Landlord for any loss, damage, injury or death to or of any
     person or property (including without limitation personal property) caused
     by theft, fire, rain or water leakage, or from the breakage, leakage,
     obstruction or other defects of pipes, fire sprinklers, wires, appliances,
     plumbing, HVAC or lighting fixtures, electrical or other systems, or by
     acts of God (including without limitation flood or earthquake), acts of a
     public enemy, riot, strike, insurrection, war, court order, requisition or
     order of governmental body or authority or for any damage or inconvenience
     which may arise through repair, except as expressly otherwise provided in
     Paragraph 10, regardless of Landlord's gross negligence or misconduct (or
                                                                            --
     its agents, employees or contractors) or Landlord's breach of this Lease.
     ------------------------------------------------------------------------
     In addition, Landlord shall in no event be liable for injury to Tenant's
     business or any loss of income or profit therefrom or for consequential
     damages, regardless of Landlord's gross negligence or misconduct (or its
                                                                       ------
     agents, employees or contractors) or Landlord's breach of this Lease.
     --------------------------------------------------------------------
     Tenant shall indemnify, defend by counsel reasonably acceptable to
     Landlord, protect and hold Landlord harmless from and against any and all
     claims, liabilities, losses, costs, loss of rents, liens, damages, injuries
     or expenses, including reasonable attorneys' fees and court costs, arising
     out of or related to: (1) claims of injury to or death of persons or damage
     to property occurring or resulting directly or indirectly from the use or
     occupancy of the Premises by Tenant or Tenant's Parties, or from activities
     of Tenant or Tenant's Parties; (2) claims arising from work or labor
     performed, or for materials or supplies furnished to or at the request of
     Tenant in connection with performance of any work done for the account of
     Tenant within the Premises or Project; (3) claims arising from any breach
     or default on the part of Tenant in the performance of any covenant
     contained in this Lease; and (4) claims arising from the negligence or
     intentional acts or omissions of Tenant or Tenant's Parties. The foregoing
     indemnity by Tenant shall not be applicable to claims to the extent arising
     from the gross negligence or willful misconduct of Landlord (or its agents,
              -----                                               -------------
     employees or contractors) or Landlord's breach of this Lease. The
     ------------------------------------------------------------
     provisions of this Paragraph shall survive the expiration or earlier
     termination of this Lease.

                           9.  WAIVER OF SUBROGATION

  To the extent permitted by law and without affecting the coverage provided by
insurance to be maintained hereunder or any other rights or remedies, Landlord
and Tenant each waive any right to recover against the other for: (a) damages
for injury to or death of persons; (b) damages to property, including personal
property; (c) damages to the Premises or any part thereof; and (d) claims
arising by reason of the foregoing due to hazards covered by insurance to the
extent of proceeds recovered therefrom.  This provision is intended to waive
fully, any rights and/or claims arising by reason of the foregoing, but only to
the extent that any of the foregoing damages and/or claims referred to above are
covered, and only to the extent of such coverage, by insurance actually carried
by either Landlord or Tenant.  This provision is also intended to waive fully,
and for the benefit of each party, any rights and/or claims which might give
rise to a right of subrogation on any insurance carrier.  Subject to all
qualifications of this Paragraph 9, Landlord waives its rights as specified in
this Paragraph 9 with respect to any subtenant that it has approved pursuant to
Paragraph 21 but only in exchange for the written waiver of such rights to be
given by such subtenant to Landlord.  Each party shall cause each insurance
policy obtained by it to provide that the insurance company waives all right of
recovery by way of subrogation against either party in connection with any
damage covered by any policy.

                    10.  LANDLORD'S REPAIRS AND MAINTENANCE

  Landlord shall at Landlord's expense maintain in good repair, reasonable wear
and tear excepted, the structural soundness of the roof, foundations, and
exterior walls of the Building.  The term "exterior walls" as used herein shall
not include windows, glass or plate glass, doors, dock bumpers or dock plates,
special store fronts or office entries.  Any damage caused by or repairs
necessitated by any act of Tenant or Tenant's Parties may be repaired by
Landlord at Landlord's option and Tenant's expense.  Tenant shall immediately
give Landlord written notice of any defect or need of repairs in such components
of the Building after which Landlord shall have a reasonable opportunity and the
right to enter the Premises at all reasonable times to repair same.  Landlord's
liability with respect to any defects, repairs, or maintenance for which
Landlord is responsible under any of the provisions of this Lease shall be
limited to the cost of such repairs or maintenance, and there shall be no
abatement of rent and no liability of Landlord by reason of any injury to or
interference with Tenant's business arising from the making of repairs,
alterations or improvements in or to any portion of the Premises or Project or
to fixtures, appurtenances or equipment in the Building, except as provided in
Paragraph 24.  By taking possession of the Premises, Tenant accepts them as
being in good order, condition and repair and the condition in which Landlord is
obligated to deliver them.

                     11.  TENANT'S REPAIRS AND MAINTENANCE

  Tenant shall at all times during the Term at Tenant's expense maintain all
parts of the Premises in a first-class, good, clean and secure condition and
promptly make all necessary repairs and replacements, as determined by Landlord,
including but not limited to, all windows, glass, doors, walls, including
demising walls, and wall finishes, floors and floor covering, heating,
ventilating and air conditioning systems, ceiling insulation, truck doors,
hardware, dock bumpers, dock plates and levelers, plumbing work and fixtures,
downspouts, entries, skylights, smoke hatches, roof vents, electrical and
lighting systems, and fire sprinklers, with materials and workmanship of the
same character, kind and quality as the original.  Tenant shall at Tenant's
expense also perform regular removal of trash and debris.  If Tenant uses rail
and if required by the railroad company, Tenant agrees to sign a joint
maintenance agreement governing the use of the rail spur, if any.  Tenant shall,
at Tenant's own expense, enter into a regularly scheduled preventative
maintenance/service contract with a maintenance contractor for servicing all hot
water, heating and air conditioning systems and equipment within or serving the
Premises.  The maintenance contractor and the contract must be approved by
Landlord.  The service contract must include all services suggested by the
equipment manufacturer within the operation/maintenance manual and must become
effective and a copy thereof delivered to Landlord within thirty (30) days after
the Term Commencement Date.  Landlord may, upon notice to Tenant, enter into
such a service contract on behalf of Tenant or perform the work and in either
case charge Tenant the cost thereof along with a reasonable amount for
Landlord's overhead.  Notwithstanding anything to the contrary contained herein,
Tenant shall, at its expense, promptly repair any damage to the Premises or the
Building or Project resulting from or caused by any act of Tenant or Tenant's
Parties.

                                       7
<PAGE>
 
                               12.  ALTERATIONS

A.  Tenant shall not make, or allow to be made, any alterations, physical
additions, improvements or partitions, including without limitation the
attachment of any fixtures or equipment, in, about or to the Premises
("ALTERATIONS") exceeding $5,000 in any single instance or exceed $15,000 in any
                ----------------------------------------------------------------
given year without obtaining the prior written consent of Landlord, which
----------
consent shall not be unreasonably withheld with respect to proposed Alterations
which: (a) comply with all applicable Regulations; (b) are, in Landlord's
opinion, compatible with the Project and its mechanical, plumbing, electrical,
heating/ventilation/air conditioning systems; and (c) will not interfere with
the use and occupancy of any other portion of the Building or Project by any
other tenant or its invitees.  Specifically, but without limiting the generality
of the foregoing, Landlord shall have the right of written consent for all plans
and specifications for the proposed Alterations, construction means and methods,
all appropriate permits and licenses, any contractor or subcontractor to be
employed on the work of Alterations, and the time for performance of such work,
and may impose rules and regulations for contractors and subcontractors
performing such work.  Tenant shall also supply to Landlord any documents and
information reasonably requested by Landlord in connection with Landlord's
consideration of a request for approval hereunder.  Tenant shall cause all
Alterations to be accomplished in a first-class, good and workmanlike manner,
and to comply with all applicable Regulations.  Tenant shall at Tenant's sole
expense, perform any additional work required under applicable Regulations due
to the Alterations hereunder.  No consent by Landlord to any proposed Alteration
or additional work shall constitute a waiver of Tenant's obligations under this
Paragraph 12.  Tenant shall reimburse Landlord for all costs which Landlord may
incur in connection with granting approval to Tenant for any such Alterations,
including any costs or expenses which Landlord may incur in electing to have
outside architects and engineers review said plans and specifications.  All such
Alterations shall remain the property of Tenant until the expiration or earlier
termination of this Lease, at which time they shall be and become the property
of Landlord if Landlord so elects.  At the time of approval, Landlord will
                                    --------------------------------------
notify Tenant if Landlord will  require that Tenant, at Tenant's expense, remove
------------------------------
any or all Alterations made by Tenant and restore the Premises by the expiration
or earlier termination of this Lease, to their condition existing prior to the
construction of any such Alterations.  All such removals and restoration shall
be accomplished in a good and workmanlike manner so as not to cause any damage
to the Premises or Project whatsoever.  If Tenant fails to remove such
Alterations or Tenant's trade fixtures or furniture, Landlord may keep and use
them or remove any of them and cause them to be stored or sold in accordance
with applicable law, at Tenant's sole expense.  In addition to and wholly apart
from Tenant's obligation to pay Tenant's Proportionate Share of Operating
Expenses, Tenant shall be responsible for and shall pay prior to delinquency any
taxes or governmental service fees, possessory interest taxes, fees or charges
in lieu of any such taxes, capital levies, or other charges imposed upon, levied
with respect to or assessed against its personal property, on the value of
Alterations within the Premises, and on Tenant's interest pursuant to this
Lease, or any increase in any of the foregoing based on such Alterations.  To
the extent that any such taxes are not separately assessed or billed to Tenant,
Tenant shall pay the amount thereof as invoiced to Tenant by Landlord.

B.  In compliance with Paragraph 27 hereof, at least ten (10) business days
before beginning construction of any Alteration, Tenant shall give Landlord
written notice of the expected commencement date of that construction to permit
Landlord to post and record a notice of non-responsibility.  Upon substantial
completion of construction, Tenant shall cause a timely notice of completion to
be recorded in the office of the recorder of the county in which the Building is
located.

                                  13.  SIGNS

All signs, notices and graphics of every kind or character, visible in or from
public view or corridors, the common areas or the exterior of the Premises,
shall be subject to Landlord's prior written approval, which Landlord shall have
the right to withhold in its absolute and sole discretion.  Tenant shall not
place or maintain any banners whatsoever or any window decor in or on any
exterior window or window fronting upon any common areas or service area or upon
any truck doors or man doors without Landlord's prior written approval which
Landlord shall have the right to withhold in its absolute and sole discretion.
Any installation of signs or graphics on or about the Premises or Project shall
be subject to any Regulations and to any other requirements imposed by Landlord.
Tenant shall remove all such signs or graphics by the termination of this Lease.
Such installations and removals shall be made in such manner as to avoid injury
to or defacement of the Premises, Building or Project and any other improvements
contained therein, and Tenant shall repair any injury or defacement including
without limitation discoloration caused by such installation or removal.

                        14.  INSPECTION/POSTING NOTICES

After reasonable notice, except in emergencies where no such notice shall be
required, Landlord and Landlord's agents and representatives, shall have the
right to enter the Premises to inspect the same, to clean, to perform such work
as may be permitted or required hereunder, to make repairs or alterations to the
Premises or Project or to other tenant spaces therein, to deal with emergencies,
to post such notices as may be permitted or required by law to prevent the
perfection of liens against Landlord's interest in the Project or to exhibit the
Premises to prospective tenants, purchasers, encumbrancers or to others, or for
any other purpose as Landlord may deem necessary or desirable; provided,
however, that Landlord shall use reasonable efforts not to unreasonably
interfere with Tenant's business operations.  Tenant shall not be entitled to
any abatement of Rent by reason of the exercise of any such right of entry.  At
any time within six (6) months prior to the expiration of the Term or following
any earlier termination of this Lease or agreement to terminate this Lease,
Landlord shall have the right to erect on the Premises and/or Project a suitable
sign indicating that the Premises are available for lease.

                                15.  UTILITIES

Tenant shall pay directly for all water, gas, heat, air conditioning, light,
power, telephone, sewer, sprinkler charges and other utilities and services used
on or from the Premises, together with any taxes, penalties, surcharges or the
like pertaining thereto, and maintenance charges for utilities and shall furnish
all electric light bulbs, ballasts and tubes.  If any such services are not
separately metered to Tenant, Tenant shall pay a proportion, as determined by
Landlord, of all charges jointly serving other premises.  Landlord shall not be
liable for any damages directly or indirectly resulting from nor shall the Rent
or any monies owed Landlord under this Lease herein reserved be abated by reason
of: (a) the installation, use or interruption of use of any equipment used in
connection with the furnishing of any such utilities or services; (b) the
failure to furnish or delay in furnishing any such utilities or services when
such failure or delay is caused by acts of God or the elements, labor
disturbances of any character, or any other accidents or other conditions beyond
the reasonable control of Landlord; or (c) the limitation, curtailment,
rationing or restriction on use of water, electricity, gas or any other form of
energy or any other service or utility whatsoever serving the Premises or
Project.  Landlord shall be entitled to cooperate voluntarily and in a
reasonable manner with the efforts of national, state or local governmental
agencies or utility suppliers in reducing energy or other resource consumption.
The obligation to make services available hereunder shall be subject to the
limitations of any such voluntary, reasonable program.

                              16.  SUBORDINATION

Without the necessity of any additional document being executed by Tenant for
the purpose of effecting a subordination, the Lease shall be subject and
subordinate at all times to: (a) all ground leases or underlying leases which
may now exist or hereafter be executed affecting the Premises and/or the land
upon which the Premises and Project are situated, or both; and (b) any mortgage
or deed of trust which may now exist or be placed upon the Building, the Project
and/or the land upon which the Premises or the Project are situated, or said
ground leases or underlying leases, or Landlord's interest or estate in any of
said items which is specified as security.

                                       8
<PAGE>
 
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
liens to this Lease. In the event that any ground lease or underlying lease
terminates for any reason or any mortgage or deed of trust is foreclosed or a
conveyance in lieu of foreclosure is made for any reason, Tenant shall,
notwithstanding any subordination, attorn to and become the Tenant of the
successor in interest to Landlord and Tenant shall not be disturbed in its
possession under this Lease by such successor in interest so long as Tenant is
not in default under this Lease. Within ten (10) days after request by Landlord,
Tenant shall execute and deliver any additional documents evidencing Tenant's
attornment or the subordination of this Lease with respect to any such ground
leases or underlying leases or any such mortgage or deed of trust, in the form
requested by Landlord or by any ground landlord, mortgagee, or beneficiary under
a deed of trust, subject to such nondisturbance requirement.

                           17.  FINANCIAL STATEMENTS

At the request of Landlord from time to time, Tenant shall provide to Landlord
Tenant's and any guarantor's current financial statements or other information
discussing financial worth of Tenant and any guarantor, which Landlord shall use
solely for purposes of this Lease and in connection with the ownership,
management, financing and disposition of the Project.

                           18.  ESTOPPEL CERTIFICATE

Tenant agrees from time to time, within ten (10) days after request of Landlord,
to deliver to Landlord, or Landlord's designee, an estoppel certificate stating
that this Lease is in full force and effect, that this Lease has not been
modified (or stating all modifications, written or oral, to this Lease), the
date to which Rent has been paid, the unexpired portion of this Lease, that
there are no current defaults by Landlord or Tenant under this Lease (or
specifying any such defaults), and such other matters pertaining to this Lease
as may be reasonably requested by Landlord.  Failure by Tenant to execute and
deliver such certificate shall constitute an acceptance of the Premises and
acknowledgment by Tenant that the statements included are true and correct
without exception.  Tenant agrees that if Tenant fails to execute and deliver
such certificate within such ten (10) day period, Landlord may execute and
deliver such certificate on Tenant's behalf and that such certificate shall be
binding on Tenant.  Landlord and Tenant intend that any statement delivered
pursuant to this Paragraph may be relied upon by any mortgagee, beneficiary,
purchaser or prospective purchaser of the Project or any interest therein.  The
parties agree that Tenant's obligation to furnish such estoppel certificates in
a timely fashion is a material inducement for Landlord's execution of the Lease,
and shall be an event of default if Tenant fails to fully comply or makes any
material misstatement in any such certificate.

                             19.  SECURITY DEPOSIT

Tenant agrees to deposit with Landlord upon execution of this Lease, a Security
Deposit as stated in the Basic Lease Information, which sum shall be held by
Landlord, without obligation to pay interest, as security for the performance of
Tenant's covenants and obligations under this Lease.  The Security Deposit is
not an advance rental deposit or a measure of damages incurred by Landlord in
case of Tenant's default.  Upon the occurrence of any event of default by
Tenant, Landlord may from time to time, without prejudice to any other remedy
provided herein or provided by law, use such fund to the extent necessary to
make good any arrears of Rent or other payments due to Landlord hereunder, and
any other damage, injury, expense or liability caused by such event of default,
and Tenant shall pay to Landlord, on demand, the amount so applied in order to
restore the Security Deposit to its original amount.  Although the Security
Deposit shall be deemed the property of Landlord, any remaining balance of such
deposit shall be returned by Landlord to Tenant at such time after termination
of this Lease that all of Tenant's obligations under this Lease have been
fulfilled.  Landlord may use and commingle the Security Deposit with other funds
of Landlord.

                            20.  TENANT'S REMEDIES

The obligations and liability of Landlord to Tenant for any default by Landlord
under the terms of this Lease are not personal obligations of Landlord or of the
individual or other partners of Landlord or its or their partners, directors,
officers, or shareholders, and Tenant agrees to look solely to Landlord's
interest in the Project for the recovery of any amount from Landlord, and shall
not look to other assets of Landlord nor seek recourse against the assets of the
individual or other partners of Landlord or its or their partners, directors,
officers or shareholders.  Any lien obtained to enforce any such judgment and
any levy of execution thereon shall be subject and subordinate to any lien,
mortgage or deed of trust on the Project.

                        21.  ASSIGNMENT AND SUBLETTING

A.  (1) GENERAL. Tenant shall not assign or pledge this Lease or sublet the
    Premises or any part thereof, whether voluntarily or by operation of law, or
    permit the use or occupancy of the Premises or any part thereof by anyone
    other than Tenant, or suffer or permit any such assignment, pledge,
    subleasing or occupancy, without Landlord's prior written consent except as
    provided herein. If Tenant desires to assign this Lease or sublet any or all
    of the Premises, Tenant shall give Landlord written notice (the "TRANSFER
    NOTICE") at least forty-five (45) days prior to the anticipated effective
                      ----------
    date of the proposed assignment or sublease, which shall contain all of the
    information reasonably requested by Landlord to address Landlord's decision
    criteria specified hereinafter. Landlord shall then have a period of fifteen
                                                                         -------
    (15) days following receipt of the Transfer Notice to notify Tenant in
    writing that Landlord elects either: (1) to terminate this Lease as to the
    space so affected as of the date so requested by Tenant; or (2) to consent
    to the proposed assignment or sublease, subject, however, to Landlord's
    prior written consent of the proposed assignee or subtenant and of any
    related documents or agreements associated with the assignment or sublease.
    If Landlord should fail to notify Tenant in writing of such election within
    said period, Landlord shall be deemed to have waived option (1) above, but
    written consent by Landlord of the proposed assignee or subtenant shall be
    required. If Landlord does not exercise option (1) above, Landlord's consent
    to a proposed assignment or sublet shall not be unreasonably withheld.

    (2) CONDITIONS OF LANDLORD'S CONSENT. Without limiting the other instances
    in which it may be reasonable for Landlord to withhold Landlord's consent to
    an assignment or subletting, Landlord and Tenant acknowledge that it shall
    be reasonable for Landlord to withhold Landlord's consent in the following
    instances: the use of the Premises by such proposed assignee or subtenant
    would not be a Permitted Use or would violate any exclusivity arrangement
    which Landlord has with any other tenant or occupant or would increase the
    Parking Density of the Building or Project; the proposed assignee or
    subtenant is not of sound financial condition as determined by Landlord in
    Landlord's sole discretion; the proposed assignee or subtenant is a
    governmental agency; the proposed assignee or subtenant does not have a good
    reputation as a tenant of property; the proposed assignee or subtenant is a
    person with whom Landlord is negotiating to lease space in the Project or is
    a present tenant of the Project ; the assignment or subletting would entail
    any Alterations which would lessen the value of the leasehold improvements
    in the Premises; or Tenant is in default of any obligation of Tenant under
    this Lease, or Tenant has defaulted under this Lease on three (3) or more
    occasions during any twelve (12) months preceding the date that Tenant shall
    request consent. Failure by Landlord to consent to a proposed assignee or
    subtenant shall not cause a termination of this Lease. Upon a termination
    under Paragraph 21.A.(1), Landlord may lease the Premises to any party,
    including parties with whom Tenant has negotiated an assignment or sublease,
    without incurring any liability to Tenant. At the option of Landlord, a
    surrender and termination of this Lease shall operate as an assignment to
    Landlord of some or all subleases or subtenancies. Landlord shall exercise
    this option by giving notice of that assignment to such subtenants on or
    before the effective date of the surrender and termination.

                                       9
<PAGE>
 
B.  BONUS RENT.  Any Rent or other consideration realized by Tenant under any
such sublease or assignment in excess of the Rent payable hereunder, after
amortization of a reasonable brokerage commission incurred by Tenant, shall be
divided and paid, fifty percent (50%) to Tenant,fifty percent (50%) to Landlord.
                  -----          --             -----          --
In any subletting or assignment undertaken by Tenant, Tenant shall diligently
seek to obtain the maximum rental amount available in the marketplace for
comparable space available for primary leasing.

C.  CORPORATION.  Notwithstanding the provisions of this Paragraph 21, Tenant
-----------------------------------------------------------------------------
may assign this Lease or sublet any portion of the Premises to any corporation
------------------------------------------------------------------------------
which controls, is controlled by or is under common control with, Tenant (each,
------------------------------------------------------------------------------
a "PERMITTED TENANT AFFILIATE"), provided that the Permitted Tenant Affiliate
-----------------------------------------------------------------------------
assumes, in full, the obligations of Tenant under this Lease (or assumes, in the
--------------------------------------------------------------------------------
case of a sublease of a portion of the Term of the Premises, the obligations of
-------------------------------------------------------------------------------
Tenant with respect to such portion) and has a net worth at least equal to
--------------------------------------------------------------------------
Tenant's net worth immediately before the assignment or subletting.  If Tenant
------------------------------------------------------------------------------
is a corporation, a dissolution of the corporation or a transfer (by one (1) or
-------------------------------------------------------------------------------
more transactions) of a majority of the voting stock of Tenant shall be deemed
------------------------------------------------------------------------------
to be an assignment of this Lease subject to the provisions of this Paragraph
-----------------------------------------------------------------------------
21; provided, however, that the provisions of this sentence shall not apply to
------------------------------------------------------------------------------
transactions with a corporation into or with which Tenant is merged or
----------------------------------------------------------------------
consolidated or to which substantially all of Tenant's assets are transferred
-----------------------------------------------------------------------------
(each, a "surviving corporation") where (i) the surviving corporation has a net
-------------------------------------------------------------------------------
worth at least equal to Tenant's net worth immediately before the merger,
-------------------------------------------------------------------------
consolidation or asset transfer and (ii) the surviving corporation assumes, in
------------------------------------------------------------------------------
full, the obligations of Tenant under this Lease (or assumes, in the case of a
------------------------------------------------------------------------------
sublease of a portion of the Term or the Premises, the obligations of Tenant
----------------------------------------------------------------------------
with respect to such portion).
----------------------------

D.  UNINCORPORATED ENTITY.  If Tenant is a partnership, joint venture,
unincorporated limited liability company or other unincorporated business form,
a transfer of the interest of persons, firms or entities responsible for
managerial control of Tenant by sale, assignment, bequest, inheritance,
operation of law or other disposition, so as to result in a change in the
present control of said entity and/or a change in the identity of the persons
responsible for the general credit obligations of said entity shall constitute
an assignment for all purposes of this Lease.

E.  LIABILITY.  No assignment or subletting by Tenant, permitted or otherwise,
shall relieve Tenant of any obligation under this Lease or alter the primary
liability of the Tenant named herein for the payment of Rent or for the
performance of any other obligations to be performed by Tenant, including
obligations contained in Paragraph 25 with respect to any assignee or subtenant.
Any assignment or subletting which conflicts with the provisions hereof shall be
void.

                                22.  AUTHORITY

     Landlord represents and warrants that it has full right and authority to
enter into this Lease and to perform all of Landlord's obligations hereunder and
that all persons signing this Lease on its behalf are authorized to do. Tenant
represents and warrants that it has full right and authority to enter into this
Lease and to perform all of Tenant's obligations hereunder and that all persons
signing this Lease on its behalf are authorized to do.

                               23.  CONDEMNATION

A.  CONDEMNATION RESULTING IN TERMINATION.  If the whole or any substantial part
of the Project of which the Premises are a part should be taken or condemned for
any public use under governmental law, ordinance or regulation, or by right of
eminent domain, or by private purchase in lieu thereof, and the taking would
prevent or materially interfere with the Permitted Use of the Premises, this
Lease shall terminate and the Rent shall be abated during the unexpired portion
of this Lease, effective when the physical taking of said Premises shall have
occurred.

B.  CONDEMNATION NOT RESULTING IN TERMINATION.  If a portion of the Project of
which the Premises are a part should be taken or condemned for any public use
under governmental law, ordinance or regulation, or by right of eminent domain,
or by private purchase in lieu thereof, and the taking materially interferes
with the Permitted Use of the Premises, and this Lease is not terminated as
provided in Paragraph 23.A. above, the Rent payable hereunder during the
unexpired portion of the Lease shall be reduced, beginning on the date when the
physical taking shall have occurred, to such amount as may be fair and
reasonable under all of the circumstances.

C.  AWARD.  Landlord shall be entitled to any and all payment, income, rent,
award or any interest therein whatsoever which may be paid or made in connection
with such taking or conveyance and Tenant shall have no claim against Landlord
or otherwise for the value of any unexpired portion of this Lease.
Notwithstanding the foregoing, any compensation specifically and separately
awarded Tenant for Tenant's personal property and moving costs, shall be and
remain the property of Tenant.

D.  WAIVER OF CCP(S)1265.130.  Each party waives the provisions of California
Civil Code Procedure Section 1265.130 allowing either party to petition the
superior court to terminate this Lease as a result of a partial taking.

                             24.  CASUALTY DAMAGE

A.  GENERAL.  If the Premises or Building should be damaged or destroyed by
fire, tornado, or other casualty (collectively, "CASUALTY"), Tenant shall give
immediate written notice thereof to Landlord.  Within thirty (30) days after
Landlord's receipt of such notice, Landlord shall notify Tenant whether in
Landlord's estimation material restoration of the Premises can reasonably be
made either: (1) within ninety (90) days; (2) in more than ninety (90) days but
within one hundred eighty (180) days; or (3) in more than one hundred eighty
(180) days from the date of such notice and receipt of required permits for such
restoration.  Landlord's determination shall be binding on Tenant.

B.  WITHIN 90 DAYS.  If the Premises or Building should be damaged by Casualty
to such extent that material restoration can in Landlord's estimation be
reasonably completed within ninety (90) days after the date of such damage and
receipt of required permits for such restoration, this Lease shall not
terminate.  Provided that insurance proceeds are received by Landlord to fully
repair the damage, Landlord shall proceed to rebuild and repair the Premises in
the manner determined by Landlord, except that Landlord shall not be required to
rebuild, repair or replace any part of the Alterations which may have been
placed on or about the Premises by Tenant.  If the Premises are untenantable in
whole or in part following such damage, the Rent payable hereunder during the
period in which they are untenantable shall be abated proportionately, but only
to the extent of rental abatement insurance proceeds received by Landlord during
the time and to the extent the Premises are unfit for occupancy.

C.  GREATER THAN 90 DAYS.  If the Premises or Building should be damaged by
Casualty to such extent that rebuilding or repairs can in Landlord's estimation
be reasonably completed in more than ninety (90) days but within one hundred
eighty (180) days after the date of such damage and receipt of required permits
for such rebuilding or repair, then Landlord shall have the option of either:
(1) terminating this Lease effective upon the date of the occurrence of such
damage, in which event the Rent shall be abated during the unexpired portion of
this Lease; or (2) electing to rebuild or repair the Premises in the manner
determined by Landlord.  Notwithstanding the above, 

                                       10
<PAGE>
 
Landlord shall not be required to rebuild, repair or replace any part of the
Alterations which may have been placed, on or about the Premises by Tenant. If
the Premises are untenantable in whole or in part following such damage, the
Rent payable hereunder during the period in which they are untenantable shall be
abated proportionately, but only to the extent of rental abatement insurance
proceeds received by Landlord during the time and to the extent the Premises are
unfit for occupancy. In the event that Landlord should fail to complete such
repairs and rebuilding within one hundred eighty (180) days after the date upon
which Landlord is notified by Tenant of such damage and receipt of required
permits, such period of time to be extended for delays caused by the fault or
neglect of Tenant or otherwise by Tenant or because of acts of God, acts of
public agencies, labor disputes, strikes, fires, freight embargoes, rainy or
stormy weather, inability to obtain materials, supplies or fuels, or delays of
the contractors or subcontractors or any other causes or contingencies beyond
the reasonable control of Landlord, Tenant may at Tenant's option within ten
(10) days after the expiration of such one hundred eighty (180) day period (as
such may be extended), terminate this Lease by delivering written notice of
termination to Landlord as Tenant's exclusive remedy, whereupon all rights
hereunder shall cease and terminate thirty (30) days after Landlord's receipt of
such termination notice.

D.  GREATER THAN 180 DAYS.  If the Premises or Building should be so damaged by
Casualty that rebuilding or repairs cannot in Landlord's estimation be completed
one hundred eighty (180) days after such damage and receipt of required permits
for such rebuilding or repair, this Lease shall terminate and the Rent shall be
abated during the unexpired portion of this Lease, effective upon the date of
the occurrence of such damage.

E.  TENANT'S FAULT.  Notwithstanding anything herein to the contrary, if the
Premises or any other portion of the Building are damaged by Casualty resulting
from the fault, negligence, or breach of this Lease by Tenant or any of Tenant's
Parties, Base Rent and Additional Rent shall not be diminished during the repair
of such damage and Tenant shall be liable to Landlord for the cost and expense
of the repair and restoration of the Building caused thereby to the extent such
cost and expense is not covered by insurance proceeds.

F.  INSURANCE PROCEEDS.  Notwithstanding anything herein to the contrary, in the
event that the Premises or Building are damaged or destroyed and are not fully
covered by the insurance proceeds received by Landlord or in the event that the
holder of any indebtedness secured by a mortgage or deed of trust covering the
Premises requires that the insurance proceeds be applied to such indebtedness,
then in either case Landlord shall have the right to terminate this Lease by
delivering written notice of termination to Tenant within thirty (30) days after
the date of notice to Landlord that said damage or destruction is not fully
covered by insurance or such requirement is made by any such holder, as the case
may be, whereupon all rights and obligations hereunder shall cease and
terminate.

G.  WAIVER.  This Paragraph 24 shall be Tenant's sole and exclusive remedy in
the event of damage or destruction to the Premises or the Building.  As a
material inducement to Landlord entering into this Lease, Tenant hereby waives
any rights it may have under Sections 1932, 1933(4), 1941 or 1942 of the Civil
Code of California with respect to any destruction of the Premises, Landlord's
obligation for tenantability of the Premises and Tenant's right to make repairs
and deduct the expenses of such repairs, or under any similar law, statute or
ordinance now or hereafter in effect.

H.  TENANT'S PERSONAL PROPERTY.  In the event of any damage or destruction of
the Premises or the Building, under no circumstances shall Landlord be required
to repair any injury or damage to, or make any repairs to or replacements of,
Tenant's personal property.

                               25.  HOLDING OVER

Unless Landlord expressly consents in writing to Tenant's holding over, Tenant
shall be only a Tenant at sufferance, whether or not Landlord accepts any Rent
from Tenant or any other person while Tenant is holding over without Landlord's
written consent.  If Tenant shall retain possession of the Premises or any
portion thereof without Landlord's consent following the expiration of this
Lease or sooner termination for any reason, then Tenant shall pay to Landlord
for each day of such retention one hundred fifty percent (150%) the amount of
                               -------------------------------
daily rental as of the last month prior to the date of expiration or earlier
termination.  Tenant shall also indemnify, defend, protect and hold Landlord
harmless from any loss, liability or cost, including reasonable attorneys' fees,
resulting from delay by Tenant in surrendering the Premises, including, without
limitation, any claims made by the succeeding tenant founded on such delay.
Acceptance of Rent by Landlord following expiration or earlier termination shall
not constitute a renewal of this Lease, and nothing contained in this Paragraph
25 shall waive Landlord's right of reentry or any other right.  Additionally, in
the event that upon expiration or earlier termination of this Lease, Tenant has
not fulfilled its obligation with respect to repairs and cleanup of the Premises
or any other Tenant obligations as set forth in this Lease, then Landlord shall
have the right to perform any such obligations as it deems necessary at Tenant's
sole cost and expense, and any time required by Landlord to complete such
obligations shall be considered a period of holding over and the terms of this
Paragraph 25 shall apply.  The provisions of this Paragraph 25 shall survive any
expiration or earlier termination of this Lease.

                                 26.  DEFAULT

A.  EVENTS OF DEFAULT.  The occurrence of any of the following shall constitute
an event of default on the part of Tenant:

     (1)  ABANDONMENT.  Abandonment or vacation of the Premises for a continuous
     period in excess of five (5) days.  Tenant waives any right to notice
     Tenant may have under Section 1951.3 of the Civil Code of the State of
     California, the terms of this Paragraph 26.A. being deemed such notice to
     Tenant as required by said Section 1951.3.

     (2) NONPAYMENT OF RENT. Failure to pay any installment of Rent or any other
     amount due and payable hereunder upon the date when said payment is due.

     (3)  OTHER OBLIGATIONS.  Failure to perform any obligation, agreement or
     covenant under this Lease other than those matters specified in
     subparagraphs (1) and (2) of this Paragraph 26.A., such failure continuing
     for fifteen (15) days after written notice of such failure.

     (4)  GENERAL ASSIGNMENT.  A general assignment by Tenant for the benefit of
     creditors.

     (5) BANKRUPTCY. The filing of any voluntary petition in bankruptcy by
     Tenant, or the filing of an involuntary petition by Tenant's creditors,
     which involuntary petition remains undischarged for a period of thirty (30)
     days. In the event that under applicable law, the trustee in bankruptcy or
     Tenant has the right to affirm this Lease and continue to perform the
     obligations of Tenant hereunder, such trustee or Tenant shall, in such time
     period as may be permitted by the bankruptcy court having jurisdiction,
     cure all defaults of Tenant hereunder outstanding as of the date of the
     affirmance of this Lease and provide to Landlord such adequate assurances
     as may be necessary to ensure Landlord of the continued performance of
     Tenant's obligations under this Lease.

     (6)  RECEIVERSHIP.  The employment of a receiver to take possession of
     substantially all of Tenant's assets or the Premises, if such appointment
     remains undismissed or undischarged for a period of ten (10) days after the
     order therefor.

                                       11
<PAGE>
 
     (7) ATTACHMENT. The attachment, execution or other judicial seizure of all
     or substantially all of Tenant's assets or the Premises, if such attachment
     or other seizure remains undismissed or undischarged for a period of ten
     (10) days after the levy thereof.

 B.  REMEDIES UPON DEFAULT.

     (1)  TERMINATION.  In the event of the occurrence of any event of default,
     Landlord shall have the right to give a written termination notice to
     Tenant, and on the date specified in such notice, Tenant's right to
     possession shall terminate, and this Lease shall terminate unless on or
     before such date all Rent in arrears and all costs and expenses incurred by
     or on behalf of Landlord hereunder shall have been paid by Tenant and all
     other events of default of this Lease by Tenant at the time existing shall
     have been fully remedied to the satisfaction of Landlord.  At any time
     after such termination, Landlord may recover possession of the Premises or
     any part thereof and expel and remove therefrom Tenant and any other person
     occupying the same, by any lawful means, and again repossess and enjoy the
     Premises without prejudice to any of the remedies that Landlord may have
     under this Lease, or at law or equity by any reason of Tenant's default or
     of such termination.  Landlord hereby reserves the right to recognize the
     continued possession of any subtenant.

     (2)  CONTINUATION AFTER DEFAULT.  Even though an event of default may have
     occurred, this Lease shall continue in effect for so long as Landlord does
     not terminate Tenant's right to possession under Paragraph 26.B.(1) hereof,
     and Landlord may enforce all of Landlord's rights and remedies under this
     Lease and at law or in equity, including without limitation, the right to
     recover Rent as it becomes due, and Landlord, without terminating this
     Lease, may exercise all of the rights and remedies of a landlord under
     Section 1951.4 of the Civil Code of the State of California or any
     successor code section.  Acts of maintenance, preservation or efforts to
     lease the Premises or the appointment of a receiver under application of
     Landlord to protect Landlord's interest under this Lease or other entry by
     Landlord upon the Premises shall not constitute an election to terminate
     Tenant's right to possession.

     (3)  INCREASED SECURITY DEPOSIT.  If Tenant is in default under Paragraph
     26.A.(2) hereof and such default remains uncured for ten (10) days after
     such occurrence or such default occurs more than three times in any twelve
     (12) month period, Landlord may require that Tenant increase the Security
     Deposit to the amount of three times the current month's Rent at the time
     of the most recent default.

C.  DAMAGES AFTER DEFAULT.  Should Landlord terminate this Lease pursuant to the
provisions of Paragraph 26.B.(1) hereof, Landlord shall have the rights and
remedies of a Landlord provided by Section 1951.2 of the Civil Code of the State
of California, or any successor code sections.  Upon such termination, in
addition to any other rights and remedies to which Landlord may be entitled
under applicable law or at equity, Landlord shall be entitled to recover from
Tenant: (1) the worth at the time of award of the unpaid Rent and other amounts
which had been earned at the time of termination, (2) the worth at the time of
award of the amount by which the unpaid Rent that would have been earned after
the date of termination until the time of award exceeds the amount of such Rent
loss that Tenant proves could have been reasonably avoided; (3) the worth at the
time of award of the amount by which the unpaid Rent for the balance of the Term
after the time of the award exceeds the amount of such Rent loss that the Tenant
proves could be reasonably avoided; and (4) any other amount and court costs
necessary to compensate Landlord for all detriment proximately caused by
Tenant's failure to perform Tenant's obligations under this Lease or which, in
the ordinary course of things, would be likely to result therefrom.  The "worth
at the time of award" as used in (1) and (2) above shall be computed at the
lesser of the "prime rate," as announced from time to time by Wells Fargo Bank,
N.A. (San Francisco) or its successor, plus five (5) percentage points, or the
maximum interest rate allowed by law ("APPLICABLE INTEREST RATE").  The "worth
at the time of award" as used in (3) above shall be computed by discounting such
amount at the Federal Discount Rate of the Federal Reserve Bank of San Francisco
at the time of the award plus one percent (1%).  If this Lease provides for any
periods during the Term during which Tenant is not required to pay Base Rent or
if Tenant otherwise receives a Rent concession, then upon the occurrence of an
event of default, Tenant shall owe to Landlord the full amount of such Base Rent
or value of such Rent concession, plus interest at the Applicable Interest Rate,
calculated from the date that such Base Rent or Rent concession would have been
payable.

D.  LATE CHARGE.  In addition to its other remedies, Landlord shall have the
right without notice or demand to add to the amount of any payment required to
be made by Tenant hereunder, and which is not paid and received by Landlord on
or before the first day of each calendar month, an amount equal to five percent
                                                                   ----
(5%) of the delinquency for each month or portion thereof that the delinquency
 -
remains outstanding to compensate Landlord for the loss of the use of the amount
not paid and the administrative costs caused by the delinquency, the parties
agreeing that Landlord's damage by virtue of such delinquencies would be
extremely difficult and impracticable to compute and the amount stated herein
represents a reasonable estimate thereof.  Any waiver by Landlord of any late
charges shall not constitute a waiver of other late charges or any other
remedies available to Landlord.

E.  REMEDIES CUMULATIVE.  All rights, privileges and elections or remedies of
the parties are cumulative and not alternative, to the extent permitted by law
and except as otherwise provided herein.

                                  27.  LIENS

Tenant shall at all times keep the Premises and the Project free from liens
arising out of or related to work or services performed, materials or supplies
furnished or obligations incurred by Tenant or in connection with work made,
suffered or done by or on behalf of Tenant in or on the Premises or Project.  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 Landlord shall deem proper, including payment of
the claim giving rise to such lien.  All sums paid by Landlord on behalf of
Tenant and all expenses incurred by Landlord in connection therefor shall be
payable to Landlord by Tenant on demand with interest at the Applicable Interest
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 Landlord not less than ten (10) business days prior written
notice of the commencement of any work in the Premises or Project which could
lawfully give rise to a claim for mechanics' or materialmen's liens to permit
Landlord to post and record a timely notice of non-responsibility.

                                       12
<PAGE>
 
                          28.  TRANSFERS BY LANDLORD

In the event of a sale or conveyance by Landlord of the Building or a
foreclosure by any creditor of Landlord, the same shall operate to release
Landlord from any liability upon any of the covenants or conditions, express or
implied, herein contained in favor of Tenant, first arising and accruing after
                                              --------------------------
the passing of title to Landlord's successor-in-interest.  In such event, Tenant
agrees to look solely to the responsibility of the successor-in-interest of
Landlord under this Lease with respect to the performance of the covenants and
duties of "Landlord" to be performed first arising and accruing after the
                                     --------------------------
passing of title to Landlord's successor-in-interest.  This Lease shall not be
affected by any such sale and Tenant agrees to attorn to the purchaser or
assignee.  Landlord's successor(s)-in-interest shall not have liability to
Tenant with respect to the failure to perform any of the obligations of
"Landlord," to the extent required to be performed prior to the date such
successor(s)-in-interest became the owner of the Building.

             29.  RIGHT OF LANDLORD TO PERFORM TENANT'S COVENANTS

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 Rent.  If Tenant shall fail to pay any sum of money,
other than Base Rent, required to be paid by Tenant hereunder or shall fail to
perform any other act on Tenant's part to be performed hereunder, including
Tenant's obligations under Paragraph 11 hereof, and such failure shall continue
for fifteen (15) days after notice thereof by Landlord, in addition to the other
rights and remedies of Landlord, Landlord may make any such payment and perform
any such act on Tenant's part.  In the case of an emergency, no prior
notification by Landlord shall be required.  Landlord may take such actions
without any obligation and without releasing Tenant from any of Tenant's
obligations.  All sums so paid by Landlord and all incidental costs incurred by
Landlord and interest thereon at the Applicable Interest Rate, from the date of
payment by Landlord, shall be paid to Landlord on demand as Additional Rent.

                                  30.  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.  The acceptance of Rent 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 Rent.  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 decrease the right of Landlord to insist
thereafter upon strict performance by Tenant.  Waiver by Landlord of any term,
covenant or condition contained in this Lease may only be made by a written
document signed by Landlord.

                                 31.  NOTICES

Each provision of this Lease or of any applicable governmental laws, ordinances,
regulations and other requirements with reference to sending, mailing, or
delivery of any notice or the making of any payment by Landlord or Tenant to the
other shall be deemed to be complied with when and if the following steps are
taken:

A.  RENT.  All Rent and other payments required to be made by Tenant to Landlord
hereunder shall be payable to Landlord at Landlord's Remittance Address set
forth in the Basic Lease Information, or at such other address as Landlord may
specify from time to time by written notice delivered in accordance herewith.
Tenant's obligation to pay Rent and any other amounts to Landlord under the
terms of this Lease shall not be deemed satisfied until such Rent and other
amounts have been actually received by Landlord.

B.  OTHER.  All notices, demands, consents and approvals which may or are
required to be given by either party to the other hereunder shall be in writing
and either personally delivered, sent by commercial overnight courier, or
mailed, certified or registered, postage prepaid, and addressed to the party to
be notified at the Notice Address for such party as specified in the Basic Lease
Information or to such other place as the party to be notified may from time to
time designate by at least fifteen (15) days notice to the notifying party.
Notices shall be deemed served upon receipt or refusal to accept delivery.
Tenant appoints as its agent to receive the service of all default notices and
notice of commencement of unlawful detainer proceedings the person in charge of
or apparently in charge of occupying the Premises at the time, and, if there is
no such person, then such service may be made by attaching the same on the main
entrance of the Premises.

                             32.  ATTORNEYS' FEES

In the event that Landlord places the enforcement of this Lease, or any part
thereof, or the collection of any Rent due, or to become due hereunder, or
recovery of possession of the Premises in the hands of an attorney, Tenant shall
pay to Landlord, upon demand, Landlord's reasonable attorneys' fees and court
costs, whether incurred at trial, appeal or review.  In any action which
Landlord or Tenant brings to enforce its respective rights hereunder, the
unsuccessful party shall pay all costs incurred by the prevailing party
including reasonable attorneys' fees, to be fixed by the court, and said costs
and attorneys' fees shall be a part of the judgment in said action.

                          33.  SUCCESSORS AND ASSIGNS

This Lease shall be binding upon and inure to the benefit of Landlord, its
successors and assigns, and shall be binding upon and inure to the benefit of
Tenant, its successors, and to the extent assignment is approved by Landlord as
provided hereunder, Tenant's assigns.

                              34.  FORCE MAJEURE

If performance by a party of any portion of this Lease is made impossible by any
prevention, delay, or stoppage caused by strikes, lockouts, labor disputes, acts
of God, inability to obtain services, labor, or materials or reasonable
substitutes for those items, government actions, civil commotions, fire or other
casualty, or other causes beyond the reasonable control of the party obligated
to perform, performance by that party for a period equal to the period of that
prevention, delay, or stoppage is excused.  Tenant's obligation to pay Rent,
however, is not excused by this Paragraph 34.

                                       13
<PAGE>
 
                          35.  SURRENDER OF PREMISES

     Tenant shall, upon expiration or sooner termination of this Lease,
surrender the Premises to Landlord in the same condition as existed on the date
Tenant originally took possession thereof, including, but not limited to, all
interior walls cleaned, all interior painted surfaces repainted in the original
color, all holes in walls repaired, all carpets shampooed and cleaned, all HVAC
equipment in operating order and in good repair, and all floors cleaned, waxed,
and free of any Tenant-introduced marking or painting, all to the reasonable
satisfaction of Landlord. Tenant shall remove all of its debris from the
Project. At or before the time of surrender, Tenant shall comply with the terms
of Paragraph 12.A. hereof with respect to Alterations to the Premises and all
other matters addressed in such Paragraph. If the Premises are not so
surrendered at the expiration or sooner termination of this Lease, the
provisions of Paragraph 25 hereof shall apply. All keys to the Premises or any
part thereof shall be surrendered to Landlord upon expiration or sooner
termination of the Term. Tenant shall give written notice to Landlord at least
thirty (30) days prior to vacating the Premises and shall meet with Landlord for
a joint inspection of the Premises at the time of vacating. In the event of
Tenant's failure to give such notice or participate in such joint inspection,
Landlord's inspection at or after Tenant's vacating the Premises shall
conclusively be deemed correct for purposes of determining Tenant's
responsibility for repairs and restoration.

                              36.  MISCELLANEOUS

A.  GENERAL.  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 respective successors, executors,
administrators and permitted assigns, according to the context hereof.

B.  TIME.  Time is of the essence regarding this Lease and all of its
provisions.

C.  CHOICE OF LAW.  This Lease shall in all respects be governed by the laws of
the State of California.

D.  ENTIRE AGREEMENT.  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 its agents or
understandings made between the parties other than those set forth in this Lease
and its Exhibits.

E.  MODIFICATION.  This Lease may not be modified except by a written instrument
signed by the parties hereto.

F.  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.

G.  RECORDATION.  Tenant shall not record this Lease or a short form memorandum
hereof.

H.  EXAMINATION OF LEASE.  Submission of this Lease to Tenant does not
constitute an option or offer to lease and this Lease is not effective otherwise
until execution and delivery by both Landlord and Tenant.

I.  ACCORD AND SATISFACTION.  No payment by Tenant of a lesser amount than the
total Rent due nor any endorsement on any check or letter accompanying any check
or payment of Rent shall be deemed an accord and satisfaction of full payment of
Rent, and Landlord may accept such payment without prejudice to Landlord's right
to recover the balance of such Rent or to pursue other remedies.

J.  EASEMENTS.  Landlord may grant easements on the Project and dedicate for
public use portions of the Project without Tenant's consent; provided that no
such grant or dedication shall materially interfere with Tenant's Permitted Use
of the Premises.  Upon Landlord's request, Tenant shall execute, acknowledge and
deliver to Landlord documents, instruments, maps and plats necessary to
effectuate Tenant's covenants hereunder.

K.  DRAFTING AND DETERMINATION PRESUMPTION.  The parties acknowledge that this
Lease has been agreed to by both the parties, that both Landlord and Tenant have
consulted with attorneys with respect to the terms of this Lease and that no
presumption shall be created against Landlord because Landlord drafted this
Lease.  Except as otherwise specifically set forth in this Lease, with respect
to any consent, determination or estimation of Landlord required or allowed in
this Lease or requested of Landlord, Landlord's consent, determination or
estimation shall be given or made solely by Landlord in Landlord's good faith
opinion, whether or not objectively reasonable.

L.  EXHIBITS.  The Exhibits attached hereto are hereby incorporated herein by
this reference.

M.  NO LIGHT, AIR OR VIEW EASEMENT.  Any diminution or shutting off of light,
air or view by any structure which may be erected on lands adjacent to or in the
vicinity of the Building shall in no way affect this Lease or impose any
liability on Landlord.

N.  NO THIRD PARTY BENEFIT.  This Lease is a contract between Landlord and
Tenant and nothing herein is intended to create any third party benefit.

O.  QUIET ENJOYMENT.  Upon payment by Tenant of the Rent, and upon the
observance and performance of all of the other covenants, terms and conditions
on Tenant's part to be observed and performed, Tenant shall peaceably and
quietly hold and enjoy the Premises for the term hereby demised without
hindrance or interruption by Landlord or any other person or persons lawfully or
equitably claiming by, through or under Landlord, subject, nevertheless, to all
of the other terms and conditions of this Lease.  Landlord shall not be liable
for any hindrance, interruption, interference or disturbance by other tenants or
third persons, nor shall Tenant be released from any obligations under this
Lease because of such hindrance, interruption, interference or disturbance.

P.  COUNTERPARTS.  This Lease may be executed in any number of counterparts,
each of which shall be deemed an original.

Q.  MULTIPLE PARTIES.  If more than one person or entity is named herein as
Tenant, such multiple parties shall have joint and several responsibility to
comply with the terms of this Lease.

                          37.  ADDITIONAL PROVISIONS

A.  ADDENDA.  Exhibits A  and Addenda 1 attached hereto are hereby incorporated
into and made a part of this Lease as though fully set forth herein.

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<PAGE>
 
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the day
and the year first above written.


                    LANDLORD

 
                    Spieker Properties, L.P.,
                    a California limited partnership
 
                    By:  Spieker Properties, Inc.,
                         a Maryland corporation,
                         its general partner
 
                         By: /s/
                            ------------------------------------

                             Its: Regional Sr. V.P.
                                 ------------------------------- 

                    Date: 3/3/98
                         ---------------------------------------


                    TENANT

                    Concentric Network Corporation, Inc.
                    ------------------------------------

                    A Delaware corporation
                    ------------------------------------
                            [type of entity]

                    By: /s/ Henry R. Nothhaft
                       ---------------------------------

                        Its: CEO
                            ----------------------------

                                       15