EXHIBIT 10.21.1


                                 LEASE AGREEMENT


                                     BETWEEN


                           MISSION WEST SHORELINE, LLC
                                  ("Landlord")


                                       and


                              MICROSOFT CORPORATION
                                   ("Tenant")


<PAGE>


                                    ARTICLE 1
                                BASIC LEASE TERMS

     1.1 Terms.  Reference in this Lease Agreement ("Lease") to any of the terms
listed  below shall be deemed to  incorporate  and be a reference to the data or
definition set forth next to such term in this Article.

          (a)  Landlord:   Mission  West  Shoreline,  LLC,  a  Delaware  limited
     liability company

          (b)  Landlord's Address:
                    10050 Bandley Drive
                    Cupertino, CA 95014
                    Attn:  Carl Berg and Ray Marino

          (c)  Tenant: Microsoft Corporation, a Washington corporation

          (d)  Tenant's Address - For Notices:
                    Microsoft Corporation
                    One Microsoft Way
                    Redmond,  WA 98052-6399
                    Attn:  Jose Oncina
                           General Manager - Real Estate & Facilities

               With a copy sent to:
                    Microsoft Corporation
                    One Microsoft Way
                    Redmond, WA  98052-6399
                    Attn:  Timothy R. Osborn
                           Senior Attorney
                           Law and Corporate Affairs

               Tenant's Address - For Billing:
                    Microsoft Corporation
                    One Microsoft Way
                    Redmond, WA  98052-6399
                    Attn:  Property Managers

          (e)  Mailing Address of the Premises:
                    1065 La  Avenida
                    Mountain View, California 94043-1421

          (f) Project: The land, buildings and improvements shown on the Project
     Site Plan ("Project").

          (g) Premises: See Article 2.1.

          (h) Execution  Date: The last date appearing  adjacent to the parties'
     signatures below.

          (i) Commencement Date: See Article 3.

          (j) Option: See Article 3.

          (k) Lease Term: See Article 3.

          (l) Improvements: See Article 2.

          (m) Use of Premises: See Article 7.

          (n) Base Rent;  Amortized Rent (unless adjusted  pursuant to the terms
     and conditions  herein contained,  including,  without  limitation  Article
     4.3):


<PAGE>

<TABLE>
<CAPTION>

       ----------------- ----------------- ---------------- ------------- ------------------ -----------------
          Lease Year         Base Rent       Monthly Base     Estimated     Amortized Rent        Total of
                            per Square      Rent (for the     Additional       includes         Monthly Base
                              Foot            Premises           Rent       Additional Rent    Rent, Estimated
                                             excluding                       for Building      Additional Rent
                                              Building                          1075            and Amortized
                                               1075)                                                Rent
       ----------------- ----------------- ---------------- ------------- ------------------ -----------------
<S>                     <C>               <C>              <C>           <C>                <C>
       01/01/2005        $1.45 per         $611,917.40      $75,113.83    $222,738.60        $909,770.00
       through           square foot for
       8/31/2005         422,012 square
                         feet
       ----------------- ----------------- ---------------- ------------- ------------------ -----------------
       09/01/2005        $1.49 per         $630,274.92      $75,297.41    $222,738.60        $928,311.00
       through           square foot for
       8/31/2006         422,012 square
                         feet
       ----------------- ----------------- ---------------- ------------- ------------------ -----------------
       09/01/2006        $1.54 per         $649,183.17      $76,803.36    $222,738.60        $948,725.00
       through           square foot for
       8/31/2007         422,012 square
                         feet
       ----------------- ----------------- ---------------- ------------- ------------------ -----------------
       09/01/2007        $1.58 per         $668,658.66      $78,339.43    $222,738.60        $969,737.00
       through           square foot for
       8/31/2008         422,012 square
                         feet
       ----------------- ----------------- ---------------- ------------- ------------------ -----------------
       09/01/2008        $1.63 per         $688,718.42      $79,906.21    $222,738.60        $991,363.00
       through           square foot for
       8/31/2009         422,012 square
                         feet
       ----------------- ----------------- ---------------- ------------- ------------------ -----------------
       09/01/2009        $1.68 per         $709,379.98      $81,504.34    $222,738.60        $1,013,623.00
       through           square foot for
       8/31/2010         422,012 square
                         feet
       ----------------- ----------------- ---------------- ------------- ------------------ -----------------
       09/01/2010        $1.73 per         $730,661.38      $83,134.42    $222,738.60        $1,036,534.00
       through           square foot for
       8/31/2011         422,012 square
                         feet
       ----------------- ----------------- ---------------- ------------- ------------------ -----------------
       09/01/2011        $1.78 per         $752,581.22      $84,797.11    $222,738.60        $1,060,117.00
       through           square foot for
       8/31/2012         422,012 square
                         feet
       ----------------- ----------------- ---------------- ------------- ------------------ -----------------
       09/01/2012        $1.82 per         $768,061.84      $86,493.06    $222,738.60        $1,077,293.00
       through           square foot for
       8/31/2013         422,012 square
                         feet
       ----------------- ----------------- ---------------- ------------- ------------------ -----------------
       09/01/2013        $1.83 per         $772,281.96      $88,222.92    $222,738.60        $1,083,243.00
       through           square foot for
       8/31/2014         422,012 square
                         feet
       ----------------- ----------------- ---------------- ------------- ------------------ -----------------
</TABLE>

          (o) Additional Rent: See Article 4.

          (p) Rent:  Base Rent,  Amortized Rent and Additional Rent (See Article
     4.)

          (q) Base Rent During Option Term:  "Market Rent" means the  prevailing
     market rental rate on a level basis that a willing  tenant would pay, and a
     willing landlord would accept, in an arm's length bona fide negotiation for
     office  space of  comparable  quality,  design and location in the Mountain
     View, CA area with  comparable  landscaping,  amenities,  and  recreational
     facilities,  for an amount of space comparable to the amount then leased by
     Tenant  including  annual rental  increases if such increases are market at
     the time.  (provided that if there are fewer than three (3) such comparable
     Class A office leaseholds in the Mountain View and Sunnyvale,  CA area then
     the market area shall be  expanded  to include the County of Santa  Clara),
     taking  into   consideration  all  relevant  factors   including,   without
     limitation,  any concessions or inducements  (e.g., rent abatement,  tenant
     improvement and other allowances) then being offered

<PAGE>

     by  landlords  to  prospective   tenants  (or  by  prospective  tenants  to
     landlords) for comparable  space,  definition of "rentable area" applicable
     to the  comparable  spaces,  distinction  between gross and net rental rate
     (exclusive of expense pass-throughs,  whether characterized as such or not,
     and exclusive of any portion of "base rentals"  attributable to expenses or
     to an  "expense  stop"),  the  term of the  lease(s),  amenities,  setting,
     leasing,  services provided and creditworthiness of tenant. For purposes of
     determining  "comparable  quality and design," the Premises shall be deemed
     to  exclude  any  increase  in the  value of the  Premises  resulting  from
     Alterations  constructed  at the expenses of Tenant after the  Commencement
     Date.

          Base Rent for each Option term shall be  ninety-five  percent (95%) of
     the Market Rent for the Option term.  The parties  shall  negotiate in good
     faith to establish  the Market Rent.  If the parties are unable to agree on
     Market Rent within fifteen (15) days after Tenant gives Landlord its notice
     exercising the Option (the "Notice Date"),  then each party shall appoint a
     disinterested,  independent  appraiser  who is a  member  of  the  American
     Institute of Real Estate  Appraisers (an "Appraiser") and has at least five
     years  experience  appraising  rental  properties in the Mountain  View, CA
     area. If the  Appraisers  are unable to reach  agreement  about market rent
     within thirty (30) days after the Notice Date,  then either party on notice
     to the other may  request  appointment  of a single  arbitrator.  Upon such
     notice the parties shall have five (5) days to agree upon an arbitrator who
     has significant real estate experience and if no such agreement is reached,
     then the American  Arbitration  Association  ("AAA") shall appoint a single
     arbitrator.  If the AAA does not  appoint an  arbitrator  meeting  the same
     qualifications  of an Appraiser  within thirty (30) days after the request,
     then either party may apply to the senior  judge of the  superior  court of
     the county where the Premises  are located  who,  acting in his  individual
     (not  judicial)  capacity,  shall make the  appointment.  See Article  27.2
     regarding commissions.

          Once the arbitrator is appointed, each Appraiser promptly shall submit
     his  determination  of Market Rent to the arbitrator.  The arbitrator shall
     determine  Market Rent  (applying the  definition  stated above) within ten
     (10) days based solely on the materials submitted by the Appraisers and the
     Market Rent shall be  determined  based on baseball  arbitration  where the
     arbitrator's  only  responsibility  is to choose which of the Appraisers is
     the closest to Market Rent.  Each party shall bear the expense of retaining
     its  Appraiser.  The fees and expenses of the arbitrator and other expenses
     of the arbitration shall be borne equally by the parties.  The arbitrator's
     determination  of Market  Rent shall be final and  binding on the  parties.
     Judgment upon the  determination  of Market Rent rendered by the arbitrator
     may be entered in any court having jurisdiction.

          (r) Project Rentable Area: 515,700 square feet, being the aggregate of
     the  following:  (i) 422,012 square feet for,  collectively,  Building 1045
     (which has 113,949  square feet),  Building 1055 (which has 113,949  square
     feet),  Building  1065 (which has 80,165  square  feet),  and Building 1085
     (which has 113,949  square feet);  and (ii) 93,688 square feet for Building
     1075.

          (s) Lease Year: The first eight (8) full calendar  months of the Lease
     Term and each succeeding twelve (12) month period.

          (t) Laws: Laws, ordinances,  rules and regulations,  including but not
     limited  to  building  and  zoning  laws,   including  the  Americans  with
     Disabilities Act, health,  energy,  and fire codes of the state,  local and
     federal  governments,  agencies,  and  boards,  and  the  requirements  and
     regulations  of  Boards of Fire  Underwriters  having  jurisdiction  and of
     insurance carriers of any insurance on the Premises.

          (u) Common  Area:  The  driveways  with dashes  (----) as shown on the
     Premises Site Plan.

     1.2 Exhibits.  The Exhibits listed below are attached and are  incorporated
in this Lease by this reference:

                   EXHIBIT A-1      Premises Site Plan
                   EXHIBIT A-2      Project Site Plan
                   EXHIBIT B        Memorandum of Lease
                   EXHIBIT C        SAND
                   EXHIBIT D        Permitted Encumbrances and Legal Description
                   EXHIBIT E        Sublet or Assignment Agreement
                   EXHIBIT F        Estoppel
                   EXHIBIT G        Final Clearance SCVWD


                                    ARTICLE 2
                     DESCRIPTION OF PREMISES; CURRENT LEASE

     2.1 Premises.  Landlord leases to Tenant the Premises.  "Premises" shall be
defined as the  portion of the  Project  under  Lease to the Tenant at any given
time.  The initial  Premises shall include the entire Project which includes all
of Building 1045, Building 1055, Building 1065, Building 1075 and Building 1085,
the other improvements  ("Improvements") now or hereafter erected or constructed
on the Land, together with all appurtenances and the benefits of any appurtenant
easements  and rights of way, and the parking  facilities  shown on Project Site
Plan  attached  hereto as Exhibit  A-2.  From time to time,  the Premises may be
amended as a result of any contraction or expansion  thereto as provided herein.
At all times,  notwithstanding  any  contraction  or expansion to the  Premises,

<PAGE>

Tenant shall have exclusive use at the Premises, as defined at any given time of
all recreational and fitness areas,  all existing  infrastructure  support areas
(e.g.  satellite;  power back-up;  etc.),  and all parking shown on the Premises
Site Plan  attached  as Exhibit  A-1  showing  different  configurations  of the
Premises.  The Premises Site Plan reflect the actual  Premises at any given time
during the Lease,  and the appropriate  Premise Site Plan shall be designated or
adjusted  as  appropriate  upon any  amendment  to the Lease  when the  Premises
changes from its initial configuration.

     2.2 Building 1075. Commencing on October 31, 2005, and provided that Tenant
receives  reasonable  advance written notice,  Tenant shall provide Landlord and
its  representatives  with  access to  Building  1075 so that  Landlord  and its
representatives may show Building 1075 to prospective tenants. At the earlier of
January 31, 2006,  or the  commencement  date of a lease by Landlord to a tenant
for all or any  part  of  Building  1075,  Tenant  shall  surrender  and  return
possession  of  Building  1075 to  Landlord  in  accordance  with the  terms and
conditions  required  herein,  and upon such surrender and return,  the Premises
shall no longer include  Building 1075 and related parking shown on the Premises
Site Plan (Exhibit A-1) and  improvements.  In event Landlord  leases all or any
part of Building 1075 with a lease  commencement date after October 31, 2005 and
prior to January 31,  2006,  Landlord  shall  deliver  written  notice to Tenant
requesting an early  surrender date which in no event shall be less than 45 days
after Landlord's notice to Tenant unless otherwise agreed by Tenant.

     Landlord  will use good  faith  business  efforts to  undertake  leasing at
Building  1075 on such terms that will allow Tenant to expand into Building 1075
during the  calendar  year 2011.  All leases  for  Building  1075 which  contain
extension  options  must  provide that such options are personal to the original
tenants  and will be  forfeited  in event of any  assignment  of such  leases or
subletting of their premises.

     2.3 Parking;  Exterior Common Areas. Landlord represents and covenants that
Tenant shall be entitled to maintain parking at the Premises with no less than a
ratio of 3.39  parking  spaces for every  1,000  rentable  square feet leased by
Tenant which  amounts to 1,748  parking  spaces as described on the Project Site
Plan attached hereto as Exhibit A-2. Upon surrender of Building 1075 pursuant to
Article  2.2  Tenant's  share of  parking  will be  reduced  from 1,748 to 1,439
parking spaces.  Tenant's  parking spaces shall include all parking shown on the
Project Site Plan as parking even if portions are being used by Tenant for other
purposes such as satellite dish location or storage.

     2.4 Current Lease.  Landlord and Tenant  acknowledge and agree that, on the
Commencement Date, without further action required by either party, that certain
Standard Form Lease, dated July 25, 1998, between Mission West Properties, L.P.,
a Delaware  limited  partnership,  and Tenant,  as amended by that certain First
Amendment  to Lease,  dated  September  6,  2000,  between  Landlord  and Tenant
(collectively,  the "Current  Lease") is Lease Terminated and replaced with this
Lease.  No further  rights,  benefits or  obligations  shall  continue after the
Commencement  Date with respect to the Current  Lease  except as  expressly  set
forth herein.  In the event Tenant has paid Rent under the terms and  conditions
of the Current Lease for any period following the Commencement Date in excess of
that required  under this Lease for the same period,  Landlord shall adjust Rent
and refund the difference to Tenant within ten (10) days of the Execution  Date.
Any amount not timely  refunded to Tenant may, at Tenant's option and not as its
exclusive  remedy, be offset against Base Rent and Amortized Rent due hereunder.
Landlord waives all Tenant's  obligations under the Current Lease except for the
those listed in Article 15.2 herein. Landlord acknowledges receipt of a complete
and  current  set of Project and  Improvement  drawings on a current  version of
Auto-Cad.   These  drawings  shall  include  all  grading,  site,   underground,
architectural,    structural,   interior,   plumbing,   sprinkler,   electrical,
HVAC/mechanical, landscape and other available plans.

     2.5 Amendments  Required For Additions and  Contractions of Premises.  Upon
Tenant's  exercise of any of the  following  options;  (a) surrender of Building
1075 pursuant to Article 2.2, (b) right to contract  pursuant to Article 3.5 and
(c) right of first offer to lease  pursuant to Article 3.6,  the Landlord  shall
prepare  for the  approval of Tenant an  Amendment  to Lease that  includes  the
following: (i) a new Premises Site Plan showing the land, parking, buildings and
other  improvements  that will  comprise the Premises and will be attached as an
exhibit to the Amendment,  (ii) a recalculation of the Base Rent and the parking
(iii) the commencement date and surrender date, (iv) a recalculation of Tenant's
Tax Share  (defined  in  Article  5.6  below)  and (v) any other  prorations  or
adjustment as required by the Lease.


                                    ARTICLE 3
                                   LEASE TERM

     3.1 Lease  Term.  The term of this  Lease  begins on  January  1, 2005 (the
"Commencement  Date") and ends on August 31, 2014 (the "Lease  Term") unless one
or more Options are  exercised  or the Lease Term ends earlier  under this Lease
(the "Lease  Term").  In no event shall the Lease Term commence or Rent begin to
accrue  under  this  Lease  unless  and until  Landlord  and  Tenant  have fully
satisfied each and every condition precedent set forth in Article 3.2.

     3.2  Conditions,  Warrants of  Representation  of Landlord  and Tenant Upon
Signing Lease. Landlord and Tenant by signing this Lease agree to the following:
(i)  conditions,  representations  and warranties  contained in Article 15.1 are
true and correct and agreed to by Landlord; (ii) conditions, representations and
warranties  contained  in  Article  15.2 are true and  correct  and agreed to by
Tenant,  (iii) Landlord shall deliver to Tenant one (1) fully executed  original
of this Lease  within ten (10) days after  Tenant  delivers to Landlord  two

<PAGE>

(2) duplicate  originals of this Lease executed by Tenant,  (iv) by signing this
Lease the Landlord  represents that the Premises are not subject to any deeds of
trust, and (v) a Memorandum of Lease in form attached as Exhibit C, will be duly
executed and  acknowledged  by Landlord  and Tenant  within ten (10) days of the
request by either party ("the Memorandum of Lease"). If Landlord or Tenant fails
to deliver  the fully  executed  Lease or other  documents  as  required in this
Article 3.2 the other party may take the actions stated below. If Landlord fails
to perform its obligations as required herein Tenant may, if Tenant so elects in
its sole  discretion,  withhold  Rent herein  until such  obligations  are fully
satisfied.  If Tenant fails to perform its  obligations  herein,  Landlord shall
give  Tenant  written  notice  to  perform  and  Tenant's  failure  to meet  its
obligation  set forth above in this  Article 3.2 within ten (10) days of receipt
of such notice will be  considered a default  under this Lease.  Nothing in this
Article  3.2 shall be  construed  to in any way  limit  the  nature or extent of
Landlord's or Tenant's covenants or duties under other provisions of this Lease.

     3.3 Extension Options. Tenant shall have the right to extend this Lease for
any or all  buildings  then  comprising  the  Premises  for two  (2)  successive
additional  periods  of five (5)  years  (each an  "Option")  commencing  on the
expiration of the initial Lease Term or the immediately  preceding  Option term,
as the case may be, upon the same terms and conditions of this Lease except that
Base Rent shall be determined as set forth in Article 1(r). Amortized Rent shall
not be payable  during an Option term.  To exercise an Option,  Tenant must give
written  notice to Landlord that Tenant is exercising the Option at least twelve
(12)  calendar  months  before the  expiration  of the initial Lease Term or the
immediately  preceding  Option term,  as the case may be,  expires and no Tenant
Default is occurring  (beyond any applicable cure period).  Any remaining Option
will expire if Tenant does not timely exercise the preceding Option. Upon Tenant
giving  Landlord  timely  written  notice of  exercise  and  complying  with the
foregoing  provisions  of this Article 3.3, the Lease Term shall be deemed to be
automatically  extended to include the Option period on the terms and conditions
set forth in this Article 3.3. If Tenant timely exercises an Option, the parties
shall execute an amendment to this Lease  memorializing  the terms of the Option
within  thirty (30) days after the Base Rent for the Option  term is  determined
under  Article 1(q).  The parties shall be bound to the Option,  notwithstanding
any  failure  to  execute  such  an  amendment.   See  Article  27.2   regarding
commissions.

     3.4 Early Termination.  Tenant shall have the right to terminate this Lease
effective  September 1, 2011 (the "Termination  Date") provided Tenant has given
Landlord  written  notice of its election no later than nine months prior to the
Termination Date (the "Termination Notice Date"). Upon termination of this Lease
pursuant to this  Article 3.4,  Tenant shall pay to Landlord on the  Termination
Notice Date (i) the sum of unamortized commissions actually paid to the Tenant's
Broker  (amortized  evenly over the Lease Term  [excluding  the number of months
remaining  under  the  Current  Lease],  as it may be  extended),  which  sum is
scheduled to be $1,032,283.07 (provided that such shall be further adjusted as a
result of an expansion in which a  commission  is actually  paid by Landlord) or
contraction  pursuant to Article  3.5,  (ii) two months of Base Rent at the rate
payable on the Termination  Notice Date, being the sum of $1,461,322.76  (unless
adjusted  pursuant  to an  expansion  or  contraction),  and  (iii)  all  unpaid
Amortized Rent on the Termination  Date, being the sum of $7,506,848.64  (unless
Amortized  Rent is  adjusted  pursuant  to  Article  4.3).  Upon  Tenant  timely
exercising  this  right:  (a) all Rent  payable  under this Lease  shall be paid
through and apportioned as of the Termination Date; (b) neither party shall have
any rights, estates, liabilities, or obligations under this Lease for the period
accruing after the  Termination  Date,  except those which, by the provisions of
this Lease,  expressly  survive the expiration or termination of the Lease Term;
(c) Tenant  shall  surrender  and vacate the  Premises  and  deliver  possession
thereof to Landlord on or before the Termination Date in the condition  required
under this Lease for  surrender  of the  Premises;  and (d)  Landlord and Tenant
shall enter into a written  agreement  reflecting the  termination of this Lease
upon the terms  provided  for in this  Article  3.4,  which  agreement  shall be
executed  and  recorded  within  thirty  (30) days after  Tenant  exercises  the
termination right and pays all required fees

     3.5 Right to Contract. Tenant shall have the right to contract the Premises
by vacating and surrendering either Building 1055 or Building 1085 (either,  the
"Contraction  Space") to Landlord effective  September 1, 2009 (the "Contraction
Date")  provided  Tenant has given  Landlord  written  notice of its election no
later than nine months prior to the Contraction  Date (the  "Contraction  Notice
Date").  Upon  contraction of the Premises  pursuant to this Article 3.5, Tenant
shall  pay  Landlord  on the  Contraction  Notice  Date  the sum of  unamortized
commissions  actually  paid to the Tenant's  Broker  attributable  to Rent which
would have been generated with respect to the Contraction  Space,  being the sum
of $399,657.94  (which is equal to 113,949 square feet divided by 422,012 square
feet multiplied by $1,480,139.79).  The amounts payable for Amortized Rent shall
not be affected as a result of any  contraction  pursuant to this  Article  3.5.
Upon Tenant  timely  exercising  this right,  all Rent payable  under this Lease
shall be paid through and  apportioned  as of the  Contraction  Date.  After the
Contraction  Date, Base Rent payable with respect to the balance of the Premises
shall be  decreased  and Tenant's  Tax Share shall be  recalculated  pursuant to
Article 5.5. After the Contraction  Date, Tenant shall have no obligations under
this Lease for the period  accruing after the  Contraction  Date with respect to
the  Contraction  Space,  except those which,  by the  provisions of this Lease,
expressly  survive  such  contraction.  Tenant  shall  surrender  and vacate the
Contraction  Space and deliver  possession  thereof to Landlord on or before the
Contraction Date in the condition required under this Lease for surrender of the
Premises (or any part  thereof).  Landlord and Tenant shall enter into a written
agreement  reflecting  the  contraction  of the Premises as shown on the current
Premises Site Plan, and a proportionate reduction in parking at the Premises for
Tenant's use as shown on the Premises  Site Plan,  and  confirming,  among other
things,  amounts payable as Base Rent and the  recalculated  Tenant's Tax Share,
which agreement shall be executed within thirty (30) days after Tenant exercises
the contraction right.

     3.6 Right of First Offer to Lease.  Tenant shall have an on-going  right of
first  offer to lease  ("Right  of First  Offer")  all space not then  leased by
Tenant at any of the five Buildings currently comprising the Premises (the "ROFO
Space").  Upon the occurrence of an Advice  Triggering Event (as defined below),
Landlord  shall give  written  notice to Tenant  advising  Tenant that an Advice
Triggering Event has occurred and the date when the ROFO Space described therein
would be available to Tenant.  Tenant  shall

<PAGE>


have ten (10) business days after receipt of Landlord's written notice to elect,
by written notice,  whether to exercise its Right of First Offer with respect to
such ROFO Space.  Rent for such ROFO Space shall  commence sixty (60) days after
Tenant is  provided  uninterrupted  access to the ROFO Space for the  purpose of
constructing tenant improvements. The square foot rental rate for the ROFO Space
shall be the same square foot  rental  rate  payable by Tenant for the  Premises
then leased by Tenant at the rent commencement date for the ROFO Space. The term
shall be  coterminous  with the Lease Term  herein but not less than three years
unless the next available Option to extend is exercised,  in which case the term
will be  co-terminus  with the  extended  expiration  date.  All other terms and
conditions  will be  identical  to those  then in effect  under the Lease at the
commencement date for such ROFO Space.  After the commencement date for any ROFO
Space  leased  pursuant to this Right of First  Offer,  such ROFO Space shall be
added to and form a part of the  Premises  and the term  "Premises,"  as used in
this Lease, shall include such ROFO Space.  "Advice Triggering Event" means: (i)
with respect to the Premises  (except for Building 1075),  Landlord's good faith
determination  that the existing tenant or occupant will not extend or renew the
term of its lease or if such lease expires  without  renewal or  extension,  and
(ii) with respect to Building 1075 and any  Contraction  Space,  upon Landlord's
receipt of a bona fide offer from a third party  tenant to lease the ROFO Space.
Landlord and Tenant  shall enter into a written  agreement  confirming  Tenant's
rights to the ROFO Space and confirming,  among other things, amounts payable as
Base Rent and the  recalculated  Tenant's Tax Share,  which  agreement  shall be
executed within thirty (30) days after Tenant  exercises a Right of First Offer.
See Article 27.2 regarding commission.

     3.7 Right of First Offer to Purchase.  Provided  that no Tenant  Default is
then  occurring  (beyond  any  applicable  cure  period),  Tenant  shall have an
on-going  right of first offer to purchase  ("Right of First Offer to Purchase")
all  or  any  of  the  five   Buildings   currently   comprising   the  Premises
(collectively,  the "Offer Property").  In the event Landlord and/or a successor
Excluded Entity elects to sell their interest in all or any portion of the Offer
Property to a third party (excluding (i) Landlord or Landlord  Affiliates,  (ii)
"Entities  Controlled  by Members of the Berg Family"  (defined as any entity or
entities  which are each over 51% owned or controlled by Carl Berg or Clyde Berg
or Kara  Ann  Berg  or a  trust  for the  benefit  of  Kara  Ann  Berg or by any
combination  of Carl  Berg or Clyde  Berg or Kara  Ann  Berg or a trust  for the
benefit of Kara Ann Berg) , and (iii) any entity that acquires substantially all
of the assets of Mission West  Properties,  Inc. through a merger or acquisition
(collectively,  the  "Excluded  Entities")),  Landlord  shall  notify  Tenant in
writing of its intent to sell all or any portion of the Offer  Property  and the
terms and  conditions  upon  which  Landlord  would be willing to sell the Offer
Property to Tenant.  "Landlord Affiliates" means any subsidiary of Landlord, any
entity with which Landlord merges, or any entity that is controlled by, controls
or is under  common  control with  Landlord.  Tenant shall have thirty (30) days
from such written  notification to notify Landlord of its intent to negotiate to
purchase the Offer Property (the "Purchase  Notice").  Landlord and Tenant shall
then  negotiate a purchase  and sale  agreement  in good faith in the sixty (60)
days  following  delivery of the  Purchase  Notice (the  "Negotiation  Period").
During the  Negotiation  Period,  Landlord shall not negotiate to sell the Offer
Property to any third  party.  If Landlord  and Tenant enter into a purchase and
sale  agreement  for the Offer  Property  during  the  Negotiation  Period,  the
purchase and sale  agreement  shall provide that,  among other things,  Landlord
shall convey good and  marketable  title to the Offer  Property,  by grant deed,
free and clear of liens  and  encumbrances  except  the  Permitted  Encumbrances
(Exhibit D). Title shall be insurable by First American Title Insurance  Company
or other mutually agreed nationally known title company at standard rates for an
ALTA standard coverage Owner's policy at Landlord's  expense;  provided,  Tenant
may, at its expense for the additional  premium,  obtain ALTA extended  coverage
title  insurance,  and shall be responsible  for any survey  required,  although
Landlord will provide  Tenant will the most recent survey of the Offer  Property
in its  possession  The  purchase and sale  agreement  shall  otherwise  contain
commercially  reasonable  terms and conditions in accordance with local industry
standards.  If  Landlord  and  Tenant  do not  enter  into a  purchase  and sale
agreement for the Offer Property during the Negotiation  Period,  Landlord shall
thereafter  have the right to sell the Offer  Property to a third party on terms
equal to or no less favorable than  originally  offered to Tenant.  In the event
Landlord is unsuccessful in consummating a sale of the Offer Property to a third
party within a period of one hundred  eighty (180) days after the  expiration of
Tenant's exclusive Negotiation Period, Tenant's Right of First Offer to Purchase
shall be  reinstated  and Landlord  shall  thereafter  comply with the terms and
conditions  set  forth  in  this  Article  3.7.  Transaction  closing  costs  in
connection  with any such sale of Offer  Property  to  Tenant  shall be paid per
standard  practices  in  Santa  Clara  County,  CA.  Notwithstanding  any  other
provision of this Lease that may limit or restrict  transfer of Tenant's  rights
under this Lease,  it is agreed that Tenant shall have the right to transfer the
Right of First  Offer to  Purchase  and/or  this  Lease to another  entity  that
exercises  the Right of First Offer to Purchase in connection  with  structuring
and  implementing  a  transaction  or series of  transactions  that  finance the
acquisition of the Offer Property,  subject to the conditions that (i) Tenant or
an assignee or subtenant  permitted  under Article 18 remains as the occupant of
the Premises upon the conclusion of the purchase,  and (ii) that the transaction
or transactions occur in such a manner that Tenant remains liable for payment of
the  purchase  price.  Notwithstanding  any other  provision of the Article 3.7,
Tenant's Right of First Offer to Purchase shall not apply to a conveyance of the
Offer Property to a lender of Landlord  secured by the Offer Property  through a
foreclosure  or transfer in lieu of  foreclosure.  See  Article  27.2  regarding
commissions.

                                    ARTICLE 4
                                      RENT

     4.1 Base Rent;  Amortized Rent. Subject to the terms and conditions of this
Lease,  the Base Rent and Amortized  Rent for the Premises shall be as set forth
in Article 1 of this Lease. Tenant shall pay Base Rent and Amortized Rent on the
first day of each month  during the Lease Term in the monthly  installments  set
forth in Article 1 or as otherwise  required  herein,  except that Base Rent and
Amortized  Rent for any portion of a calendar  month during the Lease Term shall
be prorated by dividing the annual Base Rent and Amortized Rent by three hundred
sixty-five (365) and multiplying the result by the number of days in the partial
month for which Base Rent and Amortized Rent is owed.  Payments shall be made at
Landlord's  Address or at such other  address as Landlord  may from time to

<PAGE>


time  designate in writing.  All  payments  required by this Lease to be made by
Tenant during the Lease Term as specified in Article 5.1 are "Additional  Rent."
The Rent shall be paid  without  setoff,  adjustment  or  deduction  and without
abatement  (unless the offset or deduction is made by Tenant as permitted  under
Articles 12, 13 and 20 and to recover any  judgments in favor of Tenant  against
Landlord)  except as provided  in this Lease.  ("Rent") is defined as Base Rent,
Amortized Rent and Additional Rent.

     4.2 Security  Deposit.  Upon execution of this Lease,  Tenant shall deposit
with  Landlord the sum of One Million  Dollars  ($1,000,000.00)  (the  "Security
Deposit").  The Security  Deposit  shall be held by Landlord as security for the
faithful performance by Tenant of all of the terms, covenants, and conditions of
this Lease applicable to Tenant.  If Tenant commits a Tenant Default as provided
for  herein,  including  but  not  limited  to a  default  with  respect  to the
provisions contained herein relating to the condition of the Premises,  Landlord
may (but shall not be required  to) use,  apply or retain all or any part of the
Security  Deposit  for the  payment of any amount  which  Landlord  may spend by
reason of the Tenant Default.  If any portion of the Security Deposit is so used
or applied,  Tenant shall,  within ten (10) days after written demand  therefor,
deposit  cash with  Landlord in an amount  sufficient  to restore  the  Security
Deposit to its original amount.  Tenant's failure to do so shall be a default by
Tenant.  Any  attempt by Tenant to  transfer  or  encumber  its  interest in the
Security Deposit shall be null and void.

     Notwithstanding  the above,  Landlord  agrees to waive the  requirement for
Tenant to make a Security Deposit provided Tenant's shareholder's equity exceeds
$500,000,000.00.  If at any time during this Lease,  while Tenant's tangible net
worth is less than  $500,000,000.00,  Tenant  shall be required to deposit  with
Landlord the Security Deposit  referenced above,  which shall be made within ten
days after  receipt of  written  demand by  Landlord  based on the  issuance  of
Tenant's  annual  financial  statements  indicating  the  reduction  in Tenant's
tangible net worth below  $500,000,000.00.  Any Security  Deposit paid by Tenant
shall be released by Landlord upon the earlier of expiration or  termination  of
this Lease in  accordance  with its terms or upon  issuance of Tenant's  audited
financial statements indicating that Tenant's tangible net worth is in excess of
$500,000,000.00.  Landlord  acknowledges  that as of the Execution Date Tenant's
net worth is in excess of  $500,000,000  and  therefore  no Security  Deposit is
currently required.

     4.3 Amortized Rent Reductions.  In event Landlord leases all or any part of
Building  1075 in  accordance  with Article 2.2 above,  Amortized  Rent shall be
decreased as follows:  Tenant's  remaining  principal  balance of Amortized Rent
will be offset by base rent and  Additional  Rent  collected  by Landlord on any
third-party lease(s) (after deducting for Landlord's reasonable attorney's fees,
marketing  costs,  prorated  leasing  commissions,  rent  abatement,  and tenant
improvement allowances pertaining exclusively to Building 1075) with such offset
being  effective at the time any such base rent and Additional Rent are actually
received  by  Landlord  and  deducted  in full  against  succeeding  payments of
Amortized  Rent.  Landlord  shall verify the amounts of base rent and Additional
Rent actually received by Landlord, and the amount of the above expenses as part
of the verification process set forth in Article 5.3 below.

     4.4 Late Charges.  Tenant hereby  acknowledges  that a late payment made by
Tenant to Landlord of Rent,  Amortized Rent,  Additional Rent and other sums due
hereunder will cause Landlord to incur costs not contemplated by this Lease, the
exact  amount of which will be  extremely  difficult  to  ascertain.  Such costs
include,  but are not limited to,  processing and accounting  charges,  and late
charges,  which may be imposed on  Landlord  according  to the terms of any Lien
Interest or trust deed covering the Premises. Accordingly, if any installment of
monthly Rent is not received by Landlord or Landlord's  designee within five (5)
days after Landlord  delivers a written notice to Tenant that such amount is due
pursuant to Article 20.1(a), Tenant shall pay to Landlord a late charge equal to
one percent (1%) of such overdue amount for each monthly  installment of Rent to
which the late fee  applies.  The  parties  hereby  agree that such late  charge
represents a fair and  reasonable  estimate of the costs  Landlord will incur by
reason of late  payments  made by  Tenant.  Acceptance  of such late  charges by
Landlord shall in no event  constitute a waiver of Tenant's default with respect
to such overdue amount, nor shall it prevent Landlord from exercising any of the
other rights and remedies granted hereunder.


                                    ARTICLE 5
                                 ADDITIONAL RENT

     5.1 Additional  Rent.  During the Lease Term,  Tenant shall pay to Landlord
Additional Rent attributable to the Premises.  Additional Rent shall consist of:
(i) the Real Estate  Taxes,  (ii) a monthly  Management  Fee of 1% of Base Rent,
(iii) Amortized Rent and (iv) any other items specifically  stated as Additional
Rent in this Lease as such may increase or decrease from time to time: provided,
however, that all Additional Rent for Building 1075 is included in the Amortized
Rent,  so there shall be no Additional  Rent  attributed to Building 1075 unless
Tenant  exercises  its Right of First Offer on Building 1075 pursuant to Article
3.6.  Tenant shall  continue,  however,  to be  responsible  for  utilities  and
maintenance  of Building  1075 through the earlier of January 31, 2006,  or when
Landlord leases all or a portion thereof,  or later if Tenant fails to surrender
Building 1075 on or before January 31, 2006 as required hereunder.

     5.2 Estimated  Additional  Rent.  Landlord  shall  reasonably  estimate the
Additional  Rent  Tenant is to pay to  Landlord  for each Lease  Year  wholly or
partially  included  within the Lease Term and shall send notice of the estimate
to Tenant within thirty (30) days after the Term begins for the first Lease Year
and thereafter at least thirty (30) days before  commencement of each subsequent
Lease Year. If Tenant requests,  Landlord will give Tenant  reasonably  detailed
documentation supporting Landlord's estimate. During each Lease Year included in
the Term for which  Tenant is to pay  Additional  Rent,  Tenant  shall  pay,  as
Additional Rent, one twelfth  (1/12th) of the applicable  estimate each month to
Landlord  together  with the Base  Rent.  If  Landlord  does not give  Tenant an
estimate within the time period stated above, then Tenant shall continue to make
estimated  payments based upon the preceding  year's  estimate

<PAGE>

and within  thirty (30) days after  receipt of the new  estimate for the current
Lease Year,  Tenant shall commence  payment of the new estimated  monthly amount
and shall pay in a lump sum any  retroactive  amounts due from the  beginning of
the new Lease Year.  The monthly charge for estimated  Additional  Rent shall be
prorated for any partial  month by dividing the  Operating  Cost charge by three
hundred sixty-five (365) and multiplying the result by the number of days in the
partial month for which Additional Rent are owed

     5.3  Verification  of Additional  Rent.  Not later than one hundred  twenty
(120) days after the  expiration  of each Lease Year included in the Lease Term,
Landlord  shall submit to Tenant a written  statement,  certified by  Landlord's
financial  officer or the financial  officer of Landlord's  property  manager in
sufficient  detail for  verification by Tenant,  containing the amount of actual
Additional  Rent for such Lease Year  broken  down by  component  expenses,  the
Operating  Cost  increase for the Lease Year,  and the amount if any Tenant owes
Landlord  or the amount  Landlord  owes  Tenant as a refund  for such  year.  If
Landlord does not furnish Tenant with a certified  statement of Additional  Rent
within six (6) months after the end of the Lease Year,  then  Landlord  shall be
deemed to have waived forever any and all claims for  reimbursement  from Tenant
for underpayment of Additional Rent for the Lease Year, in addition to any other
rights and remedies to which Tenant may be entitled under this Lease. Landlord's
books and records shall be kept in accordance with generally accepted accounting
principles.  Tenant or its audit representatives shall have the right to inspect
and audit  Landlord's  books and  records  with  respect to this Lease to verify
actual Additional Rent within two (2) years of receipt of a certified  statement
of  Additional  Rent.  Tenant shall have the right to retain a copy of the audit
for its records.  If Tenant's audit of the Additional Rent reveals an overcharge
of more than five percent (5%), Landlord promptly shall reimburse Tenant for the
out of pocket cost of the audit.  Any overcharge or  underpayment  of Additional
Rent shall be due from one party to the other within  thirty (30) days after the
amount of the overcharge or underpayment  has been fixed.  The foregoing  rights
also shall apply with respect to verification of any amounts charged by Landlord
to Tenant for utility costs and Real Estate Taxes.

     5.4 Real Estate  Taxes.  Landlord  shall timely pay and  discharge all real
estate taxes,  taxes based on vehicles  utilizing parking areas in the Premises,
taxes  computed  or based on  rental  income  (other  than  federal,  state  and
municipal net income taxes),  environmental surcharges,  privilege taxes, excise
taxes, business and occupation taxes, school fees or surcharges,  gross receipts
taxes, sales and/or use taxes, employee taxes, occupational license taxes, water
and sewer taxes,  assessments  (including,  but not limited to,  assessments for
public   improvements  or  benefit),   assessments  for  local  improvement  and
maintenance  districts,  and all other  governmental  impositions and charges of
every kind and nature whatsoever,  regardless of whether now customary or within
the contemplation of the parties hereto and regardless of whether resulting from
increased rate and/or valuation,  or whether extraordinary or ordinary,  general
or special,  unforeseen  or  foreseen,  or similar or  dissimilar  to any of the
foregoing  (all of the foregoing  being  hereinafter  collectively  called "Real
Estate Taxes") which, at any time during the Lease Term,  shall be applicable or
against the  Project,  or shall become due and payable and a lien or charge upon
the  Project  under or by  virtue  of any  present  or  future  laws,  statutes,
ordinances,  regulations,  or other  requirements of any governmental  authority
whatsoever.  The  term  "Environmental  Surcharge"  shall  include  any  and all
expenses,  taxes,  charges or  penalties  imposed by the Federal  Department  of
Energy,  Federal Environmental  Protection Agency, the Federal Clean Air Act, or
any regulations  promulgated  thereunder,  or any other local,  state or federal
governmental  agency or entity now or hereafter  vested with the power to impose
taxes,  assessments  or other types of surcharges as a means of  controlling  or
abating  environmental  pollution  or the use of  energy  in  regard to the use,
operation or occupancy of the Premises  provided  such  surcharge is based on an
area wide action not related to the specific occurrences on the Project. Project
Environmental issues will be covered by Article 26 of this Lease. The term "Real
Estate Tax" shall include, without limitation,  all taxes, assessments,  levies,
fees, impositions or charges levied,  imposed,  assessed,  measured, or based in
any  manner  whatsoever  (i) in whole or in part on the Rent  payable  by Tenant
under this Lease, (ii) upon or with respect to the use,  possession,  occupancy,
leasing,  operation or management of the Project, (iii) upon this transaction or
any document to which Tenant is a party creating or  transferring an interest or
an estate in the Project,  (iv) upon Tenant's business  operations  conducted at
the Premises,  (v) upon,  measured by or reasonably  attributable to the cost or
value of Tenant's  equipment,  furniture,  fixtures and other personal  property
located on the Premises or the cost or value of any leasehold  improvements made
in or to the  Premises by or for  Tenant,  regardless  of whether  title to such
improvements shall be in Landlord or Tenant, or (vi) in lieu of or equivalent to
any of the Real  Estate  Taxes set forth in this  Article  5.4. In the event any
such Real Estate  Taxes are  payable by Landlord  and it shall not be lawful for
Tenant to reimburse  Landlord for such Real Estate Taxes,  then the Rent payable
hereunder shall be increased to net Landlord the same net rent after  imposition
of any such Real  Estate  Taxes  upon  Landlord  as would  have been  payable to
Landlord  prior to the  imposition  of any  such  Real  Estate  Tax.  The  above
notwithstanding,  nothing  contained in this Article 5.4 shall require Tenant to
pay any Federal or State income,  franchise,  estate,  inheritance,  succession,
transfer or excess profits tax imposed upon Landlord.  If any general or special
assessment  is levied and  assessed  against the  Premises or Project,  Landlord
agrees to use its best  reasonable  efforts to cause the  assessment to become a
lien on the Premises or Project securing repayment of a bond sold to finance the
improvements to which the assessment relates which is payable in installments of
principal  and  interest  over the maximum term allowed by law, and Tenant shall
only be  responsible  for  installments  due and payable  during the Lease Term,
prorated  for  partial  months.  It  is  understood  and  agreed  that  Tenant's
obligation  under this  paragraph  will be prorated to reflect the  Commencement
Date and the end of the Lease Term.

     5.5  Separate  Tax  Allocation.   Each  building  shall  be  allocated  its
proportional  share of the total Project  current tax bill based on square feet.
This  proportional  share will not change unless a new amount is assessed to the
Project at which time the new assessed amount will be allocated to that building
or buildings  which created the new assessed amount as determined by information
provided  by the  assessor's  office,  and the  percentages  will be adjusted to
reflect  this  change.  The  initial  percentage  for each  building  will be as
follows:  building  1045,  1055,  and 1085 are  113,949  sq. ft. each or 22.09%,
Building 1075 is 93,688 sq. ft. or 18.18% and building

<PAGE>

1065 is 80,165  sq. ft. or 15.54%  and each will be  allocated  that per cent of
total Project tax bill. The sum of the  percentage for each building  comprising
the Premises shall be referred to as "Tenant's Tax Share".  All allocation  will
be prorated for commencement and termination.

     5.6 Payment of Real  Estate  Taxes.  Tenant  shall pay as  Additional  Rent
Tenant's  Tax Share (as  defined  and  adjusted  from time to time  pursuant  to
Article  5.5) of Real Estate  Taxes  assessed  against the real  property in the
Project.

     5.7 Contesting Real Estate Taxes.  Landlord and Tenant shall have the right
to contest or review (in the name of Tenant, or of Landlord,  or both, as Tenant
shall elect) by appropriate  proceedings  (which may be instituted either during
or after the Lease Term,  and if  instituted  shall be with the  cooperation  of
Landlord  if  requested)  any  valuation  of the  Project  for Real  Estate  Tax
assessment purposes and/or any increase in the tax rate. Landlord shall furnish,
on a timely basis,  such data,  documents,  information  and assistance and make
such appearances as may be reasonably required by Tenant.  Landlord will execute
all necessary  instruments in connection with any such protest,  appeal or other
proceedings.  If any  proceeding  may  only  be  instituted  and  maintained  by
Landlord,  then  Landlord  shall do so at the  request  and  expense  of Tenant.
Landlord shall not settle any such appeal or other proceeding  without obtaining
Tenant's prior written  approval in each  instance.  Tenant shall be entitled to
any  refund  obtained  by reason of any such  proceeding  or  otherwise  whether
obtained  during or after the expiration of the Lease Term and whether  obtained
by Landlord or Tenant for the  Premises  (less  Tenant's  Tax Share of any costs
reasonably incurred by Landlord if Landlord is responsible for the decrease, and
not to exceed the tax savings)except that if the refund shall relate to the year
in which the Lease Term  commences or expires,  the refund shall be  apportioned
between  Landlord  and Tenant  according  to the number of days within the Lease
Term.  If Tenant  contests  Real Estate  Taxes at its expense  that results in a
savings,  it shall be  entitled to any  proceeds  received  from the  assessor's
office attributable to the Premises,  and shall be reimbursed by Landlord within
ten (10) days of invoice for any portion of costs reasonably  incurred by Tenant
not exceeding the tax savings relating to property owned by Landlord not part of
the  Premises,  or relating to time  periods not part of the Lease Term.  Tenant
shall not be responsible to pay any portion of any increase in Real Estate Taxes
attributable  to an increase  (excluding  the annual 2%  increases) in valuation
unless  Tenant has  received a copy of the  applicable  Real  Estate Tax bill or
notification  of  valuation  increase  in  sufficient  time to enable  Tenant to
contest the tax increase if Tenant so desires.

     5.8 Tax  Increases.  Notwithstanding  any other  provision  of this  Lease,
during the first five (5) years of the Lease Term,  Tenant shall not be required
to pay any  increase in Real  Estate  Taxes  above the  Proposition  13 base and
annual  related  increases  as permitted  pursuant to  Proposition  13,  whether
arising from an increase in assessed value occurring as a result of a sale, long
term lease or other  transfer of an  interest in the real  property of which the
Premises are a part or otherwise,  unless (i) the increase is as a result of the
applicable  property  tax system  being  modified by  governmental  intervention
unrelated to the  Premises,  or (ii) the increase is the result of  improvements
made by Tenant.  Notwithstanding the foregoing,  the Tenant shall be required to
pay any  increase in Real  Estate  Taxes as a result of a reversal of a previous
Proposition 8 appeal plus any applicable  Proposition 13 increases due following
the reversal of a Proposition 8 appeal.

                                    ARTICLE 6
                             UTILITIES AND SERVICES

     6.1 Utilities.  Tenant shall pay for all water,  gas, heat,  light,  power,
telephone  and  other  utilities  supplied  to  the  Premises.  In  event  of  a
contraction  of the Premises,  Landlord  shall cause gas,  building  water,  and
electrical power to be separately  metered by an internal meter installed at the
time of any  contraction  in the  Premises,  all at  Landlord's  sole  cost  and
expense.  Any other utilities shall be prorated or equitably  allocated based on
usage and be subject to the provisions of Article 6.2.

     6.2 Costs of Utilities and Services:

          (a) During the Lease Term,  Tenant  shall  continue to provide the (1)
     electrical,  gas and building water service to the buildings in the Project
     that are not part of the Premises, and (2) landscape maintenance and repair
     (including irrigation,  weeding, trimming, planting and mowing) and parking
     lot  maintenance and repair  (including  sweeping,  lighting,  resurfacing,
     re-striping)  portions  of the Project  which is not part of the  Premises.
     Tenant  shall have no  liability of any kind to Landlord or any other party
     for  providing  such  services  except (i) only to the extent of Landlord's
     actual  damages,  and (ii) to the  extent  due to  Tenant's  negligence  or
     willful  misconduct.  This  provision  is  for  the  exclusive  benefit  of
     Landlord,  and no other  tenant of Landlord,  the  Project,  or other party
     shall be deemed an intended  beneficiary of this provision.  Landlord shall
     install a  submeter  at  Landlord's  cost prior to the  contraction  of any
     buildings to measure the amount of electrical,  gas and building water used
     at such buildings.


               (i) Regarding Tenant's  supplying the electricity,  gas and water
          to  buildings  in the  Project  that  are not  part  of the  Premises,
          Landlord  will  credit  Tenant's  Rent  for the  amount  of  estimated
          electrical,  gas and building water costs ("Utility  Expense  Credit")
          upon  surrender of Building 1075 or the  Contraction  Space and during
          the first six (6) months after occupancy ("Lease Up Period"). "Utility
          Cost" are defined as the actual  unit usage  times the actual  monthly
          unit charge to Tenant.  Upon request by Landlord  Tenant will promptly
          supply copies of monthly unit charges.  Following the Lease Up Period,
          the Utility  Expense  Credit shall be (i) based on the actual  Utility
          Cost for the preceding six (6) month period,  and (ii) recalculated by
          Landlord every six (6) months based on

<PAGE>

          the actual Utility Cost for the preceding period.  The Utility Expense
          Credit paid by Landlord shall be reconciled on an annual basis against
          actual  Utility Cost for the applicable  period  between  Landlord and
          Tenant.  In the event that Tenant has been  credited  less than actual
          Utility Cost for the  corresponding  period,  Landlord shall forthwith
          credit the difference  against Tenant's monthly  installments of Rent.
          In the event that Tenant has been  credited  more than actual  Utility
          Cost for the  corresponding  period,  Tenant shall  forthwith  pay the
          difference to Landlord.  Notwithstanding  the above,  if any utilities
          cannot be  reasonably  metered the cost shall be allocated  based on a
          reasonable amount of usage.

               (ii) The landscaping and parking lot maintenance and repair costs
          for areas of the Project  outside the Premises  will not be separately
          metered or accounted for, and therefore Tenant will charge Landlord on
          a monthly basis,  throughout the Lease Term,  Landlord's  share of the
          total  landscape  and  parking  lot  maintenance,  repair and  utility
          expense, and Tenant may offset the amount owed from Rent. Upon request
          Tenant will promptly  provide  support for such charges,  provided the
          request is made within two (2) years of when the expense was incurred.
          Landlord's  share of parking lot  maintenance  and repair costs and of
          landscaping  maintenance and repair costs shall be based on the number
          of  parking  spaces to each  Building,  or  percentage  shown,  on the
          Premises Site Plan as shown on the Premises Site Plan Exhibit A-1.

          (b) Landlord  and Tenant  acknowledge  that various  federal and state
     initiatives  are  under  way that are  expected,  over  time,  to result in
     deregulation  of the  electric  utility  industry  so  that  the  historic,
     vertically-integrated  monopoly for  generation  and delivery of electrical
     power and  services is replaced by  market-priced  elements of  production,
     capacity,  transmission  and ancillary  services.  In order to maximize the
     benefit of this  opportunity,  throughout the Lease Term, Tenant shall have
     the right to acquire  its  electrical  energy or other  electrical  utility
     service directly from a third party or parties that has the legal authority
     to provide such service and,  from time to time, to change such third party
     or parties.  Landlord shall  cooperate with Tenant in giving effect to this
     Article 6.2 so that  Tenant is afforded  the  unrestricted  opportunity  to
     purchase  electrical energy and electrical  utility service from such third
     party or parties as Tenant in its sole  discretion may choose provided such
     arrangements  will not result in extra costs to Landlord at  expiration  of
     the Lease Term.

          (c) Tenant shall be permitted to install solar panels and other energy
     saving  devices  at its  expense in the  Premises  in  accordance  with all
     applicable  building codes and after obtaining  approval from  governmental
     authorities.

     6.3  Interruption  of  Utilities.  If the  utilities  that are required for
Tenant's  use of the  Premises  (such  as  electricity,  gas or  water)  are not
available for 120 consecutive hours or more to the extent such unavailability is
the result of the  negligence or willful  misconduct of Landlord,  Rent shall be
abated for entire time period such utilities are not supplied to the Premises.

     6.4 Landlord  Access.  Landlord shall be entitled to access to the Premises
accompanied by a representative  of Tenant upon giving Tenant  sufficient notice
to allow Tenant to prepare, at its option, for any potential  interference.  The
parties agree that the following  will  constitute  sufficient  advance  notice:
forty-eight (48) hours,  except that in the case of an emergency that gives rise
to imminent  danger to persons or property,  Landlord need only give Tenant such
notice as is practicable  under the  circumstances.  Access by Landlord shall be
strictly in accordance with the security and  confidentiality  requirements that
Tenant may adopt from time to time, including, without limitation, a requirement
that persons  other than Landlord  having access to the Premises  shall sign and
deliver to Tenant a  confidentiality  and  nondisclosure  agreement  in form and
content  acceptable to Tenant.  Tenant may object to and Landlord  shall prevent
access to the Premises by any  prospective  purchaser or tenant or other visitor
whom  Landlord  intends  to  bring  onto  the  Premises  who is one of  Tenant's
Competitors as defined in Article 27.21.  Landlord's entry shall cause the least
interference to Tenant's business reasonably  possible.  Landlord shall promptly
finish any work for which it entered If  Landlord's  sole  negligence or willful
misconduct causes damage to Tenant's property,  Landlord shall be liable for any
such damage.

     During the twelve (12) months preceding expiration of the Lease Term or any
Option term,  and nine (9) months  preceding  the  surrender of the  Contraction
Space,  Tenant shall, at all reasonable  times upon forty-eight (48) hours prior
notice,  permit  Landlord  or its agents to enter the  Premises  to show them to
others,  and to affix a For Lease sign to any  suitable  part of the Building or
Premises,  but in a manner that will not interfere  unreasonably with any of the
signs or the windows of Tenant.


                                    ARTICLE 7
                                 USE OF PREMISES

     7.1  Purpose.  Tenant may use the  Premises  for any legal  purpose  not in
violation of Article 7.3,  including (by way of example but not  limitation) (a)
offices, (b) demonstration of Tenant's products and services,  (c) training, (d)
research and development and (e) customer  service,  or Tenant may allow part or
all of the Premises to remain  vacant.  Landlord  shall not take any action that
will cause the specific uses  delineated in this Article 7.1 to be prohibited or
otherwise restricted by any covenant, condition,  restriction, easement or other
instrument or matter affecting title or use of the Premises or any part thereof.

     7.2 Code Compliance for Tenant's Occupancy.  All authorizations and permits
that may be required for any use made of the Premises  including but not limited
to  certificates  of occupancy and  variances  (if  required)  prior to the time
Tenant  occupies  the  Premises  for the  purposes  set forth in Article 7.1 are
Tenant's  responsibility  and cost.  Landlord shall assist Tenant to obtain such

<PAGE>


authorizations  and  permits,  if its  assistance  is  required  by the  issuing
authority or authorities, and Tenant shall reimburse Landlord for any reasonable
out of pocket costs incurred while rendering any assistance requested by Tenant.
Any  special  business  permits or  licenses  that may be  required of Tenant to
conduct its business in the State or locality where the Premises are located are
the responsibility of Tenant.

     7.3 Prohibited Activities. Nothing shall be done upon or about the Premises
that  violates  any law,  ordinance,  regulation  or  requirement  of any public
authority having  jurisdiction.  Tenant will keep the Premises  reasonably clean
and will not do or keep  anything in or upon the  Premises  that may prevent the
obtaining of any insurance on the Premises or that may void any such insurance.

                                    ARTICLE 8
                           PREPARATION OF THE PREMISES

     8.1  Multi-Tenant  Costs.  Landlord  will  be  responsible  for  any  costs
necessary to lease Building 1075 or the Contraction building when surrendered by
Tenant, and separate same from the remainder of the Premises.

     8.2  Signage.  Tenant is  authorized  to install and display at its expense
signs identifying Tenant by its business name or as otherwise required by Tenant
as  follows:  (i) on the  roof or face of any of the  buildings  located  in the
Premises, (ii) in the directories of any of the buildings in the Premises, (iii)
near the entrances of any of the  buildings in the Premises,  and/or (iv) on the
top  position  of a  monument  sign as long as  Tenant  leases  at  least  three
buildings,  which  shall be  located at a location  mutually  acceptable  to the
parties.  Without  limiting  Landlord's  obligations set forth in Article 27.21,
Landlord  shall not install or display any signage,  or permit any third parties
to install or display any signage at the Project.  Notwithstanding  the above, a
tenant of Building 1075 and the Contraction Space may install and display, at no
expense to Tenant,  signage  identifying that tenant by its business name on the
exterior of Building 1075 or the  Contraction  Space, so long as such signage is
no higher than the first floor of that  building  and no larger than any sign of
Tenant on the  Premises or on Building  1075.  All signs shall be  installed  in
compliance with the requirements of applicable laws.

     8.3 Communications Equipment.  Tenant shall be entitled to use the roofs of
the  Buildings  that are  part of the  Premises  and any  other  portion  of the
Premises,  without  additional rental or other charge,  to install,  operate and
maintain  telecommunication  antennas,  satellite  and/or  microwave  dishes and
antenna and other  communications  equipment for reception and  transmission  of
electromagnetic  signals or otherwise for Tenant use in its business, but not to
a  non-related   entity  for  rental,   royalty,   fees,  barter  or  any  other
consideration.  Tenant  shall  be  responsible  for the  cost  of  installation,
maintenance  and removal of such equipment (but in no event shall be responsible
for removal of the  equipment,  wiring or cabling of others,  including  that of
prior tenants).  All such use shall be subject to applicable Laws.  Tenant shall
bear the cost, if any, to remove all such equipment,  related infrastructure and
to repair  damage  caused by such  removal  upon the earlier of  termination  or
expiration  of this Lease.  Tenant shall not be charged any  additional  rent or
fees by Landlord for installation or operation of such equipment, except for any
fees or other charges imposed by Law or a governmental agency.


                                    ARTICLE 9
                               COMPLIANCE WITH LAW

     9.1 Compliance with Law. Tenant shall be solely  responsible for compliance
with Laws affecting the Premises at its expense, provided, however,

          (a) Tenant shall not remove or destroy then existing telephone, audio,
     video,  data,  or TV cables  and  punchboards  (but  Tenant  may remove its
     computers  and  related  equipment  at its  discretion)  and  Tenant is not
     required to remove  abandoned  cable and wiring in the  Premises.  Landlord
     assumes legal responsibility for removal of any of said items; and

          (b) If and to the  extent  compliance  with  Laws  requires  a capital
     expenditure  to the  Premises as defined by generally  accepted  accounting
     principles  (not to exceed  fifteen (15) years at an interest rate equal to
     Libor plus 2%),  Landlord shall perform and pay for such  compliance in the
     first  instance,  and  Landlord's  out of  pocket  cost  thereof  shall  be
     amortized  on a straight  line  basis  over its useful  life (not to exceed
     fifteen (15) years),  and Tenant  shall pay the  amortized  amount in equal
     monthly installments,  prorated for partial months; provided,  Tenant shall
     be responsible to perform such legally  mandated changes to the Premises at
     its cost if such changes are required  due to  alterations  to the Premises
     made by Tenant.

     9.2 ADA  Compliance.  Tenant  shall be solely  responsible  at its cost and
expense for causing the  Premises to comply in all respects  with the  Americans
With  Disabilities  Act  ("ADA")  including  any change in the  interior  of the
Premises  necessitated  by  reconfiguration  of the  interior of the Premises by
Tenant.

     9.3 Contesting Legal Requirement. Tenant shall have the right to contest at
its sole cost any obligations imposed it by this Article and to defer compliance
during the duration of such contest. Landlord shall cooperate with Tenant in the
contest and shall execute any documents  reasonably  required in the furtherance
of that  purpose.  Tenant  shall not be deemed  to be in  default  (a) until and
unless it is determined  that Tenant must perform the obligation and it fails to
do so by the date upon which all applicable appeal periods have expired,  or (b)
provided  enforcement  is stayed  pending  appeal,  until all appeals  have been
finally  decided  against  Tenant and Tenant fails

<PAGE>

to comply with the resulting decision.  Tenant shall be responsible for any fees
or penalties  imposed on the Project as a result of Tenant's  contest under this
Article 9.


                                   ARTICLE 10
                     ALTERATIONS, ADDITIONS AND IMPROVEMENTS

     10.1  Nonstructural.   "Alterations"  are  any  alterations,  additions  or
improvements made to the Premises by a Tenant.  "Nonstructural  Alterations" are
any  Alterations  to the  Premises  that  do not  materially  affect  structural
elements of the  Buildings.  Tenant may,  from time to time, at its own cost and
expense and without the consent of Landlord make Nonstructural  Alterations that
are decorative or cosmetic in nature regardless of cost (e.g., painting,  window
or wall  treatment,  carpeting).  In  addition,  Tenant may,  from time to time,
without consent of Landlord, make other Non-Structural Alterations whose cost in
any one instance is One Hundred  Thousand and 00/100  Dollars  ($100,000.00)  or
less per Building,  provided  Tenant first  notifies  Landlord in writing of any
such  Nonstructural  Alterations.  Notwithstanding  the  foregoing,  Tenant may,
without the consent of and without  notice to Landlord,  (i) remove up to 60% of
private offices in any building, (ii) install, remove, or move cable/data drops,
networks,   telephones,   door  closures,   wireless  transmission  systems  and
broadband,  and (iii) install,  remove,  or move electrical  outlets without the
consent of or prior notice to Landlord,  but shall notify Landlord following any
such installation,  removal, or move of electrical outlets. If Tenant desires to
make any such other types of  Nonstructural  Alterations  costing  more than One
Hundred  Thousand  and 00/100  Dollars  ($100,000.00)  per  Building  in any one
instance,  Tenant must first obtain  Landlord's  consent thereto,  which consent
shall not be unreasonably withheld.  Landlord's consent shall be deemed given if
Landlord does not respond to Tenant's  request for such consent  within ten (10)
days from  receipt of such  request.  Tenant may in its sole  discretion  either
remove  or leave the  Nonstructural  Alterations  at the end of the Lease  Term;
provided,  however, for Nonstructural  Alterations requiring Landlord's consent,
or for structural  alterations  (Article 10.2 below),  if Landlord desires their
removal  at the end of the  Lease  Term it shall so  inform  Tenant  at the time
consent is given.  Tenant on or before the expiration of the Lease shall use its
best  efforts  to  provide  Landlord  with  current  Auto-Cad  files  which show
Alterations  made by Tenant  during Lease Term,  and if such files are less than
80% accurate or complete Landlord my require Tenant to complete them to at least
80% accuracy.

     10.2  Structural.  If Tenant desires to make any structural  Alterations to
the  Premises,  Tenant must first obtain the written  consent of Landlord  which
consent will not be unreasonably  withheld.  Landlord's  consent shall be deemed
given if  Landlord  does not  respond  within  fifteen  (15) days of  receipt of
Tenant's  request for consent.  Notwithstanding  anything to the contrary herein
contained,  Landlord may not  withhold or condition  its consent to any proposed
Alteration to the Premises  unless the making or  installation of the Alteration
(a) adversely affects a Building's structural integrity, (b) adversely affects a
Building's  life-safety,  mechanical,  HVAC, or other critical systems, (c) does
not comply with applicable Law, or (d) adversely affects the exterior appearance
of a Building in Landlord's opinion, acting reasonably.

     10.3 Contractor;  Architect;  Consultants.  Tenant shall retain the general
contractor, architect, engineer and other consultants of its choice with respect
to any Alterations that are properly  licensed.  Tenant shall not be required to
use union trades.

     10.4 Compliance with Law. Tenant in making any Alterations  shall cause all
work to be done in a good and  workmanlike  manner using  materials  equal to or
better than those used in the construction of the Premises and shall comply with
or cause  compliance  with all Laws and with any  direction  given by any public
officer pursuant to law with respect to such Alterations. Tenant shall obtain or
cause to be obtained and maintain in effect, as necessary, all building permits,
licenses,  and other governmental  approvals which may be required in connection
with the making of the  Alterations.  Landlord  shall  cooperate  with Tenant in
obtaining  them  and  shall  execute  any  documents   reasonably   required  in
furtherance of such purpose.

     10.5 Removal of Alterations. At any time during the Lease Term, Tenant may,
at its option,  remove any  Alterations.  In the event of such  removal,  Tenant
shall,  at its sole  cost,  repair  any  damage to the  Premises  caused by such
removal but does not need to restore the Premises to its prior condition.

     10.6 Construction  Insurance.  Tenant shall procure or cause its contractor
to procure and maintain in effect during the  construction of  Alterations,  the
insurance coverages specified Article 16.6.

     10.7 No  Supervisory  Fee or Other  Charges.  Landlord shall not charge any
coordination  or supervisory  fee with respect to any  Alterations and shall not
have  any  obligation  to  supervise  or  coordinate  the   performance  of  any
Alterations.

     10.8 Conduit.  Tenant shall continue to be entitled to utilize the existing
conduits  between  the  Buildings  and shall  have the  right,  with  Landlord's
reasonable consent,  to trench additional  conduits to the Premises,  subject to
Tenant's  obligation  to repair all  damages  and obtain  all  necessary  permit
approvals.



<PAGE>



                                   ARTICLE 11
                  CONDITION, REPAIR AND MAINTENANCE OF PREMISES

     11.1  Tenant's  Obligations.  Tenant  accepts  the  Premises  in an "AS IS"
condition and "AS IS" state of repair as of the Commencement Date. Tenant agrees
on the last day of the Lease Term, or on the sooner  termination  of this Lease,
upon  surrendering  Building 1075 or any Contraction  Space, upon exercising the
early  termination right set forth in Article 3.4, or otherwise to surrender the
Premises to Landlord in Good Condition and Repair.  "Good  Condition and Repair"
shall mean that the  Premises  are in the  condition  that one would  expect the
Premises to be in, if  throughout  the Lease Term Tenant keeps the Premises in a
clean,  safe and  tenantable  condition  comparable  to other first class office
buildings in the Mountain View, CA area; specifically (i) the interior walls and
floors of all office and other  interior  areas shall be in good  condition (but
new carpet or paint is not required), (ii) any carpeting is to be cleaned, (iii)
all glazing,  windows, doors and closures,  plate glass must be intact, and (vi)
all electrical systems including light fixtures and ballasts,  plumbing and HVAC
(including  temperature control systems) must be in working order. This standard
does not require  Tenant to keep or return the  Premises in "as new"  condition,
the parties recognizing the normal  depreciation of any structure,  improvements
or system over time.

     11.2 Landlord's Obligations.  Landlord shall, at its sole cost and expense,
be  responsible  for  maintenance,  repair and  replacement  of  exterior  walls
structures,  structural  support  systems,  and all plumbing and other utilities
outside  each  Building  within  the  Project.  If the roof of any  Building  or
Buildings should need to be replaced during the Lease Term and the roof warranty
has not be  voided by the  actions  of  Tenant,  Landlord  shall at its  expense
replace the roof and amortize the cost on a straight  line basis over the roof's
reasonable  useful  life at an  interest  rate of  Libor  plus 2%,  and  monthly
amortized amount shall be added to Rent,  prorated for partial months. If Tenant
determines  that  the HVAC  system,  electrical  system,  plumbing  (within  the
Buildings),  elevator(s)  and/or  Building  exterior  or parking  lot need to be
replaced,  Landlord shall perform the work,  which shall be paid for as follows:
the first $100,000 of the total expense for such items per Building will be paid
by Tenant, and the remainder by Landlord.  The portion paid by Landlord shall be
amortized over the useful life of the items in question on a straight line basis
not to exceed  fifteen (15) years,  at an interest  rate equal to Libor plus 2%,
and Tenant  shall pay the  amortized  amount on a monthly  basis,  prorated  for
partial months.

     11.3 Removal of Tenant's  Personal  Property.  Subject to the provisions of
Articles 19.2 and 9.1, Tenant,  on or before the end of the Lease Term or sooner
termination  of this Lease,  shall  remove all its  personal  property  from the
Premises,  and all such  property not removed shall be deemed to be abandoned by
Tenant.  If the  Premises  are not  surrendered  at the end of the Lease Term or
earlier termination of this Lease, and unless Tenant is holding over pursuant to
Article 23, Tenant shall indemnify Landlord against loss or liability  resulting
from any delay caused by Tenant in surrendering the Premises including,  without
limitation,  any claims  made by any  succeeding  tenant  founded on such delay.
Landlord hereby assigns to Tenant any warranty or guarantee of which Landlord is
the beneficiary and which pertains to any building  element or system.  Landlord
will  execute  such  other  instruments  as are  necessary  to  effectuate  this
assignment and will cooperate with Tenant in prosecuting  any claim Tenant makes
under a warranty or guarantee.


                                   ARTICLE 12
                             DAMAGE AND DESTRUCTION

     12.1 Repair. If (a) all or part of the Premises or buildings are damaged or
destroyed,  or (b) Tenant's  access to any of the Buildings,  Premises,  parking
area or any Common Areas to which Tenant must have access for the  continued use
and  occupancy of the  Premises  ("Access")  is  obstructed  or  hindered,  then
Landlord shall substantially  complete: (i) repair and restoration of the damage
and destruction,  including,  at Landlord's sole cost and expense, all leasehold
improvements  that were  completed at Landlord's  cost and expense,  and/or (ii)
restoration of Access.  Landlord shall comply with this obligation to the extent
proceeds from insurance coverage are available to pay for the cost of repair and
restoration.  In the event insurance proceeds are not sufficient,  Landlord will
complete  repair and restoration and amortize the costs not covered by insurance
evenly  over a ten (10)  year  period  at an  interest  rate  equal to  ten-year
Treasury Rate plus 2% and such amount shall be added to Rent.

     Landlord  in good faith  shall  estimate  the time  required  to repair the
damage and  destruction  and restore the  Premises or all or any part thereof to
the  condition  existing at  Commencement  Date as that  condition may have been
changed by improvements paid for or made by Landlord.  If Landlord's estimate of
the time required for repair exceeds one hundred eighty (180) days, Tenant shall
have the right to  terminate  this Lease with respect to the damage or destroyed
part of the Premises with a  proportionate  reduction in Rent by giving  written
notice to the  Landlord  within  thirty  (30) days after  receipt of  Landlord's
estimate.

     12.2 Lease  Termination.  If Tenant  exercises its termination  right under
this Article,  the Lease shall terminate in whole or in part (but if in part may
only be for a complete building or buildings, not portions thereof) effective as
of the  date of the  casualty,  and if  terminated  in part the  Lease  shall be
modified to exclude the damage or destroyed part of the Premises or building and
Rent shall be adjusted  accordingly  as of the date of  casualty.  Rent shall be
payable to the cancellation or contraction  date.  Landlord will promptly refund
to Tenant any prepaid Rent.

<PAGE>

     12.3  Delay in  Completing  Repair.  If  Landlord  does  not  substantially
complete  repair and  restoration  of partial  damage or does not restore Access
within the estimated  repair period  pursuant to Article 12.1,  unless caused by
Force Majeure or delays of 30 days or more in getting  building  permits,  which
Landlord  shall use its best efforts to promptly  obtain,  Tenant shall have the
right to terminate  this Lease with  respect to the damage or destroyed  part of
the Premises with a proportionate  reduction in Rent by giving written notice to
Landlord within thirty (30) days after expiration of the estimated repair period
that  Tenant is  exercising  its right's  herein to  terminate.  Landlord  shall
receive a day for day extension as a result of Force Majeure or permit delays.

     12.4 Final Year of Term.  If the damage or  destruction  to the Premises or
loss of Access occurs  during the last year of the Lease Term,  either party may
terminate  this Lease as to the  damaged or  destroyed  part of the  Premises by
giving  written  notice to the other party within thirty (30) days after date of
damage  or  destruction,  and  the  Rent  and  other  costs  shall  be  adjusted
accordingly;  provided  Tenant  may  terminate  the  entire  lease  if,  in  its
reasonable  business  judgment,  the  remaining  portion of the Premises are not
suitable for its use, it may  terminate  the Lease as to the entire  Premises by
giving Landlord  written notice within thirty (30) days after the date of damage
or destruction.

     12.5  Abatement.  The Rent shall  abate in  proportion  to that part of the
Premises  that is  unfit  for use in  Tenant's  business.  The  abatement  shall
consider the nature and extent of interference  with Tenant's ability to conduct
business in the Premises  and the need for Access and  essential  services.  The
abatement  shall  continue  from the date the  damage  occurred  until  ten (10)
Business Days after (a) Landlord  completes the repairs and  restoration and (b)
Landlord gives notice to Tenant that the repairs and  restoration are completed.
Notwithstanding  the foregoing,  if Landlord  notifies Tenant that it desires to
cancel  this Lease  pursuant to this  Article 12 and Tenant,  at the time of the
damage or destruction or loss of Access, has an unexercised  Option, then Tenant
shall  have  the  right,  notwithstanding  any  provision  of this  Lease to the
contrary,  to  exercise  such Option by  delivering  written  notice  thereof to
Landlord within thirty (30) days of Tenant's receipt of Landlord's  cancellation
notice.  If  Tenant  exercises  such  Option  in  accordance  with the  previous
sentence,  Landlord's  cancellation notice shall be nullified,  this Lease shall
continue  in full  force and  effect,  and the  repair  and  restoration  of the
Premises shall proceed as required by this Article 12. Notwithstanding  anything
in the  Article  12,  Landlord  shall have the right to  terminate  the Lease if
sufficient  insurance  proceeds  are not  available  to complete the repairs and
restoration required.


                                   ARTICLE 13
                                  CONDEMNATION

     13.1 Taking.  "Taking" means a taking by condemnation or by the exercise of
the power of eminent  domain by a public or  quasi-public  authority  or entity,
whether or not there is a taking of title,  or a conveyance in lieu thereof.  If
there is a Taking of all of the  Premises or of the entire  parking area serving
the  Premises,  this Lease shall  terminate  as of the earlier of the date title
vests or the date Tenant is dispossessed by the Taking authority.

     If there is a taking of a portion of the  Premises  not  resulting in Lease
termination  pursuant to this  Article 13, this Lease shall be amended to reduce
the Rent for that  portion  of the  Premises  affected  by the  Taking as of the
earlier of the date title vests or the date Tenant is dispossessed by the Taking
authority.

     13.2  Termination  for  Material  Interference.  If a Taking of part of the
Premises in Tenant's  judgment  reasonably  exercised (a) materially  interferes
with  Tenant's  ability  to  conduct  its  business  in  the  Premises,  or  (b)
substantially denies or interferes with Tenant's access to the Premises,  Tenant
shall have the right to terminate  this Lease by giving  Landlord  notice of its
election  within  thirty (30) days after  written  notice  from  Landlord of the
Taking.  The Lease shall  terminate on the earlier of the date when title vests,
the date  Tenant is  dispossessed  by the Taking  authority  provided  that such
termination  shall in no event  extinguish  or  diminish  Tenant's  right  under
Article 13.5.

     13.3 Taking of Parking.  If only a portion of the parking  area serving the
Premises is the subject of a Taking, and the Taking reduces the ratio of parking
spaces to  rentable  square  feet in the  Premises  below  three (3)  unreserved
parking spaces per 1,000 rentable  square feet  ("Parking  Ratio"),  then Tenant
shall have the right to terminate this Lease by giving notice to Landlord within
thirty (30) days after written notice from Landlord of the Taking.  Landlord may
suspend the  effectiveness of Tenant's notice by notifying  Tenant,  within five
(5) days of receiving Tenant's  termination  notice,  that Landlord will restore
the Parking Ratio by providing, within thirty (30) days of the vesting of title,
substitute  parking  spaces  equal to the number taken within 1,000 yards of the
Premises.  If Landlord  restores the Parking  Ratio within the thirty (30) days,
Tenant's notice of termination shall be nullified and of no force and effect. If
Landlord  does not restore the Parking  Ratio within the thirty (30) day period,
this Lease shall  automatically  terminate at the expiration of such thirty (30)
day period.

     13.4  Abatement.  If this Lease is not  terminated as a result of a Taking:
(a) Rent shall  abate,  from the  earlier of the date title  vests in the Taking
authority  or the date  Tenant  is  dispossessed  by the  Taking  authority,  in
proportion  to the part of the Premises  (including  but not limited to parking)
subject to the Taking and  Tenant's Tax Share shall be  proportionally  reduced;
and (b) Landlord, at its sole expense,  shall commence the work of repairing and
restoring any affected Building to a complete architectural unit and the work of
restoring  the  remainder of the Premises as nearly as possible to its condition
existing  immediately  prior to the Taking and to restore Tenant's access to the
Premises or provide  comparable access thereto within ninety (90) days after the
earlier to occur of title vesting in

<PAGE>

the Taking authority or the date Tenant is dispossessed by the Taking authority.
If Landlord  does not  complete  the work of repair and  restoration  within the
ninety (90) day period,  Tenant has the right to terminate  this Lease by giving
Landlord  notice  within  thirty  (30) days  after the  ninety  (90) day  period
expires,  if Landlord  does not complete the work within  thirty (30) days after
receipt  of  the  notice  of  termination.   Tenant's  notice  shall  specify  a
termination date not more than sixty (60) days from the date of the notice.

     13.5  Taking  Award.  Within  ten  (10)  days  of the  effective  date of a
termination  of this Lease or an abatement of Rent under this Article 13, Tenant
shall receive a refund from Landlord of all prepaid and unaccrued Rent and other
sums paid with respect to the portion of Premises taken.  From the award payable
on account of the Taking,  Tenant  shall be  entitled to an amount  equal to the
value of its leasehold interest  immediately prior to termination,  the value of
Tenant's unamortized  leasehold  improvements made on or after Commencement Date
of this Lease, moving expenses, trade fixtures and equipment.  Tenant shall make
a separate  claim for this  amount,  which  Landlord  will not  duplicate in its
claim.  Except as expressly  provided in this Article 13.5,  Tenant shall not be
entitled to any award or settlement resulting from a condemnation.

     13.6 Savings  Clause.  Landlord  and Tenant's  rights under this Article 13
shall survive termination of the Lease in whole or in part due to a Taking.


                                   ARTICLE 14
           SUBORDINATION, RECOGNITION, ATTORNMENT AND NON-DISTURBANCE

     14.1  Subordination.  Tenant is not obligated to subordinate  this Lease to
the lien of any deed of trust or mortgage of any interest of the Premises or any
renewals,  modifications  or extensions  thereof (any of the foregoing,  a "Lien
Interest"),  unless a Subordination,  Attornment and  Non-Disturbance  Agreement
("SAND  Agreement")  is executed,  acknowledged  and  delivered to Tenant by the
holder  of the Lien  Interest  ("Lender").  The SAND  Agreement  must be in form
suitable  for  recording,  must be  commercially  reasonable  and  must  contain
substantially the following provisions:

          (a) Lender consents to and approves this Lease;

          (b) Tenant  shall not be named or joined as a party  defendant  in any
     suit,  action or proceeding for the  foreclosure of the Lien Interest or to
     enforce any rights under the Lien Interest or obligation secured thereby;

          (c) The  possession by Tenant of the Premises and the Tenant's  rights
     in the Premises  shall not be disturbed,  affected or impaired by, nor will
     the Lease or the Term be terminated or otherwise affected by: (i) any suit,
     action or  proceeding  upon the Lien  Interest  or the  obligation  secured
     thereby,  or for the foreclosure of the Lien Interest or the enforcement of
     any  rights  under the Lien  Interest  or any other  documents  held by the
     Lender, or by any judicial sale or execution or other sale of the Premises,
     or by any deed  given in lieu of  foreclosure,  or by the  exercise  of any
     other rights  given to the Lender by any other  documents or as a matter of
     law, or (ii) any default under the Lien Interest or the obligation secured;

          (d) All  condemnation  awards and  insurance  proceeds paid or payable
     with respect to the Premises and received by the Lender shall be applied to
     the repair and restoration of the Premises or disbursed to Tenant as and to
     the extent provided in this Lease;

          (e) To the extent that any  concessions  to be provided to Tenant have
     not been  fully  paid or  performed  by  Landlord  at the time of any suit,
     action or  proceeding  upon the Lien  Interest  or the  obligation  secured
     thereby,  or for the foreclosure of the Lien Interest or the enforcement of
     any  rights  under the Lien  Interest  or any other  documents  held by the
     Lender, or by any judicial sale or execution or other sale of the Premises,
     or by any deed  given in lieu of  foreclosure,  or by the  exercise  of any
     other rights  given to the Lender by any other  documents or as a matter of
     law,  Tenant  may,  to the  extent it has  incurred,  or  incurs,  costs or
     expenses attributable thereto,  deduct the unpaid amount (or the equivalent
     value thereof),  together with interest  thereon  accruing at the lesser of
     the annual rate of twelve  percent  (12%) or the maximum rate  permitted by
     law, from any Rent next becoming due and payable.

          (f) Lender acknowledges and agrees that all trade fixtures,  equipment
     and personal  property  owned by Tenant  ("Tenant's  Property")  located or
     installed in or on the Premises,  regardless  of the manner of  attachment,
     shall be and remain the  property of Tenant and may be removed by Tenant at
     any  time.  In no  event  (including  a  default  under  the  Lease or Lien
     Interest)  shall  Lender  have any  liens,  rights or  claims  in  Tenant's
     Property,  and Lender  expressly waives all rights of levy,  distraint,  or
     execution with respect to that property;

          (g)  If  the  Lender  takes  possession  of  the  Premises  or  starts
     collecting  rent  or  becomes  the  owner  of the  Premises  by  reason  of
     foreclosure of the Lien Interest or otherwise;  or if the Premises shall be
     sold as a result of any action or proceeding to foreclose the Lien Interest
     or by a deed given in lieu of foreclosure, the Lease shall continue in full
     force and effect,  without  necessity  for  executing  any new lease,  as a
     direct lease between Tenant and the Lender or then owner of the Premises as
     landlord upon all of the same terms, covenants, and provisions contained in
     the  Lease,  and in that  event the  Lender or new owner  shall be bound to
     Tenant under all of

<PAGE>

     the terms,  covenants and  provisions of the Lease for the remainder of the
     Lease Term which terms,  covenants and  provisions  the Lender or new owner
     agrees to assume and perform;

          (h) Any  agreement  between  Lender and Tenant shall bind and inure to
     the  benefit  of and  be  enforceable  by the  parties  thereto  and  their
     respective heirs, personal representatives, successors and assigns;

          (i) Tenant agrees with Lender that if Lender  succeeds to the interest
     of  Landlord  under the  Lease,  Lender  shall not be:  (i) liable in money
     damages  for any act or  omission  of any  prior  landlord  under the Lease
     except for defaults of the prior  landlord that are  continuing on the date
     Lender  succeeds to such interest;  (ii) subject to any offsets or defenses
     which Tenant might have against any prior landlord except offsets permitted
     by Article 20.4 and unless arising from an act or omission mentioned in (i)
     above;  (iii)  bound by any Rent that  Tenant  has  prepaid  on  account of
     periods after the then current  month;  or (iv) liable in money damages for
     any  security  deposit  that  Tenant  may have paid to any prior  landlord,
     unless such deposit was actually received by Lender in connection with this
     Lease.

          Tenant  shall  execute  and send to Landlord  any such SAND  Agreement
     within  fifteen  (15)  days  of  receipt  if the  SAND  Agreement  contains
     substantially the provisions set forth above, or within five (5) days after
     agreement  of the parties to the contents of same.  Notwithstanding  any of
     the above if the Lender  provides a SAND as  attached  hereto as Exhibit C,
     Tenant will execute and send to Landlord as required above.

                                   ARTICLE 15
                       LANDLORD'S AND TENANT'S WARRANTIES

          15.1  Landlord's  Warranties.  To induce Tenant to execute this Lease,
     and in addition to the other  representations  and  warranties  of Landlord
     contained in this Lease, Landlord warrants and represents that:

               (a) Landlord is the owner in fee simple of the Premises;

               (b) Landlord has good and marketable title to the Premises,  free
          and clear of liens,  easements,  restrictions or encumbrances upon the
          Premises,  except those shown on the Title Report  attached  hereto as
          Exhibit D as Permitted Encumbrances;

               (c) Restrictions  contained in any leases of other tenants at the
          Premises,  or in any covenants or restrictions or any kind,  shall not
          prohibit, restrict, conflict with or adversely affect Tenant's use and
          occupancy  of the  Premises  or the  intended  use of the  rights  and
          easements granted to Tenant in this Lease;

               (d) Access to the Premises is by public roadways,  and occupants,
          invitees,  agents  and  guests  of the  Premises  have  access  to the
          Premises over the existing roads,  paths, walks and drives on the land
          owned by Landlord or by virtue of common driveways; and

               (e)  Landlord  has full  power and  authority  to enter into this
          Lease, and the individual(s)  signing this Lease on behalf of Landlord
          are authorized to do so.

     15.2 Tenant's Warranties.  To induce Landlord to execute this Lease, and in
addition to the other representations and warranties of Tenant contained in this
Lease, Tenant agrees, warrants and represents that:

          (a) Tenant has full power and authority to enter into this Lease,  and
     the individual(s)  signing this Lease on behalf of Tenant are authorized to
     do so, and

          (b) Tenant's  environmental  indemnity  and  indemnity for third party
     claims set forth in Section 37 of the Current  Lease shall remain in effect
     for the Lease Term.


                                   ARTICLE 16
                           INSURANCE; WAIVER OF CLAIM

     16.1 Tenant's Liability Insurance.  Throughout the Lease Term of the Lease,
Tenant, at Tenant's expense  including any deductibles,  shall purchase and keep
in force during the Lease Term a Commercial General Liability Policy with limits
of not less  than Five  Million  and  00/100  Dollars  ($5,000,000.00)  for each
occurrence  covering bodily injury to persons,  including  death,  and damage to
property.  Such insurance  shall be with Tenant's  liability  insurer so long as
Tenant  is  Microsoft  Corporation;  otherwise  such  insurance  shall  be  with
responsible insurers acceptable to Landlord with a Best Rating of A as a minimum
(whose acceptance shall not be unreasonably withheld or delayed). Such insurance
shall provide  coverage for Tenant's use,  condition and  occupation of Premises
and  Project  and  operations,  independent  contractors,  and to the  extent of
Tenant's insurable  contractual  liability assumed in Article 17.1. Tenant shall
cause its Commercial  General  Liability  insurer to name Landlord and any other
parties  with  an  insurable  interest  as  an

<PAGE>

additional  insured under such insurance.  The insurance  policy shall contain a
severability of interests provision,  a provision that the insurance provided to
Landlord  and  others  as  additional  insured  shall  be  primary  to  and  not
contributory with insurance maintained by Landlord,  and a provision that an act
or omission of one of the  insureds or  additional  insureds  that would void or
otherwise  reduce coverage shall not reduce or void the coverage as to the other
named and additional  insureds.  A certificate of insurance  evidencing that the
foregoing  insurance is in effect  shall be  delivered to Landlord  prior to the
Commencement  Date or  Effective  date of this Lease,  and shall be kept current
throughout the Lease Term. Such certificate shall reflect the status of Landlord
and any other  parties with an insurable  interest as  additional  insured,  and
shall  provide for at least thirty (30) days  advance  notice to Landlord in the
event of  cancellation.  At Tenant's  option,  Tenant may  undertake to maintain
deductibles  under its Commercial  General  Liability  insurance  policy and may
elect to  self-insure  with  respect to some or all of the  liability  insurance
obligation set forth above.  Any undertaking by Tenant to assume  deductibles or
self-insure  with  respect to some or all of its  Commercial  General  Liability
insurance shall not serve to adversely  affect  Landlord,  and Landlord shall be
protected  against  loss or damage in the same manner as if Tenant had  obtained
separate Commercial General Liability insurance as provided herein.

     16.2 Tenant's  Property  Insurance.  Throughout the Lease Term,  Tenant, at
Tenant's expense including any deductibles, shall maintain Special Form property
insurance  insuring the  Premises  against the perils of fire,  earthquake  (DIC
coverage),  extended coverage,  vandalism,  malicious mischief, special extended
coverage (All Risk), boiler and machinery coverage and sprinkler leakage with an
endorsement  to cover  the  cost of law  mandated  changes  to the  Premises  in
connection  with  restoration  after a casualty.  Such  insurance  shall provide
coverage for all personal  property and trade  fixtures in which Tenant holds an
interest if Tenant has advised Landlord of the specific amount that is allocated
to Tenant's  property and the total amount  including  the Tenant's  property is
equal to the full replacement value of the property,  including any code upgrade
coverage. All proceeds of such insurance shall be payable to Landlord until full
replacement  of  Premises  has  been  paid and  then  the  portion  specifically
designated  for  Tenant's  property  shall be paid to Tenant.  Unless  Tenant or
Landlord  elect to  terminate  the Lease as  permitted  herein all  proceeds  of
insurance to be used by Landlord to repair or replace the damaged portion of the
Premises on the same land to the extent  required under this Lease.  At Tenant's
option,  Tenant  may  undertake  to  maintain  deductibles  under  its  property
insurance  policy  and may  elect  to  self-insure  some or all of its  property
insurance.  Any undertaking by Tenant to assume  deductibles or self-insure with
respect to some or all of its  property  insurance  shall not serve to adversely
affect  Landlord,  and  Landlord  shall be  protected  against loss or damage to
Premises  in the  same  manner  as if  Tenant  had  obtained  separate  property
insurance as provided  herein.  Tenant shall  obtain,  at Tenant's sole cost and
expense, a separate policy or a specific endorsement as stated above showing the
amount of fire and extended  coverage  insurance  including  coverage for direct
physical  loss special form,  and a sprinkler  leakage  endorsement,  earthquake
(DIC) that is  specifically  insuring  the  personal  property  of  Tenant.  The
proceeds  specifically  allocated to Tenant's  personal  property  damage policy
shall be payable to Tenant as provided above.

     16.3 Landlord's Liability Insurance.  Landlord, at Tenant's expense,  shall
purchase and keep in force during the Lease Term a Commercial  General Liability
Policy  with  limits  of  not  less  than  Five   Million  and  00/100   Dollars
($5,000,000.00)  each occurrence  covering  bodily injury to persons,  including
death,  and  damage  to  property  as a result  of the  negligence  and  willful
misconduct of Landlord or it's agents.  Such insurance shall be with responsible
insurers with a financial  rating of a minimum of A and shall  provide  coverage
for Landlord's premises and operations, independent contractors, and contractual
liability  assumed in Article 17.  Landlord shall cause its  Commercial  General
Liability  insurer to name Tenant as an additional  insured under such insurance
to the extent of Landlord's insurable  contractual  liability assumed in Article
17. Unless a the result of the  negligence  and willful  misconduct of Landlord,
the insurance  policy shall contain a  severability  of interests  provision,  a
provision that the insurance  provided to Tenant as additional insured shall not
be contributory with insurance  maintained by Tenant and a provision that an act
or omission of one of the  insureds or  additional  insureds  that would void or
otherwise  reduce coverage shall not reduce or void the coverage as to the other
named and additional  insureds.  A certificate of insurance  evidencing that the
foregoing  insurance is in effect shall be delivered to Tenant prior to Tenant's
occupancy of the Premises,  and shall be kept current throughout the Lease Term.
Such certificate shall reflect the status of Tenant as additional  insured,  and
shall  provide for fifteen  (15) days  advance  notice to Tenant in the event of
cancellation.

     16.4 Landlord's Property  Insurance.  At all times during the Lease Term of
the Lease,  with respect to any of the  buildings (or any part thereof) not then
under the Premises (collectively,  "Landlord Insured Property"),  Landlord shall
maintain a property  insurance  policy with  responsible  insurers  covering the
Landlord  Insured  Property  consistent with the form of coverage carried by the
Landlord on other like kind properties owned by the Landlord. To the extent that
Tenant expands into a building  insured by Landlord,  Tenant will be responsible
to  immediately  pay the amount of the  cancellation  penalty to  Landlord  upon
delivering  the  notification  to  Landlord  to  cancel  the in  place  property
insurance policy.

     16.5 Waiver of Recovery and  Subrogation.  Landlord and Tenant  release and
relieve the other from any  liability  it might  otherwise  have and waive their
entire  right of  recovery  for loss or damage  to  property  located  within or
constituting a part or all of the Premises or the Project to the extent that the
loss  or  damage  either  (a) is  actually  covered  by the  injured  party's  -
insurance,  or (b) would have been covered by the insurance the injured party is
required  to carry  under this  Article 16,  whichever  is greater.  This waiver
applies  regardless  of the  cause or  origin  of the  claim  including  without
limitation loss due to the negligent acts or omissions of Landlord or Tenant, or
their respective officers, directors, employees, agents, contractors,  invitees,
Tenant's  assignees  or Tenant's  subtenants.  Each of Landlord and Tenant shall
have  their  respective  property  insurers  endorse  the  applicable  insurance
policies to reflect the foregoing waiver of claims,  provided however,  that the
endorsement  shall not be required if the applicable policy of insurance permits
the named insured to waive rights of subrogation  on a blanket  basis,  in which
case the blanket waiver shall be acceptable.  For purposes of this Article 16.5,
the term "Tenant" and  "Landlord"  shall include any subsidiary and any assignee
or subtenant.

<PAGE>

     16.6 Construction  Insurance.  During any construction on the Premises, any
party who is performing  work under this Lease or its general  contractor  shall
procure  and  maintain  in effect  the  following  insurance  coverages  with an
insurance company or companies  authorized to do business in the State where the
Premises are located:

          (a) Workmen's  Compensation - Statutory  Limits for the State in which
     the  work  is to be  performed,  together  with  "ALL  STATES,"  "VOLUNTARY
     COMPENSATION" and "FOREIGN COMPENSATION" coverage endorsements;

          (b) Employer's  Liability  Insurance with a limit of not less than One
     Million and 00/100 Dollars ($1,000,000.00);

          (c)  Commercial  General  Liability  - at least Two Million and 00/100
     Dollars  ($2,000,000.00)  Combined Single Limit, including Personal Injury,
     Contractual and Products/Completed Operations Liability naming Landlord and
     Tenant as additional insured. Coverage must be primary and non-contributing
     and include the  following:  (i) Premises - Operations,  (ii) Elevators and
     Hoists,  (iii)Independent  Contractor,  (iv) Contractual  Liability assumed
     under the construction  contract,  (v) Completed Operations - Products, and
     (vi) Explosion, Underground and Collapse (XUC) Coverage;

          (d)  Automobile  Liability  -  Including  Owned,  Hired and  Non-owned
     licensed  vehicles used in connection with  performance of the construction
     work of at least:  One  Million  and 00/100  Dollars  ($1,000,000.00)  each
     person Bodily Injury Three Million and 00/100 Dollars  ($3,000,000.00) each
     occurrence   Bodily  Injury  Five  Hundred   Thousand  and  00/100  Dollars
     ($500,000.00)  each occurrence  Property Damage.  Coverage must include the
     following:  (i) Owned vehicles, (ii) Leased vehicles, (iii) Hired vehicles,
     (iv) Non-owned vehicles;

          (e) Procure or cause  contractor to procure and maintain  installation
     floater  insurance  to protect  against the risk of physical  damage  until
     acceptance of the construction work;

          (f) Furnish Tenant and Landlord, as the case may be, with certificates
     of  insurance  naming  Tenant  and  Landlord  as  additional   insured  and
     evidencing  such coverage  prior to the  commencement  of the  construction
     work. All insurance shall be carried in companies reasonably  acceptable to
     the other party;

          (g) The  following  statement  shall  appear  in each  certificate  of
     insurance provided Tenant by Landlord hereunder:

          "It  is  agreed  that  in  the  event  of  any  material   change  in,
     cancellation  or  non-renewal of this policy,  the insurance  company shall
     endeavor to give thirty (30) days prior notice to";

          (h)  During  construction  of any work by  Landlord  or  Tenant on the
     Premises, the constructing party shall give prompt notice to other party of
     all  losses,  damages,  or  injuries  to any person or to property or third
     parties.  The  constructing  party shall promptly report to other party all
     such claims of which the constructing party has notice,  whether related to
     matters  insured or  uninsured.  No settlement or payment for any claim for
     loss,  injury or damage or other matter as to which other party may have an
     obligation  for  any  payment  or  reimbursement,  shall  be  made  by  the
     constructing party without the written approval of other party;

          (i) The carrying of any of the insurance  required hereunder shall not
     be interpreted as relieving the insuring party of any responsibility to the
     other party, and the other party does not waive any rights that it may have
     against the insuring party and/or its  representatives  for any expense and
     damage to persons and property  (tangible  and  intangible)  from any cause
     whatsoever with respect to the insuring party's work;

          (j) Landlord and Tenant shall assist and cooperate  with any insurance
     company in the  adjustment or  litigation  of all claims  arising under the
     terms of this Article; and

          (k) The contract for  construction  shall  include an  indemnification
     substantially similar to the text of Article 17.1 by the contractor for the
     benefit of Landlord and Tenant.

     16.7 Loss of Rents  Insurance.  Tenant  shall,  at  Tenant's  sole cost and
expense,  purchase and maintain in full force and effect a policy of rental loss
insurance,  in an  amount  equal  to the  amount  of  Rent,  Amortized  Rent and
Additional  Rent,  commencing  on the date of loss for the next  ensuing one (1)
year, with proceeds payable to Landlord ("Loss of Rents Insurance"). At Tenant's
option,  Tenant  may  undertake  to  maintain  deductibles  under  its  property
insurance  policy and may elect to self-insure  some or all of the Loss of Rents
Insurance.  Any undertaking by Tenant to assume  deductibles or self-insure with
respect  to some or all of the  Loss of  Rents  Insurance  shall  not  serve  to
adversely affect Landlord, and Landlord shall be protected against loss of rents
in the same  manner as if Tenant had  obtained  separate  insurance  as provided
herein.

<PAGE>

                                   ARTICLE 17
                                 INDEMNIFICATION

     17.1 Tenant.  Subject to the waiver of recovery and  subrogation in Article
16.5, Tenant shall defend, indemnify and hold harmless Landlord from and against
any and all obligations,  losses,  costs,  expenses,  demands,  attorney's fees,
investigation costs, claims, suits, actions, or liabilities if and to the extent
they  arise out of; (i) the use,  condition  or  occupancy  of the  Premises  or
Project  by  Tenant,  (ii) any acts or  omissions  to act by Tenant  or  Tenants
Agent's  including  any  violations  of  Hazardous  Materials  Laws by Tenant or
Tenant's Agents in, about or on the Premises,  and (iii) personal injury,  death
or for loss or damage to property to the extent caused by Tenant's negligence or
willful misconduct in or on the Premises.

     This indemnity does not apply: (x) to claims, suits, actions or liabilities
to the extent they are caused by the  negligent  acts or willful  misconduct  of
Landlord, its agents, employees,  contractors or invitees; or to the obligations
covered by the Hazardous Materials indemnity in Article 26.2.

     Tenant  shall  assume the defense of any claim  subject to this  indemnity.
Landlord  agrees to  cooperate  fully with  Tenant and  Tenant's  counsel in any
matter  where  Tenant  elects to defend,  provided  Tenant  promptly  reimburses
Landlord for reasonable out of pocket costs and expenses  incurred in connection
with its duty to cooperate.

     The  foregoing  indemnity is  conditioned  upon Landlord  providing  prompt
written  notice to Tenant of any claim or  occurrence  that Landlord is directly
aware of that is  likely  to give rise to a claim,  suit,  action  or  liability
falling  within the scope of the  foregoing  indemnity,  along with any  details
available  that will enable  Tenant to make a  reasonable  investigation  of the
claim.

     17.2 Landlord. Subject to the waiver of recovery and subrogation in Article
16.5, Landlord shall indemnify, defend and hold harmless Tenant from and against
any and all obligations,  losses,  costs,  expenses,  demands,  attorneys' fees,
investigation costs, claims, suits, actions, or liabilities for personal injury,
death or for loss or damage to  property  to the extent  arising  from:  (i) the
negligence  or  willful  misconduct  of  Landlord,  its  employees,   agents  or
contractors or (ii) obligations  covered by the Hazardous Materials indemnity in
Article 26.2.

     The foregoing indemnity is conditioned upon Tenant providing prompt written
notice to Landlord of any claim or  occurrence  that is likely to give rise to a
claim,  suit,  action or  liability  falling  within the scope of the  foregoing
indemnity,  along with  sufficient  details that will enable  Landlord to make a
reasonable investigation of the claim.

     17.3  Survival.  The provisions of Articles 17.1 and 17.2 shall survive the
termination of the Lease.


                                   ARTICLE 18
                           ASSIGNMENT AND SUBLETTING

     18.1 Assignment Without Consent. Without Landlord's consent:

          (a) This Lease may be assigned in part or whole  (whether by operation
     of law or  otherwise)  or all or any part of the  Premises may be sublet at
     any time:  (i) to a subsidiary of Tenant,  to the entity with which or into
     which  Tenant may merge,  whether  or not  Tenant is the  survivor  of such
     merger,  to any affiliate of Tenant,  to an entity that is  controlled  by,
     controls or is under  common  control  with Tenant (or a valid  assignee of
     this Lease) (any of the foregoing,  a "Tenant  Affiliate");  or (ii) to the
     purchaser of substantially  all of the assets of the operating  division of
     Tenant using the Premises; and

          (b) One or more parts of the  Premises  may be used or  occupied  by a
     party or  parties in  connection  with the  transaction  of  business  with
     Tenant,  an entity  that  controls,  is  controlled  by or is under  common
     control with Tenant (or a valid assignee of Tenant),  Tenant Affiliate,  or
     any of their employees.

          For purposes of this Lease, "control" means the possession,  direct or
     indirect,  of the power to direct or cause the direction of the  management
     and  policies  of a person or entity,  or majority  ownership  of any sort,
     whether  through  the  ownership  of  voting  securities,  by  contract  or
     otherwise.

     18.2 Assignment With Consent. Except as otherwise provided in Article 18.1,
Tenant may only  assign this Lease in part or whole or sublet all or any part of
the Premises if Tenant first obtains Landlord's consent to the proposed assignee
or subtenant in writing.  Landlord's consent shall not be unreasonably withheld.
Landlord  shall be deemed to have  consented  if  Landlord  does not  respond to
Tenant's request within fifteen (15) days after delivery of Tenant's request for
consent  to  Landlord.  In the case of any  modification  of this  Lease made by
Landlord  after the date of an  assignment  or other  transfer  of this Lease by
Tenant, if such modification  increases or enlarges the obligations of Tenant or
reduces  the  rights of  Tenant,  then (a)  Tenant  named in this Lease and each
respective  assignor or  transferor  shall not be liable  under or bound by such
increase,  enlargement  or  reduction,  and  (b) in the  case of any  waiver  by
Landlord of a specific  obligation of an assignee or transferee of Tenant,  such
waiver  shall  also be deemed a waiver of such  obligation  with  respect to

<PAGE>

the  immediate  and  remote   assignors  or  transferors  of  such  assignee  or
transferee.  Landlord  approval of any sublet or assignment shall be on the form
attached as Exhibit E.

     Landlord's  consent  or refusal of  consent  shall be in  writing  and,  if
Landlord  refuses  consent,  the  reasons  for  refusal  shall  be  stated  with
particularity.  Landlord's  consent  to  an  assignment  or  sublease  shall  be
accompanied  by a statement  addressed to Tenant and the assignee or  subtenant,
upon which statement Tenant and the assignee or subtenant may conclusively rely,
stating that Tenant is not in default  under the Lease (or setting forth in what
respects Tenant is in default), that this Lease has not been amended or modified
(or setting forth such amendments or modifications), the expiration date of this
Lease,  and the date to which Rent has been paid.  In no event  shall  Tenant be
prohibited  from  assigning  this Lease in part or in whole or sublet all or any
part of the Premises on the grounds that the proposed assignee or subtenant is a
prospective  tenant  of any of  the  five  Buildings  currently  comprising  the
Premises.

     18.3 Effect of Transfer.  Landlord agrees,  upon request by Tenant,  (a) to
amend the notice address for Tenant to add the transferee, and (b) to deliver to
Tenant  or  its  successor  concurrently  with  the  delivery  thereof  to  such
transferee,  copies of any notices of default delivered pursuant to the terms of
this Lease. Additionally,  if requested of Landlord pursuant to an assignment or
sublease,  the  transferee  shall have the right to cure any default  under this
Lease within the applicable  cure period  provided for Tenant in this Lease.  If
the assignment or sublease permits Tenant to recover  possession of the Premises
from the  transferee  and again  take  possession  of the  Premises  as  Tenant,
Landlord agrees to again  recognize  Tenant as the "Tenant" under this Lease. An
assignee  or  subtenant  shall  have the right to  further  assign or  sublease,
subject to the terms and conditions of this Article 18.

     18.4 Excess  Rent.  If the rental rate  agreed  upon  between  Tenant and a
subtenant  pursuant to Articles  18.1 or 18.2 is greater than the rent rate that
Tenant must pay Landlord hereunder for that portion of the Premises,  then fifty
percent  (50%) of such excess rent shall be considered  Additional  Rent owed by
Tenant to Landlord less third party brokerage commissions,  rent abatement,  out
of pocket marketing costs,  tenant  improvement  costs, out of pocket attorneys'
fees,  and other out of pocket  costs  reasonably  incurred  by Tenant  for such
subletting,  and shall be paid by Tenant to  Landlord  in the same  manner  that
Tenant pays Additional Rent.  Notwithstanding the foregoing,  Tenant may convey,
in  connection  with an  assignment  or  subletting,  but pursuant to a separate
legally binding  agreement,  the Tenant's  assets,  business and trade fixtures,
inventory,  equipment or furniture or other Tenant's Property to the extent paid
for by Tenant,  and Tenant shall be entitled to retain any and all consideration
received in connection with such conveyance.

     18.5 Tenant Lease Obligations. Notwithstanding any other provisions of this
Article 18. Tenant shall remain primarily liable for all obligations,  payments,
and liabilities under Lease during any sublease or assignment  described in this
Article 18,  provided  Tenant's notice and cure rights in the event of a default
remain in effect notwithstanding an assignment or sublease.


                                   ARTICLE 19
                               TENANT'S PROPERTY

     19.1  Removal of  Tenant's  Property  During  Lease  Term.  Tenant's  trade
fixtures  and  personal  property  (collectively  called  "Tenant's  Property"),
however  installed or located on the Premises,  shall be and remain the property
of Tenant and may be removed at any time and from time to time  during the Lease
Term  provided  any damage to  Premises  is  repaired  and  except as  otherwise
provided in Article 19.2 below.

     19.2  Removal  of  Tenant's  Property  at  End  of  Lease  Term;  Surrender
Obligations.  Upon the expiration or  termination of this Lease,  and consistent
with  Articles  9.1  and  10.5,  Tenant  may,  but is not  required  to,  remove
improvements  performed  by or on behalf of Tenant and all of Tenant's  Property
from the  Premises.  Notwithstanding  the  foregoing or anything to the contrary
herein contained, Tenant, upon surrendering any building, or upon the expiration
or  termination  of this  Lease,  shall not remove,  damage or destroy  existing
telephone, audio, video, data, or TV cables racks and punchboards; provided that
Tenant may remove its computers,  related  equipment and other Tenant's Property
at its  discretion.  Tenant's  failure  to  remove  its  property  prior  to the
expiration or  termination  of the Lease shall not  constitute a Holding Over as
defined  in  Article  23 of this  Lease,  but  shall not  relieve  Tenant of any
liability therefore pursuant to Article 20, Default. Notwithstanding anything to
the contrary  herein  contained,  Tenant shall have no obligation to restore the
Premises,  but has the repair and maintenance  obligation as provided in Article
11.1 upon expiration or termination of this Lease,  upon  surrendering  Building
1075 or any Contraction  Space,  upon exercising the early termination right set
forth in Article 3.4, or otherwise.

     19.3 No Lien.  In no event  (including a Tenant  Default  under this Lease)
shall  Landlord  have any lien or other  security  interest  in any of  Tenant's
Property  located in the Premises or elsewhere,  and Landlord  hereby  expressly
waives and  releases  any lien or other  security  interest  however  created or
arising.


                                   ARTICLE 20
                                     DEFAULT

     20.1  Tenant's  Default.  Each of the  following  constitutes  a default by
Tenant ("Tenant Default"):

          (a) If Tenant  fails to pay Rent as required by this Lease within five
     (5) days after receipt of written notice thereof from Landlord to Tenant or
     the  failure to make any other  payments  due under  this Lease  where such
     failure  continues  for a period of ten (10) days after  receipt of written
     notice thereof from Landlord to Tenant;

          (b) If Tenant  fails to  perform or observe  any other  obligation  of
     Tenant  under this Lease within  thirty (30) days after  receipt of written
     notice from  Landlord  setting  forth in  reasonable  detail the nature and
     extent of the failure  referencing  pertinent  Lease  provisions (or if the
     breach requires longer than thirty (30) days to cure, Tenant fails to start
     curing  within  thirty  (30) days after  receipt  of written  notice and to
     prosecute the cure to completion with due diligence);

          (c)  If  Tenant  files  a  voluntary  petition  in  bankruptcy  or  is
     adjudicated  a  bankrupt  or  insolvent,  or files any  petition  or answer
     seeking an arrangement,  composition,  liquidation or dissolution under any
     present or future  Federal,  State,  or other  statute,  law or  regulation
     relating to  bankruptcy,  insolvency or other relief for debtors,  or shall
     seek or consent to or acquiesce in the  appointment of a trustee,  receiver
     or liquidator of Tenant or of all or a substantial  part of its assets,  or
     of the  Premises,  or shall make a general  assignment  for the  benefit of
     creditors,  or shall  admit  in  writing  its  inability  to pay its  debts
     generally as they become due; or

          (d) If a court  enters  an  order,  judgment  or  decree  approving  a
     petition  filed  against  Tenant  seeking  an   arrangement,   composition,
     liquidation,  dissolution  or similar  relief  under the  present or future
     Federal,  State or other statute, law or regulation relating to bankruptcy,
     insolvency or other relief for debtors,  and the order,  judgment or decree
     remains unvacated or unstayed for sixty (60) days.

     20.2 Landlord's Remedies.

          (a) If a Tenant Default occurs, then in addition to any other remedies
     available  to  Landlord  at law  or in  equity,  Landlord  shall  have  the
     immediate  option to terminate  this Lease before the end of the Lease Term
     and all  rights  of Tenant  hereunder,  by  giving  written  notice of such
     intention to terminate.  In the event that Landlord  terminates  this Lease
     due to a Tenant  Default,  then  Landlord may recover from Tenant:  (i) the
     worth at the time of award of any unpaid Base Rent which had been earned at
     the time of such  termination;  plus (ii) the worth at the time of award of
     unpaid Base Rent which would have been earned after  termination  until the
     time of award  exceeding  the amount of such rental loss that Tenant proves
     could  have been  reasonably  avoided;  plus (iii) the worth at the time of
     award of the  amount by which the unpaid  Base Rent for the  balance of the
     Lease Term after the time of award  exceeds  the amount of such rental loss
     that the Tenant proves could have been  reasonably  avoided;  plus (iv) any
     other  amount  necessary  to  compensate  Landlord  for all  the  detriment
     proximately  caused by Tenant's  failure to perform his  obligations  under
     this  Lease or which in the  ordinary  course of things  would be likely to
     result  therefrom;  and (e) at Landlord's  election,  such other amounts in
     addition to or in lieu of the  foregoing as may be  permitted  from time to
     time by  applicable  California  law. As used in (i), (ii) and (iii) above,
     the "worth at the time of award" is computed by discounting  such amount at
     the discount rate of the Federal  Reserve Bank of San Francisco at the time
     of award plus one percent (1%).

          (b) If a Tenant Default occurs,  Landlord shall also have the right to
     maintain  Tenant's  right to  possession,  in which case this  Lease  shall
     continue in effect whether or not Tenant shall have abandoned the Premises.
     In such event  Landlord  shall be entitled to enforce all of the Landlord's
     rights  and  remedies  under  this  Lease and under  Section  1951.4 of the
     California  Civil Code,  or any successor  statute,  including the right to
     recover  the rent as it  becomes  due  hereunder.  Acts of  maintenance  or
     preservation  or efforts to relet the Premises or appointment of a receiver
     upon initiative of Landlord to protect Landlord's  interest under the Lease
     shall not constitute a termination of Tenant's right to possession.

          (c) In the event of re-entry  or taking  possession  of the  Premises,
     Landlord  shall have the right but not the  obligation to remove all or any
     part of the trade fixtures,  furnishings,  equipment and personal  property
     located  in the  Premises  and to  place  the same in  storage  in a public
     warehouse at the expense of and risk to Tenant,  and to sell such  property
     in accordance with applicable law.

          (d) Landlord shall mitigate its damage by making reasonable efforts to
     relet the Premises on reasonable terms. Landlord may relet for a shorter or
     longer  period of time than the Lease  Term and make  reasonably  necessary
     repairs or  alterations.  If Landlord  relets for a period  longer than the
     Lease Term, then any special  concessions  given to the new tenant shall be
     allocated  throughout  the entire  reletting term so that Tenant is charged
     only with the proportion of the  concessions  allocated to the remainder of
     the Lease Term. All sums collected from reletting shall be applied first to
     Landlord's  expenses of  reletting,  and then to the payment of amounts due
     from Tenant to Landlord under this Lease.

     20.3  Landlord's  Default.  Each of the following  constitutes a default by
Landlord "Landlord's Default"):

<PAGE>

          (a)  Landlord's  failure to make any  payment  required  to be made by
     Landlord under this Lease,  as and when due,  where such failure  continues
     for a period of ten (10) days after receipt of written  notice thereof from
     Tenant to Landlord;

          (b)  Landlord's  failure to perform or observe any of its  obligations
     under this Lease made in this Lease within  thirty (30) days after  receipt
     of written notice from Tenant setting forth in reasonable detail the nature
     and extent of the failure referencing pertinent Lease provisions or if more
     than thirty (30) days is required to cure the breach, Landlord's failure to
     begin curing within the thirty (30) day period and diligently prosecute the
     cure to completion.

     20.4 Tenant's Remedies.  If a Landlord Default occurs,  Tenant may, without
waiving  any claim for damages for breach of  agreement  or any other  rights or
remedies it may have under this Lease at law, at any time  thereafter  do any of
the following:

          (a) Cure the  Landlord  Default for the account of  Landlord,  and any
     amount  paid or any  contractual  liability  incurred by Tenant in so doing
     shall be deemed paid or incurred for the account of Landlord,  and Landlord
     shall  reimburse such amount (plus  interest  accruing at the lesser of the
     annual rate of twelve  percent  (12%) or the maximum rate  permitted by law
     until paid) to Tenant on demand.  If Landlord fails to reimburse  Tenant on
     demand for any sum it otherwise  owes Tenant  under this Lease,  the amount
     may be deducted by Tenant from the next or any succeeding  payments of Base
     Rent. If Tenant wrongly invokes this right, Landlord's sole relief shall be
     the  payment by Tenant of all  installments  of rent  withheld  by it, plus
     interest at the annual  rate of twelve  percent  (12%) or the maximum  rate
     permitted by law accruing from the date the withheld rent was due.

          (b) Abate Rent for the  portion(s) of the Premises  rendered  unusable
     for Tenant's purposes.

          (c) Terminate this Lease if Tenant's use and occupancy of the Premises
     or a material  portion  thereof  are  interfered  with,  prevented  or made
     dangerous.

          (d) If the  obligations of Landlord under this Lease are not performed
     during the  pendency of a bankruptcy  or  insolvency  proceeding  involving
     Landlord  as the  debtor,  or  following  the  rejection  of this  Lease in
     accordance  with Section 365 of the United States  Bankruptcy  Code and the
     election of Tenant to remain in  possession of the Premises in a bankruptcy
     or  insolvency   proceeding   involving   Landlord  as  the  debtor,   then
     notwithstanding  any provision of this Lease to the contrary,  Tenant shall
     have the right to set off against  Rent next due and owing under this Lease
     (i) any and all damages that it demonstrates  to the Bankruptcy  Court were
     caused by  nonperformance  of  Landlord's  obligations  under this Lease by
     Landlord, debtor-in-possession, or the bankruptcy trustee, and (ii) any and
     all damages caused by the  nonperformance  of Landlord's  obligations under
     this Lease following any rejection of this Lease in accordance with Section
     365 of the United States Bankruptcy Code.

     20.5 No Cure Period.  The cure periods in Articles  20.1(b) and 20.3 do not
apply to failure to maintain  the  insurance  required by this Lease.  If either
party fails to maintain  the  insurance  required of that party under the Lease,
then the other may  immediately  obtain such insurance and the defaulting  party
shall on demand pay the non-defaulting party the cost of such insurance.

     20.6 Self-Help.  For purposes of this Article, a Tenant Default or Landlord
Default is  generally  referred to as a  "Defaults".  If there is a Default by a
party, the other party may, without being obligated to do so and without waiving
the Default,  cure the Default. The defaulting party shall pay the nondefaulting
party  on  demand  all  costs,  expenses  and  disbursements   incurred  by  the
nondefaulting party to cure the Default.

     20.7  Survival.  The remedies  permitted  in this  Article,  Landlord's  or
Tenant's  obligation to mitigate  damages and the indemnities in Articles 15, 17
and 26 shall survive termination or expiration of this Lease.


                                   ARTICLE 21
                                     NOTICES

     All notices,  demands or requests  which may or are required to be given by
one party to the other under this Lease shall be given in writing and  delivered
personally or sent by United States  Certified  Mail,  postage  prepaid,  return
receipt requested, or nationally recognized overnight air carrier, and addressed
to  the  Landlord's   Address  or  Tenant's   Address,   as  the  case  may  be.
Correspondence  to Tenant  also shall be  addressed  to  Tenant's  Address.  Any
correspondence  or  notice to Tenant  sent to  Tenant  at the  Premises,  or any
location other than as designated in this Article 21, shall be null and void and
of no force and effect.  Notices shall be deemed to have been given upon receipt
or attempted  delivery where  delivery is not accepted.  Either party may change
its  address  upon notice  given to the other.  Tenant  shall also give  default
notices to  Landlord's  Lender  after  receiving  notice  form  Landlord  of the
Lender's name and address.

<PAGE>

                                   ARTICLE 22
                                 QUIET ENJOYMENT

     Landlord  warrants  and  agrees  that,  so long as this  Lease has not been
terminated  as a result  of a  Tenant  Default,  Tenant's  peaceable  and  quiet
enjoyment of the Premises shall not be disturbed by Landlord or anyone  claiming
by or through Landlord.


                                   ARTICLE 23
                                  HOLDING OVER

     Any  holding  over  after the end of the  Lease  Term  requires  Landlord's
written approval prior to the end of the Lease Term, which,  notwithstanding any
other provisions of this Lease,  Landlord may withhold.  Such holding over shall
be construed to be a tenancy at sufferance from month to month. Tenant shall pay
to Landlord monthly base rent equal to 125% of the monthly base rent installment
due in the last  month of the Lease Term and all other  Additional  Rent and all
other terms and  conditions  of the Lease  shall  apply,  so far as  applicable.
Holding over by Tenant without written approval of Landlord shall subject Tenant
to the liabilities and obligations provided for in this Lease and by law. Tenant
shall  indemnify  and hold  Landlord  harmless  against  any  loss or  liability
resulting  from any  delay  caused  by  Tenant  in  surrendering  the  Premises,
including  without  limitation,  any claims  made or  penalties  incurred by any
succeeding  tenant or by Landlord.  No holding over shall be deemed or construed
to exercise  any option to extend or renew this Lease in lieu of full and timely
exercise of any such option as required hereunder.


                                   ARTICLE 24
                               MEMORANDUM OF LEASE

     This Lease shall not be recorded  except as permitted in this  Article.  At
the request of either party, the parties shall promptly  execute and record,  at
the  cost of the  requesting  party,  a short  form  memorandum  describing  the
Premises and stating this Lease's Term  (including  any options to extend),  the
Commencement   Date,  any  rights  of  first  offer  or  refusal,   contraction,
termination,  or expansion rights held by Tenant,  other information the parties
agree to include,  and such other information as necessary to satisfy the notice
of lease statute of the State where the Premises are located. Both parties agree
that the form  attached  as Exhibit B may be  recorded  at the request of either
party.


                                   ARTICLE 25
                              ESTOPPEL CERTIFICATES

     Upon  request of either  party at any time and from time to time,  Landlord
and Tenant shall execute and deliver to the other,  within fifteen (15) business
days after receipt of the request,  a written  instrument,  duly  executed:  (a)
certifying that this Lease has not been amended or modified and is in full force
and effect or, if there has been a modification or amendment, that this Lease is
in full force and effect as modified or amended,  and stating the  modifications
or  amendments;  (b)  specifying  the date to which the Rent has been paid;  (c)
stating whether to the best knowledge of the party executing the instrument, the
other party is in default and, if so, stating the nature of the default; and (d)
stating  the  Commencement  Date and whether any option to extend the Lease Term
has been exercised;  and such other statements that may be reasonably  requested
by Landlord or Tenant. Notwithstanding the above Tenant will execute and deliver
to Landlord as required above the Estoppel form attached as Exhibit F.


                                   ARTICLE 26
                            ENVIRONMENTAL PROVISIONS

     26.1 Definitions. As used in this Lease, the following terms shall have the
following meaning:

          (a) The term  "Hazardous  Materials"  shall  mean (i)  polychlorinated
     biphenyls;  (ii) radioactive materials and (iii) any chemical,  material or
     substance  now or hereafter  defined as or included in the  definitions  of
     "hazardous  substance"  "hazardous water," "hazardous material," "extremely
     hazardous waste,"  "restricted  hazardous waste" under Section 25115, 25117
     or 15122.7,  or listed  pursuant to Section 25140 of the California  Health
     and Safety Code,  Division 20, Chapter 6.5  (Hazardous  Waste Control Law),
     (ii) defined as "hazardous substance" under Section 25316 of the California
     Health and Safety Code, Division 20, Chapter 6.8  (Carpenter-Presley-Tanner
     Hazardous  Substances Account Act), (iii) defined as "hazardous  material,"
     "hazardous  substance,"  or  "hazardous  waste" under  Section 25501 of the
     California  Health and Safety Code,  Division 20,  Chapter 6.95  (Hazardous
     Materials  Release,  Response,  Plans and  Inventory),  (iv)  defined  as a
     "hazardous  substance"  under  Section 25181 of the  California  Health and
     Safety Code,  Division 20l, Chapter 6.7  (Underground  Storage of Hazardous
     Substances),  (v) petroleum, (vi) asbestos, (vii) listed under Article 9 or
     defined as "hazardous" or "extremely  hazardous"  pursuant to Article II of
     Title 22 of the  California  Administrative  Code,  Division 4, Chapter 20,
     (viii)  defined as  "hazardous  substance"  pursuant  to Section 311 of the
     Federal  Water  Pollution  Control  Act,  33 U.S.C.  1251 et seq. or listed
     pursuant to Section  1004 of the Federal  Water  Pollution  Control Act (33
     U.S.C. 1317), (ix) defined as a

<PAGE>

     "hazardous  waste,"  pursuant  to  Section  1004  of the  Federal  Resource
     Conservation  and  Recovery  Act,  42 U.S.C.  6901 et seq.,  (x) defined as
     "hazardous   substance"  pursuant  to  Section  101  of  the  Comprehensive
     Environmental  Responsibility  Compensations,  and Liability Act, 42 U.S.C.
     9601 et seq., or (xi) regulated under the Toxic Substances Control Act, 156
     U.S.C. 2601 et seq.

          (b) The term "Hazardous  Materials  Laws" shall mean any local,  state
     and federal laws, rules,  regulations,  or ordinances  relating to the use,
     generation,  transportation,  analysis, manufacture, installation, release,
     discharge, storage or disposal of Hazardous Material.

          (c)  The  term  "Landlord's  Agents"  shall  mean  Landlord's  agents,
     representatives,   employees,   contractors,   subcontractors,   directors,
     officers, partners, relatives of employees and invitees.

          (d)  The  term   "Tenant's   Agents"  shall  mean   Tenant's   agents,
     representatives,   employees,   contractors,   subcontractors,   directors,
     officers, partners, relatives of employees and invitees.

     26.2 Landlord's Representations and Obligations to Indemnify.

          (a) Landlord hereby  represents and warrants to the best of Landlord's
     knowledge  that the Premises are, as of the  Execution  Date, in compliance
     with all  Hazardous  Material  Laws,  except for the possible  ground water
     contamination  identified  in  attached  Exhibit  G (April  3,  2001  final
     clearance from Santa Clara Water  District).

          (b) Landlord will give Tenant  prompt  notice of (i) any  governmental
     proceeding or inquiry  concerning  Hazardous  Materials on, in or under the
     Premises  or  Project;  (ii) claims  made or  threatened  by third  parties
     against  Landlord  or the  Premises  relating  to  loss  or  injury  due to
     Hazardous  Materials,  and (iii) Landlord's discovery of any condition that
     may adversely affect Tenant's use of the Premises.

          (c) Landlord, at its sole cost and expense, shall protect,  indemnify,
     defend and hold harmless  Tenant and its  directors,  officers,  employees,
     agents,  parents,  subsidiaries,  successors  and  assigns  from any  loss,
     damage,  cost, expense or liability (including  reasonable  attorneys' fees
     and costs,  including on appeal)  directly or indirectly  arising out of or
     attributable  to the use,  generation,  presence,  release or  discharge of
     Hazardous  Materials on, under or from the Premises or Project,  (i) caused
     by Landlord or Landlord's  Agents,  or (ii) existing prior to July 25, 1998
     and not  caused  by  Tenant  or  Tenant's  Agents.  The cost  and  expenses
     indemnified against include, but are not limited to the following:

               (i) Any and all  claims,  actions,  suits,  proceedings,  losses,
          damages,  liabilities,  deficiencies,  forfeitures,  penalties, fines,
          punitive damages, cost or expenses;

               (ii) Any claim,  action,  suit or proceeding for personal  injury
          (including  sickness,  disease,  or  death),  tangible  or  intangible
          property damage, compensation for lost wages, business income, profits
          or  other  economic  loss,  damage  to the  natural  resources  of the
          environment,  nuisance,  pollution,   contamination,   leaks,  spills,
          release or other adverse effects on the environment;

               (iii)   The  cost  of  any   repair,   clean-up,   treatment   or
          detoxification  of the  Premises  or  Project  necessary  to bring the
          Premises into compliance with all Hazardous  Material Laws,  including
          the preparation and implementation of any closure, disposal,  remedial
          action,  or other actions with regard to the Premises or Project,  and
          expenses (including,  without limitation,  reasonable  attorneys' fees
          and consultants'  fees,  investigation and laboratory fees, court cost
          and litigation expenses).

          (d) Landlord  shall,  at its sole cost and expense,  promptly take any
     and all action  necessary  to  remediate  contamination  of the Premises or
     Project  by  Hazardous  Materials  arising  from or caused by  Landlord  or
     Landlord's Agents as provided in 26.2.

     26.3  Tenant's  Obligation  to  Indemnify.  Tenant,  at its  sole  cost and
expense, shall protect,  indemnify,  defend and hold Landlord and its directors,
officers,  employees,  agents,  parents,  subsidiaries,  successors  and assigns
harmless  from  and  against  any  loss,  damage,  cost,  expense  or  liability
(including reasonably  attorneys' fees and costs,  including on appeal) directly
or indirectly arising out of or attributable to the use,  generation,  presence,
release or discharge of  Hazardous  Materials  on, under or from the Premises or
Project, caused by the events described in subparagraphs a., b. and c. below:

          (a)   Tenant's   or   Tenant's   Agents'   use,   analysis,   storage,
     transportation,   disposal,   release,  threatened  release,  discharge  or
     generation  of  Hazardous  Material  to, in, on,  under,  about or from the
     Premises or Project; or

          (b)  Tenant's or  Tenant's  Agents  failure to comply  with  Hazardous
     Material laws; or

          (c) Any release of Hazardous  Material to, in, on, under,  about, from
     or onto the Premises or Project caused by Tenant or Tenant's  Agents or to,
     in, on, under,  about, from or onto the Premises occurring during the Lease
     Term, except ground water contamination from other parcels where the source
     is from off the  Premises  not arising from or caused by Tenant or Tenant's
     Agents.

<PAGE>

          The cost and expenses indemnified against include, but are not limited
     to the following:

               (i) Any and all  claims,  actions,  suits,  proceedings,  losses,
          damages,  liabilities,  deficiencies,  forfeitures,  penalties, fines,
          punitive damages, cost or expenses;

               (ii) Any claim,  action,  suit or proceeding for personal  injury
          (including  sickness,  disease,  or  death),  tangible  or  intangible
          property damage, compensation for lost wages, business income, profits
          or  other  economic  loss,  damage  to the  natural  resources  of the
          environment,  nuisance,  pollution,   contamination,   leaks,  spills,
          release or other adverse effects on the environment;

               (iii)   The  cost  of  any   repair,   clean-up,   treatment   or
          detoxification  of the  Premises  or  Project  necessary  to bring the
          Premises into compliance with all Hazardous  Material Laws,  including
          the preparation and implementation of any closure, disposal,  remedial
          action,  or other actions with regard to the Premises or Project,  and
          expenses (including,  without limitation,  reasonable  attorneys' fees
          and consultants'  fees,  investigation and laboratory fees, court cost
          and litigation expenses).

     26.4 Tenant's Obligation to Remediate  Contamination.  Tenant shall, at its
sole cost and expense,  promptly take any and all action  necessary to remediate
contamination of the Premises or Project by Hazardous  Materials arising from or
caused by Tenant or Tenant's Agents as provided in 26.3.

     26.5  Obligation  to Notify.  Landlord  and Tenant  shall each give written
notice to the other as soon as  reasonably  practical  of (i) any  communication
received from any governmental  authority  concerning  Hazardous  Material which
related to the Premises or Project and (ii) any contamination of the Premises or
Project by Hazardous  Materials  which  constitutes a violation of any Hazardous
Material Laws.

     26.6 Survival.  The  obligations of the parties under this Article 26 shall
survive the Lease Term or earlier termination of this Lease.

     26.7  Certification and Closure.  On or before the end of the Lease Term or
earlier termination of this Lease, at Landlord's  request,  Tenant shall deliver
to Landlord a  certification  executed by Tenant  stating  that,  to the best of
Tenant's  knowledge,  there  exists no  violation  of  Hazardous  Material  Laws
resulting  from  Tenant's use of the  Premises or Project.  If pursuant to local
ordinance,  state or federal law,  Tenant is required,  at the expiration of the
Lease  Term,  to submit a closure  plan for the  Premises or Project to a local,
state or federal  agency,  then Tenant shall  furnish to Landlord a copy of such
plan.

     26.8 Prior Hazardous Materials. Tenant shall have no obligation to clean up
or to hold Landlord  harmless with respect to, any Hazardous  Material or wastes
discovered on the Premises or Project which were not  introduced  into,  in, on,
about,  from or under the  Premises  or Project  during the Lease Term or ground
water contamination from other parcels where the source is from off the Premises
or Project not arising from or caused by Tenant or Tenant's Agents.


                                   ARTICLE 27
                              ADDITIONAL PROVISIONS

     27.1 Removal of Liens.  If Landlord or Tenant is doing,  or is having done,
any work in the Premises or Project and liens are placed against the Premises or
Project  by any  person  or entity  engaged  in  providing  work,  services,  or
materials for or to such work, the contracting  party has the sole and exclusive
obligation to take whatever steps may be appropriate and necessary,  at its sole
cost and expense, to discharge, bond or otherwise remove the liens within thirty
(30) days after Landlord notifies Tenant of the existence of the lien. If Tenant
does not timely pay, remove or bond over the lien, Landlord may satisfy the lien
and the sum paid by Landlord shall constitute Additional Rent due and payable on
demand from Tenant.

     27.2  Brokers.  Landlord  warrants  to Tenant that no  broker(s)  have been
retained in connection with this Lease on behalf of Landlord. Tenant warrants to
Landlord that the only broker(s) that have been retained in connection with this
Lease on behalf  of  Tenant is Jones  Lang  LaSalle  Americas,  Inc.  ("Tenant's
Broker"). Landlord covenants and agrees that it shall pay all commissions,  fees
and amounts owing to Tenant's  Broker in connection with this Lease as agreed to
in the Commission  Agreement  entered into by and between  Landlord and Tenant's
Broker dated  September  17, 2004.  Landlord  shall  indemnify and defend Tenant
against the claims of any other broker  arising  from  Landlord's  acts.  Tenant
shall  indemnify  and defend  Landlord  against  the claims of any other  broker
arising from Tenant's acts.  Tenant shall be responsible  for any commissions or
fees payable to any broker  retained by Tenant in  connection  with Articles 1.1
(r), 3.3, 3.6 and 3.7 (although Landlord acknowledges it may owe Tenant's broker
commissions in connection with leasing space within the Project  pursuant to the
September 17, 2004 agreement  referred to above), and shall indemnity and defend
Landlord  against the claims of such broker  arising  through  Tenant.  Landlord
shall be solely  responsible  for any  commissions or fees payable to any broker
retained by Landlord in connection  with Articles  1.1(r),  3.3, 3.6 and 3.7 and
shall defend Tenant against the claims of such broker arising through Landlord.

<PAGE>

     27.3  Successors.  This  Lease  shall  bind  and  inure to the  benefit  of
Landlord, its successors and assigns, and Tenant and its successors and assigns.

     27.4  Severability.  If any  provision  of this Lease is  determined  to be
invalid or  unenforceable,  then that  provision and the remainder of this Lease
shall continue in effect and be  enforceable to the fullest extent  permitted by
law. It is the  intention of the parties that if any  provision of this Lease is
capable of two constructions,  one of which would render the provision void, and
the other of which would render the provision  valid,  then the provision  shall
have the meaning that renders it valid.

     27.5 Integration.  This instrument contains the entire integrated agreement
between the parties as to the Premises,  and supersedes  any oral  statements or
representations  or prior written matter not contained in this instrument.  This
Lease shall not be modified except by a written document signed by both parties.

     27.6  Governing  Law.  This Lease shall be governed  by and  construed  and
enforced  in  accordance  with the laws of the  State  where  the  Premises  are
located. Any actions or proceeding related to this Lease shall be brought in the
appropriate court in Santa Clara County, California.

     27.7 No Waiver.  Failure of either party to complain of any act or omission
on the part of the other,  no matter how long the same may  continue,  shall not
constitute a waiver of any rights under this Lease except as expressly  provided
in this Lease. No waiver by either party of any breach of any provisions of this
Lease shall be deemed a waiver of a breach of any other  provision of this Lease
or a consent to any subsequent breach of the same or any other provision. If any
action of any party  requires  the consent or approval of the other,  consent or
approval  given on one occasion  shall not be deemed a consent to or approval of
that action on any other  occasion.  No extension of time for performance of any
obligation  or act shall be deemed an extension of the time for  performance  of
any other obligation or act.

     27.8  Construction.  Captions are solely for the convenience of the parties
and are not a part of this Lease. This Lease shall not be construed as if it had
been prepared by one of the parties,  but rather as if both parties had prepared
it.

     27.9 Time. Time is of the essence of every provision of this Lease.

     27.10  Cumulative  Remedies.  The rights and remedies that either party may
have under this Lease or at law or in equity,  upon any  breach,  are  distinct,
separate and  cumulative and shall not be deemed  inconsistent  with each other,
and no one of them shall be deemed to be exclusive of any other.

     27.11 Protest.  If a dispute arises with respect to the  performance of any
obligation  including an  obligation  to pay money,  the party against which the
obligation  is  asserted  shall have the right to perform the  obligation  under
protest.  Performance  of an  obligation  under protest shall not be regarded as
voluntary  performance.  A party that has performed under protest shall have the
right to institute a lawsuit to recover any amount paid or the  reasonable  cost
of otherwise complying with the disputed obligation.

     27.12  Execution;  Binding  Effect.  This Lease shall not be  effective  or
binding on the parties until it has been signed by both Landlord and Tenant.

     27.13 Authority. Each party represents to the other that the person signing
this Lease on its behalf is properly  authorized to do so, and in the event this
Lease is signed by an agent or other third party on behalf of Landlord,  written
authority  to sign on behalf of  Landlord  in favor of the agent or third  party
shall be provided to Tenant either prior to or simultaneously with the return to
Tenant of a fully executed copy of this Lease.

     27.14 Certificate of Commencement Date. If the Lease Term does not commence
on the date set forth in Article 1, Landlord shall prepare, execute, and deliver
to Tenant for execution  within thirty (30) days of  commencement of the initial
Lease Term a certificate  setting forth the commencement and expiration dates of
the Lease Term.

     27.15 Force Majeure. Performance by Landlord or Tenant of their obligations
under  this  Lease  shall be  extended  by the  period of delay  caused by Force
Majeure (including,  without limitation,  Tenant's  obligations herein to supply
electricity  to  Building  1075),   provided,   however,   that  either  parties
obligations That are of an emergency nature shall be done as soon as possible by
the responsibility party. "Force Majeure" is war, natural catastrophe,  strikes,
walkouts  or  other  labor  disturbance,  order  of  any  government,  court  or
regulatory body having jurisdiction,  shortages,  blockade, embargo, riot, civil
disorder, or any similar cause beyond the reasonable control of the party who is
obligated to render performance (but excluding  financial  inability to perform,
however caused).

     27.16  Attorneys'  Fees. If legal  proceedings are initiated to enforce any
term of this Lease, to recover any Rent due under this Lease,  for the breach of
any covenant or condition of this Lease,  or for the restitution of the Premises
to Landlord and/or eviction of Tenant, the prevailing party shall be entitled to
recover, as an element of its cost of suit and not as damages, reasonable out of
pocket attorneys' fees and costs to be fixed by the court.

<PAGE>

     27.17  Confidentiality.  Landlord  and  Tenant  agree  that the  terms  and
conditions  of this Lease and details  regarding its  negotiation  are and shall
remain confidential between Landlord and Tenant. Neither party shall distribute,
copy or  otherwise  submit,  orally or in  writing,  this  Lease or any  summary
thereof,  to any other  person or  entity,  except a  prospective  purchaser  or
lender,  prospective  or actual  subtenants,  assignees and their  successors in
interest,  auditors,  arbitrators,  appraisers,  and to  those  to whom  certain
information is contemplated  to be given in the  arbitration  provisions of this
Lease,  but limited as provided  therein.  In addition,  Landlord  shall make no
announcements  regarding  Tenant's  proposed or actual occupancy of the Premises
without  Tenant's prior written  consent,  which Tenant may withhold in its sole
discretion.  In addition,  all  information  learned by or disclosed to Landlord
with respect to Tenant's business, or information disclosed or discovered during
an entry by Landlord into the Premises,  shall be kept strictly  confidential by
Landlord,  Landlord's legal  representatives,  successors,  assigns,  employees,
servants  and agents and shall not be used (except for  Landlord's  confidential
internal purposes) or disclosed to others by Landlord,  or Landlord's  servants,
agents,  employees,  legal representatives,  successors or assigns,  without the
express prior written  consent of Tenant,  which Tenant may withhold in its sole
and absolute  discretion.  Notwithstanding  the above,  Tenant's  consent is not
required for disclosures that Landlord is required by Law to make including, but
not limited to; (i) filing the Lease with the SEC, and (ii) discuss  basic terms
of Lease in its public  filing and with its public  investors  in  meetings  and
conference calls but only to the extent required by law.

     27.18  Reasonableness.  In determining the  reasonableness  of the decision
made,  action  taken,  or consent  given or withheld by a party,  the  following
standards and covenants  shall apply:  (a) no party shall challenge the validity
or  enforceability of any provision in this Lease requiring it to act reasonably
in its  decisions  and  actions  and to not  unreasonably  withhold  consents or
approvals;  (b) common sense shall be applied in determining whether a party was
reasonable;  (c) what is  reasonable  in a commercial  leasing  context shall be
taken into account;  and (d) it shall be deemed unreasonable to withhold consent
or approval  because of the failure of one party to pay or provide  something of
value to the  other  party  where  this  Lease  does not  require  the same as a
condition of approval or consent.

     27.19 Waiver of Trial by Jury.  Landlord and Tenant each hereby waive trial
by jury in any  action,  proceeding  or  counterclaim  brought  by either  party
against the other on any matter arising out of or in any way connected with this
Lease, the relationship of Landlord and Tenant, Tenant's use or occupancy of the
Premises, any claim of injury or damage, or any statutory remedy.

     27.20 Competitor Restrictions. So long as Microsoft Corporation or a Tenant
Affiliate occupies at least three buildings  currently  comprising the Premises,
Landlord will not lease space,  or permit  another  tenant to sublease or assign
space, within any of the five buildings  currently  comprising the Premises (the
"Restricted Space") to SCO, Sun Microsystems,  Google, Intuit, Netscape,  Apple,
IBM, Oracle, any developer or seller of Linux based operating  systems,  and AOL
Time Warner (collectively, along with their successors, "Tenant's Competitors").
So long as Microsoft  Corporation or a Tenant Affiliate  occupies at least three
buildings currently  comprising the Premises,  Landlord agrees that it shall not
grant  signage  rights to any of the Tenant's  Competitors.  These  prohibitions
shall  also  apply to any  affiliates  (being  any  company  that  controls,  is
controlled by, or under common control with any of the Tenant's  Competitors) or
subsidiaries of Tenant's Competitors. If one of Tenant's Competitors desiring to
leases space in the Restricted  Space threatens legal action against Landlord as
a result of the restrictions in this Article,  Landlord shall notify Tenant, and
Tenant  shall  notify  Landlord  within ten (10) days of receipt  whether or not
Tenant will permit such party to lease space in the Restricted  Space. If Tenant
denies the  request,  Tenant  agrees to  indemnify,  defend,  and hold  harmless
Landlord and Landlord's Agents from and against any legal actions or claims made
by such Tenant  Competitor,  third party or  governmental  agency as a result of
Tenant's enforcement of the restrictions in this Article. Landlord shall include
these restrictions in other leases for space in the Restricted Space to likewise
restrict subleasing and assignments.



<PAGE>




     IN WITNESS WHEREOF, the parties have duly executed and delivered this Lease
as of the Execution Date.



                                   LANDLORD:

                                   MISSION WEST SHORELINE, LLC,
                                   a Delaware limited liability company

                                   By:   Mission West Properties, LP,
                                         a member

                                         By:   Mission West Properties, Inc.,
                                               general partner


                                               By: /s/ Carl E. Berg
                                                  ------------------------------
                                                  Carl E. Berg
                                                  Chairman & CEO
Dated:   12/23/04







                                   TENANT:

                                   MICROSOFT CORPORATION
                                   a Washington corporation


                                   By: /s/ Jose Oncina
                                      -----------------------------------------
                                      Jose Oncina
                                      General Manager - Real Estate & Facilities
Date:    12/16/04