<PAGE>   1
                                                                    EXHIBIT 10.7

                                LEASE AGREEMENT

1.       Parties. This Lease, is made by and between SBC&D Co., Inc., a
         California corporation or     nominee ('landlord"), and Arbor Software
         Corporation, a California corporation ("Tenant:").

2.       Premises. Landlord hereby leases to Tenant and Tenant hereby leases
         from Landlord, upon the terms and conditions hereinafter set forth,
         those certain premises (the "Premises") Situated in the City of
         Sunnyvale, County of Santa Clara, State of California, shall be deemed
         to be approximately ninety eight thousand eight hundred thirty six
         (98,836) square feet of floor space in the building (the "Building"),
         and the land as described on Exhibit "A" and known as 1344 Crossrnan
         Avenue. Landlord shall not be required to make any alterations,
         additions or improvements to the Premises and the Premises shall be
         leased to Tenant in an "As is" condition.

         Tenant and its representatives, have, prior to executing this Lease,
         made such inspections of the Premises and matters related thereto as
         Tenant and its representatives desire, including, without limitation,
         governmental laws and regulations to which the Premises is subject and
         Tenant shall accept the Premises upon the basis of its review and
         determination of the applicability and effect of such laws and
         regulations. Tenant further acknowledges and agrees that, the Premises
         is to be leased and delivered to and accepted by Tenant in an "As Is"
         condition as of the Commencement Date with all faults and defects and
         without any covenant (whether express, implied or otherwise) made by
         Landlord to remedy any then existing fault or defect, whether known or
         unknown, suspected or unsuspected subject to the condition set forth
         in Paragraph 40 below. Tenant still further acknowledges that Tenant
         has received, has reviewed and is knowledgeable of the disclosures and
         information contained in the environmental assessments, investigations
         and reports listed in Exhibit "B" attached hereto. Landlord makes no
         representation or warranty as to the accuracy or completeness of the
         disclosures or information contained in said engineering and
         environmental assessments and reports.  Landlord does not make any
         representations or warranties of any kind whatsoever, either express
         or implied, with respect to the Premises or any of such related
         matters; in particular, but without limitation, Landlord makes no
         representation or warranties with respect to the use, condition, size,
         dimensions, boundaries, title, occupation, management or value of the
         Premises or the building and improvements thereon, presence or absence
         of hazardous materials in, on, under or about the Premises or
         surrounding properties, compliance with applicable statutes, laws,
         codes, ordinances, regulations or requirements relating to leasing,
         zoning, subdivision, planning, building, fire, safety, health or
         environmental matters, compliance with covenants, conditions and
         restrictions (whether or not of record), other local, municipal,
         regional, state or federal requirements, or other statutes, laws,
         codes, ordinances, regulations or requirements (including, without
         limitation, The Americans With Disabilities Act). Tenant acknowledges
         that it Is entering into this Agreement on the basis of Tenant's own
         investigation of the physical and environmental conditions of the
         Premises. Tenant waives and releases its right to recover from
         Landlord and its partners, employees and agents any and all damages,
         losses, liabilities, costs or expenses whatsoever (including, without
         limitation, reasonable attorneys' fees and costs), and claims
         therefor, whether direct or indirect, known or unknown, foreseen or
         unforeseen, which may arise on account of or in any way growing out of
         or connected with the physical condition of the Premises or any
         federal, state or local law, statute, ordinance or regulation
         applicable thereto (including, without limitation, the Comprehensive
         Environmental Response Compensation and Liability Act of 1980, as
         amended, 42 U.S.C. Sections 9601 et seq. and The Resources
         Conservation and Recovery Act of 1976,42 U.S.C. Sections 6901 et seq.
         Tenant expressly waives the benefits of Section 1542 of the


                                       1
<PAGE>   2
         California Civil Code, which provides as follows:

                 A general release does not extend to claims which the creditor
                 does not know or expect to exist in his favor at the time of
                 executing the release, which if known to him must have
                 materially affected the settlement with the debtor.

         Tenant acknowledges that, notwithstanding any prior or contemporaneous
         oral or written representations, statements, documents or
         understandings, this Lease constitutes the entire understanding of the
         parties with respect to the subject matter hereof and supersedes any
         such prior or contemporaneous oral or written representations,
         statements, documents or understandings.

         As a material consideration for this Lease, Tenant agrees to make
         certain improvements to the Premises. These improvements shall include
         retrofit of the existing building exterior shell and interior
         Improvements ("Tenant Improvements"). Tenant agrees that it will spend
         a minimum of Three Million Dollars ($3,000,000.00) on these
         improvements (Tenant Improvement Costs'). Landlord shall reimburse
         Tenant a total of Seven Hundred Thousand Dollars ($700,000.00) of the
         total Improvement dollars within twenty (20) days of completion to be
         evidenced by a final building inspection and issuance of a Certificate
         of Occupancy by the Building Department of the City of Sunnyvale.

         Landlord shall remove all furniture, cubicles and office equipment
         prior to commencement of demolition.


         2.1     Reimbursement If No Lease Commencement. Inasmuch as Tenant
         will he commencing Tenant Improvements before Commencement Date and
         before Landlord has purchased the Premises, if Landlord is unable to
         close escrow and take tide to the Premises, Landlord shall reimburse
         Tenant for all of Tenant's expenses incurred regarding the Tenant
         Improvements up to the maximum reimbursable amount of $200,000.00.
         Tenant shall furnish to Landlord evidence of costs incurred with its
         request for reimbursement.

     3.  Term. The term of this Lease ("Lease Term") shall be for six (6)
         years, commencing on the earlier of (1) ninety (90) days from the date
         Tenant procures a building permit from the City of Sunnyvale; (ii) the
         date Tenant moves substantial furniture or, trade fixtures, or any
         personnel into the Building; or (iii) December 15, 1996, (the
         "Commencement Date") and ending six (6) years thereafter unless sooner
         terminated or extended pursuant to any provision hereof.
         Notwithstanding said scheduled Commencement Date, if for any reason
         Landlord cannot deliver possession of the Premises to Tenant, Landlord
         shall not be subject to any liability therefor, beyond that in
         Paragraph 2.1 above.


         3.1     Early Access. Tenant and/or its contractors are hereby
         authorized to enter the Premises prior to the Commencement Date for
         purposes of demolition and construction of Tenant Improvements, and
         such early occupancy shall be upon all of the terms of this Lease
         (including obligations regarding indemnity and insurance) except those
         regarding the obligation to pay rent which shall commence on the
         Commencement Date.

     4.  Rent.





                                       2
<PAGE>   3
         A.      Time of Payment. Tenant shall pay to Landlord as rent for the
                 Premises the sum specified in Paragraph 4.B below (the "Monthly
                 Installment") each month in advance on the first day of each
                 calendar month, without deduction or offset, prior notice or
                 demand, commencing on the Commencement Date and continuing
                 through the Lease Term, together with such additional rents as
                 are payable by Tenant to Landlord under the terms of this
                 Lease. The Monthly Installment for any period during the Lease
                 Term which period is less than one (1) full month shall be a
                 prorata portion of the Monthly Installment based upon a thirty
                 (30) day month.

         B.      Monthly Installment. The Monthly Installment of rent payable
                 each month during the Term shall be as follows:

                 Months 1-24      $ 84,011
                 Months 25-48     $ 93,894
                 Months 49-72     $103,778

         C.      Absolute Rent. It is the intention of Landlord and Tenant that
                 (i) the rent herein specified shall be absolute to Landlord in
                 each month during the Lease Term, without abatement,
                 deduction, offset, cost or expenses, and (ii) all costs,
                 expenses and obligations of every kind relating to the
                 Premises shall be paid by Tenant.

         D.      Late Charge. Tenant acknowledges that late payment by Tenant
                 to Landlord of 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 by the terms of any mortgage or deed of
                 trust covering the Premises. Accordingly, if any installment
                 of rent or any other sum due from Tenant shall not be received
                 by Landlord within ten (10) days after such amount shall be
                 due, Tenant shall pay to Landlord, as additional rent, a late
                 charge equal to six percent (6%) of such overdue amount. The
                 parties hereby agree that such late charge represents a fair
                 and reasonable estimate of the costs Landlord will incur by
                 reason of late payment by Tenant. Acceptance of such late
                 charge by Landlord shall in no event constitute a waiver of
                 Tenants default with respect to such overdue amount, nor
                 prevent Landlord from exercising any of its other rights and
                 remedies granted hereunder.

         E.      Additional Rent. All taxes, insurance premiums, late charges,
                 costs and expenses which Tenant is required to pay thereunder,
                 together with all interest and penalties that may accrue
                 thereon in the event of Tenant's failure to pay such amounts,
                 and all reasonable damages, costs and attorneys' fees and
                 expenses which Landlord may incur by reason of any default of
                 Tenant or failure on Tenant's part comply with the terms of
                 this Lease, shall be deemed to be additional rent ("Additional
                 Rent") and shall be paid in addition to the Monthly
                 Installment of rent, and, in the event of nonpayment of the
                 Monthly Installment of rent.

         F.      Place of Payment. Rent shall be payable in lawful money of the
                 United States of America to Landlord at 511 Division Street,
                 Campbell CA, or to such other person (s) or at such other
                 place (s) as Landlord may designate in writing.

         G.      Advance Payment. Concurrently with the execution of this Lease,
                 Tenant shall pay to





                                       3
<PAGE>   4
                 Landlord the sum of Eighty-Four Thousand and Eleven Dollars
                 ($84,011) to be applied to the Monthly Installment of rent
                 first accruing under this Lease

     5.  Security Deposit.  Tenant shall deposit the sum of eighty-four
         Thousand Eleven Dollars ($84,011.00) (the "Security Deposit") upon
         execution of this Lease, to secure the faithful performance by Tenant
         of each term, covenant and condition of this Lease. If Tenant shall at
         any time fail to make any payment or fail to keep or perform any term,
         covenant or condition on its part to be made or performed or kept
         under this Lease, Landlord may, but shall not be obligated to and
         without waiving or releasing Tenant from any obligation under this
         Lease, use, apply or retain the whole or any part of the Security
         Deposit (A) to the extent of any sum due to Landlord; (B) to make any
         required payment on Tenant's behalf or (C) to compensate Landlord for
         any loss, damages, attorneys' fees or expense sustained by Landlord
         due to Tenant's default. In such event, Tenant shall, within five (5)
         days of written demand by Landlord, remit to Landlord sufficient funds
         to restore the Security Deposit to its original sum. No interest shall
         accrue on the Security Deposit. Landlord shall not be required to keep
         the Security Deposit separate from its general funds. Should Tenant
         comply with all the terms, covenants, and conditions of this Lease and
         at the end of the term of this Lease leave the Premises in the
         condition required by this Lease, then said Security Deposit, less any
         sums owing to Landlord, shall be returned to Tenant within thirty (30)
         days after the termination of this Lease and vacancy of the Premises
         by Tenant. At any time the Monthly Installment is increased pursuant
         to this Lease, the Security Deposit shall be increased by the same
         amount.

     6.  Use of Premises. Tenant shall use the Premises only in conformance
         with applicable governmental laws, regulations, rules and ordinances
         for the purpose of general office and manufacturing, packaging and
         storage of non hazardous material products or any other related
         purpose and for no other purpose without the prior written consent of
         Landlord. Tenant shall indemnify, protect, defend, and hold Landlord
         harmless against any loss, expense, damage, attorneys' fees or
         liability arising out of the failure of Tenant to comply with any
         applicable law. Tenant shall not commit or suffer to be committed, any
         waste upon the Premises, or any nuisance, or other acts or things
         which may disturb the quiet enjoyment of any other tenant in the
         buildings adjacent to the Premises, or allow any sale by auction upon
         the Premises, or allow the Premises to be used for any unlawful
         purpose, or place any loads upon the floor, walls or ceiling which
         endanger the structure, or place any harmful liquids in the drainage
         system of the Building. No waste materials or refuse shall be dumped
         upon or permitted to remain upon any part of the Premises outside of
         the Building proper, except in trash containers placed inside exterior
         enclosures designated for that purpose by Landlord. No materials,
         supplies, equipment, finished products or semi-finished products, raw
         materials or articles of any nature shall be stored upon or permitted
         to remain on any portion of the Premises outside of the Building
         proper. Tenant shall strictly comply with the provisions of Paragraph
         39 below.


     7.  Taxes and Assessments.

         A.      Tenant's property. Tenant shall pay before delinquency any and
                 all taxes and assessments, license fees and public charges
                 levied, assessed or imposed upon or against Tenant's fixtures,
                 equipment, furnishings, furniture appliances and personal
                 property installed or located on or within the Premises.
                 Tenant shall cause said fixtures, equipment, furnishings,
                 furniture appliances and personal property to be assessed and
                 billed separately from the real property of Landlord. If any
                 of Tenant's said personal property shall be assessed with
                 Landlord's real property, Tenant shall pay Landlord the





                                       4

<PAGE>   5
                 taxes attributable to Tenant within ten (10) days after
                 receipt of a written statement from Landlord setting forth the
                 taxes applicable to Tenant's property.

         B.      Property Taxes. Tenant shall pay, as additional rent, all
                 Property Taxes levied or assessed with respect to the land
                 comprising the Parcel and with respect to all buildings and
                 Improvements located on the Parcel which become due or accrue
                 during the term of this Lease. Tenant shall pay such Property
                 Taxes to Landlord within twenty (20) days after receipt of
                 billing. Provided that Landlord bills Tenant at least thirty
                 (30) days prior to the delinquency date of such Property
                 Taxes, Tenant shall pay such Property Taxes to Landlord at
                 least ten (10) days prior to the delinquency date, and if
                 Tenant fails to do so, Tenant shall reimburse Landlord, on
                 demand, for all interest, late fees and penalties that the
                 taxing authority charges Landlord. In the event Landlord's
                 mortgage requires an impound for Property Taxes, then on the
                 first day of each month during the Lease Term, Tenant shall
                 pay Landlord one twelfth (1/12) of its annual share of such
                 Property Taxes. Tenant's liability thereunder shall be
                 prorated to reflect the Commencement and termination dates of
                 this Lease

                 For the purpose of this Lease, "Property Taxes" means and
                 includes all taxes, assessments (including, but not limited
                 to, assessments for public improvements or benefits), taxes
                 based on vehicles, utilizing parking areas, taxes based or
                 measured by the rent paid, payable or received under this
                 Lease, taxes on the value, use, or occupancy of the Premises,
                 the Buildings and/or the Parcel, Environmental Surcharges, and
                 all other governmental impositions and charges of every kind
                 and nature whatsoever, whether or not customary or within the
                 contemplation of the parties hereto and regardless of whether
                 the same shall be extraordinary or ordinary, general or
                 special, unforeseen or foreseen, or similar or dissimilar to
                 any of the foregoing which, at any time during the Lease Term,
                 shall be applicable to the Premises, the Building and/or the
                 Parcel or assessed, levied or imposed upon the Premises, the
                 Building and/or the Parcel, or become due and payable and a
                 lien or charge upon the Premises, the Building and/or the
                 Parcel, or any part thereof, under or by virtue of any present
                 or future laws, statutes, ordinances, regulations or other
                 requirements of any governmental authority whatsoever. The
                 term "Environmental Surcharges" shall mean and include any and
                 all expenses, taxes, charges or penalties imposed by the
                 Federal Department of Energy, the 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.  The term
                 "Property Taxes" shall not include any federal, state or local
                 net income, estate, or inheritance tax imposed on Landlord.

         C.      Other Taxes: Tenant shall, as additional rent, pay or
         reimburse Landlord for any tax based upon, allocable to, or measured
         by the area of the Premises or the Buildings or the Parcel; or by the
         rent paid, payable or received under this Lease; any tax upon or with
         respect to the possession, leasing, operation, any tax upon or with
         respect to the possession, leasing, operation, management,
         maintenance, alteration, repair, use or occupancy of the Premises or
         any portion thereof; any privilege tax, excise tax, business and
         occupation tax, gross receipts tax, sales and/or use tax, water tax,
         sewer tax, employee tax, occupational license tax imposed upon
         Landlord or Tenant with respect to the Premises; any tax upon this
         transaction or any document to which Tenant is a party creating or
         transferring an interest or an estate in the Premises.





                                       5
<PAGE>   6
8.       Insurance.

         A.      Indemnity. Tenant agrees to indemnify, protect and defend
                 Landlord against and hold Landlord harmless from any and all
                 claims, causes of action, judgments, obligations or
                 liabilities, and all reasonable expenses incurred in
                 investigating or resisting the same (including reasonable
                 attorneys' fees), on account to, or arising out to, the
                 operation, maintenance, use or occupancy of the Premises and
                 all areas appurtenant thereto. This Lease is made on the
                 express understanding that Landlord shall not be liable for,
                 or suffer loss by reason to, injury to person or property,
                 from whatever cause (except for active negligence or willful
                 misconduct of Landlord), which in any way may be connected
                 with the operation, use or occupancy of the Premises
                 specifically including, without limitation, any liability for
                 injury to the person or property of Tenant, its agents,
                 officers, employees, licensees and invitees.

         B.      Liability Insurance. Tenant shall, at Tenant's expense, obtain
         and keep in force during the term of this Lease a policy of
         comprehensive public liability insurance insuring Landlord and Tenant
         against claims and liabilities arising out of the operation, use, or
         occupancy of the Premises and all areas appurtenant thereto, including
         parking areas. Such insurance shall be in an amount of not less than
         Two Million Dollars ($2,000,000.00) for bodily injury or death as a
         result of any one occurrence and Five Hundred Thousand Dollars
         ($500,000.00) for damage to property as a result of any one
         occurrence. The insurance shall be with companies approved by
         Landlord, which approval Landlord agrees not to withhold unreasonably.
         Tenant shall deliver to Landlord, prior to possession, and at least
         thirty (30) days prior to the expiration thereof, a certificate of
         insurance evidencing the existence of the policy required hereunder
         and such certificate shall certify that the policy (1) names Landlord
         as an additional insured, (2) shall not be canceled or altered without
         thirty (30) days prior written notice to Landlord, (3) insures
         performance of the indemnity set forth in Paragraph 8.A above, (4) the
         coverage is primary and any coverage by Landlord is in excess thereto
         and (5) contains a cross-liability endorsement.  Landlord may maintain
         a policy or policies of comprehensive general liability insurance
         insuring Landlord (and such others as are designated by Landlord),
         against liability for personal injury, bodily injury, death and damage
         to property occurring or resulting from an occurrence in, on or about
         the Premises or the Common Area, with such limits of coverage as
         Landlord may from time to time determine are reasonably necessary for
         its protection. The cost of any such liability insurance maintained by
         Landlord shall be a Common Area Charge and Tenant shall pay, as
         additional rent, its share of such cost to Landlord as provided in
         Paragraph 12 below

C.       Property Insurance. Landlord shall obtain and keep in force during the
         term of this Lease a policy or policies of insurance covering loss or
         damage to the Premises and the Building, in the amount of the full
         replacement value thereof, providing protection against those perils
         included within the classification of "all risk" insurance, plus a
         policy of rental income insurance in the amount of one hundred percent
         (100%) of twelve (12) months rent (including, without limitation, sums
         payable as Additional Rent), plus, at Landlord's option, flood
         insurance and earthquake insurance, and any other coverage which may
         be required from time to time by Landlord's mortgagee. Tenant shall
         have no interest in nor any right to the proceeds of any insurance
         procured by Landlord on the Premises. Tenant shall, within twenty (20)
         days after receipt of billing, pay to Landlord as additional rent, the
         full cost of such insurance procured and maintained by Landlord.
         Tenant acknowledges that such insurance procured by Landlord shall
         contain a deductible which reduces Tenant's cost for such insurance
         and, in the event of loss or damage, Tenant shall be required to pay
         to Landlord the amount of such deductible. Notwithstanding the above,
         Tenant shall only be responsible for the payment of Earthquake





                                       6
<PAGE>   7
         Insurance if it is reasonable or if Landlord's lender requires it.


         D.      Tenant's Option to Maintain Property Insurance. Tenant shall
                 have the right to obtain and keep in force all of the
                 insurance described in Subparagraph 8.C above in lieu of
                 Landlord obtaining such insurance. If Tenant desires to
                 exercise such right to obtain such insurance, Tenant may do so
                 only on the renewal date of Landlord's then current insurance
                 policy and Tenant must exercise such right by giving Landlord
                 written notice of Tenant's election to obtain such insurance
                 not later than thirty (30) days prior to the renewal date of
                 Landlord's then current insurance policy. If Tenant so elects
                 to obtain the insurance described in Subparagraph 8.C above,
                 such insurance shall be provided by companies approved by
                 Landlord which approval shall not be unreasonably withheld.
                 Tenant shall deliver to Landlord, at least fifteen (15) days
                 prior to the expiration of Landlord's then current insurance
                 policy or Tenant's then current insurance policy, as the case
                 may be, a duplicate original of or a certificate evidencing
                 the policy required hereunder. Such policy and/or certificate
                 shall certify that the policy: (i) names Landlord and
                 Landlord's Lender as additional insureds; (ii) shall not be
                 canceled or altered without thirty (30) days prior written
                 notice to Landlord and to Landlord's Lender; (iii) is primary
                 and any coverage by Landlord is in excess thereto; and (iv)
                 contains a standard lender's loss payable endorsement in favor
                 of Landlord's Lender. If any such policy obtained by Tenant
                 contains a deductible, Tenant shall be responsible for the
                 amount of such deductible, or a portion thereof, as specified
                 in Subparagraph 8.C above. Any deductible must be approved by
                 Landlord and Landlord's Lender, which approval shall not be
                 unreasonably withheld. If Tenant makes the election to
                 maintain all of the insurance described in Subparagraph 8.C
                 above, Landlord shall be relived of its obligation to obtain
                 and maintain such insurance.

         E       Tenant's Insurance: Release of Landlord. Tenant acknowledges
                 that the insurance to be maintained by Landlord on the
                 Premises pursuant to Subparagraph C above will not insure any
                 of Tenants property. Accordingly, Tenant, at Tenant's own
                 expense, shall maintain in full force and effect on all of its
                 fixtures, equipment, leasehold improvements and personal
                 property in the Premises, a policy of "All Risk' coverage
                 insurance to the extent of at least ninety percent (90%) of
                 their insurable value.  Tenant hereby releases Landlord, and
                 its partners, officers, agents employees and servants from any
                 and all claims, demands, losses, expenses or injuries to the
                 Premises or to the furnishings, fixtures, equipment, inventory
                 or other personal property of Tenant in, about, or upon the
                 Premises, which are caused by perils, events or happenings
                 where the same are covered by the insurance required by this
                 Lease or which are the subject of insurance carried by Tenant
                 and in force at the time of such loss.

9.       Utilities. Tenant shall' pay for all water, gas, light, heat, power,
         electricity, telephone, trash pickup, sewer charges and all other
         services supplied to or consumed on the Premises, and all taxes and
         surcharges thereon.

10.      Repairs and Maintenance.

                 A.       Tenant's Repairs. Tenant shall, during the term of
                          this Lease, at Tenant's sole cost and expense, keep
                          and maintain in good order, condition and repair the
                          entire Premises and every part thereof structural and
                          non-structural, including, without limitation, the
                          roof including structural roof), roofing, roof
                          membrane





                                       7
<PAGE>   8
                          and roof screens, gutters and down spouts,
                          foundation, footings, floor slab, floor coverings,
                          windows, window frames, plate glass, glazing,
                          skylights, truck doors, doors and all door hardware,
                          walls (exterior and interior, structural and
                          non-structural), partitions, sidewalks, landscaping,
                          irrigation systems, parking areas, driveways, paving,
                          fences, signs and all other areas or facilities
                          located outside the Building and all plumbing,
                          electrical, lighting, , heating, air conditioning and
                          ventilation facilities, equipment and Systems within
                          the Premises The term "repair" shall include
                          replacements, restorations and/or renewals when
                          necessary, as well as painting. Tenant's obligation
                          shall extend to all alterations, additions and
                          improvements to the Premises, and all fixtures and
                          appurtenances therein and thereto. Tenant shall, at
                          all times during the Lease Term, have in effect a
                          service contract for the maintenance of the heating,
                          ventilating and air conditioning ("HVAC") equipment
                          with an HVAC repair maintenance contractor approved
                          by Landlord which provides for periodic inspection
                          and servicing at least once every ninety (90) days
                          during the Lease Term and shall provide Landlord with
                          a copy of such contract. Tenant shall indemnify and
                          save Landlord harmless against and from all costs,
                          expenses liabilities, losses, injuries, damages,
                          suits, fines, penalties, claims and demands,
                          including attorneys' fees, resulting from Tenant's
                          failure to comply with the foregoing; and Tenant
                          hereby expressly releases and discharges Landlord of
                          and from any liability therefor.

                 B.       No Landlord Obligations. Landlord shall have no
                          maintenance or repair obligations whatsoever with
                          respect to the Premises Tenant hereby waives the
                          provision of any law now or hereafter in effect
                          requiring that Landlord make repairs, and further
                          waives the provisions of any Law now or hereafter in
                          effect allowing Tenant to make repairs at the expense
                          of Landlord or to terminate this Lease because of
                          Landlord's failure to keep the Premises in good
                          order, condition and repair. Tenant specifically
                          waives the provisions of Subsection (1) of Section
                          1932 and Sections 1941 and 1942 of the Civil Code of
                          California Landlord shall not he liable for damage to
                          the goods, wares, merchandise or other property of
                          Tenant, Tenant's employees, invitees, customers, or
                          any other person in or about the Premises, whether
                          such damage or injury is caused by or results from
                          fire, steam, electricity, gas, water or rain, or from
                          the breakage, leakage, obstruction or other defects
                          of pipes, fire sprinklers, wires, appliances,
                          plumbing, air conditioning or lighting fixtures, or
                          from any other cause, whether the said damage or
                          injury results from conditions arising upon the
                          Premises or upon other portions of the building of
                          which the Premises are a part, or from other sources
                          or places and regardless of whether the cause of such
                          damage or injury or the means of repairing the same
                          is inaccessible to Tenant.  Notwithstanding
                          Landlord's negligence or breach of this Lease,
                          Landlord shall, under no circumstances, be liable for
                          injury to Tenant's business or for any loss of income
                          or profit therefrom or for any consequential damages
                          whatsoever.

                 C.       Tenant's Failure. Should Tenant fail to make the
                          repairs and maintenance required of Tenant hereunder
                          within ten (10) days after notice from Landlord, in
                          addition to all its other rights and remedies
                          hereunder or by law and without waiving any
                          alternative remedies, Landlord may make the same, and
                          in that event, Tenant shall reimburse Landlord as
                          Additional Rent for the cost of such maintenance or
                          repairs within five (5) days of written demand by
                          Landlord.





                                       8
<PAGE>   9
     11.         Alterations. Except for non-structural alterations costing
                 less than Twenty-Five Thousand Dollars ($25,000.00), Tenant
                 shall not make, or suffer to be made, any alterations,
                 improvements or additions in, on, about or to the Premises or
                 any part thereof, without the prior written consent of
                 Landlord. Any alterations, improvements, or additions shall be
                 made by licensed contractors holding valid building permits
                 issued by the appropriate governmental authority. Copies of
                 all plans and permits for any alterations, improvements or
                 additions shall be delivered to Landlord prior to the
                 commencement of work. As a condition to giving such consent,
                 Landlord may request that Tenant agree to remove any such
                 alterations, improvements or additions at the termination of
                 this Lease, and to restore the Premises to their prior
                 condition. Unless Landlord requires that Tenant remove any
                 such alterations, improvement or addition, any alteration,
                 addition or improvement to the Premises, except movable
                 furniture and trade fixtures not affixed to the Premises,
                 shall become the property of Landlord upon termination of the
                 Lease and shall remain upon and be surrendered with the
                 Premises at the termination of this Lease. Without limiting
                 the generality of the foregoing, all heating, lighting,
                 electrical (including all wiring, conduit, outlets, drops,
                 buss ducts, main and subpanels), air conditioning,
                 partitioning, window coverings, and carpet installations made
                 by Tenant regardless of how affixed to the Premises, together
                 with all other additions, alterations and improvements that
                 have become an integral part of the Building, shall be and
                 become the property of the Landlord upon termination of the
                 Lease, and shall not be deemed trade fixtures, and shall
                 remain upon and be surrendered with the Premises at the
                 termination of this Lease.

                 If, during the Lease Term hereof, any alteration, addition or
                 change of any sort to all or any portion of the Premises is
                 required by law, regulation, ordinance or order of any public
                 agency, due to Tenant's use, occupancy, or alterations, Tenant
                 shall promptly make the same at its sole cost and expense.

     12.         Acceptance of the Premises. By entry and taking possession of
                 the Premises pursuant to this Lease, Tenant accepts the
                 Premises in their condition existing as of the date of such
                 entry. Tenant acknowledges that neither the Landlord nor
                 Landlord's agents has made any representation or warranty as
                 to the suitability of the Premises to the conduct of Tenant's
                 business. Any agreements, warranties or representations not
                 expressly contained herein shall in no way bind either
                 Landlord or Tenant, and Landlord and Tenant expressly waive
                 all claims for damages by reason of any statement,
                 representation, warranty, promise or agreement, if any, not
                 contained in this Lease. This Lease constitutes the entire
                 understanding between the parties hereto and no addition to,
                 or modification of, any term or provision of this Lease shall
                 be effective until set forth in a writing signed by both
                 Landlord and Tenant.

     13.         Default.

                 A.       Events of Default. A breach of this Lease shall exist
                          if any of the following events (hereinafter referred
                          to as "Event of Default) shall occur:

                          1.      Default in the payment when due of any
                                  Monthly Installment or other payment required
                                  to be made by Tenant hereunder, where such
                                  default shall not have been cured within five
                                  (5) days after written notice of such default
                                  is given to Tenant;

                          2.      Tenant's failure to perform any other term,
                                  covenant or condition contained in this Lease
                                  where such failure shall have continued for
                                  thirty (30) days after written notice of such
                                  failure is given to Tenant; provided that
                                  Tenant shall not





                                       9
<PAGE>   10
                                  be deemed to be in default if such default is
                                  incapable of cure within said period and
                                  Tenant has commenced to complete the cure of
                                  such default within said thirty (30) day
                                  period and is proceeding diligently;

                          3.      Tenant's vacating or abandonment of the
                                  Premises without the payment of rent;

                          4.      Tenant's assignment of its assets for the
                                  benefit of its creditors:

                          5.      The sequestration of, attachment of or
                                  execution on, any substantial part of the
                                  property of Tenant or on any property
                                  essential to the conduct of Tenant's business
                                  shall have occurred and Tenant shall have
                                  failed to obtain a return or release of such
                                  property within thirty (30) days thereafter,
                                  or prior to sale pursuant to such
                                  sequestration, attachment or levy, whichever
                                  is earlier;

                          6       Tenant or any guarantor of Tenant's
                                  obligations hereunder shall commence any
                                  case, proceeding or other action seeking
                                  reorganization, arrangement, adjustment,
                                  liquidation, dissolution or composition of it
                                  or its debts under any law relating to
                                  bankruptcy, insolvency, reorganization or
                                  relief of debtors, or seek appointment of a
                                  receiver, trustee, custodian, or other
                                  similar official for it or for all or any
                                  substantial part of its property and such
                                  proceeding is not terminated within sixty
                                  (60) days;

                          7.      Tenant or any such guarantor shall take any
                                  corporate action to authorize any of the
                                  actions set forth in Clause 6 above; or

                          8.      Any case, proceeding or other action against
                                  Tenant or any guarantor of Tenant's
                                  obligations hereunder shall be commenced
                                  seeking to have an order for relief entered
                                  against it as debtor, or seeking
                                  reorganization, arrangement, adjustment,
                                  liquidation, dissolution or composition of it
                                  or its debts under any law relating to
                                  bankruptcy, insolvency, reorganization or
                                  relief of debtors, or seeking appointment of
                                  a receiver, trustee, custodian or other
                                  similar official for it or for all or any
                                  substantial part of its property, and such
                                  case, proceeding or other action (i) results
                                  in the entry of an order for relief against
                                  it which is not fully stayed within seven (7)
                                  business days after the entry thereof or (ii)
                                  remains undismissed for a period of sixty
                                  (60) days.

                 B.       Remedies. Upon any Event of Default, Landlord shall
                          have the following remedies, in addition to all other
                          rights and remedies provided by law, to which
                          Landlord may resort cumulatively, or in the
                          alternative:

                          1.      Recovery of Rent. Landlord shall be entitled
                                  to keep this Lease in full force and effect
                                  (whether or not Tenant shall have abandoned
                                  the Premises) and to enforce all of its
                                  rights and remedies under this Lease,
                                  including the right to recover rent and other
                                  sums as they become due, plus interest at the
                                  Permitted Rate (as defined in Paragraph 31
                                  below) from the due date of each installment
                                  of rent or other sum until paid.

                          2.      Termination. Landlord may terminate this
                                  Lease by giving Tenant written notice of
                                  termination. On the giving of the notice all
                                  of Tenant's rights in the Premises and the
                                  Building and Parcel shall terminate. Upon the
                                  giving of the notice of





                                       10
<PAGE>   11
                                  termination, Tenant shall surrender and
                                  vacate the Premises in the condition required
                                  by Paragraph 32, and Landlord may re-enter
                                  and take possession of the Premises and all
                                  the remaining improvements or property and
                                  eject Tenant or any of Tenant's subtenants,
                                  assignees or other person or persons claiming
                                  any right under or through Tenant or eject
                                  some and not others or eject none. This Lease
                                  may also be terminated by a judgment
                                  specifically providing for termination. Any
                                  termination under this paragraph shall not
                                  release Tenant from the payment of any sum
                                  then due Landlord or from any claim for
                                  damages or rent previously accrued or then
                                  accruing against Tenant. In no event shall
                                  any one or more of the following actions by
                                  Landlord constitute a termination of this
                                  Lease:

                                  a.       maintenance and preservation of the
                                           Premises;

                                  b        efforts to relet the Premises;

                                  c        appointment of a receiver in order
                                           to protect Landlord's interest
                                           hereunder;
  
                                  d        consent to any subletting of the
                                           Premises or assignment of this Lease
                                           by Tenant, whether pursuant to
                                           provisions hereof concerning
                                           subletting and assignment or
                                           otherwise; or

                                  e.       any other action by Landlord or
                                           Landlord's agents intended to
                                           mitigate the adverse effects from
                                           any breach of this Lease by Tenant.

                          3.      Damages. In the event this Lease is
                                  terminated pursuant to Subparagraph 13.B.2
                                  above, or otherwise, Landlord shall be
                                  entitled to damages in the following sums:

                          a.      the worth at the time of award of the unpaid
                                  rent which has been earned at the time of
                                  termination; plus

                          b.      the worth at the time of award of the amount
                                  by which the unpaid rent which would have
                                  been earned after termination until the time
                                  of award exceeds the amount of such rental
                                  loss that Tenant proves could have been
                                  reasonably avoided; plus

                          c.      the worth at the time of award of the amount
                                  by which the unpaid rent for the balance of
                                  the term after the time of award exceeds the
                                  amount of such rental loss that Tenant proves
                                  could be reasonably avoided; and

                          d.      any other amount necessary to compensate
                                  Landlord for all detriment proximately caused
                                  by Tenant's failure to perform Tenant's
                                  obligations under this Lease, or which in the
                                  ordinary course of things would be likely to
                                  result therefrom including, without
                                  limitation, the following: (i) expenses for
                                  cleaning, repairing or restoring the
                                  Premises; (ii) expenses for altering,
                                  remodeling or otherwise improving the
                                  Premises for the purpose of reletting,
                                  including installation of leasehold
                                  improvements (whether such installation be
                                  funded by a





                                       11
<PAGE>   12
                                  reduction of rent, direct payment or
                                  allowance to the succeeding lessee, or
                                  otherwise); (iii) real estate broker's fees,
                                  advertising costs and other expenses of
                                  reletting the Premises; (iv) costs of
                                  carrying the Premises such as taxes and
                                  insurance premiums thereon, utilities and
                                  security precautions; (v) expenses in retaking
                                  possession of the Premises; and (vi)
                                  attorneys' fees and court costs.;

                          e.      The "worth at the time of award" of the
                                  amounts referred to in Subparagraphs (a) and
                                  (b) of this paragraph, is computed by allowing
                                  interest at the Permitted Rate. The worth at
                                  the time of award" of the amounts referred to
                                  in Subparagraph (c) of this Paragraph is
                                  computed by discounting such amount at the
                                  discount rate of the Federal Reserve Board of
                                  San Francisco at the time of award plus one
                                  percent (1%). The term "rent" as used in this
                                  Paragraph shall include all sums required to
                                  be paid by Tenant to Landlord pursuant to the
                                  terms of this Lease.

     14.         Destruction. In the event that any portion of the Premises are
                 destroyed or damaged by an uninsured peril, Landlord or Tenant
                 may, upon written notice to the other, given within thirty
                 (30) days after the occurrence of such damage or destruction,
                 elect to terminate this Lease; provided, however, that either
                 party may, within thirty (30) days after receipt of such
                 notice, elect to make any required repairs and/or restoration
                 at such party's sole cost and expenses, in which event this
                 Lease shall remain in full force and effect, and the party
                 having made such election to restore or repair shall
                 thereafter diligently proceed with such repairs and/or
                 restoration.

                 In the event the Premises are damaged or destroyed from any
                 insured peril to the extent of ninety percent (90%) or more of
                 the then replacement cost of the Premises, Landlord may, upon
                 written notice to Tenant, given within thirty (30) days after
                 the occurrence of such damage or destruction, elect to
                 terminate this Lease. If Landlord does not give such notice in
                 writing within such period, Landlord shall be deemed to have
                 elected to rebuild or restore the Premises, in which event
                 Landlord shall, at its expense promptly rebuild or restore the
                 Premises to their condition prior to the damage or destruction
                 and Tenant shall pay to Landlord upon commencement of
                 reconstruction the amount of any deductible from the insurance
                 policy.

                 In the event the Premises are damaged or destroyed from any
                 insured peril to the extent of less than ninety percent (90%)
                 of the then replacement cost of the Premises, Landlord shall,
                 at Landlord's expense, promptly rebuild or restore the
                 Premises to their condition prior to the damage or destruction
                 and Tenant shall pay to Landlord upon commencement of
                 reconstruction the amount of any deductible from the insurance
                 policy.


                 In the event that, pursuant to the foregoing provisions,
                 Landlord is to rebuild or restore the Premises, Landlord
                 shall, within thirty (30) days after the occurrence of such
                 damage or destruction, provide Tenant with written notice of
                 the time required for such repair or restoration. If such
                 period is longer than one hundred eighty (180) days from the
                 issuance of a building permit, Tenant may, within thirty (30)
                 days after receipt of Landlord's notice, elect to terminate
                 the Lease by giving written notice to Landlord of such
                 election, whereupon the Lease shall immediately terminate. The
                 period of time for Landlord to complete the repair or
                 restoration shall be extended for delays caused by the fault
                 or neglect of Tenant or because of acts of God, acts of
                 publication, labor disputes, strikes, fires, freight
                 embargoes, rainy or stormy weather, inability to obtain
                 materials, supplies or fuels, acts of contractors or
                 subcontractors, or delay of contractors or subcontractors due
                 to such causes, or other contingencies beyond the





                                       12
<PAGE>   13
                 control of Landlord. Landlord's obligation to repair or
                 restore the Premises shall not include restoration of Tenant's
                 trade fixtures, equipment, merchandise, or any improvements,
                 alterations or additions made by Tenant to the Premises.

                 Unless this Lease is terminated pursuant to the foregoing
                 provisions, this Lease shall remain in full force and effect;
                 provided, however, that during any period of repairs or
                 restoration, rent and all other amounts to be paid by Tenant
                 on account of the Premises and this Lease shall be abated in
                 proportion to the area of the Premises rendered not reasonably
                 suitable for the conduct of Tenant's business thereon. Tenant
                 hereby expressly waives the provisions of Section 1932,
                 Subdivision 2 and Section 1933, Subdivision 4 of the
                 California Civil Code.

     15.         Condemnation.

                  A.      Definition of Terms. For the purposes of this Lease,
                          the term (1) "Taking" means a taking of the Premises
                          or damage to the Premises related to the exercise of
                          the power of eminent domain and includes a voluntary
                          conveyance, in lieu of court proceedings, to any
                          agency, authority, public utility, person or
                          corporate entity empowered to condemn property; (2)
                          "Total Taking" means the taking of the entire
                          Premises or so much of the Premises as to prevent or
                          substantially impair the use thereof by Tenant for
                          the uses herein specified; provided, however, in no
                          event shall a Taking of less than ten percent (10%)
                          of the Premises be deemed a Total Taking; (3)
                          "Partial Taking" means the taking of only a portion
                          of the Premises which does not constitute a Total
                          Taking; (4) "Date of Taking" means the date upon
                          which the title to the Premises, or a portion
                          thereby, passes to and vests in the condemnor or the
                          effective date of any order for possession if issued
                          prior to the date title vests in the condemnor; and
                          (5) "Award" means the amount of any award made,
                          consideration paid, or damages ordered as a remit of
                          a Taking.

                  B.      Rights. The parties agree that in the event of a
                          Taking all rights between them or in and to an Award
                          shall be as set forth herein and Tenant shall have no
                          right to any Award except as set forth herein.

                  C.      Total Taking. In the event of a Total Taking during
                          the term hereof (1) the rights of Tenant under the
                          Lease and the leasehold estate of Tenant in and to
                          the Premises shall cease and terminate as of the Date
                          of Taking; (2) Landlord shall refund to Tenant any
                          prepaid rent; (3) Tenant shall pay Landlord any rent
                          or charges due Landlord under the Lease, each
                          prorated as of the Date of Taking; (4) Tenant shall
                          receive from Landlord those portions of the Award
                          attributable to trade fixtures of Tenant and for
                          moving expenses of Tenant; and(S) the remainder of
                          the Award shall be paid to and be the property of
                          Landlord.

                  D.      Partial Taking. In the event of a Partial Taking
                          during the term hereof (1) the rights of Tenant under
                          the Lease and leasehold estate of Tenant in and to
                          the portion of the Premises taken shall cease and
                          terminate as of the Date of Taking; (2) from and
                          after the Date of Taking the Monthly installment of
                          rent shall be an amount equal to the product obtained
                          by multiplying the Monthly Installment of rent
                          immediately prior to the Taking by a fraction, the
                          numerator of which is the number of square feet
                          contained in the Premises after the Taking and the
                          denominator of which is the number of square feet
                          contained in the Premises prior to the Taking; (3)
                          Tenant shall receive from the Award the portions of
                          the Award attributable to trade fixtures of Tenant;
                          and (4) the remainder of the Award shall be paid to
                          and be the property of Landlord.





                                       13
<PAGE>   14
     16.         Mechanics' Lien. Tenant shall (A) pay for all labor and
                 services performed for, materials used by or furnished to,
                 Tenant or any contractor employed by Tenant with respect to
                 the Premises; (B) indemnify, defend, protect and hold Landlord
                 and the Premises harmless and free from any liens, claims,
                 liabilities, demands, encumbrances, or judgments created or
                 suffered by reason of any labor or services performed for,
                 materials used by or furnished to, Tenant or any contractor
                 employed by Tenant with respect to the Premises; (C) give
                 notice to Landlord in writing five (5) days prior to employing
                 any laborer or contractor to perform services related to, or
                 receiving materials for use upon the Premises; and ([)) permit
                 Landlord to post a notice of no responsibility in accordance
                 with the statutory requirements of California Civil Code
                 Section 3094 or any amendment thereof. In the event Tenant is
                 required to post an improvement bond with a public agency in
                 connection with the above, Tenant agrees to include Landlord
                 as an additional obligee.

     17.         Inspection of the Premises. Tenant shall permit Landlord and
                 its agents to enter the Premises upon written notice thereof
                 at least twenty-four (24) hours in advance (except in case of
                 emergency) at any reasonable time for the purpose of
                 inspecting the same, posting a notice of non-responsibility
                 for alterations, additions or repairs; and at any time within
                 one hundred eighty (180) days prior to expiration of this
                 Lease, to place upon the Premises, ordinary "For Lease" or
                 "For Sale" signs.

     18.         Compliance with Laws. Tenant shall, at its own cost, comply
                 with all of the requirements of all municipal, county, state
                 and federal authorities now in force, or which may hereafter
                 be in force, pertaining to Tenant's use and occupancy of the
                 Premises, and shall faithfully observe all municipal, county,
                 state and federal law, statutes or ordinances now in force or
                 which may hereafter be in force. The judgment of any court of
                 competent jurisdiction or the admission of Tenant in any
                 action or proceeding against Tenant, whether Landlord be a
                 party thereto or not, that Tenant has violated any such
                 ordinance or statute in the use and occupancy of the Premises
                 shall be conclusive of the fact that such violation by Tenant
                 has occurred.

     19.         Subordination. The following provisions shall govern the
                 relationship of this Lease to any, underlying lease, mortgage
                 or deed of trust which now or hereafter affects the Premises,
                 the Building and/or the Parcel, or Landlord's interest or
                 estate therein (the "Project") and any renewal, modification,
                 consolidation, replacement, or extension thereof (a "Security
                 instrument").

                 A.       Priority. This Lease is subject and subordinate to
                          Security Instruments existing as of the Commencement
                          Date. However, if any Lender so requires, this Lease
                          shall become prior and superior to any such Security
                          instrument.

                 B.       Subsequent Security Instruments. At Landlord's
                          election, this Lease shall become subject and
                          subordinate to any Security Instrument created after
                          the Commencement Date. Notwithstanding such
                          subordination, Tenant's right to quiet possession of
                          the Premises shall not be disturbed so long as Tenant
                          is not in default and performs all of its obligations
                          under this Lease, unless this Lease is otherwise
                          terminated pursuant to its terms.

                 C.       Documents. Tenant shall execute any document or
                          instrument reasonably required by Landlord or any
                          Lender to make this Lease either prior or subordinate
                          to a Security Instrument, which may include such
                          other matters as the Lender customarily requires in
                          connection with such agreements, including provisions
                          that the Lender not be liable for





                                       14
<PAGE>   15
                          (1) the return of the Security Deposit unless the
                          Lender receives it from Landlord, and (2) any
                          defaults on the part of Landlord occurring prior to
                          the time that the Lender takes possession of the
                          Project in connection with the enforcement of its
                          Security Instrument. Tenant's failure to execute any
                          such document or instrument within ten (10) days
                          after written demand therefor shall constitute a
                          default by Tenant or, at Landlord's option, Landlord
                          may execute such documents on behalf of Tenant as
                          Tenant's attorney-in-fact. Tenant does hereby make,
                          constitute and irrevocably appoint Landlord as
                          Tenant's attorney-in-fact to execute such documents
                          in accordance with this Paragraph.

                 D.       Tenant's Attornment. Tenant shall attorn (1) to any
                          purchaser of the Premises at any foreclosure sale or
                          private sale conducted pursuant to any Security
                          Instrument encumbering the Project; (2) to grantee or
                          transferee designated in any deed given in lieu of
                          foreclosure; or (3) to the lessor under any
                          underlying ground lease should such ground lease be
                          terminated.

                  E.      Lender. The term "Lender" shall mean (1) any
                          beneficiary, mortgagee, secured party, or other
                          holder of any deed of trust, mortgage, or other
                          written security device or agreement affecting the
                          Project; and (2) any lessor under any underlying
                          lease under which Landlord holds its interest in the
                          Project.

     20.         Holding Over. This Lease shall terminate without further
                 notice at the expiration of the Lease Term. Any holding over
                 by Tenant after expiration shall not constitute a renewal or
                 extension or give Tenant any rights in or to the Premises
                 except as expressly provided in this Lease. Any holding over
                 after the expiration with the consent of Landlord shall be
                 construed to be a tenancy from month to month, at one hundred
                 fifty percent (150%) of the monthly rent for the last month of
                 the Lease Term, and shall otherwise be on the terms and
                 conditions herein specified insofar as applicable.

     21.         Notices. Any notice required or desired to be given under this
                 Lease shall be in writing with copies directed as indicated
                 below and shall be personally served or given by mail. Any
                 notice given by mail shall be deemed to have been given when
                 forty eight (48) hours have elapsed from the time such notice
                 was deposited in the United States mails, certified and postage
                 prepaid, addressed to the party to be served with a copy as
                 indicated herein at the last address given by that party to the
                 other party under the provisions of this Paragraph. At this
                 date of execution of this Lease, the address of Landlord is:

                          511 Division Street
                          Campbell, CA 95008

                 and the address of Tenant is:

                          1325 Chesapeake Terrace
                          Sunnyvale, CA 94089

                 After the Commencement Date, the address of Tenant will be at
                the Premises.

     22.         Attorneys' Fees. In the event either party shall bring any
                 action or legal proceeding for damages for any alleged breach
                 of any provision of this Lease, to recover rent or possession
                 of the Premises, to terminate this Lease, or to enforce,
                 protect or establish any term or covenant of this Lease or
                 right or remedy of either party, the prevailing party shall be
                 entitled to recover as a part





                                       15
<PAGE>   16
                 of such action or proceeding, reasonable attorneys' fees and
                 court costs, including attorneys' fees and costs for appeal,
                 as may be fixed by the court or jury. The term "prevailing
                 party" shall mean the party who received substantially the
                 relief requested, whether by settlement, dismissal, summary
                 judgment, judgment, or otherwise.

     23.         Nonassignment.

                 A.       Landlord's Consent Required. Except for "Permitted
                 Transfers" as defined below, Tenant's interest in this Lease
                 is not assignable, by operation of law or otherwise, nor shall
                 Tenant have the right to sublet the Premises, transfer any
                 interest of Tenant therein or permit any use of the Premises
                 by another party, without the prior written consent of
                 Landlord to such assignment, subletting, transfer or use,
                 which consent Landlord agrees not to withhold unreasonably
                 subject to the provisions of Subparagraph B below. A consent
                 to one assignment, subletting, occupancy or use by another
                 party shall not be deemed to be a consent to any subsequent
                 assignment, subletting, occupancy or use by another party. Any
                 assignment or subletting without such consent shall be void
                 and shall, at the option of Landlord, terminate this Lease.

                 Landlord's waiver or consent to any assignment or subletting
                 hereunder shall not relieve Tenant from any obligation under
                 this Lease unless the consent shall so provide.

                 A Permitted Transfer is any merger, consolidation,
                 reorganization or acquistion, so long as the surviving entity
                 tenant's net worth is equal to or greater than Tenant's at the
                 time of the merger, consolidation, reorganization or
                 acquistion.

     B.          Transferee Information Required. If Tenant desires to assign
                 its interest in this Lease or sublet the Premises, or transfer
                 any interest of Tenant therein, or permit the use of the
                 Premises by another party hereinafter collectively referred to
                 as a "Transfer"), Tenant shall give Landlord at least ten (10)
                 days prior written notice of the proposed Transfer and of the
                 terms of such proposed Transfer, including, but not limited
                 to, the name and legal composition of the proposed transferee,
                 a financial statement of the proposed transferee, the nature
                 of the proposed transferee's business to be carried on in the
                 Premises, the payment to be made or other consideration to be
                 given to Tenant on account of the Transfer, and such other
                 pertinent information as may be requested by Landlord, all in
                 sufficient detail to enable Landlord to evaluate the proposed
                 Transfer and the prospective transferee. It is the intent of
                 the parties hereto that this Lease shall confer upon Tenant
                 only the right to use and occupy the Premises, and to exercise
                 such other rights as are conferred upon Tenant by this Lease.
                 The parties agree that this Lease is not intended to have a
                 bonus value nor to serve as a vehicle whereby Tenant may
                 profit by a future Transfer of this Lease or the right to use
                 or occupy the Premises as a result of any favorable terms
                 contained herein, or future changes in the market for leased
                 space. It is the intent of the parties that any such bonus
                 value that may attach to this Lease shall be and remain the
                 exclusive property of Landlord, to the extent as set forth in
                 Paragraph 23.B(2) below.  Accordingly, in the event Tenant
                 seeks to Transfer its interest in this Lease or the Premises,
                 Landlord shall have the following options, which may be
                 exercised at its sole choice without limiting Landlord in the
                 exercise of any other right or remedy which Landlord may have
                 by reason of such proposed Transfer:

                 (1)      Should Tenant assign or sublease all of the Premises
                          during the Option Term, as defined in Paragraph 38
                          below, Landlord may elect to terminate this Lease
                          effective as of the proposed effective date of the
                          proposed Transfer and release Tenant from any further





                                       16
<PAGE>   17
                          liability hereunder accruing after such termination
                          date by giving Tenant written notice of such
                          termination within twenty (20) days after receipt by
                          Landlord of Tenant's notice of intent to transfer as
                          provided above. If Landlord makes such election to
                          terminate this Lease, Tenant shall surrender the
                          Premises, in accordance with Paragraph 34, on or
                          before the effective termination date; or

                          (2)     Landlord may consent to the proposed Transfer
                                  on the condition that Tenant agrees to pay to
                                  Landlord, as additional rent, seventy-five
                                  percent (75%) of any and all rents or other
                                  consideration for the Premises (including key
                                  money) received by Tenant from the transferee
                                  by reason of such Transfer in excess of the
                                  rent payable by Tenant to Landlord under this
                                  Lease "Transfer Rent" (less any reasonable
                                  and documented brokerage commissions or
                                  advertising expenses incurred by Tenant in
                                  connection with the Transfer and, during the
                                  initial six (6) year lease Term only, less
                                  an amount to cover Tenant's Tenant
                                  Improvement Costs set forth in Paragraph 2
                                  above, and which shall be calculated as
                                  follows:. Seven Hundred Thousand Dollars
                                  ($700,000.00) shall be deducted from the
                                  total cost of the Tenant Improvements,
                                  including soft costs, and the remainder shall
                                  be divided by 98,836 (square feet). The
                                  resulting quotient shall be divided by
                                  seventy-two (72) (months). The end result of
                                  this calculation is the amount per square
                                  foot to be deducted from the Transfer Rent
                                  from the effective date of a Transfer through
                                  the last month of said initial Lease Term.
                                  Upon completion of the Tenant Improvements,
                                  this Lease shall be amended to establish the
                                  exact amount which may be deducted) Tenant
                                  expressly agrees that the foregoing is a
                                  reasonable condition for obtaining Landlord's
                                  consent to any Transfer; or

                          (3)     Landlord may reasonably withhold its consent
                                  to the proposed Transfer.

   24.           Successors  The covenants and agreements contained in this
                 Lease shall be binding on the parties here to and on their
                 respective heirs, successors and assigns (to the extent the
                 Lease is assignable).

   25.           Mortgagee Protection. In the event of any default on the part
                 of Landlord, Tenant will give notice by registered or
                 certified mail to any beneficiary of a deed of trust or
                 mortgagee of a mortgage encumbering the Premises, whose
                 address shall have been furnished to Tenant, and shall offer
                 such beneficiary or mortgagee a reasonable opportunity to cure
                 the default, including time to obtain possession of the
                 Premises by power of sale or judicial foreclosure, if such
                 should prove necessary to effect a cure.

   26.           Landlord Loan or Sale. Tenant agrees promptly following
                 request by Landlord to (A) execute and deliver to Landlord any
                 documents, including estoppel certificates presented to Tenant
                 by Landlord, (i) certifying that this Lease is unmodified and
                 in full force and effect and the date to which the rent and
                 other charges are paid in advance, if any, and (ii)
                 acknowledging that there are not, to Tenant's knowledge, any
                 uncured defaults on the part of Landlord hereunder, and (iii)
                 evidencing the status of the Lease as may be required either
                 by a lender making a loan to Landlord to be secured by a deed
                 of trust or mortgage covering the Premises or a purchaser of
                 the Premises from Landlord and (B) to deliver to Landlord the
                 financial statement of Tenant with an opinion of a certified
                 public accountant, including a balance sheet and profit and
                 loss statement, for the last completed fiscal year all
                 prepared in accordance with generally accepted accounting
                 principles consistently applied. If Tenant fails to deliver an
                 estoppel certificate within five (5) business days following
                 such request from Landlord, Tenant shall be deemed to have
                 appointed





                                       17
<PAGE>   18
                 Landlord as Tenant's attorney-in-fact, in Tenant's name, place
                 and stead, to execute such estoppel certificate.

                 At the time of executing this Lease, it is understood that
                 Landlord is finalizing a loan secured by the Premises and upon
                 the request of lender, Tenant agrees to execute a Tenant
                 Estoppel and Subordination, Attournment and Non-Disturbance
                 Agreement in the forms as attached hereto as Exhibit "C" and
                 made a part hereof

     27.         Surrender of Lease Not Merger. The voluntary or other
                 surrender of this Lease by Tenant, or a mutual cancellation
                 thereof, shall not work a merger and shall' at the option of
                 Landlord, terminate all or any existing subleases or
                 subtenants, or operate as an assignment to Landlord of any or
                 all such subleases or subtenants.

     28.         Waiver. The waiver by Landlord or Tenant of any breach of any
                 term' covenant or condition herein contained shall not be
                 deemed to be a waiver of any preceding or succeeding breach of
                 the same or any other covenant or condition herein contained.

     29.         General.

                  A.      Captions. The captions and paragraph headings used in
                          this Lease are for the purposes of convenience only.
                          They shall not be construed to limit or extend the
                          meaning of any part of this Lease, or be used to
                          interpret specific sections.  The word (s) enclosed
                          in quotation marks shall be construed as defined
                          terms for purposes of the Lease. As used in this
                          Lease, the masculine, feminine and neuter and the
                          singular or plural number shall each be deemed to
                          include the other whenever the context so requires.

                 B.       Definition of Landlord. The term "Landlord" as used
                          in this Lease, so far as the covenants or obligations
                          on the part of Landlord are concerned, shall be
                          limited to mean and include only the owner at the
                          time in question of the fee title of the Premises,
                          and in the event of any transfer or transfers of the
                          title of such fee, the Landlord herein named (and in
                          case of any subsequent transfers or conveyances, the
                          then grantor) shall after the date of such transfer
                          or conveyance be automatically freed and relieved of
                          all liability with respect to performance. of any
                          covenants or obligations on the part of Landlord
                          contained in this Lease, thereafter to be performed;
                          provided that any fluids in the hands of Landlord or
                          the then grantor at the time of such transfer, in
                          which Tenant has an interest, shall be turned over to
                          the grantee. It is intended that the covenants and
                          obligations contained in this Lease on the part of
                          Landlord shall, subject as aforesaid, be binding
                          upon each Landlord, its heirs, personal
                          representatives, successors and assigns only during
                          its respective period of ownership.

                 C.       Time of Essence. Time is of the essence for the
                          performance of each term, covenant and condition of
                          this Lease.

                 D.       Serverability. In case any one or more of the
                          provisions contained herein, except for the payment
                          of rent, shall for any reason be held to be invalid,
                          illegal or unenforceable in any respect, such
                          invalidity, illegality or unenforceability shall not
                          affect any other provision of this Lease, but this
                          Lease shall be construed as if such invalid, illegal
                          or unenforceable provision had not been contained
                          herein. This Lease shall be construed and enforced in
                          accordance with the laws of the State of California.





                                       18
<PAGE>   19
                 E        Joint and Several Liability. If Tenant is more than
                          one person or entity, each such person or entity
                          shall be jointly and severally liable for the
                          obligations of Tenant hereunder.

                 F.       Law. The term "law" shall mean any judicial decision,
                          statute, constitution, ordinance, resolution,
                          regulation, rule, administrative order, or other
                          requirement of any government agency or authority
                          having jurisdiction over the parties to this Lease or
                          the Premises or both, in effect at the Commencement
                          Date of this Lease or any time during the Lease Term,
                          including, without limitation, any regulation, order,
                          or policy of any quasi-official entity or body (e.g.,
                          board of fire examiners, public utility or special
                          district).

     30.         Sign. Tenant shall not place or permit to be placed any sign
                 or decoration on the land or the exterior of the Building
                 without the prior written consent of Landlord, which consent
                 shall not be unreasonably withheld, provided such sign or
                 decoration has been approved by the appropriate agency of the
                 City of Sunnyvale. Tenant, upon written notice by Landlord,
                 shall immediately remove any sign or decoration that Tenant
                 has placed or permitted to be placed on the land or the
                 exterior of the Building without such prior written consent of
                 Landlord, and if Tenant fails to so remove such sign or
                 decoration within five (5) days after Landlord's written
                 notice, Landlord may enter upon the Premises and remove said
                 sign or decoration and Tenant agrees to pay Landlord, as
                 additional rent upon demand, the cost of such removal. At the
                 termination of this Lease, Tenant shall remove any sign which
                 it has placed on the Parcel or Building and shall repair any
                 damage caused by the installation or removal of such sign.

     31.         Interest on Past Due Obligations. Any Monthly Installment of
                 rent or any other sum due from Tenant under this Lease (except
                 for any late charge) which is received by Landlord after the
                 date the same is due shall bear interest from said due date
                 until paid, at an annual rate equal to the prime rate then
                 being charged by Bank of America, N.T.S.A., plus one percent
                 (1%).  Payment of such interest shall not excuse or cure any
                 default by Tenant. In addition, Tenant shall pay all costs and
                 attorneys' fees incurred by Landlord in collection of such
                 amounts.

     32.         Surrender of the Premises. On the last day of the term hereof,
                 or on the sooner termination of this Lease, Tenant shall
                 surrender the Premises to Landlord in their condition existing
                 as of the Commencement Date of this Lease, subject to Paragraph
                 11 above, ordinary wear and tear excepted, with all originally
                 painted interior walls washed, and other interior walls
                 cleaned, and repaired or replaced, all carpets shampooed and
                 cleaned, the air conditioning and heating equipment serviced
                 and repaired by a reputable and licensed service firm, all
                 floors cleaned and waxed, all to the reasonable satisfaction of
                 Landlord. Tenant shall remove all of Tenant's personal property
                 and trade fixtures from the Premises, and all property not so
                 removed shall be deemed abandoned by Tenant. Tenant, at its
                 sole cost shall repair any damage to the Premises caused by the
                 removal of Tenant's personal property, machinery and equipment,
                 which repair shall include, without limitation, the patching
                 and filling of holes and repair of structural damage.
                 Notwithstanding the above, Tenant shall not be obligated to
                 replace the Building roof upon surrender of the Premises,
                 provided Tenant has maintained the roof pursuant to Paragraph
                 10.A above, and the roof is watertight upon said surrender. If
                 the Premises are not so surrendered at the termination of this
                 Lease, and Landlord has given Tenant thirty (30) days' written
                 notice that it is in negotiations or has negotiated a lease
                 with a third party, Tenant shall indemnify, defend, protect and
                 hold Landlord harmless from and against loss or liability
                 resulting from delay by Tenant in so surrendering the Premises
                 including without limitation, any claims made by any succeeding
                 tenant or losses to Landlord due to lost opportunities to lease
                 to succeeding tenants. No third party shall be a beneficiary
                 with respect to the obligations of Tenant under the preceding
                 sentence.





                                       19
<PAGE>   20
     33.         Authority. The undersigned parties hereby warrant that they
                 have proper authority and are empowered to execute this Lease
                 on behalf of Landlord and Tenant, respectively.

     34.         Public Record. This Lease is made subject to all matters of
                 public record affecting title to the property of which the
                 Premises are a part Tenant shall abide by and comply with all
                 such matters of public record now or hereafter affecting the
                 Premises and any amendment thereof

     35.         Brokers. Tenant represents and warrants to Landlord that it
                 has not dealt with any broker respecting this transaction
                 other than Cornish & Carey Oncor International and Park Place
                 and hereby agrees to indemnify and hold Landlord harmless from
                 and against any brokerage commission or fee, obligation, claim
                 or damage (including attorneys' fees) paid or incurred
                 respecting any broker claiming through Tenant or with
                 which/whom Tenant has dealt. Landlord's exclusive broker for
                 this transaction is Colliers Parrish International, Inc. The
                 broker commission to be paid by Landlord shall be paid
                 one-fourth (1/4th) to Cornish & Carey Oncor International,
                 one-forth (1/4th) to Park Place, and one-half (1/2) to
                 Colliers Parrish International, Inc. per separate agreement.

     36.         Limitation on Landlord's Liability Tenant, for itself and its
                 successors and assigns (to the extent this Lease is
                 assignable), hereby agrees that in the event of any actual, or
                 alleged, breach or default by Landlord under this Lease that:

                 A.       Tenant's sole and exclusive remedy against Landlord
                          shall be as against Landlord's interest in the
                          Building;

                 B.       No partner or officer of any partner of Landlord
                          shall be sued or named as a party in a suit or action
                          (except as may be necessary to secure jurisdiction of
                          the partnership);

                 C.       No service of process shall be made against any
                          partner of Landlord (except as may be necessary to
                          secure jurisdiction of the partnership);

                 D.       No partner of Landlord shall be required to answer or
                          otherwise plead to any service of process;

                 E.       No judgment will be taken against any partner of
                          Landlord beyond its interest in the Premises;

                 F.       Any judgment taken against any partner of Landlord,
                          except as to its interest in the Premises, may be
                          vacated and set aside at any time nunc pro tunc;

                 G.       No writ of execution will ever be levied against the
                          assets of any partner of Landlord beyond its interest
                          in the Premises;

                 H.       The covenants and agreements of Tenant set forth in
                          this Section 36 shall be enforceable by Landlord and
                          any partner of Landlord.

     37.         Hazardous Material.

                 A.       Definitions. As used herein, the term "Hazardous
                          Material" shall mean any substance or material which
                          has been determined by any state, federal or local
                          government authority





                                       20
<PAGE>   21
                          to be capable of posing a risk of injury to health,
                          safety or property including all of those materials
                          and substances designated as hazardous or toxic by
                          the Environmental Protection Agency, the California
                          Water Quality Control Board, the Department of Labor,
                          the California Department of Industrial Relations,
                          the Department of Transportation, the Department of
                          Agriculture, the Consumer Product Safety Commission,
                          the Department of Health and Human Services, the Food
                          and Drug Agency or any other governmental agency now
                          or hereafter authorized to regulate materials and
                          substances in the environment. Without limiting the
                          generality of the foregoing, the term "Hazardous
                          Material" shall include all of those materials and
                          substances defined as ."Toxic Materials" in Sections.
                          66680 through 66685 of Title 22 of the California
                          Code of regulations, Division 4, Chapter 30, as the
                          same shall be amended from time to time.


                  B.      Use Restriction.  Subject to the terms and conditions
                          set forth herein, Landlord acknowledges that so long
                          as Tenant is under this Lease, Tenant shall be
                          permitted to use and store in the Premises those
                          materials described in Paragraph G below, in the
                          quantities set forth in said Paragraph. Except as
                          specifically allowed in this Lease, Tenant shall not
                          cause or permit and Hazardous Material to be used,
                          stored, generated, discharged, transported to or
                          from, or disposed of in or about the Premises, or any
                          other land or improvements in the vicinity of the
                          Premises. The appearance of any Hazardous Material
                          that is not permitted by this Lease in or about the
                          Premises shall be deemed an Event of Default under
                          Paragraph 13 above. Without limiting the generality
                          of the foregoing, Tenant, at its sole cost' shall
                          comply with all laws relating to the storage, use,
                          generation, transport, discharge and disposal of
                          Hazardous Materials. If the presence of Hazardous
                          Materials on the Premises caused or permitted by
                          Tenant results in contamination of the Premises or
                          any soil, air, ground or surface waters under,
                          through, over, on, in or about the Premises, Tenant,
                          at its expense, shall promptly take all actions
                          necessary to return the Premises and/or the
                          surrounding real and personal property to the
                          condition existing prior to the appearance of such
                          Hazardous Material.

                          Tenant shall defend, protect, hold harmless and
                          indemnify Landlord and its Agents and Lenders with
                          respect to all actions, claims, losses (including,
                          diminution in value of the  Premises), fines,
                          penalties, fees, (including, but not limited to,
                          reasonable attorneys' and  consultants' fees and
                          costs) costs, damages, liabilities, remediation
                          costs, investigation costs, response costs and other
                          expenses arising out of, resulting from, or caused by
                          any Hazardous Material used, generated discharged,
                          transported to or from, stored, or disposed of by
                          Tenant or its Agents in, on, under, over, through or
                          about the Premises and/or the surrounding real
                          property. Tenant shall not suffer any lien to be
                          recorded against the Premises as a consequence for
                          the disposal of any Hazardous Material on the
                          Premises by Tenant or its Agents, including any so
                          called state, federal or local "super fund" lien
                          related to the "clean up" of any Hazardous Material
                          in, over, on, under through, or about the Premises.

           C.       Compliance. Tenant shall immediately notify Landlord
                    of any inquiry, test, investigation, enforcement
                    proceeding by or against Tenant or the Premises
                    concerning any Hazardous Material. Any remediation
                    plan prepared by or on behalf of Tenant must be
                    submitted to landlord prior to conducting any work
                    pursuant to such plan and prior to submittal to any
                    applicable government authority and shall be subject
                    to Landlord's consent. Tenant acknowledges that
                    Landlord, as the owner of the Property, at its
                    election, shall have the sole right to negotiate, at
                    Tenant's expense, to negotiate, defend, approve and
                    appeal any action taken or order issued with





                                       21
<PAGE>   22
                          regard to any Hazardous Material(s) by any applicable
                          governmental authority. Landlord shall have the right
                          to appoint a consultant, at Tenant's expense, to
                          conduct an investigation to determine whether
                          Hazardous Material(s) are being used, generated,
                          discharged, transported to or from, stored or
                          disposed of in, on, over, through, or about the
                          Premises, in an appropriate and lawful manner.
                          Tenant, at its expense, shall comply with all
                          recommendations of the consultant. Such
                          investigation, negotiation, defense or appeal shall be
                          performed at the sole expense of Landlord, unless
                          such investigation shows that the contamination of
                          the Premises has been caused directly by Tenant or
                          Tenant's agent, employees or invitees

                 D.       Assignment and Subletting. It shall not be
                          unreasonable for Landlord to withhold its consent to
                          any proposed assignment or subletting if the proposed
                          assignee's or subtenant's anticipated use of the
                          Premises involves the storage, generation, discharge,
                          transport, use or disposal of any Hazardous Material.

                 E.       Surrender. Upon the expiration or earlier termination
                          of the Lease, Tenant, at its sole cost, shall remove
                          all hazardous Materials from the Premises and the
                          surrounding real and personal property caused by
                          Tenant, its agents, employees, or invitees.  If
                          Tenant fails to so surrender the Premises, Tenant
                          shall indemnify, protect, defend and hold Landlord
                          harmless from and against all damages resulting from
                          Tenant's failure to surrender the Premises as
                          required by this Paragraph, including, without
                          limitation, any actions, claims, losses, liabilities,
                          fees (including, but not limited to, reasonable
                          attorneys' fees and consultants' fees and costs),
                          fines, costs, penalties, or damages in connection
                          with the condition of the Premises including, without
                          limitation, damages occasioned by the inability to
                          relet the Premises or a reduction in the fair market
                          and/or rental value of the Premises by reason of the
                          existence of any Hazardous Materials in, on, over,
                          under, through or around the Premises.

                 F.       Holding Over. If any action of any kind is required
                          to be taken by any governmental authority to clean
                          up, remove, remediate or monitor Hazardous Material
                          (the presence of which is the result of the acts or
                          omissions of Tenant or its Agents) and such action is
                          not completed prior to the expiration or earlier
                          termination of the Lease, Tenant shall be deemed to
                          have impermissibly held over until such time as such
                          required action is completed, and Landlord shall be
                          entitled to all damages directly or indirectly
                          incurred in connection with such holding over,
                          including without limitation, damages occasioned by
                          the inability to relet the Premises or a reduction of
                          the fair market and/or rental value of the Premises.

                 G.       Materials. Landlord has provided to Tenant prior to
                          the date of this Lease copies of all reports in
                          Landlord's possession concerning the environmental
                          condition of the Center and the soil and groundwater
                          in on, and about the Premises, which reports are
                          described in Exhibit "B" attached hereto and are
                          herinafter collectively referred to as the "Project
                          Environmental Reports". Tenant may use and store in
                          Premises the following:

                          Write "none" if applicable:     "none"
                                                         ------------------
                          Materials:               Quantity:


                          __________________       ________________________

                          __________________       ________________________





                                       22
<PAGE>   23
                 H.       Provisions Survive Termination. The provisions of
                          this Paragraph 39 shall survive the expiration or
                          termination of this Lease.

                 I.       The provisions of this Paragraph 37 are intended to
                          govern the rights and liabilities of the Landlord and
                          Tenant hereunder respecting Hazardous Materials to
                          the exclusion of any other provisions in this Lease
                          that might otherwise be deemed applicable. The
                          provisions of this Paragraph 37 shall be controlling
                          with respect to any provisions in this Lease that are
                          inconsistent with this Paragaph 37.


                 38.      Option to Extend. Provided that Tenant is not in
                 default under this Lease at the time of exercise of this
                 option or at the time of termination of the then existing term
                 of this Lease, as the case may be, Tenant shall have one (1)
                 option to extend the term of this Lease for a period of four
                 (4) years (the "Option Term"). Said option shall be exercised
                 only by written notice delivered to Landlord not later than
                 six (6) months prior to the expiration date of the then
                 existing term of this Lease. In all respects, the terms,
                 covenants and conditions of this Lease shall remain unchanged
                 during the Option Term, except that the Monthly Installment of
                 rent payable during the Option Term shall be as follows:

                 Months 1-24      $113,662.00
                 Months 25-48     $123,545.00

                 There shall be no further options at the expiration of the
                 above four (4) year Option Term.

     39.         Early Termination. Tenant shall have the right to terminate
                 this Lease at the end of the fifth (5th) year of the Lease
                 Term by doing all of the following on or before the end of the
                 fifty-fourth (54th) month of the Lease Term:

                          (a)     Giving Landlord written notice of Tenant's
                                  election to terminate this Lease on the last
                                  day of the fifth (5th) year of the Lease Term
                                  (the "Early Termination Date"); and

                          (b)     Paying to Landlord, as a lease termination
                                  payment, a sum equal to the total Monthly
                                  Installments of rent and Additional Rent that
                                  would have been payable under the Lease
                                  during the first six (6) months of the sixth
                                  (6th) year of the Lease Term had the Lease
                                  not been terminated.

                 If Tenant so elects to terminate the Lease, Tenant shall pay
                 all Monthly Installments of rent and Additional Rent accruing
                 under the Lease through the Early Termination Date and shall
                 surrender the Premises to Landlord on the Early Termination
                 Date.

     40.         Condition Precedent. Tenant understands Landlord is under
                 contract to purchase the Premises, but does not currently own
                 the Premises. Accordingly, this Lease and the obligations of
                 Landlord and Tenant hereunder are conditioned upon Landlord
                 acquiring fee title to the Premises.

                 Furthermore, Tenant shall have until 3:00 p.m., August 2,
                 1996, to do a structural inspection of the Premises and any
                 reasonable testing to determine the structural integrity and
                 latent defects, if any, of the Premises and if Tenant
                 discovers defects that will cost more than One Hundred
                 Thousand and No/100ths Dollars ($100,000.00) to correct,
                 Tenant may cancel this Lease





                                       23
<PAGE>   24
                 anytime before 3:00 p.m., August 2, 1996, by giving Landlord
                 written notice of such cancellation, unless Landlord elects to
                 correct the defects at its expense.

IN WITNESS WHEREOF, the parties have executed this Agreement on the dates set
forth below.

TENANT:                                   LANDLORD:

SBC&D CO., INC.                           ARBOR SOFTWARE CORPORATION,
                                          A CALIFORNIA CORPORATION

By: /s/                                   By: /S/ STEPHEN IMBLER

DATED: 7/14/96                            DATED:   7/16/96





                                       24
<PAGE>   25
EXHIBIT "A"


LEGAL DESCRIPTION



All that certain property situate in the City of Sunnyvale, County of Santa
Clara State of California described as follows:

Parcel 8, as shown on that Parcel Map filed for record in the office of the
Recorder of the County of Santa Clara, State of California on July 18, 1978, in
Book 423 of Maps, page(s) 13.


ARB No: 1104-23.02.03





                                       25
<PAGE>   26
EXHIBIT "B"

PROJECT ENVIRONMENTAL REPORTS





     1.  PHASE I Environmental Site Assessment and Limited Asbestos Survey
         dated October 1993, performed by Fugro-McClelland (West), Inc.

     2.  Letter dated June 26, 1996, regarding Phase I Environmental Site
         Assessment, performed by E2C, Inc.

     3.  Phase I Environmental Site Assessment dated July 2, 1996, by E2C, Inc.





                                       26
<PAGE>   27
FIRST AMENDMENT

This First Amendment to Lease ("First Amendment") is made by and between ARBOR
SOFTWARE CORPORATION, a California Corporation ("Tenant"), and SBC&D CO., INC.,
a California corporation or nominee ("Landlord"), as of the date set forth
below with reference to the following facts:

     A.  By Lease Agreement dated July 16, 1996 (the "Lease"), Landlord has
leased to Tenant certain property commonly known as 1344 Crossman Avenue,
Sunnyvale, California.

     B.  Landlord and Tenant desire to amend the Lease to acknowledge their
mutual understanding as provided below.

NOW THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, Landlord and Tenant hereby agree as follows:

     I.  The correct name of Tenant is Arbor Software Corporation, a Delaware
Corporation.

     2.  SBC&D CO., Inc. has assigned its interest in the Lease to TD Drive
Associates, a California general partnership.

MI other terms and conditions of the Lease shall remain the same and in full
force and effect.

         AS entered into this 25th day of October 1996.


LANDLORD:                                 TENANT:
SBC&D CO., INC.,                          ARBOR SOFTWARE CORPORATION,
a California Corporation or nominee       a Delaware Coroporation
By:   /s/                                 By: /s/ Stephen Imbler

Title:   RVP                              Title:  Chief Financial Officer
         ---                                                           
Dated    10/25/96                         Dated: 10/24/96
         --------                                                          


TD DRIVE ASSOCIATES,
a California general partnership

BY:   Scott Trobbe

Title:   General Partner
Dated:   10/15/96





                                       27