Document:

<PAGE>   1
                                                                    EXHIBIT 10.3

                        TENANT: BROADBASE SOFTWARE, INC.

                                      LEASE

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
ARTICLE                 TITLE                       PAGE
-------                 -----                       ----
<S>      <C>                                        <C>
1        PREMISES AND TERM                           1

2        RENT                                        3

3        LANDLORD'S WORK - TENANT'S WORK             5

4        STREETS                                     5

5        UTILITY SERVICES                            5

6        ASSIGNMENT - CHANGE OF OWNERSHIP            5

7        TENANT'S ADDITIONAL AGREEMENTS              8

8        USE OF PREMISES                             10

9        INDEMNITY AND PUBLIC LIABILITY INSURANCE    10

10       FIRE INSURANCE AND CASUALTY                 11

11       REPAIR                                      14

12       FIXTURES & ALTERATIONS                      17

13       REMEDIES                                    18

14       BANKRUPTCY                                  19

15       SURRENDER OF PREMISES                       20

16       EMINENT DOMAIN                              20

17       REAL PROPERTY TAXES                         21

18       PARKING AND ACCOMMODATION AREAS             23

19       MISCELLANEOUS                               24
</TABLE>

<PAGE>   2

                               BUSINESS PARK LEASE

         THIS LEASE is made this 23'rd day of December, 1999, between BOHANNON
TRUSTS PARTNERSHIP II, a California partnership, herein referred to as
"Landlord," and BROADBASE SOFTWARE, INC., a Delaware corporation, herein
referred to as "Tenant".

                                   WITNESSETH:

                          ARTICLE 1 - PREMISES AND TERM

         Section 1.1. Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord the demised premises, including the building and other
improvements thereon commonly known as 181 and 185 Constitution Drive, Menlo
Park, California, the total area of which is approximately 44,723 square feet
(as more fully described in Exhibit "A" and located substantially as shown on
Exhibit "B" attached hereto) upon and subject to the terms and provisions of
this Lease for a demised term of seven (7) years three (3) months commencing on
February 1, 2000, and ending on April 30, 2007.

         Section 1.2. The demised premises are currently occupied by existing
tenants pursuant to leases which are currently in full force and effect. This
Lease and the obligations of Tenant and Landlord hereunder are expressly
conditioned upon Landlord obtaining satisfactory termination agreements from the
existing tenants and the vacation of the demised premises by the existing
tenants. In the event Landlord does not deliver all or any portion of the
demised premises to Tenant on the commencement of the term, Landlord shall not
be in default hereunder and the term of this Lease shall not be extended
thereby, but the Base Rent Commencement Date, as defined in Section 2.1, for the
portion of the demised premises not so delivered shall be deferred by one day
for each day of delay in delivering said portion of the demised premises to
Tenant, provided that if Landlord does not deliver the entire demised premises
to Tenant on or before April 1, 2000, Tenant shall have the right to terminate
this Lease by written notice given to Landlord at any time after April 1, 2000,
but prior to delivery of the entire demised premises to Tenant.

         Upon vacation of any portion of the demised premises by either of the
existing tenants, Tenant shall have the right to occupy such portions of the
building prior to the commencement of the demised term hereof. From and after
the date Tenant first occupies any portion of the demised premises, all of the
provisions of this Lease shall be applicable to said portion notwithstanding
that the demised term has not yet commenced. Specifically, but without
limitation, Tenant's and Landlord's obligations with respect to insurance and
indemnities shall be operable as of the date Tenant occupies any portion of the
demised premises and, notwithstanding any provision of this Lease to the
contrary, commencing May 1, 2000, and continuing until one (1) day before the
Base Rent Commencement Date (for the entire demised premises), Tenant shall pay
to Landlord monthly base rent on all of such portion occupied calculated by
multiplying $2.16 by the number of square feet in the portion of the demised
premises occupied by Tenant. In addition to the above, in the event Tenant makes
any alterations, decorations, additions or improvements to any portion of the
demised

                                      -1-
<PAGE>   3
premises occupied by Tenant and subsequently terminates the Lease pursuant to
the above provisions, then Tenant shall restore such portion of the demised
premises to the condition existing at the time of delivery of possession of any
such portion of the demised premises to Tenant in accordance with the provisions
of Section 12.2. hereinbelow.

         Notwithstanding anything herein to the contrary, Tenant shall have the
right, unless restricted by local ordinance, during the demised term to install
two (2) microwave antennae and related equipment (collectively, the "Antennae")
on the roof ("Roof") of the building to serve Tenant exclusively, which Antennae
shall be comparable to the antenna on the building located at 173 Constitution
Drive, subject to reasonable requirements as determined by Landlord and
Landlord's roofing consultant, which will include, without limitation, the
following: (i) the size and dimensions of the Antennae shall be approved by
Landlord, in Landlord's sole discretion; (ii) the Antennae shall be installed
and screened in a manner approved in advance by Landlord and in locations on the
Roof such that one of such Antennae shall be in line of sight to an antenna on
the building located at 173 Constitution Drive and the other shall be in line of
sight to an antenna on the building located at 172 Constitution Drive, as
reasonably approved by Landlord; (iii) Tenant shall submit to Landlord detailed
plans on the Antennae and the installation procedures and shall make use of roof
mount assemblies, including, without limitation, hardware to be used in
attaching any support pole to the Roof and the type and application of the
sealant to be used, as approved by Landlord; (iv) the installation, repair,
maintenance and removal of the Antennae shall be performed at Tenant's sole cost
and expense in a good and workmanlike manner in accordance with all applicable
governmental requirements, including, without limitation, FCC licensing
requirements; (v) Tenant shall give Landlord at least forty eight (48) hours'
prior notice of the dates and times Tenant requires access to the Roof for the
installation, repair, maintenance and removal of the Antennae (except in the
case of an emergency); (vi) upon removal of the Antennae, Tenant shall return
all areas affected by the installation thereof to their original condition,
ordinary wear and tear and damage from fire or other casualty not caused by
Tenant and/or condemnation excepted; (vii) any damage to the building or the
Roof caused by the installation, operation, maintenance or removal of the
Antennae will be repaired at Tenant's sole cost and expense by a contractor
approved by Landlord; (viii) if Tenant should fail to properly maintain or
repair the Antennae, and such failure continues for twenty (20) days after
Tenant's receipt of written notice of such failure from Landlord (or such
shorter notice period as is appropriate in the event such failure has caused, or
is likely to cause, a Roof leak or other problem which requires an immediate
response), then Landlord shall have the right to cancel Tenant's use of the Roof
for placement of Tenant's Antennae and, in such event, Tenant shall remove the
Antennae from the Roof; and (ix) Tenant agrees, at its expense, to relocate the
Antennae to another location suitable to Landlord in the event construction,
Roof repairs or other similar work is undertaken by or for Landlord which
necessitates such relocation. Additionally, Tenant shall defend, indemnify and
hold Landlord harmless from and against any claims, costs or expenses incurred
by Landlord as a result of such installation by Tenant.

                                      -2-
<PAGE>   4
                                ARTICLE 2 - RENT

         Section 2.1. (A) Commencing May 1, 2000 (the "Base Rent Commencement
Date") and continuing for the term of this Lease, Tenant shall pay to Landlord
base rent as follows:

<TABLE>
<CAPTION>
         Period                                                Amount
         ------                                                ------
<S>                                                            <C>
         From the Base Rent Commencement
         Date through April 30, 2001                           $  96,528.00 per month

         May 1, 2001 through April 30, 2002                     $100,389.12 per month

         May 1, 2002 through April 30, 2003                     $104,404.69 per month

         May 1, 2003 through April 30, 2004                     $108,580.87 per month

         May 1, 2004 through April 30, 2005                     $112,924.11 per month

         May 1, 2005 through April 30, 2006                     $117,441.07 per month

         May 1, 2006 through April 30, 2007                     $122,138.71 per month
</TABLE>

         Base rent shall be paid monthly in advance on the first (1st) day of
each calendar month. If the Base Rent Commencement Date is not the first day of
a calendar month, the base rent attributable to the first partial month shall be
appropriately prorated.

         (B) Tenant covenants and agrees to pay rent to Landlord without
set-off, recoupment, deduction or demand of any nature whatsoever except as
otherwise expressly provided herein.

         Section 2.2. For the purpose of this Lease, a year shall be twelve (12)
calendar months, commencing with the first day of May and ending on the last day
of the next succeeding April, and the succeeding anniversaries thereof. The
first year shall commence on May 1, 2000, and shall end on April 30, 2001.

         Section 2.3. All sums payable by Tenant under this Lease shall be paid
at 60 Hillsdale Mall, San Mateo, California 94403-3497, or at such other place
as Landlord may from time to time direct by notice to Tenant and all such sums
shall be paid in lawful money of the United States.

         Section 2.4. Upon execution of this Lease, Tenant shall pay to the
Landlord the following:

         (A) Ninety Six Thousand Five Hundred Twenty Eight Dollars ($96,528.00)
which shall be applied by Landlord to the first base rent to become due and
payable under this Lease, and

                                      -3-
<PAGE>   5
         (B) A letter of credit in the amount of Five Hundred Eighty Thousand
Dollars ($580,000.00) which shall be held as a Security Deposit pursuant to the
terms of Section 19.9.

         Tenant shall deliver said letter of credit in the amount of $580,000.00
(the "Initial Amount") to Landlord concurrently with Tenant's execution of this
Lease. Such letter of credit shall be issued by and drawn on an institution
reasonably acceptable to Landlord and otherwise upon conditions acceptable to
Landlord and shall be renewed at least thirty (30) days prior to any scheduled
expiration during the entire demised term hereof and shall, subject to Tenant's
right to retire the letter of credit if Tenant elects to replace same with cash
as provided hereinbelow, remain in effect without expiration for a term ending
sixty (60) days after the scheduled expiration or sooner termination of the
demised term of this Lease. Provided that no material default beyond applicable
cure periods has occurred under the Lease at any time prior to the scheduled
reduction in the amount of the letter of credit as provided herein, the Initial
Amount may be reduced to the following amounts at the commencement of the
following years of the demised term:

<TABLE>
<CAPTION>
                Year                         Amount of Letter of Credit
                ----                         --------------------------
<S>                                          <C>
                  2                                  $464,000.00
                  3                                  $348,000.00
                  4                                  $232,000.00
                  5                                  $116,000.00
</TABLE>

         At the election of Tenant, at the beginning of the sixth (6th) year of
the demised term the letter of credit shall be retired and replaced by a cash
security deposit in the amount of $116,000.00.

         Section 2.5. In addition to base rent under Section 2.1., all other
payments to be made under this Lease by Tenant to Landlord shall be deemed to be
and shall become additional rent hereunder, whether or not the same to be
designated as such, and shall be included in the term "rent" wherever used in
this Lease; and, unless another time shall be expressly provided for the payment
thereof, all rent and additional rent shall be due and payable together with the
next succeeding installment of base rent; and Landlord shall have the same
remedies for failure to pay the same as for a nonpayment of base rent.

         Section 2.6. Any amount due from Tenant to Landlord that is not paid
within five (5) days after the date due shall bear interest from the due date at
the highest rate then permitted to be charged on late payments under leases
under California law; provided, however, the payment of any such interest shall
not excuse or cure the default upon which such interest accrued. Tenant
acknowledges and agrees that payment of such interest on late payments is
reasonable compensation to Landlord for the additional costs incurred by
Landlord caused by such late payment, including, but not limited to, collection
and administration expenses and the loss of the use of the money that was late
in payment.

                                      -4-
<PAGE>   6
                   ARTICLE 3 - LANDLORD'S WORK - TENANT'S WORK

         Section 3.1. Landlord shall not be required to perform any work in the
demised premises except as necessary to satisfy the provisions of Section 11.5;
and, subject to the provisions of Section 11.5. hereinbelow, Tenant accepts the
demised premises in an "as is" condition.

         Section 3.2. Any additional work to be performed other than that
provided for in Section 3.1. and designated as Landlord's Work shall be
performed at the sole cost of Tenant in accordance with detailed plans and
specifications therefor which must be approved, in writing, by Landlord or
Landlord's architect before work is commenced. Tenant shall furnish Landlord
with a set of "as built" plans therefor in IBM-compatible AutoCAD format or such
other format which is compatible to Landlord's computer aided design software
after any such work is completed. Tenant shall provide insurance during the
course of Tenant's construction in accordance with Landlord's standard
requirements.

                               ARTICLE 4 - STREETS

         Section 4.1. Tenant agrees to require employees, and to direct
customers and other persons visiting Tenant, to park in the parking area
provided in the Parking and Accommodation Areas. Tenant agrees that it will not
oppose any measures undertaken to restrict or eliminate on street parking in
front of the demised premises.

                          ARTICLE 5 - UTILITY SERVICES

         Section 5.1. Landlord has at its own cost and expense secured the
installation of water, gas, sanitary sewers and electrical services to the
demised premises and made all necessary connections thereof to the building.
Tenant shall pay all meter or service charges made by public utilities companies
and shall pay for the water, gas and/or electricity used on the demised premises
and sewer use fees and charges whether ad valorum or not and any so called
"sewer connection charges" based on increased wastewater discharge from the
demised premises exclusively. Tenant shall maintain such connections of
utilities to the building.

         Section 5.2. Landlord shall not be liable to Tenant for the failure of
any utility services, provided that in the event of any interruption or failure
of utility services to the demised premises rendering the demised premises
unsuitable for Tenant's use, if Landlord carries off-premises services coverage
as part of its rental insurance, Tenant shall be entitled to an abatement of
rent to the extent of the proceeds available to Landlord from such insurance as
a result of such interruption or failure.

                  ARTICLE 6 - ASSIGNMENT - CHANGE OF OWNERSHIP

         Section 6.1.

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<PAGE>   7
         A. Except as otherwise provided herein, Tenant shall not, by operation
of law or otherwise, transfer, assign, sublet, enter into license or concession
agreements, mortgage or hypothecate this Lease or the Tenant's interest in and
to the demised premises without first procuring the written consent of Landlord.
Any attempted transfer, assignment, subletting, license or concession agreement,
mortgage or hypothecation without Landlord's written consent shall be void and
confer no rights upon any third person. Landlord's consent to a proposed
assignment or sublease shall not be unreasonably withheld provided that in
connection with an assignment, the proposed assignee shall have: (i) a net
worth, at the time of the assignment, determined in accordance with good
accounting principles, equal to or in excess of the net worth of Tenant at the
date of the Lease; (ii) been active in its current business for a minimum of
three (3) years immediately prior to the assignment; and (iii) a good reputation
in the business community; provided further that Tenant shall give Landlord not
less than thirty (30) days notice prior to the effective date of any such
assignment, and any sublease of all or any portion of the demised premises for a
term ending after June 30, 2002, and Landlord shall have (subject to the
provisions hereinbelow) the option to terminate this Lease with respect to the
space to be so assigned or subleased by notice to Tenant given within twenty
(20) days of Landlord's receipt of Tenant's notice. Unless Landlord and Tenant
otherwise agree, the termination date of this Lease with respect to the space to
be so assigned or subleased shall be the date the assignment or sublease
otherwise would have become effective. Nothing herein contained shall relieve
Tenant and any Guarantor from its covenants and obligations for the demised term
except as to space as to which the Lease is terminated. Tenant agrees to
reimburse Landlord for Landlord's reasonable outside attorneys' fees incurred in
conjunction with the processing and documentation of any such requested
transfer, assignment, subletting, licensing or concession agreement, mortgage or
hypothecation of this Lease or Tenant's interest in and to the demised premises.
Notwithstanding anything to the contrary contained herein, Landlord's consent
shall not be required for any assignment or sublease to any corporation that
controls, is controlled by or is under common control with Tenant, or for any
assignment in connection with a merger, consolidation or sale of all or
substantially all of the assets of Tenant, provided that in all instances the
assignee shall satisfy the net worth requirement set forth above and provided
that the assignee agrees in writing for the benefit of Landlord to assume, to be
bound by, and to perform the terms, covenants and conditions of this Lease to be
done, kept and performed by Tenant, including the payment of all amounts due or
to become due under this Lease directly to Landlord. If Landlord consents to any
assignment or sublease pursuant to this Article, Tenant shall pay Landlord, as
additional rent:

                (a) in the case of each and every assignment requiring
         Landlord's consent, an amount equal to ALL monies, property, and other
         consideration of every kind whatsoever paid or payable to Tenant by the
         assignee for such assignment and for all property of Tenant transferred
         to the assignee as part of the transaction (including, but not limited
         to, fixtures, other leasehold improvements, furniture, equipment, and
         furnishings); and

                                      -6-
<PAGE>   8
                (b) in the case of each and every sublease, one-half (1/2) of
         all rent, and/or other monies, property, and consideration of every
         kind whatsoever paid or payable to Tenant by the subtenant under the
         sublease, LESS

                  (i) all base rent and additional rent under this Lease
accruing during the term of the sublease in respect of the subleased space (as
reasonably determined by Landlord, taking into account the useable area of the
premises demised under the sublease);

                  (ii) commissions actually paid by Tenant to procure the
sublease to an independent third party licensed real estate broker, amortized
over the term of the sublease, commencing with the date on which the sublease
term commences; and

                  (iii) the actual cost of leasehold improvements undertaken by
Tenant (subject to Landlord's prior written consent) solely to prepare the
sublease space for the subtenant, amortized over the period of the term of the
sublease, commencing with the date on which the sublease commences.

         During the period ending June 30. 2002, Tenant shall have the right to
sublease all or portions of the demised premises for sublease term(s) ending no
later than June 30, 2002, subject to Landlord's prior consent and otherwise
pursuant to the provisions of this Article, without Landlord having the right to
terminate this Lease with respect to the space to be subleased. However, in the
event the sublease term of any space subleased by Tenant continues beyond June
30, 2002, Landlord shall have the right to terminate this Lease with respect to
any such subleased space the term of which continues beyond June 30, 2002, upon
thirty (30) days' advance written notice to Tenant given at any time after such
date or at the time the sublease is presented if the sublease is initially
scheduled to extend beyond June 30, 2002.

         B. Each transfer, assignment, subletting, license, concession
agreement, mortgage and hypothecation to which there has been consent shall be
by an instrument in writing in form satisfactory to Landlord, and shall be
executed by the transferor, assignor, sublessor, licensor, concessionaire,
hypothecator or mortgagor and the transferee, assignee, sublessee, licensee,
concessionaire or mortgagee in each instance, as the case may be; and each
transferee, assignee, sublessee, licensee, concessionaire or mortgagee shall
agree in writing for the benefit of Landlord herein to assume, to be bound by,
and to perform the terms, covenants and conditions of this Lease to be done,
kept and performed by Tenant, including the payment of all amounts due or to
become due under this Lease directly to Landlord. One (1) executed copy of such
written instrument shall be delivered to Landlord. Failure to first obtain in
writing Landlord's consent or failure to comply with the provisions of this
Article shall operate to prevent any such transfer, assignment, subletting,
license, concession agreement, mortgage, or hypothecation from becoming
effective.

         C.

                                      -7-
<PAGE>   9

         D. Landlord's rights to assign this Lease are and shall remain
unqualified. Upon any sale of the demised premises and provided the purchaser
assumes all obligations under this Lease, Landlord shall thereupon be entirely
released of all obligations of Landlord hereunder accruing under this Lease from
and after such sale and shall not be subject to any liability resulting from any
act or omission or event occurring after such sale.

         E. The consent of Landlord to any transfer, assignment, sublease,
license or concession agreement, mortgage or hypothecation of this Lease is not
and shall not operate as a consent to any future or further transfer,
assignment, sublease, license or concession agreement, mortgage or
hypothecation, and Landlord specifically reserves the right to refuse to grant
any such consents except as otherwise provided in this Section 6.1.

                   ARTICLE 7 - TENANT'S ADDITIONAL AGREEMENTS

         Section 7.1. Tenant agrees at all times during the demised term to: (A)
Keep the demised premises in a neat and clean condition. (B) Promptly remove all
waste, garbage or refuse from the demised premises. (C) Promptly comply with all
laws and ordinances and all rules and regulations of duly constituted
governmental authorities affecting the demised premises, and the cleanliness,
safety, use and occupation thereof, but this clause (C) shall not be construed
to require Tenant to comply with any such laws, ordinances, rules or regulations
which require structural changes in the demised premises unless the same are
made necessary by act or work performed by Tenant or the nature of Tenant's
business. (D) Prevent the escape from the demised premises of all fumes, odors
and other substances which are offensive or may constitute a nuisance or
interfere with other tenants.

         Section 7.2. Tenant agrees that it will not at any time during the
demised term without first obtaining the Landlord's written consent: (A) Conduct
or permit any fire, bankruptcy or auction sale in the demised premises. (B)
Place on the exterior walls (including both interior and exterior surfaces of
windows and doors), the roof of any buildings or any other part of the demised
premises, any sign, symbol, advertisement, neon light, other light or other
object or thing visible to public view outside of the demised premises. (C)
Change the exterior color of the building on the demised premises, or any part
thereof, or the color, size, location or composition of any sign, symbol or
advertisement that may have been approved by Landlord. (D) Park, operate, load
or unload, any truck or other delivery vehicle on any place other than the
loading area designated for Tenant's use. (E) Use the plumbing facilities for
any purpose other than that for which they were constructed or dispose of any
foreign substance therein. (F) Install any exterior lighting or plumbing
facilities, shades or awnings, amplifiers or similar devices, or use any
advertising medium which may be heard or experienced outside the demised
premises, such as loudspeakers, phonographs, or radio broadcasts. (G) Deface any
portion of the building or improvements on the demised premises, normal usage
excepted. In the event any portion of the building is defaced or

                                      -8-
<PAGE>   10
damaged, Tenant agrees to repair such damage. (H) Permit any rubbish or garbage
to accumulate on the demised premises, or any part thereof, unless confined in
metal containers so located as not to be visible to members of the public. (I)
Install, maintain or operate any sign except as approved in writing by Landlord.
(J) Store materials, supplies, equipment, finished products, raw materials or
articles of any nature outside of the demised premises. (K) Use the demised
premises for retail, commercial or residential purposes.

         Section 7.3. Tenant agrees that it will not at any time during the
demised term: (A) Perform any act or carry on any practice which may injure the
demised premises. (B) Burn anything in or about the demised premises. (C) Keep
or display any merchandise or other object on or otherwise obstruct any
sidewalks, walkways or areaways. (D) Use or permit the use of any portion of the
demised premises as living quarters, sleeping apartments, lodging rooms, or for
any unlawful purpose. (E) Use or permit the demised premises to be used for any
purpose which is or shall not then be allowed under the Zoning Ordinance of the
City of Menlo Park, California, in that area.

         Section 7.4. Tenant shall, at its expense, comply with all applicable
laws, regulations, rules and orders relating to the demised premises and the use
thereof, regardless of when they become or became effective, including, without
limitation, those relating to health, safety, noise, environmental protection,
waste disposal, and water and air quality, and furnish satisfactory evidence of
such compliance upon request of Landlord.

         Should any discharge, leakage, spillage, emission or pollution of any
type occur upon or from the demised premises due to Tenant's use and occupancy
thereof, Tenant, at its expense, shall be obligated to remedy the same to the
satisfaction of Landlord and any governmental body having jurisdiction
thereover. Tenant agrees to indemnify, hold harmless, and defend Landlord
against all liability, cost, and expense (including without limitation any
fines, penalties, judgments, litigation costs, and attorneys' fees) incurred by
Landlord as a result of Tenant's breach of this section, or as a result of any
such discharge, leakage, spillage, emission, or pollution during the demised
term of this Lease that is attributable to Tenant's use and occupancy of the
demised premises, regardless of whether such liability, cost, or expense arises
during or after the demised term, except to the extent such liability, cost or
expense is proximately caused by the negligence of Landlord.

         Tenant shall pay all amounts due Landlord under this section, as
additional rent, within ten (10) days after any such amounts become due.

         Tenant shall, at least thirty (30) days prior to the termination of the
demised term, or any earlier termination of this Lease, submit a plan to the
Menlo Park Fire Protection District in accordance with applicable provisions of
the Uniform Fire Code, with a copy to Landlord, demonstrating how any hazardous
materials which were stored, dispensed, handled or used in, at or upon the
demised premises will be transported, disposed of or reused at the expiration or
sooner termination of the demised term of this Lease; and Tenant shall, at the
expiration or sooner termination of the demised term, comply with all applicable
laws, regulations, rules and orders of any governmental

                                      -9-
<PAGE>   11

body having jurisdiction thereover (including without limitation the Menlo Park
Fire Protection District) regarding the disposal of any such hazardous
materials.

         Tenant's obligations under this Section 7.4. shall survive the
expiration or earlier termination of this Lease, including without limitation
any termination resulting from any default by Tenant under the Lease.

                           ARTICLE 8 - USE OF PREMISES

         Section 8.1. Tenant shall use the demised premises solely for general
office, research and development, and for no other purposes without Landlord's
written consent.

              ARTICLE 9 - INDEMNITY AND PUBLIC LIABILITY INSURANCE

         Section 9.1. Tenant agrees to indemnify and save harmless Landlord from
and against all claims arising from any act, omission or negligence of Tenant,
or its contractors, licensees, agents, servants, invitees or employees, or
arising from any accident, injury or damage whatsoever caused to any person, or
to the property of any person occurring during the demised term in or about the
demised premises, the sidewalks (if any) adjoining the same and from and against
all costs, expenses and liabilities incurred in or in connection with any such
claim or proceeding brought thereon, including, but not limited to, reasonable
attorneys' fees and court costs, except to the extent any such claim arises from
the willful misconduct, omission or gross negligence of Landlord's contractors,
licensees, agents, servants or employees. The foregoing indemnity shall not
apply to any discharge, leakage, spillage, emission or pollution occurring upon
or from the demised premises which is addressed by Section 7.3.

         Landlord agrees to indemnify and save harmless Tenant from and against
all claims arising from any willful misconduct, omission or gross negligence of
Landlord, or its contractors, licensees, agents, servants, or employees.

         Section 9.2. Tenant agrees to maintain in full force during the demised
term a policy of public liability and property damage insurance under which
Landlord (and such other persons, firms or corporations as are designated by
Landlord and are properly includible as additional insureds under the terms of
any such policies of insurance) and Tenant are named as insureds, and the
insurer agrees to indemnify and hold Landlord and Landlord's said designees
harmless from and against all cost, expense and/or liability arising out of or
based upon any and all claims, accidents, injuries and damage mentioned in
Section 9.1. All public liability and property damage policies shall contain a
provision that Landlord, although named as an insured, shall nevertheless be
entitled to recovery under said policies for any loss occasioned to it, its
servants, agents and employees, by reason of the negligence of Tenant. Each such
policy shall be approved as to form and insurance company by Landlord, such
approval not to be unreasonably withheld, be noncancelable with respect to the
Landlord and Landlord's said designees without twenty (20) days' written notice
to the Landlord and Landlord's said designees,

                                      -10-
<PAGE>   12
and a duplicate original or certificate thereof shall be delivered to Landlord
prior to commencement of the demised term and thereafter thirty (30) days prior
to expiration of the term of each policy. The limits of liability of such
comprehensive general liability insurance shall be Two Million Dollars
($2,000,000.00) for injury or death to one or more persons and damage to
property, combined single limit. All public liability, property damage and other
casualty policies shall be written as primary policies, not contributing with
and not in excess of coverage which Landlord may carry.

         If Tenant shall not comply with its covenants to maintain insurance
made above, or if Tenant fails to provide duplicate originals or certificates
thereof to Landlord as is provided above, Landlord may, but shall not be
required to, obtain any such insurance; and if Landlord does obtain any such
insurance, Tenant shall, on demand, reimburse Landlord for the premium for any
such insurance.

         Section 9.3. Tenant agrees to use and occupy the demised premises, the
Parking and Accommodation Areas and to use all other portions of the Business
Park (which it is herein given the right to use) at its own risk and hereby
releases to the full extent permitted by law the Landlord, and its agents,
servants, contractors, and employees, from all claims and demands of every kind
resulting from any accident, damage or injury occurring therein.

         Notwithstanding anything to the contrary contained in Section 9.2. or
Section 9.3, Landlord and Tenant each hereby releases the other and its
respective officers, agents, servants, contractors and employees from any and
all claims or demands for damages, loss, expense or injury to the demised
premises, or to the improvements, furnishings, fixtures, equipment, inventory or
other property of either Landlord or Tenant in, about or upon the demised
premises, caused by or resulting from perils, events or happenings which are the
subject of insurance carried or required to be carried by the respective
parties, that is or is required to be in force at the time of such loss.

         The provisions of this Section shall apply during the whole of the
demised term.

                      ARTICLE 10 - PROPERTY INSURANCE AND CASUALTY

         Section 10.1. Landlord shall maintain at all times during the term of
this Lease a Special Perils policy (previously known as "All Risk" coverage);
and, subject to Tenant's approval (or if otherwise deemed appropriate by
Landlord pursuant to the provisions of Section 10.9. hereof), earthquake
coverage insuring the demised premises, including the building constituting the
demised premises and all leasehold improvements therein, against loss, or damage
in an amount equal to the full replacement cost, exclusive of foundations, if
obtainable from responsible insurance companies licensed to do business in the
State of California. If the building on the demised premises should be damaged
or destroyed during the demised term by any insured casualty, Landlord shall
(except as hereinafter provided) repair and/or rebuild the same to substantially
the condition in which the same existed immediately prior to such damage or
destruction. Landlord's obligation under this Section shall in no event exceed
either

                                      -11-
<PAGE>   13
(A) the scope of the work done by Landlord in the original construction of such
building, together with all leasehold improvements therein, or (B) the proceeds
of the insurance policy or policies carried or required to be carried by
Landlord, unless Landlord nevertheless elects to repair and/or rebuild the
building and the demised premises. Tenant shall in the event of any such damage
or destruction, unless this Lease shall be terminated as hereinafter provided,
be responsible for replacing or repairing all exterior signs, trade fixtures,
equipment, display cases, and other installations originally installed by the
Tenant. Tenant shall have no interest in the proceeds of any insurance carried
by Landlord. Tenant shall, in the event of casualty covered by Landlord's
insurance, reimburse Landlord the amount of the deductible thereunder as
follows: (a) in the event of an earthquake covered by insurance carried by
Landlord, (i) said deductible shall not exceed ten percent (10%) of the
replacement value of the building; (ii) Tenant's share of said deductible shall
be forty percent (40%) of the deductible; (iii) Tenant's share of said
deductible shall be paid by Tenant to Landlord on an amortized basis over the
remaining demised term of this Lease; and (iv) if Tenant's share of said
deductible exceeds One Hundred Fifty Thousand Dollars ($150,000.00), Tenant
shall have the right to terminate this Lease by written notice to Landlord
within twenty (20) days after receipt of Landlord's notice of the amount of
Tenant's share of said deductible pursuant to the above provisions; and (b) in
the event of any other casualty covered by insurance carried by Landlord,
Tenant's share of said deductible shall be one hundred percent (100%) of the
deductible.

         Section 10.2. Tenant's base rent and all additional rent obligations
which are based on square footage shall be abated proportionately during any
period in which, by reason of any such damage or destruction, the building is
rendered partially or totally untenantable. Such abatement shall continue for
the period commencing with such destruction or damage and ending with the
substantial completion by the Landlord of such work or repair and/or
reconstruction as Landlord is obligated to do.

         Section 10.3. If the building on the demised premises should be damaged
or destroyed to the extent of 33-1/3% or more of its then replacement cost by an
event described in Section 10.1., then Landlord may terminate this Lease by
written notice to Tenant given within thirty (30) days after the casualty event.

         If the building on the demised premises should be damaged or destroyed
to the extent of fifty percent (50%) or more of its then replacement cost by an
event described in Section 10.1., then Tenant may terminate this Lease by
written notice to Landlord given within thirty (30) days after the casualty
event.

         As soon as possible following any casualty to the building on the
demised premises, Landlord shall notify Tenant of Landlord's reasonable estimate
of the time required to repair and/or rebuild the same. In the event such
estimated time is in excess of two hundred seventy (270) days from the date of
the casualty, Tenant may

                                      -12-
<PAGE>   14
terminate this Lease by written notice to Landlord given within (20) days after
receipt of Landlord's notice of the estimated time.

           If neither Landlord nor Tenant elects to terminate this Lease then
Landlord shall repair and/or rebuild the same as provided in Section 10.1. If
such damage or destruction occurs and this Lease is not so terminated, this
Lease shall remain in full force and effect and the parties waive the provisions
of any law to the contrary. The Landlord's obligation under this Section shall
in no event exceed the scope of the work to be done by the Landlord in the
original construction of said building and the demised premises together with
all leasehold improvements therein.

         Section 10.4. Tenant agrees to comply with all of the regulations and
rules of the Insurance Service Office or any similar body and will not do,
suffer, or permit an act to be done in or about the demised premises which will
increase any insurance rate with respect thereto.

         Section 10.5. Tenant agrees, in addition to any rent provided for
herein, to pay to the Landlord the cost of the property insurance carried by
Landlord on the demised premises during the entire demised term or any renewal
or extension thereof pursuant to Section 10.1.

         Section 10.6. During the demised term, Tenant shall carry, at its
expense, insurance against loss and damage by fire with an "All Risk"
endorsement for the full insurable value of Tenant's merchandise, trade
fixtures, furnishings, operating equipment and personal property, including wall
coverings, carpeting and drapes, if installed by Tenant. Landlord and Landlord's
mortgagee shall be named as additional insureds under said policy, which shall
be noncancellable with respect to Landlord and Landlord's mortgagee without
twenty (20) days' prior written notice. A certificate evidencing such coverage
shall be delivered to Landlord prior to commencement of the demised term and
thereafter thirty (30) days prior to the expiration of the term of such policy.
Such insurance shall be written as a primary policy, not contributing with and
not in excess of coverage Landlord may carry. If Tenant shall not comply with
its covenants to maintain said insurance, or if Tenant fails to provide a
certificate thereof to Landlord, Landlord may, but shall not be required to,
obtain any such insurance, and if Landlord does obtain any such insurance,
Tenant shall, on demand, reimburse Landlord for the premium for any such
insurance.

         Section 10.7. In the event the building on the demised premises shall
be damaged as a result of any flood, earthquake, act of war, nuclear reaction,
nuclear radiation or radioactive contamination, or from any other casualty not
covered by Landlord's property insurance, to any extent whatsoever, subject to
Tenant's termination right pursuant to Section 10.3., Landlord may within ninety
(90) days following the date of such damage, commence repair, reconstruction or
restoration of the building and prosecute the same diligently to completion, in
which event this Lease shall continue in full force and effect, or within said
ninety (90) day period elect not to so repair, reconstruct or restore the
building, in which event this

                                      -13-
<PAGE>   15
Lease shall cease and terminate. In either such event Landlord shall give Tenant
written notice of its intention within said ninety-day period.

         Section 10.8. Upon any termination of this Lease under the provisions
of this Article 10, the rent shall be adjusted as of the date of such
termination and the parties shall be released without further obligation to the
other party upon the surrender of possession of the demised premises to
Landlord, except for items that have been theretofore accrued and are then
unpaid, and except for obligations that are designated as surviving such
termination.

         Section 10.9. Notwithstanding anything in this Article 10 or elsewhere
in this Lease to the contrary, Landlord may maintain any insurance on the
demised premises that a prudent owner would carry, including, but not limited
to, any rental insurance, owner's protective liability insurance or any
insurance required by any mortgagee of Landlord; and Landlord may include the
amount of the premiums for such insurance in the total of the insurance premiums
which Tenant is required to pay under the terms hereof.

         Section 10.10. Landlord and Tenant shall each obtain from their
respective insurers under all policies of property, public liability, worker's
compensation and other insurance maintained by either of them at any time during
the term hereof insuring or covering the demised premises or any portion thereof
or operations therein, a waiver of all rights of subrogation which the insurer
of one party might have against the other party. If either Landlord or Tenant
fails to obtain the requisite subrogation waiver, it shall not thereby be in
default hereunder, but it shall indemnify the other party against any loss or
expense, including reasonable attorneys' fees, resulting from the failure to
obtain such waiver.

                               ARTICLE 11 - REPAIR

         Section 11.1. Landlord agrees, at Landlord's sole expense, to repair
structural defects of the building on the demised premises throughout the life
of the Lease. Structural defects and maintenance shall not be deemed to include
cracks or fissures in walls or floors that do not materially affect the
structural integrity of the walls or floors, nor the requirement of painting or
caulking.

         Section 11.2. Tenant agrees during the demised term or any extension
thereof to maintain the interior of the building on the demised premises, and
every part thereof, except as to work to be performed by Landlord under Sections
11.1. and 11.3. Tenant further agrees to clean, inside and out, all of the glass
on the exterior of the building. If Tenant should fail to faithfully perform its
maintenance obligations hereunder then Landlord shall, upon having given notice
to Tenant of the need for said maintenance, have the right to perform, or cause
to be performed, said maintenance and Tenant shall on demand reimburse Landlord
for Landlord's costs of providing such maintenance. Landlord's reservation of
the right to enter upon the demised premises to perform any repairs or
maintenance or other work in, to, or about the demised premises which in the
first instance is the Tenant's obligation pursuant to this Lease shall not be
deemed to impose any obligation on Landlord to do so, nor shall Landlord be
rendered liable to

                                      -14-
<PAGE>   16
Tenant or any third party for the failure to do so, and Tenant shall not be
relieved from any obligation to indemnify Landlord as otherwise provided
elsewhere in this Lease.

         Section 11.3 Landlord shall provide the following services and Tenant
shall, in addition to all other payments required to be made under other
provisions of this Lease, within ten (10) days after invoice therefor, reimburse
Landlord for Landlord's gross costs of: (i) maintaining, repairing and replacing
the roof; (ii) painting, maintaining and repairing the exterior of the building;
(iii) maintaining, repairing and replacing the elevator and elevator equipment
room (if any); (iv) maintenance and repair associated with the mechanical and
electrical rooms; (v) maintenance and repair of the trash enclosure utilized in
connection with the building; (vi) maintenance, repair and replacement of the
glass on the exterior of the building and (vii) any other maintenance and repair
other than that which Landlord is required to perform at Landlord's expense per
Section 11.1. Tenant shall also, within ten (10) days after invoice therefor,
reimburse Landlord for Landlord's gross costs of maintaining, repairing and
replacing the heating and air conditioning equipment serving the demised
premises, whether furnished by Landlord or Tenant. Landlord's said gross costs
as used in this Section 11.3. shall include all costs and expenses of every kind
or nature reasonably incurred by Landlord in the performance of such
maintenance, repair or replacements.

         Notwithstanding the provisions of Sections 11.3. and 18.3 hereof to the
contrary, Tenant's obligation to reimburse Landlord for (i) costs associated
with the replacement (as opposed to repairs and maintenance) of the roof
membrane and underlayment and the heating, ventilating and air-conditioning
units furnished by Landlord and (ii) the cost of any capital improvement
required to be made by Landlord pursuant to Article 11 and/or Article 18 of this
Lease during the demised term and required under good accounting practice to be
amortized, shall be limited to a proportionate share of such replacement costs
(the "Reimbursement Amounts") calculated as follows:

                (a) if such costs are incurred during the initial demised term
of this Lease, by multiplying such replacement costs by a fraction, the
numerator of which is the number of days in the original demised term and the
denominator of which is the number of days in the estimated useful life of the
replacement; and

                (b) if such costs are incurred during any extended term of this
Lease, by multiplying such replacement costs by a fraction, the numerator of
which is the number of days in the demised term of this Lease (including any
extended term) and the denominator of which is the number of days in the
estimated useful life of the replacement.

                If a Reimbursement Amount has been determined under subsection
(a) above with respect to any replacement costs, and Landlord and Tenant
subsequently agree to extend the term of this Lease, Tenant shall also be
responsible for another Reimbursement Amount with respect to such replacement
costs determined by multiplying such replacement costs by a fraction, the
numerator of which is the number of days in the extended term of this Lease and
the denominator of which is the number of days in the estimated useful life of
the replacement.

                                      -15-
<PAGE>   17
         The foregoing limitation shall not apply to equipment furnished by
Tenant and maintained by Landlord. Tenant shall pay any Reimbursement Amounts,
as additional rent, monthly on a straight-line basis amortized over the
remaining demised term of the Lease using an interest rate equal to ten percent
(10%) per annum.

         The limitations on Tenant's liability for expenses hereunder shall in
no event apply to any costs for repairs or replacements occasioned by (x)
Tenant's negligent acts or omissions or those of its employees, contractors,
agents, invitees or servants, or (y) the particular nature of Tenant's business,
all of which costs shall be borne solely by Tenant.

         Landlord shall bill Tenant monthly for one-twelfth of the estimated
costs to be reimbursed by Tenant under this Section 11.3. (except for repairs
and replacements which shall be billed as incurred), subject to an annual
reconciliation within ninety (90) days after the end of each lease year. In
connection with the annual reconciliation, Landlord shall, at Tenant's request,
furnish to Tenant a statement showing the costs incurred, in reasonable detail,
the estimated payments made by Tenant, and the amount of any overpayment or
underpayment. Tenant shall pay to Landlord the amount of any underpayment within
thirty (30) days after receipt of the statement, and Tenant shall be entitled to
credit the amount of any overpayment against the next payments of rent due
hereunder, except that following the expiration of the term hereof, Landlord
shall pay to Tenant the amount of any overpayment at the time it furnishes the
statement to Tenant.

         Section 11.4. If during the term of this Lease Landlord or Landlord's
insurance carrier requires the installation of an Ansul Fire Control System or
its equivalent, or any fire detection device, because of the nature of the
particular activities being carried on by Tenant in the demised premises, then
said system or device shall be installed at the sole cost of the Tenant within
the time specified.

         Section 11.5. Landlord agrees that it will deliver the demised premises
to Tenant with the existing electrical, HVAC and plumbing systems of the
building on the demised premises in good working order and the roof of the
building in good repair. In addition, Landlord shall, prior to the Base Rent
Commencement Date, repair and stain the fascia boards along the front of the
building or reimburse Tenant in an amount not to exceed Three Thousand Dollars
($3,000.00) towards Tenant's replacement of such fascia boards with stucco,
subject to Landlord's approval.

         Section 11.6. Notwithstanding the above provisions to the contrary, on
or before July 1, 2000 (subject to Unavoidable Delay, as that term is defined in
Section 19.19. hereinbelow), Landlord shall replace the roof membrane of the
building and Tenant shall, in addition to all other payments required to be made
by Tenant hereunder, reimburse Landlord as Additional Rent the amount of Fifty
Five Thousand Dollars ($55,000.00) within ten (10) days after invoice therefor.
Landlord agrees to use reasonable efforts to cooperate with Tenant's contractor
to replace said roof membrane at the same time as Tenant's contractor is
performing Tenant's improvement work within the demised premises; however, the
final determination as to the timing of the replacement of said roof membrane
shall remain with Landlord, in Landlord's sole discretion.

                                      -16-
<PAGE>   18
                      ARTICLE 12 - FIXTURES & ALTERATIONS

         Section 12.1. All trade fixtures owned by Tenant and installed in the
demised premises shall remain the property of Tenant and may be removed from
time to time and shall be removed at the expiration of the demised term. Tenant
shall repair any damage to the demised premises caused by the removal of said
fixtures. If Tenant fails to remove such fixtures on or before the last day of
the demised term, all such fixtures shall become the property of Landlord,
unless Landlord elects to require their removal, in which case Tenant shall
promptly remove them and restore the demised premises to its condition prior to
such removal. Landlord may also, at Landlord's sole discretion, store such
fixtures at Tenant's expense.

         Section 12.2. Tenant shall not make any alterations, additions or
improvements in or to the demised premises or the building without submitting
plans and specifications therefor for the prior written consent of Landlord,
which consent shall not be unreasonably withheld so long as any such
alterations, additions or improvements do not affect the exterior of the
building or materially affect the sprinkler system and/or mechanical/electrical
systems or require removal or modification of improvements installed by
Landlord, and so long as Tenant notifies Landlord of any such alterations and
provides Landlord with plans therefor in advance, and which consent, if granted,
may be subject to such reasonable conditions as Landlord may deem appropriate.
Any such alterations, additions or improvements consented to by Landlord shall
be made at Tenant's sole cost and expense in accordance with the plans and
specifications therefor and Tenant agrees to provide Landlord with an "as built"
set of plans and specifications after any such work is completed. Tenant shall
secure any and all governmental permits, approvals or authorizations required in
connection with any such work, and shall hold Landlord harmless from any and all
liability, costs, damages, expenses (including attorneys' fees) and any and all
liens resulting therefrom. All alterations, decorations, additions and
improvements (and expressly including all light fixtures and floor coverings
installed by Tenant), except furniture, removable paneling, wall fixtures, trade
fixtures, appliances and equipment which do not become a part of the demised
premises, shall be deemed to belong to Tenant, but shall be deemed to have been
attached to the demised premises or the building and to have become the property
of Landlord upon the termination of the demised term. Upon the expiration or
sooner termination of the demised term hereof, Tenant shall, upon written demand
by Landlord, at Tenant's sole cost and expense, forthwith remove any
alterations, decorations, additions or improvements made by Tenant which were
designated by Landlord to be removed at the time of Landlord's approval of the
plans and specifications therefor, or any alterations, decorations, additions or
improvements made by Tenant without Landlord's consent and designated by
Landlord prior to the termination of the demised term to be removed, and Tenant
shall forthwith at its sole cost and expense repair any damage to the demised
premises or the building caused by such removal. The parties acknowledge and
agree that, in addition to those alterations, decorations, additions or
improvements designated by Landlord to be removed as provided hereinabove,
Tenant shall perform all the necessary work to reinstall the t-bar ceiling
(including ceiling tiles), lighting (including fixtures), skylight wells, and
electrical and HVAC distribution systems throughout the demised premises as they
existed at the time of delivery of possession of the demised premises to Tenant,
all in accordance with the applicable building codes in effect at the time.

                                      -17-
<PAGE>   19
                              ARTICLE 13 - REMEDIES

         Section 13.1. Should Tenant default in the performance of any of its
obligations under this Lease with reference to the payment of rent and such
default continue for five (5) days after receipt of written notice of nonpayment
from Landlord, or should Tenant default in the performance of any other
obligations under this Lease and such default continue for thirty (30) days
after receipt of written notice from Landlord specifying such default or beyond
the time reasonably necessary to cure if such default is of a nature to require
more than thirty (30) days to remedy, then, in addition to all other rights and
remedies Landlord may have under this Lease or under applicable law, Landlord
shall have the following rights and remedies:

         (1) The Landlord has the remedy described in California Civil Code
Section 1951.4 (Landlord may continue the lease in effect after Tenant's breach
and abandonment and recover rent as it becomes due, if Tenant has the right to
sublet or assign, subject only to reasonable limitations). If Tenant breaches
any covenants of this Lease or if any event of default occurs, whether or not
Tenant abandons the demised premises, this Lease shall continue in effect until
Landlord terminates Tenant's right to possession, and Tenant shall remain liable
to perform all of its obligations under this Lease and Landlord may enforce all
of Landlord's rights and remedies, including the right to recover rent as it
falls due. If Tenant abandons the demised premises or fails to maintain and
protect the same as herein provided, Landlord shall have the right to do all
things necessary or appropriate to maintain, preserve and protect the demised
premises, including the installation of guards, and may do all things
appropriate to a re-letting of the demised premises, and none of said acts shall
be deemed to terminate Tenant's right of possession, unless Landlord elects to
terminate the same by written notice to Tenant. Tenant agrees to reimburse
Landlord on demand for all amounts reasonably expended by Landlord in
maintaining, preserving and protecting the demised premises, together with
interest on the amounts expended from time to time at the maximum legal rate.
Landlord shall also have the right to repair the demised premises at the expense
of Tenant to the extent necessary to put the demised premises in the condition
required under this Lease.

         (2) Landlord shall have the right to terminate Tenant's possession of
the demised premises, and if Tenant's right to possession of the demised
premises is terminated by Landlord by reason of a breach of this Lease by
Tenant, or by reason of the happening of an event of default, or by reason of
abandonment of the demised premises by Tenant, Tenant agrees to pay to Landlord
on demand (i) all unpaid rent earned at the time of termination, together with
interest on all unpaid installments from the times they were due to the date of
termination at the maximum legal rate; (ii) the amounts by which the unpaid rent
which would have been due and payable by Tenant since the date of termination
exceeds the amount of any rental loss that Tenant proves could have been
avoided, together with interest on said amounts from the dates they were due at
the maximum legal rate; (iii) the worth at the time of demand of the amount by
which the unpaid rent for the balance of the term of this Lease exceeds the
amount of rental loss that Tenant proves may reasonably be avoided, together
with interest on such amount at the maximum legal rate from the date of demand
until paid; (iv) all other amounts due Landlord from Tenant under the terms of
this Lease, or necessary to

                                      -18-
<PAGE>   20
compensate Landlord for all detriment caused by Tenant's failure to perform its
obligations under this Lease. The right to possession of the demised premises by
Tenant should not be deemed terminated until Landlord gives Tenant written
notice of such termination or until Landlord re-lets all or a portion of the
demised premises. In the event that Landlord seeks to recover the amount due,
Landlord shall be entitled to recover the amounts specified in paragraphs (a)
(1), (a) (2) and (a) (4) of Section 1951.2 of the Civil Code of California as
such section reads at the date of this Lease, together with interest on said
amounts at the maximum legal rate from the dates they were due, computed as of
the date of the award, together with the worth at the time of the award of the
amount by which the unpaid rent for the balance of the term exceeds the amount
of such rental loss that Tenant proves could reasonably have been avoided.
Landlord shall be required to mitigate damages by making a good faith effort to
re-let the demised premises.

         (3) No right or remedy herein conferred upon or reserved to Landlord is
intended to be exclusive of any other right or remedy herein or by law, provided
that each shall be cumulative and in addition to every other right or remedy
given herein or now hereafter existing at law or in equity or by statute.

         Section 13.2. Landlord shall in no event be in default in the
performance of any of its obligations hereunder unless and until Landlord shall
have failed to perform such obligations within thirty (30) days or such
additional times as is reasonably required to correct any such default after
notice by Tenant to the Landlord properly specifying wherein the Landlord has
failed to perform any such obligation.

                             ARTICLE 14 - BANKRUPTCY

         Section 14.1. Tenant shall give written notice to Landlord of its
intention to commence proceedings under any state or federal insolvency or
bankruptcy law, or any comparable law that is now or hereafter may be in effect,
whereby Tenant seeks to be, or would be, discharged of its debts or the payment
of its debts is sought to be delayed, at least thirty (30) days prior to the
commencement of such proceedings.

         Section 14.2. If any of the following events occur:

         (1) The entry of an order for relief under Title 11 of the United
States Code as to Tenant or its executors, administrators or assigns, if any, or
the adjudication of Tenant or its executors, administrators or assigns, if any,
as insolvent or bankrupt pursuant to the provisions of any state insolvency or
bankruptcy act;

         (2) The appointment of a receiver, trustee or other custodian of the
property of Tenant by reason of the insolvency or inability of Tenant to pay its
debts;

         (3) The assignment of the property of Tenant for the benefit of
creditors;

         (4) The commencement of any proceedings under any state or federal
insolvency or bankruptcy law, or any comparable law that is now or hereafter may
be in effect, whereby Tenant seeks to be, or would be, discharged of its debts
or the payment of its debts is sought to be delayed;

                                      -19-
<PAGE>   21

         (5) The failure of Tenant to give written notice to Landlord provided
for in Section 14.1. above;

         then Landlord may, at any time thereafter, in addition to any and all
other rights or remedies of Landlord under this Lease or under applicable law,
upon written notice to Tenant, terminate this Lease, and upon such notice this
Lease shall cease and terminate with the same force and effect as though the
date set forth in said notice were the date originally set forth herein and
fixed for the expiration of the demised term. Tenant shall thereupon vacate and
surrender the demised premises, but shall remain liable as herein provided.

                       ARTICLE 15 - SURRENDER OF PREMISES

         Section 15.1. Tenant shall, upon termination of the demised term, or
any earlier termination of this Lease, surrender to Landlord the demised
premises, including, without limitation, all building equipment and apparatus,
and fixtures (except as provided in Sections 12.1. and 12.2.) then upon the
demised premises without any damage, injury, or disturbance thereto, or payment
therefor, except damages due to ordinary wear and tear, acts of God, fire and
other perils to the extent the demised premises are not required to be repaired
or restored as hereinbefore provided, and Tenant shall dispose of any hazardous
materials stored, dispensed, handled or used in, at or upon the demised premises
in accordance with the provisions of Section 7.4.

                           ARTICLE 16 - EMINENT DOMAIN

         Section 16.1. If (i) more than thirty-three percent (33%) of the floor
area of the building on the demised premises or (ii) a portion of the Parking
and Accommodation Areas shall be taken under the power of eminent domain and the
portion of the building and/or Parking and Accommodation Areas not so taken will
not be reasonably adequate for the operation of Tenant's business after the
Landlord completes such repairs or alterations as the Landlord is obligated or
elects to make, Tenant shall have the right to elect either to terminate this
Lease, or, subject to Landlord's right to terminate the Lease pursuant to
Section 16.4., to continue in possession of the remainder of the demised
premises and shall notify Landlord in writing within ten (10) days after such
taking of Tenant's election. In the event less than thirty-three percent (33%)
of the floor area of the building on the demised premises shall be taken or
Tenant elects to remain in possession, as provided in the first sentence hereof,
all of the terms herein provided shall continue in effect, except that the base
rent shall be reduced in the same proportion that the floor area of the building
on the demised premises taken bears to the original floor area of the building
on the demised premises, and Landlord shall at its own cost and expense make all
necessary repairs or alterations to the building so as to constitute the portion
of the building not taken a complete architectural unit and the demised premises
a complete unit for the purposes allowed by this Lease, but such work shall not
exceed the scope of the work to be done by Landlord in originally constructing
said building.

                                      -20-
<PAGE>   22
         Section 16.2. Each party waives the provisions of Code of Civil
Procedure Section 1265.130 allowing either party to petition the Superior Court
to terminate this Lease in the event of a partial taking.

         Section 16.3. All damages or awards for any taking under the power of
eminent domain whether for the whole or a part of the demised premises shall
belong to and be the property of Landlord whether such damages or awards shall
be awarded as compensation for diminution in value to the leasehold or to the
fee of the demised premises; provided however, that Landlord shall not be
entitled to the award made to Tenant or Landlord for loss of business,
depreciation to, and cost or removal of stock and fixtures and for leasehold
improvements which have been installed by Tenant at its sole cost and expense
less depreciation which is to be computed on the basis of completely
depreciating such leasehold improvements during the initial term of this Lease,
and any award made to Tenant in excess of the then depreciated value of
leasehold improvements shall be payable to the Landlord.

         Section 16.4. If more than thirty-three percent (33%) of the floor
areas of the building on the demised premises shall be taken under power of
eminent domain, or if any part of the Parking and Accommodation Areas shall be
so taken, Landlord may, by written notice to Tenant delivered on or before the
date of surrendering possession to the public authority pursuant to such taking,
terminate this Lease as of such date.

         Section 16.5. If this Lease is terminated as provided in this Article,
the rent shall be paid up to the day that possession is so taken by public
authority and Landlord shall make a prorata refund of any rent and all deposits
paid by Tenant in advance and not yet earned.

                        ARTICLE 17 - REAL PROPERTY TAXES

         Section 17.1. Tenant shall reimburse Landlord for all real property
taxes, assessments and ongoing sewer fees applicable to the demised premises
during the entire term of this Lease. Taxes shall be prorated to lease years for
purpose of making this computation. Such payment shall be made by Tenant within
thirty (30) days after receipt of Landlord's written statement setting forth the
amount of such computation thereof. If the demised term of this Lease shall not
expire concurrently with the expiration date of the fiscal tax year, Tenant's
liability for taxes for the last partial lease year shall be prorated on an
annual basis.

         Section 17.2. If the demised premises are not separately assessed,
Tenant's liability shall be an equitable proportion of the real property taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be determined by Landlord from the respective valuations
assigned in the assessor's work sheets or such other information as may be
reasonably available. Landlord's reasonable determination thereof, in good
faith, shall be conclusive.

         Section 17.3. Tenant shall pay prior to delinquency all taxes assessed
against and levied upon trade fixtures, furnishings, equipment and all other
personal property of Tenant contained in the demised premises or elsewhere.
Tenant shall cause said trade

                                      -21-
<PAGE>   23
fixtures, furnishings, equipment and all other 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 taxes attributable to
Tenant within ten (10) days after receipt of a written statement setting forth
the taxes applicable to Tenant's property.

         Section 17.4. In addition to all other payments provided for herein,
the Tenant shall on demand reimburse Landlord for any surcharges, fees, and any
similar charges required to be paid by any instrumentality of local, state or
federal government in connection with parking in the parking area, including
policing; supervising with attendants; other costs in connection with providing
charged parking; repairs, replacements and maintenance not properly chargeable
to capital account under good accounting principles; interest and depreciation
of the actual cost of modification or improvements to the areas, facilities and
improvements maintained in this Article either (i) required by any
instrumentality of local, state or federal government, or (ii) installed by
Landlord to facilitate payment of a parking charge by the general public for
parking in the parking area, or both, and other similar costs; and there shall
be excluded (a) cost of construction of such improvements which is properly
chargeable to capital account and (b) depreciation of the original cost of
construction of all items not previously mentioned in this sentence. If Landlord
shall require the payment of a parking charge by the general public for parking
in the parking area, then during any period in which such a charge is made the
total revenue (after deducting excise and similar taxes thereon and taxes, fees
or surcharges imposed by any agency or instrumentality of local, state or
federal government) actually received in cash or its equivalent by Landlord for
such parking charge shall be credited against said gross costs.

         Section 17.5. Notwithstanding the provisions of Article 17 hereinabove,
Tenant shall pay any increase in "real property taxes" resulting from any and
all improvements of any kind whatsoever placed on or in the demised premises for
the benefit of or at the request of Tenant regardless of whether said
improvements were installed or constructed either by Landlord or Tenant.

         Section 17.6. In addition to all other payments provided for herein,
the Tenant shall on demand reimburse Landlord for any tax (excluding income tax)
and/or business license fee or other levy that may be levied, assessed or
imposed upon the rent or other payments provided for herein or on the square
footage of the demised premises, on the act of entering into this Lease, or on
the occupancy of the Tenant however described, as a direct substitution in whole
or in part for, or in addition to, any real property taxes, whether pursuant to
laws presently existing or enacted in the future.

         Section 17. If Tenant is obligated under this Article 17 to pay any
real property taxes, fees or assessments that can be paid over a period of time,
Tenant shall only be obligated to pay the portion thereof at least thirty (30)
days before the date it falls due during the term of this Lease assuming that
Landlord had elected to pay the assessment over the longest permissible period,
whether or not such election had been made.

                                      -22-
<PAGE>   24
                  ARTICLE 18 - PARKING AND ACCOMMODATION AREAS

         Section 18.1. Landlord grants to Tenant during the demised term the
right to use the parking facilities and other areas provided and designated as
"Parking and Accommodation Areas" on Exhibit "B" hereto for the accommodation
and parking of such automobiles of the Tenant, its officers, agents, employees
and its customers and those of any subtenant of Tenant while working or visiting
Tenant or any such subtenant. Landlord shall not extend to any person other than
a tenant of space in the building the right to use such parking facilities and
other areas for such purposes. Tenant agrees that its officers, agents and
employees will park their automobiles only in the parking areas provided in the
Parking and Accommodation Areas, and Tenant specifically agrees that such
officers, agents and employees will not park on any public streets in the
vicinity of the demised premises. Except as provided in Section 17.4., Landlord
shall not charge parking fees for such right to use parking facilities.

         Section 18.2. All parking areas and facilities furnished by Landlord
including, but not limited to, pedestrian sidewalks, landscaped areas and
parking areas shall at all times be subject to the control and management of
Landlord so that Landlord will be in a position to make available efficient and
convenient use thereof, and Landlord shall have the right from time to time to
establish, modify and enforce reasonable rules and regulations with respect to
all facilities and areas mentioned in this Article, and Tenant agrees to abide
by and conform therewith. Landlord shall have the right to construct, maintain
and operate lighting facilities on all of said areas and improvements, to police
the same, from time to time to change the area, location and arrangement of
parking areas and facilities, to restrict employee parking to employee parking
areas, to construct surface, subterranean and/or elevated parking areas and
facilities, to establish and from time to time change the level of parking
surfaces, to close (if necessary) all or any portion of said areas or facilities
to such extent as may in the opinion of Landlord's counsel be legally sufficient
to prevent a dedication thereof or the accrual of any rights of any person or of
the public therein, and to do and perform such other acts in and to said areas
and improvements respectively as in the use of good business judgment the
Landlord shall determine to be advisable with a view to the improvement of the
convenience and use thereof by Tenant, and its employees and visitors.
Notwithstanding anything to the contrary contained herein, Landlord shall not
(except if required to comply with applicable laws or regulations) reduce the
number of parking spaces to a ratio of parking spaces to the area of the demised
premises that is less than the ratio in effect on the commencement of the term
of this Lease.

         Section 18.3. Tenant agrees during the demised term to pay to Landlord
an annual charge which shall be Landlord's actual gross costs of operating,
maintaining and/or replacing all of the areas and facilities mentioned in this
Article. The annual charge shall be an estimate computed on the basis of periods
of twelve (12) consecutive calendar months, commencing and ending on such dates
as may be designated by Landlord, and shall be paid in monthly installments on
the first day of each calendar month in the amount estimated by Landlord. Within
ninety (90) days after the end of each such annual period, Landlord will
determine (and furnish to Tenant a statement showing in reasonable detail) the
actual annual charge for such period and the amounts so estimated and paid
during such period shall be adjusted

                                      -23-
<PAGE>   25

within such ninety (90) days (including adjustments on a prorata basis of any
partial such period at either end of the demised term) and one party shall pay
to the other on demand whatever amount is necessary to effectuate such
adjustment.

         Landlord's said gross costs shall consist of and include all costs and
expenses of every kind or nature incurred by Landlord in the operation,
maintenance and/or replacement of all of the areas, facilities and improvements
mentioned in this Article determined in accordance with good accounting practice
by an accountant employed by Landlord. The determination of such accountant
shall be conclusive. Without otherwise limiting the generality of the foregoing,
there shall be included in such gross costs public liability and property damage
insurance, landscape maintenance, maintenance of utilities, water, cleaning of
areas, facilities and improvements, operation of lighting, common area taxes and
assessments determined in the same manner as taxes and assessments on the
demised premises, policing and sweeping of parking areas, supervising with
attendants, repairs, replacements and maintenance, and an amount equal to ten
percent (10%) of the total of all of the above for administration of the Parking
and Accommodation Areas.

         Section 18.4. The Parking and Accommodation Areas included for the
purpose of this Article are those shown on Exhibit "B" outside of the building
area.

                           ARTICLE 19 - MISCELLANEOUS

         Section 19.1. Landlord and its designee shall have the right during
reasonable business hours and on reasonable prior notice to Tenant (except in
the event of an emergency) to enter the demised premises (i) to inspect the
same, or (ii) for any purpose connected with Landlord's rights or obligations
under this Lease. . Except in the event of an emergency, Tenant shall have the
right to require that Landlord be accompanied by a representative of Tenant and
to exclude Landlord from security areas established by Tenant.

         Section 19.2. Tenant shall not be entitled to make repairs at
Landlord's expense, and Tenant waives the provisions of Civil Code Sections 1941
and 1942 with respect to Landlord's obligations for tenantability of the demised
premises and Tenant's right to make repairs and deduct the expenses of such
repairs from rent.

         Section 19.3. This Lease shall be governed exclusively by the
provisions hereof and by the laws of the State of California as the same from
time to time exist. This Lease expresses the entire understanding and all
agreements of the parties hereto with each other and neither party hereto has
made or shall be bound by any agreement or any representation to the other party
which is not expressly set forth in this Lease.

         Section 19.4. If Tenant should hold over after the demised term and any
extension thereof as herein provided for, then such holding over shall be
construed as a tenancy from month to month under all of the terms and conditions
of this Lease except that, effective thirty (30) days after the expiration of
the demised term

                                      -24-
<PAGE>   26
or any extension thereof, the rental shall be 150% of that provided for under
the monthly rental of the principal term of this Lease.

         Section 19.5. Tenant agrees to maintain all toilet and washroom
facilities within the demised premises in a neat, clean and sanitary condition.

         Section 19.6. Landlord covenants and agrees that Tenant, subject to the
terms and provisions of this Lease, on paying the rent and observing, keeping
and performing all of the terms and provisions of this Lease on its part to be
observed, kept and performed, shall lawfully, peaceably and quietly have, hold,
occupy and enjoy the demised premises during the demised term without hindrance
or ejection by any person lawfully claiming under or against the Landlord.

         Section 19.7. Subject to Article 6, the terms and provisions hereof
shall be construed as running with the land and shall be binding upon and inure
to the benefit of heirs, executors, administrators, successors and assigns of
Landlord and Tenant.

         Section 19.8.

         A. Tenant shall promptly pay all sums of money with respect to any
labor, services, materials, supplies or equipment furnished or alleged to have
been furnished to Tenant in, at or about the demised premises, or furnished to
Tenant's agents, employees, contractors or subcontractors, that may be secured
by any mechanic's, materialmen's, supplier's or other liens against the demised
premises or Landlord's interest therein. In the event any such or similar liens
shall be filed, Tenant shall, within three (3) days of receipt thereof, give
notice to Landlord of such lien, and Tenant shall, within ten (10) days after
receiving notice of the filing of the lien, discharge such lien by payment of
the amount due to the lien claimant. However, Tenant may in good faith contest
such lien provided that within such ten (10) day period Tenant provides Landlord
with a surety bond from a company acceptable to Landlord, protecting against
said lien in an amount at least one and one-half (1-1/2) times the amount
claimed or secured as a lien or such greater amount as may be required by
applicable law; and provided further that Tenant, if it should decide to contest
such lien, shall agree to indemnify, defend and save harmless Landlord from and
against all costs arising from or in connection with any proceeding with respect
to such lien. Failure of Tenant to discharge the lien, or, if contested, to
provide such bond and indemnification, shall constitute a default under this
Lease and in, addition to any other right or remedy of Landlord, Landlord may,
but shall not be obligated, to discharge or secure the release of any lien by
paying the amount claimed to be due, and the amount so paid by Landlord, and all
costs and expenses incurred by Landlord therewith, including, but not limited
to, court costs and reasonable attorneys' fees, shall be due and payable by
Tenant to Landlord forthwith on demand.

         B. At least fifteen (15) days before the commencement by Tenant of any
material construction or remodeling work on the demised premises, Tenant shall
give written notice thereof to Landlord. Landlord shall have the right to post
and maintain on the demised premises such Notices of Non-Responsibility, or
similar notices, provided for under applicable laws.

                                      -25-
<PAGE>   27
         Section 19.9.

         A. Tenant shall deposit with Landlord the letter of credit pursuant to
the terms of Section 2.4.(B) in the sum specified in Section 2.4.(B) hereof as a
"Security Deposit" (the Security Deposit may be converted to cash at the
beginning of the sixth year of the demised term). The Security Deposit shall be
held by Landlord as security for the faithful performance of all the terms of
this Lease to be observed and performed by Tenant. The Security Deposit shall
not be mortgaged, assigned, transferred or encumbered by Tenant without the
written consent of Landlord and any such act on the part of Tenant shall be
without force and effect and shall not be binding upon Landlord.

         B. If any of the rents herein reserved or any other sum payable by
Tenant to Landlord shall be overdue and unpaid, or should Landlord make payments
on behalf of Tenant, or should Tenant fail to perform any of the terms of this
Lease, then Landlord may, at its option and without prejudice to any other
remedy which Landlord may have on account thereof, apply so much of the Security
Deposit as may be necessary to compensate Landlord toward the payment of rent or
additional rent, loss, or damage sustained by Landlord due to such breach on the
part of Tenant, and Tenant shall forthwith upon demand restore said Security
Deposit to the original sum deposited. Should Tenant comply with all of said
terms and promptly pay all of the rent and all other sums payable by Tenant to
Landlord, said Security Deposit shall be returned in full to Tenant sixty (60)
days after the end of the demised term.

         C. In the event of bankruptcy or other similar proceedings listed in
Article 14 hereof, the Security Deposit shall be deemed to be applied first to
the payment of rent and other charges due Landlord for all periods prior to the
filing of such proceedings.

         D. In the event Landlord delivers the Security Deposit to the purchaser
of Landlord's interest in the demised premises, Landlord, after written notice
to Tenant of said delivery and written assumption by the purchaser of the
obligations of Landlord with respect to the Security Deposit, shall be
discharged from any further liability with respect to the Security Deposit. This
provision shall also apply to any subsequent transferees.

         Section 19.10. All notices, statements, demands, requests, consents,
approvals, authorizations, offers, agreements, appointments or designations
hereunder by either party to the other shall be in writing and shall be
sufficiently given and served upon the other party or, if sent by overnight
carrier or United States certified mail, return receipt requested, postage
prepaid, and addressed as follows:

         If sent to Tenant, the same shall be addressed to the Tenant at
________________________________________or at such other place as Tenant may
from time to time designate by notice to Landlord.

         If sent to Landlord, the same shall be addressed to Landlord at 60
Hillsdale Mall, San Mateo, California 94403-3497, or at such other place as
Landlord may from time to time designate by notice to Tenant.

                                      -26-
<PAGE>   28
         Any such notice when sent by overnight carrier or certified mail as
above provided shall be deemed duly served on receipt or the refusal of
delivery.

         Section 19.11. As used in this Lease and when required by the context,
each number (singular or plural) shall include all numbers, and each gender
shall include all genders; and unless the context otherwise requires, the word
"person" shall include corporation, firm or association.

         Section 19.12. In case of litigation with respect to the mutual rights,
obligations, or duties of the parties hereunder, the prevailing party shall be
entitled to reimbursement from the other party of all costs and reasonable
attorneys' fees actually incurred.

         Section 19.13. Each term and each provision of this instrument
performable by Tenant shall be construed to be both a covenant and a condition.

         Section 19.14. Except as otherwise expressly stated, each payment
provided herein to be made by Tenant to Landlord shall be in addition to and not
in substitution for the other payments to be made by Tenant to Landlord.

         Section 19.15. Time is and shall be of the essence of this Lease and
all of the terms, provisions, covenants and conditions hereof.

         Section 19.16. The Tenant warrants that Landlord shall not have any
obligation to pay any commissions, charges or other compensation claimed by any
realtor, broker, or agent whom Tenant has dealt with in connection with the
negotiation of this Lease. Each party agrees to hold the other harmless from any
cost, expense or liability for any compensation, commissions or charges claimed
by any realtor, broker, or agent with respect to this Lease and/or the
negotiation thereof with whom the other party has or purportedly has dealt.

         Section 19.17. Tenant agrees that its interest in this Lease shall be
subordinate to any mortgage, deed of trust and/or other security indenture
hereafter placed upon the demised premises and to any and all advances made or
to be made thereunder and to the interest thereon made and all renewals,
replacements, and extensions thereof, but nothing herein contained shall be
deemed to alter or limit Tenant's rights as set forth in Section 19.6.; and as a
condition to such subordination the secured party under any such mortgage, deed
of trust or other security indenture shall agree that so long as Tenant is not
in default hereunder beyond any applicable cure period, Tenant shall not be
disturbed in its possession of the demised premises. Subject to the foregoing
non-disturbance condition, Tenant shall, at the request of Landlord or any
mortgagee, trustee or holder of any such security instrument, execute in writing
an agreement subordinating its rights under this Lease to the lien of such
mortgage, deed of trust and/or other security indenture. If any mortgagee,
trustee or holder of such security instrument elects to have the Tenant's
interest in this Lease superior to any such instrument by notice to Tenant, then
this Lease should be deemed superior to the lien of any such mortgage, deed of
trust or security indenture whether

                                      -27-
<PAGE>   29
this Lease was executed before or after said mortgage, deed of trust and/or
security indenture.

         Section 19.18. Landlord reserves the right during the last six months
of the demised term of this Lease or the last six months of any extension hereof
to enter the property during normal working hours, with reasonable prior notice
to Tenant, for the purpose of showing the demised premises to prospective
tenants or purchasers. Tenant shall have the right to require that Landlord and
any prospective tenant or purchaser be accompanied by a representative of Tenant
and to exclude Landlord and any prospective tenant or purchaser from security
areas established by Tenant.

         Section 19.19. Unavoidable Delay. The time within which any of the
parties hereto shall be required to perform any act or acts under this Lease
shall be extended to the extent that the performance of such act or acts shall
be rendered impossible, reasonably impracticable or delayed by strike(s),
lockout(s), labor dispute(s) (other than disputes involving Tenant or Tenant's
contractor), act(s) of God, inability to obtain labor or materials or reasonable
substitutes therefor, governmental restrictions, governmental regulations,
governmental controls, enemy or hostile governmental action, civil commotion,
fire or other casualty, and other conditions or causes (other than financial
inability) beyond the reasonable control of the party obligated to perform. The
party entitled to such extension hereunder shall give prompt notice to the other
party of the occurrence causing such delay. This provision shall not operate to
excuse Tenant from prompt payment of base rent and additional rent required by
the terms of this Lease.

         Section 19.20. Landlord and Tenant acknowledge that Tenant leases
premises at 173 Constitution Drive, Menlo Park, California, from Landlord (as
successor in interest to R & R Properties) pursuant to that certain Lease dated
April 7, 1997, for a term ending July 10, 2002 (the "173 Lease"). Landlord and
Tenant agree to enter into an amendment to amend the 173 Lease to extend the
expiration of the term thereof to April 30, 2007, to set the base rent at $2.30
per square foot effective August 1, 2002, and that such base rent shall
thereafter be subject to 3.5% cumulative annual increases.

         IN WITNESS WHEREOF, the parties have executed this instrument.

TENANT:                                     LANDLORD:

BROADBASE SOFTWARE, INC.,                   BOHANNON TRUSTS PARTNERSHIP II,
a Delaware corporation                      a California corporation

By:                                         By:
  -------------------------                    ---------------------------------
       President                                       Managing Partner

                                      -28-
<PAGE>   30

By:
   ------------------------
       Secretary

(Single Tenant -
Land Building)

                                      -29-<PAGE>   1
                                                                    EXHIBIT 10.3

February 10, 2000

The Board of Directors of Auspex Systems, Inc.
Mr. Bruce N. Moore., President, CEO & Director
Mr. W. Frank King, Director
Mr. R. Stephen Cheheyl, Director
Auspex Systems, Inc.
2300 Central Expressway
Santa Clara, CA  95050

Dear Messrs. Moore, King, and Cheheyl:

RE:     Retainer Agreement between Regent Pacific Management Corporation and
        Auspex Systems, Inc.

I am writing this letter, pursuant to your request, to set forth the terms and
conditions upon which Regent Pacific Management Corporation, a California
corporation ("Regent Pacific"), will be engaged to perform certain management
services for Auspex Systems, Inc., a California corporation, and its wholly
owned and controlled subsidiaries (collectively, "Auspex"), under certain
guarantees and indemnities to be provided by the company. This agreement is
contingent upon and subject to an indemnification and guarantee agreement, in a
form acceptable to Regent Pacific.

Included within these services will be the following work product, which Regent
Pacific will supply to Auspex in accordance with the terms of this letter and
for the agreed-upon cash payments required by this letter:

1.      Regent Pacific agrees to provide a five person team, to immediately
        assume the chief executive and general management responsibilities of
        Auspex, and to develop and implement a restructuring plan for Auspex.
        The goal of this assignment shall be to redirect the company with
        respect to the potential operational restructuring of the ongoing
        business of Auspex.

2.      Regent Pacific shall provide the services of Gary J. Sbona, Chairman and
        Chief Executive Officer of Regent Pacific Management Corporation, who
        shall be a part of the team and lead the engagement on behalf of Regent
        Pacific as the board-appointed Chairman and interim Chief Executive
        Officer of Auspex. Regent Pacific shall be appointed by the Board of
        Directors to provide General Management services to Auspex. Both Regent
        Pacific and Mr. Sbona shall report

<PAGE>   2

Mr. Bruce N. Moore, President, CEO & Director
Mr. W. Frank King, Director
Mr. R. Stephen Cheheyl, Director
Auspex Systems, Inc.
February 10, 2000
Page 2

        to the Board of Directors of Auspex and shall be solely accountable to
        the Board for fulfilling the obligations of this engagement.

3.      Within four (4) weeks of the date of this agreement, Regent Pacific will
        provide an appropriately qualified person to serve as principal
        financial officer of Auspex. Until such time, Mr. Gary J. Sbona shall
        serve as principal financial officer of Auspex.

Regent Pacific's services do not include the following activities and/or work
product:

        With the exception of Gary J. Sbona, Regent Pacific personnel provided
        under the terms of this engagement shall not be appointed officers of
        Auspex, and shall not accept nor be held accountable for the fiduciary
        obligations of an officer or director of Auspex.

Regent Pacific is prepared to begin our services this week, contingent upon:

1.      This duly executed retainer agreement on the part of Auspex;

2.      The transfer of and receipt by Regent Pacific of the required initial
        payments of this retainer agreement;

3.      Duly executed indemnification agreement between Auspex and Mr. Sbona and
        Auspex and Regent Pacific in a form acceptable to Regent Pacific.

4.      Duly executed employee stock option agreement in a form acceptable to
        Regent Pacific.

In addition to Mr. Sbona, the initial team assigned will be Dennis J. Dunnigan,
Thomas E. Gardner, James A. Garvey, Matthew W. Service and/or Earl C. Royse
and/or Peter R. Simpson, Principals of Regent Pacific. You understand that
Regent Pacific retains the right to assign or interchange these people with
other people as the work progresses, in order to address your requirements, as
long as the fee paid for our services is not increased for the included work
product.

FEES: We have agreed to provide the work product included in this agreement for
a period of twelve months, including twenty-six (26) weeks of non-cancelable
services. This

<PAGE>   3

Mr. Bruce N. Moore, President, CEO & Director
Mr. W. Frank King, Director
Mr. R. Stephen Cheheyl, Director
Auspex Systems, Inc.
February 10, 2000
Page 3

service shall be $75,000 per week payable in four (4) week increments, each to
be paid in advance of each Regent Pacific standard four-week billing period,
except that the parties agree to negotiate a mutually acceptable fee reduction
for the second (26) week period commensurate with a reduced level of service. It
is agreed and understood between us that the payments of such cash fees are to
be made immediately preceding the start of each four-week billing period, and
that failure to pay such periodic payments when due shall constitute a breach of
this agreement by Auspex. It is further understood that Regent Pacific's fees
are to be paid in advance of the work to be performed, and that the initial
payment is to be paid on or before the start of the engagement. It is further
agreed that such cash payments are earned in full upon receipt by Regent
Pacific, by virtue of our accepting this agreement and the responsibilities it
entails, and are nonrefundable.

ADVANCE RETAINER: In the light of the uncertainty of the situation facing
Auspex, Auspex agrees to pay Regent Pacific an advance four (4) weeks retainer
for services which may be rendered and expenses which may be incurred in
connection with this engagement. The amount of that retainer is to be in the sum
of $300,000. The funds shall be deposited in an escrow account titled "Regent
Pacific Management Corporation, for the benefit of Auspex". Immediately prior to
any cancellation by Auspex, prior to the expiration of the non-cancelable period
or, thereafter, without 60 days written notice, or immediately upon the filing
of any petition in bankruptcy by or against Auspex, the retainer, plus any
interest earned thereon, shall become the property of Regent Pacific, free and
clear of any claims of Auspex, and shall be transferred to Regent Pacific's
general account. In such an event the retainer shall be deemed earned in full by
virtue of Regent Pacific's undertaking this engagement and be nonrefundable.
This sum is in addition to and not in satisfaction of any damages which Regent
Pacific may otherwise recover against Auspex for breach of this agreement, and
reflects Auspex's agreement that the retainer represents the minimum fee for
Regent Pacific's acceptance of the agreement and the work undertaken,
irrespective of the amount of time actually spent by Regent Pacific in the
course of its employment. In the event that this agreement expires upon
completion of the term, or terminates in accordance with its cancellation
provisions, the escrow account, plus any interest, will be returned to Auspex
within five business days after such expiration or termination.

TERM OF AGREEMENT: The term of this agreement shall be for twelve (12) months,
unless earlier terminated in accordance with this paragraph. Regent Pacific
hereby commits the availability of its resources to Auspex under this agreement
for the full twelve (12) month

<PAGE>   4

Mr. Bruce N. Moore, President, CEO & Director
Mr. W. Frank King, Director
Mr. R. Stephen Cheheyl, Director
Auspex Systems, Inc.
February 10, 2000
Page 4

term of the engagement. Auspex may discharge Regent Pacific at any time after
the non-cancelable period provided that Auspex had delivered 60-day written
notice of intent to cancel this agreement. Regent Pacific may withdraw from this
assignment at any time with Auspex's consent or for good cause without Auspex's
consent. Good cause includes Auspex's breach of this agreement (including
Auspex's failure to pay any invoice within five working days of presentation),
or any fact or circumstance that would render our continuing participation in
the assignment unethical or unlawful.

EXPENSE REIMBURSEMENT: In addition to the fees, any requests for compensation
will also include certain charges for costs and expenses. Such costs and
expenses will include, among others, charges for messenger services, air
couriers, word processing services, photocopying, travel expenses, postage, long
distance telephone, legal advice, and other charges customarily invoiced by
professional firms for reimbursement of out-of-pocket expenses. Said expenses
shall not include meal expenses except when Regent Pacific professionals are
engaged in business-related activities and company travel. Regent Pacific will
periodically present invoices, which shall include reasonable supporting detail,
to Auspex for reimbursement of such charges, and Auspex agrees to pay such
invoices within ten (10) working days of presentation.

We will provide regular progress reviews to Auspex and its Board of Directors at
approximately biweekly intervals, as the work progresses. These progress reviews
will include a discussion of the alternatives available to Auspex and the
performance of the company relative to the restructuring of the ongoing
business. In addition, Regent Pacific requires, and Auspex agrees, that the
Board of Directors of Auspex will be available to Regent Pacific on a reasonable
consultation and communication basis and will meet with Regent Pacific in person
in regularly scheduled monthly board meetings to review the status of the
engagement.

During the progress of the work, should circumstances warrant, we may apply for
additions to the retainer fees, and attendant increases in the payments
scheduled above. Should we seek such additional compensation in order to
continue the level of effort required by the undertaking, we will do so based
upon our professional guideline hourly rates. We understand and acknowledge that
nothing in this agreement obligates Auspex to pay such additional retainer fees
or other compensation unless the Auspex Board of Directors shall have agreed to
make such payments after a written request by Regent Pacific.

<PAGE>   5

Mr. Bruce N. Moore, President, CEO & Director
Mr. W. Frank King, Director
Mr. R. Stephen Cheheyl, Director
Auspex Systems, Inc.
February 10, 2000
Page 5

Because of the breadth and nature of our practice, from time to time our firm
may work for one client whose interest may be opposed to that of another client,
for which we work in an unrelated matter. Please be assured that, despite any
potential difference in the interests of our clients, we strictly preserve all
client confidences and zealously pursue the interests of each of our clients.
Auspex agrees that it does not consider such concurrent work in unrelated
matters of Auspex and any other client of Regent Pacific to be inappropriate,
and therefore waives any objections to any such present or future concurrent
assignments provided, however, that such waiver shall not apply to any willful
misconduct or breach of confidentiality obligations of Regent Pacific hereunder.

Except in the case of willful misconduct or gross negligence, Auspex shall
indemnify, defend, and hold Regent Pacific, its officers, directors, principals,
associates, affiliates, employees, agents, and counsel, harmless against any
damages, costs, fines, penalties, liabilities, attorneys' and other professional
fees and disbursements, suffered, incurred by, or asserted against, Regent
Pacific, its officers, directors, principals, associates, affiliates, employees,
agents, and/or counsel, including any amounts incurred or paid in settlement or
any judgment of any action, suit, or proceeding brought under any statute, at
common law, or otherwise, which arises under or in connection with the
performance by Regent Pacific of services pursuant to this agreement and any
amendment or modification thereto. The obligations of Auspex under this
paragraph are hereinafter collectively referred to as "Indemnity Obligations."
The Indemnity Obligations shall survive, for a period of five (5) years, any
termination of Regent Pacific's services under this agreement and any amendment
or modification thereto. Auspex agrees to promptly tender any payments due to
Regent Pacific, its officers, directors, principals, associates, affiliates,
employees, agents, and/or counsel, under or in respect of the Indemnity
Obligations, within three (3) business days following written demand by Regent
Pacific, its officers, directors, principals, associates, affiliates, employees,
agents, and/or counsel. Auspex's Indemnity Obligations shall not apply to
amounts paid in settlement of any loss, claim, damage, liability, or action if
such settlement is effected without the consent of Auspex, which consent shall
not be unreasonably withheld.

CONFIDENTIAL INFORMATION: Regent Pacific and its team shall have access under
this agreement to certain proprietary and/or confidential information with
respect to Auspex's business. Regent Pacific hereby agrees to protect such
confidential information as though

<PAGE>   6

Mr. Bruce N. Moore, President, CEO & Director
Mr. W. Frank King, Director
Mr. R. Stephen Cheheyl, Director
Auspex Systems, Inc.
February 10, 2000
Page 6

it were Regent Pacific's own confidential information, in accordance with the
following terms and conditions:

1.      Auspex shall permit Regent Pacific to review financial and proprietary
        information necessary to Regent Pacific's participation in Auspex's
        management.

2.      Auspex shall permit, and Regent Pacific shall require, review of all
        Auspex Board of Directors minutes and all executive actions taken within
        the three months prior to the execution of this agreement.

3.      Regent Pacific shall maintain the confidentiality of all such
        information and prevent the unauthorized disclosure thereof. No such
        information shall be made available for the use of any other party or be
        divulged to others unless it:

        a.     is independently developed by Regent Pacific, provided that the
               person or persons developing same have had no access to
               confidential information received from Auspex;

        b.     is or becomes publicly available; or

        c.     is rightfully and lawfully received by Regent Pacific from an
               independent third party.

This agreement is made under the laws of the State of California. If any legal
action arises under this Agreement or by reason of an asserted breach of it, the
prevailing party shall be entitled to recover all costs and expenses, including
reasonable attorney's fees, incurred in enforcing or attempting to enforce the
terms of this agreement.

NON-SOLICITATION: in recognition of the fact that the Regent Pacific individuals
that we provide to Auspex under this agreement may perform similar services from
time to time for others, this agreement shall not prevent Regent Pacific from
performing such similar services or restrict Regent Pacific from using such
individuals. Regent Pacific and Auspex agree that they shall not, except by
mutual agreement between the parties, during the term of this agreement nor for
a period of three (3) years after its termination, solicit for employment nor
employ, whether as employee or independent contractor or agent, any person who
performs services under this agreement or employees of Auspex. It is

<PAGE>   7

Mr. Bruce N. Moore, President, CEO & Director
Mr. W. Frank King, Director
Mr. R. Stephen Cheheyl, Director
Auspex Systems, Inc.
February 10, 2000
Page 7

agreed that in the event of a breach of this paragraph by Auspex, it would be
impractical or extremely difficult to fix actual damages and, therefore, Regent
Pacific and Auspex agree that either party in breach of this paragraph shall pay
to the other party $350,000 per individual solicited or employed as employee,
independent contractor or agent, as Liquidated Damages and not as a penalty,
which is agreed by Regent Pacific and Auspex to represent reasonable
compensation for the foreseeable loss that will, in all likelihood, be incurred
because of such breach.

It is our policy to provide such additional services as you may request, in
addition to those covered in this letter, when qualified individuals are
available to fulfill your request. In such instances, the additional services
will be provided and paid for in accordance with Regent Pacific's guideline
hourly rates as contained in Regent Pacific's published fee schedules, a copy of
which is enclosed with this agreement.

This constitutes the entire understanding between Regent Pacific and Auspex
regarding our services. Further, this agreement supersedes and replaces any
prior agreement(s) between the parties. By executing this agreement you
acknowledge that you have read it carefully and understand all of its terms.
This agreement cannot be modified except by further written agreement signed by
each party.

If you have any questions about the foregoing, please call me. If Auspex is in
agreement with the foregoing, and it accurately represents your understanding of
the agreement between Auspex and our firm, please approve the enclosed copy of
this letter, and return the approved copy to me, along with the advance retainer
of $300,000 and the first four (4) week service fee of $300,000. Said payments
may be wire-transferred to the account of Regent Pacific Management Corporation
at Comerica Bank, 333 West Santa Clara Street, San Jose, CA 95113, Account #
Routing number. Our contact there is Zona Peterson. If there are any questions
with regard to the terms set forth herein, kindly contact me immediately. In
order to maintain continuity in scheduling of our resources, we ask that we
receive your affirmative response as soon as possible. In any event, this offer
to provide our services will expire on February 11, 2000, unless accepted by you
prior to that date, or extended in writing by an officer of Regent Pacific.
Please understand that we can assume no responsibility in connection with the
services to be provided under this agreement until the signed copy has been
returned and the required funds, as agreed to by us, have been received.

<PAGE>   8

Mr. Bruce N. Moore, President, CEO & Director
Mr. W. Frank King, Director
Mr. R. Stephen Cheheyl, Director
Auspex Systems, Inc.
February 10, 2000
Page 8

                                   # # # # # #

<PAGE>   9

Mr. Bruce N. Moore, President, CEO & Director
Mr. W. Frank King, Director
Mr. R. Stephen Cheheyl, Director
Auspex Systems, Inc.
February 10, 2000
Page 9

Very truly yours,

REGENT PACIFIC MANAGEMENT CORPORATION

/s/ Gary J. Sbona

Gary J. Sbona
Chairman and Chief Executive Officer

THE FOREGOING IS HEREBY APPROVED AND AGREED TO:

DATED: February 15, 2000

AUSPEX SYSTEMS, INC.
(Signifies full agreement with all terms and conditions)

BY:   /s/ Bruce N. Moore
    -----------------------------------------------------------------
       Bruce N. Moore                       President, CEO & Director
       On Behalf of the Board of Directors

BY:   /s/ W. Frank King
    -----------------------------------------------------------------
       W. Frank King                        Director
       On Behalf of the Board of Directors

BY:   /s/ R. Stephen Cheheyl
    -----------------------------------------------------------------
       R. Stephen Cheheyl                   Director
       On Behalf of the Board of Directors

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