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                                                                   EXHIBIT 10.15

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INDUSTRIAL & COMMERCIAL REAL ESTATE

                  This Lease, executed in duplicate at Palo Alto, California,
                  this 28 day of September, 1999

PARTIES           by and between

                  Kifer Investment Co.

                  and

                  Cobalt Networks, Inc., a California corporation

                  hereinafter called respectively Lessor and Lessee, without
                  regard to number or gender.

PREMISES          1. Witnesseth: That Lessor hereby leases to Lessee, and Lessee
                  hires from Lessor, those certain premises, hereinafter in this
                  lease  designated as "the Premises,"  with the  appurtenances,
                  situated in the City of Mountain View,  County of Santa Clara,
                  State  of  California,  and  more  particularly  described  as
                  follows, to-wit:

                  An approximate 29,842 square foot industrial building commonly
                  referred to as 515 Ellis Street.

USE               2. The  Premises  shall be used and occupied by Lessee for the
                  purpose  of  general  office,  sales,  service,   engineering,
                  research & development,  manufacturing  and any related lawful
                  purpose in conformity to municipal zoning requirements and any
                  CC&R  applicable  to the  property  and for no  other  purpose
                  without the prior written consent of Lessor.

TERM              3. The term shall be for four (4 years) 48 months,  commencing
                  on the 1st day of April, 2000 and  terminating on the 31st day
                  of March 2004.

RENTAL            4. Rent shall be payable to the Lessor  without  deduction  or
                  offset  initially at 2500 E1 Camino Real,  Palo Alto, CA 94306
                  or at such place or places as may be  designated  from time to
                  time by the Lessor as follows:

                  Twenty Thousand and NO/100ths Dollars ($20,000.000),  due upon
                  execution of this Lease representing  partial rental due April
                  1, 2000. An additional Fifty Thousand One Hundred Twenty Eight
                  and  70/100ths  Dollars  ($50,128.70  shall be due on April 1,
                  2000.  Seventy Thousand One Hundred Twenty Eight and 70/100ths
                  dollars  ($70,128.70)  shall be due on May 1,  2000 and on the
                  first  day of each and  every  month  through  March 1,  2001.
                  Seventy  Three  Thousand  One  Hundred  Twelve  and  90/100ths
                  Dollars  ($73,112.90) shall be due on April 1, 2001 and on the
                  first  day of each and  every  month  through  March 1,  2002.
                  Seventy  Six  Thousand  Ninety  Seven  and  10/100ths  Dollars
                  ($76,097.10)  shall be due on April 1,  2002 and on the  first
                  day of each and every  month  through  March 1, 2003.  Seventy
                  Nine Thousand  Eighty One and 30/100ths  Dollars  ($79,081.30)
                  shall be due on April 1, 2003 and on the first day of each and
                  every month through March 1, 2004.

SECURITY          5. On April 1, 2000 Lessee shall deposit with Lessor Seventy
                  Nine Thousand Eighty One Dollars and
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DEPOSIT           .30/100ths  ($79,081.30)  as  security  for the full and
                  faithful  performance  of  each  and  every  term,  provision,
                  covenant  and  condition  of this Lease.  In the event  Lessee
                  defaults in respect of any of the terms, provisions, covenants
                  or conditions of this Lease, including, but not limited to the
                  payment of rent,  Lessor may use, apply or retain the whole or
                  any  part of such  security  for the  payment  of any  rent in
                  default  or for any  other sum  which  Lessor  may spend or be
                  required to spend by reason of Lessee's default. Should Lessee
                  faithfully and fully comply with all of the terms, provisions,
                  covenants and  conditions  of this Lease,  the security of any
                  balance  thereof shall be returned to Lessee or, at the option
                  of Lessor,  to the last assignee of Lessee's  interest in this
                  Lease at the  expiration of the term hereof.  Lessee shall not
                  be entitled to any interest on said security deposit.

POSSESSION        6.  If  Lessor,  for any  reason  whatsoever,  cannot  deliver
                  possession  of the Premises to Lessee at the  commencement  of
                  the said term, as hereinbefore specified, this Lease shall not
                  be void or voidable,  nor shall Lessor, or Lessor's agents, be
                  liable to Lessee for any loss or damage  resulting  therefrom;
                  but in that event the  commencement  and termination  dates of
                  the  Lease  and all  other  dates  affected  thereby  shall be
                  revised  to  conform  to the  date  of  Lessor's  delivery  of
                  possession.  The above is,  however,  subject to the provision
                  that the period of delay of delivery of the Premises shall not
                  exceed Thirty (30) days from the commencement  date herein. If
                  the period of delay of delivery exceeds the foregoing, Lessee,
                  at his or it's option, may declare this Lease null and void.

ACCEPTANCE        7. By entry  hereunder,  the Lessee  accepts the Premises as
OF                being in good and  satisfactory  condition,  unless  within
PREMISES          Sixty  (60) days after such  entry  Lessee  shall give  Lessor
AND               written notice  specifying in reasonable  detail the
CONSENT TO        respects  in  which  the  Premises  were  not in  satisfactory
SURRENDER         condition,  and Lessor shall promptly  repair such items.
                  The Lessee  agrees on the last day of the term  hereof,  or on
                  sooner  termination of this Lease,  to surrender the Premises,
                  together with all  alterations,  additions,  and  improvements
                  which have been made in, to, or on the  Premises  by Lessor or
                  Lessee,  unto Lessor in the same good condition as at Lessee's
                  entry into the  Premises  excepting  for such wear and tear as
                  would be normal for the period of the Lessee's occupancy, Acts
                  of  God,  casualty,  condemnation,   hazardous  materials  not
                  stored,  used or  disposed of by Lessee and  alterations  with
                  respect to which Lessor has not required removal.  The Lessee,
                  on or before the end of the term or sooner termination of this
                  Lease,  shall remove all Lessee's  personal property and trade
                  fixtures  from the Premises and all property not removed shall
                  be deemed  abandoned  by the  lessee.  If the  Premises be not
                  surrendered  at the end of term or sooner  termination of this
                  Lease,  the Lessee shall  indemnify the Lessor against loss or
                  liability   resulting   from   delay  by  the   Lessee  in  so
                  surrendering the Premises including,  without, limitation, any
                  claims made by any succeeding tenant founded on such delay.

USES              8. Lessee shall not commit,  or permit to be committed,  any
PROHIBITED        waste upon the Premises, or any nuisance,or other act or thing
                  which may disturb the quiet  enjoyment  of any other tenant in
                  or around the  buildings in which the Premises may be located,
                  or allow any sale by auction upon the  Premises,  or allow the
                  premises  to be used for any  unlawful  purpose,  or place any
                  loads  upon the  floor,  walls,  or roof  which  endanger  the
                  structure, or place any harmful liquids in the drainage system
                  of the building.  No waste materials or refuse shall be dumped
                  upon or  permitted  to  remain  upon any part of the  Premises
                  outside  of  the  building  proper.  No  materials,  supplies,
                  equipment,  finished products or semi-finished  products,  raw
                  materials  or articles  of any nature  shall be stored upon or
                  permitted to remain on any portion of the Premises  outside of
                  the buildings proper.

ALTERATIONS       9. Except for  nonstructural alterations not exceeding Seventy
AND               Five Hundred Dollars ($7500.00) per work of improvement, the
ADDITIONS         Lessee shall make no alterations,  additions,  or improvements
                  to the Premises or any part thereof  without  first  obtaining
                  the prior  written  consent of the Lessor,  which shall not be
                  unreasonably  withheld or delayed.  The Lessor may impose as a
                  condition to the aforesaid consent such requirements as Lessor
                  may  reasonably   deem   necessary  in  Lessor's   discretion,
                  including without  limitation  thereto the manner in which the
                  work is done,  a right of approval of the  contractor  by whom
                  the  work  is to be  performed  which  approval  shall  not be
                  unreasonably withheld or delayed, the times during which it is
                  to be  accomplished,  and the  requirement  that upon  written
                  request  of  Lessor  made at the  time  that  Lessee  requests
                  consent  to  such,   prior  to  :the   expiration  or  earlier
                  termination  of  the  Lease,  Lessee  will  remove  any or all
                  improvements  or  additions  to  the  Premises   installed  at
                  Lessee's   expense.   All  such   alterations,   additions  or
                  improvements   not  specified  to  be  removed  shall  at  the
                  expiration or earlier termination of the lease become property
                  of the  Lessor  and remain  upon and be  surrendered  with the
                  Premises. All movable furniture,  business and trade fixtures,
                  or machinery and equipment shall remain in the property of the
                  Lessee and may be removed by the Lessee at any time during the
                  Lease
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                  term when  Lessee is not in  default  beyond  applicable  cure
                  period. Items which are not to be deemed as movable furniture,
                  business and trade fixtures,  or machinery and equipment shall
                  include   heating,    lighting,    electrical   systems,   air
                  conditioning, hard wall partitioning,  carpeting, or any other
                  installation   which  has  become  an  integral  part  of  the
                  Premises.  The  Lessee  will at all times  permit  notices  of
                  non-responsibility to be posted and to remain posted until the
                  completion  of  alterations  or  additions   which  have  been
                  approved by the Lessor.

MAINTE-           10.  Subject to the  Memorandum  of  Understanding,  Lessee
NANCE OF          shall, at Lessee's  sole cost,  keep and maintain the Premises
PREMISES          and appurtenances and every  part thereof,  including  but not
                  limited  to,  glazing,  sidewalks,  parking  areas,  plumbing,
                  electrical    systems,    heating    and   air    conditioning
                  installations,  any store front,  roof covering - unless it is
                  not  feasible to repair the existing  roof  coveting and a new
                  roof is  required,  and the  interior of the  Premises in good
                  order, condition, and repair. Lessor at the Lessor's sole cost
                  and expense  shall  maintain  the  exterior of the walls,  and
                  structural portions of the roof, foundations, walls and floors
                  except  for any  repairs  caused  by the  wrongful  act of the
                  Lessee and Lessee's  agents.  The Lessor will replace the roof
                  covering   if   repairs  to  said   coveting   are  no  longer
                  economically feasible in the judgement of roofing experts, and
                  provided said replacement is not made necessary by acts of the
                  Lessee and Lessee's agents.  The Lessee shall water,  maintain
                  and replace,  when  necessary,  any shrubbery and  landscaping
                  provided by the Lessor on the Premises.  The Lessee  expressly
                  waives the  benefits of any statute now or hereafter in effect
                  which  would  otherwise  afford  the  Lessee the right to make
                  repairs at Lessor's  expense or to terminate this Lease became
                  of  Lessor's  failure  to keep  the  Premises  in good  order,
                  conditions or repair.

FIRE AND          11. See revised insurance clause attached.
EXTENDED
COVERAGE
INSURANCE
AND
SUBROGATION

ABANDON-          12. Lessee shall not vacate or abandon the Premises while in
MENT              default of it's  obligation  to pay rent;  and if Lessee shall
                  abandon,  vacate, or surrender,  the Premises while in default
                  of it's  obligation to pay rent, or be dispossessed by process
                  of law, or  otherwise,  any  personal  property  belonging  to
                  Lessee and left on the Premises shall be deemed abandoned,  at
                  the  option of the  Lessor,  except  such  property  as may be
                  mortgaged to Lessor.

FREE FROM         13.  Lessee  shall keep the  Premises  and the  property  in
LIENS             which the Premises  are  situated,  free  from  any lien
                  arising out of any work  performed,  materials  furnished,  or
                  obligations incurred by Lessee.

COMPLIANCE        14.  As  of  commencement  date,  Premises  is  in  compliance
WITH              with applicable law. Lessee shall, at his sole cost and
GOVERN-           expense, comply will all the requirements of all Municipal,
MENTAL            State, and Federal authorities, which may  hereafter be in
REGULATIONS       force,  pertaining  to the Lessee's  particular  use of the
                  Premises  and shall  faith-  fully  observe  in the use of the
                  Premises  all  Municipal  ordinances  and  State  and  Federal
                  statutes now in force or which may hereafter be in force.  The
                  judgement  of any  court  of  competent  jurisdiction,  or the
                  admission  of  Lessee  in any  action  or  proceeding  against
                  Lessee,  whether Lessor be a party thereto or not, that Lessee
                  has violated  any such  ordinance or statute in the use of the
                  Premises,  shall be conclusive  of the fact as between  Lessor
                  and Lessee.  With respect to cost incurred to comply with laws
                  of applicability to owners of commercial  property in general,
                  Lessor shall pay such costs, amortized over the useful life of
                  the  improvement and Lessee shall pay the Lessor the amortized
                  costs  falling  due during the term as  extended  on a monthly
                  basis.

INDEMNI-          15. The Lessee,  as a material part of the consideration to be
FICATION OF       rendered to the Lessor, hereby waives all  claims  against the
LESSOR AND        Lessor for damages to goods, wares, and merchandise, and all
LESSEE'S          other personal property in, upon, or about the Premises and
LIABILITY         for injuries to persons in or about the Premises,  from any
INSURANCE         cause arising at any time, excepting claims arising from the
                  Lessor's  negligence  or  willful  misconduct  or that of it's
                  agent, employees, or contractors, and the Lessee will hold the
                  Lessor  exempt and harmless from any damage or from the use of
                  the Premises by the lessee,  or from the failure of the Lessee
                  to keep the Premises in good  condition and repair,  as herein
                  provided. See revised insurance clause attached.
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ADVERTISE-        16. Lessee will not place or permit to be placed,  in, upon or
MENTS AND         about the  Premises  any unusual or extraordinary  signs,  or
SIGNS             any signs not approved  by the city or other  governing
                  authority.  The Lessee will not place, or permit to be placed,
                  upon the  Premises,  any  signs,  advertisements,  or  notices
                  without  the  written  consent  of the  Lessor  first  had and
                  obtained, which shall not be unreasonably withheld or delayed.
                  Any sign so placed on the Premises shall be so placed upon the
                  understanding  and agreement  that the Lessee will remove same
                  at the  termination  of the tenancy  herein created and repair
                  any damage or injury to the Premises  caused  thereby,  and if
                  not so removed by Lessee  then Lessor may have same so removed
                  at Lessee's expense.

UTILITIES         17. Lessee shall pay for all water, gas, heat,  light,  power,
                  telephone  service  and  all  other  service  supplied  to the
                  Premises.  If the premises are not served by a separate  water
                  meter,  the Lessee  shall pay to the Lessor 100 percent of the
                  water bill for the Premises.

ATTORNEY'S        18. In case suit shall be brought for the possession of the
FEES              Premises, for the recovery of any sum due hereunder,  or
                  because of the breach of any other covenant herein, the losing
                  party  shall  pay  to  the   prevailing   party  a  reasonable
                  attorney's  fee,  which shall be deemed to have accrued on the
                  commencement  of such action and shall be enforceable  whether
                  or not such action is prosecuted to judgement.

DEFAULT           19. In the event of any failure by Lessee to pay rent  within
                  5 days after  receipt of notice  from  Lessor that such sum is
                  due, or any failure by Lessee to perform any other  obligation
                  on its part to be  performed  within 15 days after  receipt of
                  written  notice  form Lessor (or if the failure is not capable
                  of  cure  within  15  days,  Lessee  shall  not be in  default
                  hereunder  if  Lessee  commences  the cure  within  the 15 day
                  period and thereafter  prosecutes the cure to completion),  or
                  an abandonment of the property by Lessee coupled with Lessee's
                  failure to pay rent hereunder, the Lessor has the option of 1)
                  removing  all  persons  and  property  from the  Premises  and
                  repossessing  the  Premises in which case any of the  Lessee's
                  property  which the Lessor  removes  from the  Premises may be
                  stored in a public  warehouse or elsewhere at the cost of, and
                  for the  account of the Lessee,  or 2) allowing  the Lessee to
                  remain in full possession and control of the Premises.  If the
                  lessor  chooses  to  repossess  the  Premises,  the lease will
                  automatically  terminate in accordance  with provisions of the
                  California  Civil Code,  Section 1951.2.  In the event of such
                  termination  of the Lease,  the Lessor  may  recover  from the
                  Lessee:  1) the worth at the time of award of the unpaid  rent
                  which  had been  earned at the time of  termination  including
                  interest at 7% per annum; 2) the worth at the time of award of
                  the  amount by which the  unpaid  rent  which  would have been
                  earned after  termination  until the time of award exceeds the
                  amount of such rental loss that the Lessee  proves  could have
                  been reasonably avoided including interest at 7% per annum; 3)
                  the  worth at the time of such  rental  loss  that the  Lessee
                  proves could be  reasonably  avoided;  and 4) any other amount
                  necessary  to  compensate  the  Lessor  for all the  detriment
                  proximately  caused by the  Lessee's  failure to  perform  his
                  obligations under the Lease or which in the ordinary course of
                  things  would be  likely to result  therefrom.  If the  Lessor
                  chooses not to repossess the  Premises,  but allows the Lessee
                  to remain in full possession and control of the Premises, then
                  in accordance  with  provisions of the California  Civil Code,
                  Section  1951.4,  the  Lessor  may treat the Lease as being in
                  full force and  effect,  and may  collect  from the Lessee all
                  rents as they become due through the  termination  date of the
                  lease  as  specified  in  the  a)  Acts  of   maintenance   or
                  preservation  or  efforts  to  relet  the  property,   b)  the
                  appointment  of a receiver on the  initiative of the Lessor to
                  protect his interest under this Lease.

LATE              20. Lessee  hereby  acknowledges  that late payment by Lessee
CHARGES           to Lessor of rent and other sums due hereunder  will cause
                  Lessor to incur  costs not  contemplated  by this  lease,  the
                  exact  amount of which will be  extremely  difficult to impose
                  the Lessor by the terms of any mortgage or trust deed covering
                  the Premises.  Accordingly,  if any installment of rent or any
                  other sum due from  Lessee  shall not be received by Lessor or
                  Lessor's designee within five (5) days after such amount shall
                  be due,  Lessee shall pay to Lessor a late charge equal to ten
                  percent (10%) of such overdue amount. The parties hereby agree
                  that  such  late  charge  represents  a  fair  and  reasonable
                  estimate  of the cost  Lessor  will  incur by  reason  of late
                  payment by Lessee.  Acceptance  of such late  charge by Lessor
                  shall in no event constitute a waiver of Lessee's default with
                  respect  to such  overdue  amount,  nor  prevent  Lessor  from
                  exercising  any of  the  other  rights  and  remedies  granted
                  hereunder.
<PAGE>

SURRENDER         21. The  voluntary or other surrender of this Lease by Lessee,
OF LEASE          or a mutual cancellation thereof, shall not work a merger, and
                  shall, at the option of Lessor,  terminate all of any existing
                  subleases or  subtenancies,  or may, at the opinion of Lessor,
                  operate as an assignment  to him of any of all such  subleases
                  or subtenancies.

TAXES             22. The Lessee shall be liable for all taxes levied against
                  personal property and trade or business  fixtures.  The Lessee
                  also agrees to pay, as an additional  rental,  during the term
                  of this  Lessee and any  extension  thereof,  all real  estate
                  taxes plus the yearly  installments of any special assessments
                  which are of record or which may  become of record  during the
                  term of this lease. If said taxes and assessments are assessed
                  against the entire  building and building site, and this Lease
                  does not cover the entire building or building site, the taxes
                  and assessment installments allocated to the Premises shall be
                  pro-rated on a square footage or other equitable  basis. It is
                  understood and agreed that the Lessee's  obligation under this
                  paragraph  will be pro-rated to reflect the  commencement  and
                  termination dates of this Lease.

NOTICES           23. All  notices to be given to Lessee may be given in writing
                  personally  or by  depositing  the same in the  United  States
                  mail,  postage  prepaid,  and  address  to  Lessee at the said
                  premises,  whether or not Lessee has departed from,  abandoned
                  or vacated the Premises.

ENTRY BY          24. Lessee shall permit Lessor and his agents to enter into
LESSOR            and upon the Premises at all reasonable times upon  reasonable
                  prior notice for the purpose of inspecting the same or for the
                  purpose of maintaining  the building in which the Premises are
                  situated, or for the purpose of making repairs, alterations or
                  additions to any other portion of said building, including the
                  erection and maintenance of such scaffolding, canopies, fences
                  and props as may be  required  without  any rebate of rent and
                  without any  liability to Lessee for any loss of occupation or
                  quiet enjoyment of the Premises thereby occasioned;  and shall
                  permit  Lessor and his agents,  at any time within ninety days
                  prior the expiration of this Lease, to place upon the Premises
                  any  usual or  ordinary  "For  Sale" or "To  Lease"  signs and
                  exhibit the  Premises  to  prospective  tenants at  reasonable
                  hours.  Lessor's  exercised of the  forgoing  rights shall not
                  materially increase Lessee's  obligations or diminish Lessee's
                  rights under this lease.

DESTRUCTION       25. In the event of a partial destruction of the Premises
OF PREMISES       during the said term from any cause, except earthquake, Lessor
                  shall forthwith repair the same,  provided such repairs can be
                  made within one hundred  eighty  (180) days under the laws and
                  regulations   of   State,   Federal,   County   or   Municipal
                  authorities,  but  such  partial  destruction  shall in no way
                  annul or void this Lease, except that Lessee shall be entitled
                  to a  proportionate  reduction  of rent while such repairs are
                  being made, such proportionate  reduction to be based upon the
                  extent to which the  making of such  repairs  shall  interfere
                  with the business carded on by Lessee in the Premises. If such
                  repairs  cannot be made within one hundred  eighty (180) days,
                  Lessor may,  at his  opinion,  make same  within a  reasonable
                  time,  this Lease  continuing in full force and effect and the
                  rent  to be  proportionately  reduced  as  aforesaid  in  this
                  paragraph provided. In the event that Lessor does not elect to
                  make such  repairs  which  cannot be made  within one  hundred
                  eighty (180) days,  or such repairs  cannot be made under such
                  laws and  regulations,  this  Lease may be  terminated  at the
                  option of either party. In respect to any partial  destruction
                  which  Lessor is obligated to repair may elect to repair under
                  the terms of this  paragraph,  the provisions of Section 1932,
                  Subdivision  2, and of  Section  1993,  Subdivision  4, of the
                  Civil Code of the State of California are waived by Lessee. In
                  the  event  that the  building  in which  the  Premise  may be
                  situated  by  the  extent  of no  less  than  33  1/3%  of the
                  replacement  cost thereof,  Lessor may elect to terminate this
                  Lease,  whether  the  Premises  is  injured  or not. A totally
                  destruction  of the  building  in which  the  Premises  may be
                  situated  shall  terminate  this  Lease.  In the  event of any
                  dispute  between Lessor and Lessee  relative to the previsions
                  of this paragraph,  they shall each elect and arbitrator,  the
                  two  arbitrators so selected  shall select a third  arbitrator
                  and the three arbitrators so selected shall hear and determine
                  the controversy and there decision  thereon shall be final and
                  binding  upon both Lessor and Lessee,  who shall bear the cost
                  of such arbitration equally between them. Lessee has the right
                  to terminate if the damage or  destruction  occurs  during the
                  last 12  months  of the term or if  Lessor  fails to  complete
                  repairs  or  reconstruction  within 180 days after the date of
                  damage or destruction.

ASSIGNMENT        26. The Lessee shall not assign, transfer, or hypothecate the
                  leasehold estate under the Lease, or any
<PAGE>

AND SUBLET-       interest  therein,  and shall not sublet the Premises,  or any
ING               part thereof, or any right of privilege appurtenant  thereto,
                  or  suffer  any  other  person  or entity to occupy or use the
                  Premises,  or any portion thereof,  without, in each case, the
                  prior consent of the Lessor. Lessor agrees to not unreasonably
                  withold or delay  consent to sublet or assign.  As a condition
                  for  granting  its  consent to any  subletting  the Lessor may
                  require  the  Lessee  to  agree  to  pay  to  the  Lessor,  as
                  additional rental 50% of all rents after expenses, received by
                  the Lessee from its Sublessee which are in excess of the mount
                  payable  to the  Lessee to the  Lessor  hereunder.  The Lessee
                  shall, by thirty (30) days written  notice,  advise the Lessor
                  of its intent to sublet the  Premises or any  portion  thereof
                  for any part of the term  hereof.  Within  fifteen  (15)  days
                  after  receipt of Lessee's  notice,  Lessor  shall either give
                  approval  to Lessee to sublease  the  portion of the  Premises
                  described in Lessee's  notice,  or Lessor shall terminate this
                  Lease as to the portion of the Premises  described in Lessee's
                  notice on the day specified in Lessee's  notice.  If, however,
                  Lessor  elects to  terminate  Lessee shall have the right upon
                  five (5) days  notice to Lessor to  recind  it's  request  for
                  consent,  in which case this Lease shall  remain in full force
                  and effect.  If Lessee  intends to sublet the entire  Premises
                  and Lessor elects to terminate this Lease, this Lease shall be
                  terminated on the date specified in the Lessee's  notice.  If,
                  however,  this Lease shall terminate pursuant to the foregoing
                  with  respect  to less than all the  Premises,  the  rent,  as
                  defined  and  reserved  herein  above  shall be  adjusted on a
                  prorata basis to the number of square feet retained by Lessee,
                  and this Lease as so amended shall  continue in full force and
                  effect.  If the Lessor  approves a subletting,  the Lessee may
                  sublet  immediately  after  receipt  of the  Lessor's  written
                  approval.  In the event Lessee is allowed to assign,  transfer
                  or  sublet  the  whole or any part of the  Premises,  with the
                  prior  consent  of the  Lessor,  no  assignee,  transferee  or
                  sublessee shall assign or transfer this Lease, either in whole
                  or in part,  or sublet the whole or any part of the  Premises,
                  without also having  obtained the prior written consent of the
                  Lessor.  A  consent  of Lessor  to one  assignment,  transfer,
                  hypothecation,  subletting,  occupation  of use  by any  other
                  person shall not release Lessee from any Lessee's  obligations
                  hereunder  or be  deemed  to be a  consent  to any  subsequent
                  similar of  dissimilar  assignment,  transfer,  hypothecation,
                  subletting,  occupation or use by any other  person.  Any such
                  assignment, transfer, hypothecation, subletting, occupation or
                  use without such consent shall be void and shall  constitute a
                  breach of this Lease by Lessee and  shall,  at the  opinion of
                  Lessor  exercised by written notice to Lessee,  terminate this
                  Lease.  The  leasehold  estate under this Lease shall not, nor
                  shall any interest  therein,  be  assignable of any purpose by
                  operation of law without the written  consent of Lessor.  As a
                  condition to its consent, Lessor may require Lessee to pay all
                  expense in connection  with the  assignment not to exceed five
                  thousand dollars ($50,00) per request,  and Lessor may require
                  Lessee's   assignee  or  transferee  (or  other  assignees  of
                  transferees)to  assume in writing all of the obligations under
                  this Lease.

CONDEM- 27.       If any part of the Premises  shall be taken for any public or
NATION            quasi-public use,  under any  statute or by right of eminent
                  domain or private purchase in lieu thereof, and a part thereof
                  remains which is  susceptible  of occupation  hereunder,  this
                  Lease shall, as to the part so taken, terminate as of the date
                  title shall vest in the condemnor or  purchaser,  and the rent
                  payable  hereunder  shall be adjusted so that the Lessee shall
                  be  required  to pay for the  remainder  of the term only such
                  portion of such rent as the value of the part remaining  after
                  such taking bears to the value of the entire Premises prior to
                  such taking; but in such event Lessor shall have the potion to
                  terminate  this  Lease as of the day when title to the part so
                  taken  vests  in the  condemnor  or  purchaser.  If all of the
                  Premises,  or such part thereof to be taken so that there does
                  not remain a portion  susceptible  for  occupation  hereunder,
                  this Lease shall be thereupon terminated. If a part or all the
                  Premises be taken, all  compensation  awarded upon such taking
                  shall go to the Lessor and the Lessee shall be entitled to any
                  separate  award made by the  condemning  authority  for moving
                  costs,   relocation   expenses,   loss  of  good   will,   and
                  improvements paid for by Lessee.

EFFECT OF         28. The term "Lessor" as used in this Lease, means only the
CONVEYANCE        owner for the time being of the land and building  containing
                  the  Premises,  so that, in the event of any sale of said land
                  or building,  or in the event of lease of said  building,  the
                  Lessor  shall be and hereby is entirely  free and  relieved of
                  all covenants and obligations of the Lessor hereunder,  and it
                  shall be  deemed  and  construed,  without  further  agreement
                  between the parties and the purchaser at any such sale, or the
                  Lessee of the  building,  that the  purchaser or Lessee of the
                  building  has  assumed  and  agreed  to carry  out any and all
                  covenants  and  obligations  of the Lessor  hereunder.  If any
                  security  be  given  by the  Lessee  to  secure  the  faithful
                  performance  of all or any of the  covenants  of this Lease on
                  the part of the Lessee,  the Lessor shall transfer and deliver
                  the
<PAGE>

                  security,  as such,  to the  purchaser at any such sale or the
                  lessee of the  building,  and  thereupon  the Lessor  shall be
                  discharged from any further liability in reference thereto.

SUBORDI-          29.  Lessee  agrees that this Lease may, at the opinion of
NATION            Lessor,  be subject and  subordinate  to any mortgage,
                  deed of trust or other  instrument of security  which has been
                  or shall be  placed  on the land  and  building  of which  the
                  Premises form a part,  and this  subordination  is hereby made
                  effective without any further act of Lessee. The Lessee shall,
                  at any time hereinafter,  on demand,  execute any instruments,
                  releases,  or  other  documents  that  may  be  required  by a
                  mortgagee, mortgagor, or trustor or beneficiary under any deed
                  of trust for the purpose of subjecting and subordinating  this
                  Lease to the lien of any such  mortgage,  deed of trust or any
                  other instrument of security, and the failure of the Lessee to
                  execute any such  instruments,  releases or  documents,  shall
                  constitute  default hereunder.  Any subordination  pursuant to
                  this section  shall not be effective  unless the holder of any
                  such  instrument  executes  a  nondisturbance  and  attornment
                  agreement   allowing  the  Lessee  to  continue  enjoying  the
                  tennancy without interruption or obstruction.  Notwithstanding
                  anything to the contrary  contained in this Lease, by no later
                  than the  commencement  date hereof,  Lessor shall obtain from
                  any  existing  lenders  or ground  lessors  of the  Premises a
                  written agreement in form reasonably  satisfactory to Lessee's
                  providing for  recognition of Lessee's  interest or under this
                  Lease in the event of a foreclosure  of the lender's  security
                  interest or  termination  of the ground lease.  Further,  as a
                  condition to Lessee's  obligation to subordinate its leasehold
                  interest to a any future ground lease or instrument  security,
                  Lessor shall obtain from any such ground  landlords or lenders
                  a   written   recognition   agreement   in   form   reasonably
                  satisfactory  to  Lessee  providing  that  Lessee's  rights of
                  occupancy   shall  no  be  disturbed  in  the  event  of  such
                  termination  or  foreclosure,  Lessee shall receive all of the
                  services, provided for under this Lease.

WAIVER            30. The waiver by Lessor of any branch of any term,  covenant
                  or condition,  herein contained shall be deemed to be a waiver
                  of such a term, covenant or condition of any subsequent breech
                  of the same or any other term,  covenant of condition  therein
                  contained.  The  subsequent  acceptance  of rent  hereunder by
                  Lessor  shall not be  deemed  to be a waiver of any  preceding
                  breach by Lessee by any term,  covenant or  condition  of this
                  Lease,  other than the failure of Lessee to pay the particular
                  rent so  accepted,  regardless  of Lessor's  knowledge of such
                  preceding breach at the time of acceptance of such rent.

HOLDING           31. Any holding  over after the  expiration  of the said term,
OVER              with the consent of Lessor, shall be construed to be a tenancy
                  from month to month,  at a rental to be  negotiated  by Lessor
                  and Lessee  prior to the  expiration  of said term,  and shall
                  otherwise be on the terms and conditions herein specified,  so
                  far applicable.

SUCCESSORS        32. The covenants and conditions  herein contained shall,
AND ASSIGNS       subject to the  provisions  as to  assignment,  apply to and
                  bind the  heirs,  successors,  executors,  administrators  and
                  assigns  for all of all  the  parties  hereto;  and all of the
                  parties   hereto  shall  be  jointly  and   severally   liable
                  hereunder.

TIME              33. Time is of the essence of this Lease.

MARGINAL          34. The marginal headings or title to the paragraphs of this
CAPTIONS          Lease are not a part of this Lease and shall have no effect
                  upon the construction and  interpretation of any part thereof.
                  This instrument  contains all of the agreements and conditions
                  made between the parties hereto and may not be modified orally
                  or in any other manner than by an agreement in writing  signed
                  by all of the parties hereto in there respective successors in
                  interest.

         Paragraphs  35, 36, and Memorandum of  Understanding  are hereby made a
part of this Lease.

THIS LEASE HAS BEEN  PREPARED FOR  SUBMISSION  TO YOUR  ATTORNEY WHO WILL REVIEW
THE DOCUMENT AND ASSIST YOU TO DETERMINE  WHETHER YOUR LEGAL RIGHTS ARE
ADEQUATELY
<PAGE>

PROTECTED  RENAULT & HANDLEY IS NOT AUTHORIZED TO GIVE LEGAL AND TAX ADVICE.  NO
REPRESENTATION  OR  RECOMMENDATION IS MADE BY RENAULT & HANDLEY OR ITS AGENTS OR
EMPLOYEES AS TO THE LEGAL SUFFICIENCY,  LEGAL EFFECT OR TAX CONSEQUENCES OF THIS
DOCUMENT OR ANY  TRANSACTION  RELATING  THERETO.  THESE ARE  QUESTIONS  FOR YOUR
ATTORNEY WITH EHOM YOU SHOULD CONSULT BEFORE SIGNING THIS DOCUMENT.

     IN WITNESS WHEREOF, Lessor and Lessee have executed there presents, the day
and year first written above.

              LESSOR                                             LESSEE
     Kifer Investment Co.                                 Cobalt Networks, Inc.

     By                                              By              /s/ xxx
             -------------------------------                 ------------------

     Printed                                         Printed        Gary Martell
             -------------------------------                 ------------------

     Date                                            Date           10/25/99
             -------------------------------                 ------------------
<PAGE>

                              ADDITIONAL PARAGRAPH

         The additional  paragraphs are hereby made a part of that certain Lease
dated September 28, 1999 by and between Kifer  Investment Co., Lessor and Cobalt
Networks, Inc., Lessee covering the Premises at 515 Ellis Street, Mountain View,
California.

   35.  Lessor  grants to Lessee the option of  renewing  this Lease for one (1)
additional  2 year term  commencing  on the  termination  day of the Lease.  The
option  period  shall  be  governed  by all the same  terms  and  conditions  as
contained in the original Lease excepting the monthly rental which shall be then
fair market for comparable office/R&D buildings in the  Ellis/Middlefield  area.
Lessor and Lessee shall  reasonably  negotiate fair market value for a period of
thirty  (30) days.  If at the end of the  thirty;  (30) day  period,  Lessor and
Lessee have not agreed  upon Fair Market  rental  value,  Lessee  shall have the
right to rescind it's exercised options. In no event however,  shall the monthly
rental for the option period be less than $79,081.30.  In order to exercise this
option,  Lessee  must give  Lessor six (6) months  written  notice  prior to the
termination of the original term.

   36. Lessor will hold Lessee  harmless from and against all costs of response,
corrective  action,  remedial action,  claims,  demands,  losses and liabilities
arising  from  any  pre-existing  environmental  contamination  which  may  have
occurred prior to the Lessee taking possession of the Premises.

Lessee will only be responsible for  contamination  of the Premises of the soils
or ground water thereon or thereunder in violation of Hazardous  Materials  Law,
that is caused by Lessee or Lessee's agents,  contractors or invitees during the
term as may be extended.  All  hazardous  materials and toxic wastes that Lessee
brings on the Premises shall be stored according to Hazardous Materials' Law.

All hazardous materials and toxic wastes that Lessee brings on the site shall be
stored  according  to  all  local,  sate  and  national  regulations.  Hazardous
materials  shall be defined as those  substances that are recognized as posing a
risk of injury to health or safety by the Santa Clare Fire Department, the Santa
Clara Health Department,  the Regional Water Quality Control Board, the State of
California or Federal Government.

For the purpose of this Lease,  "Hazardous Materials Law" shall meant all local,
state, and federal laws, shames,  ordinances,  rules,  regulations,  judgements,
injunctions,  stipulations,  decrees,  orders,  permits,  approval,  treaties or
protocols now of hereafter  enacted,  issued of  promulgated  by any  government
authority  which  relate  to  any  Hazardous  Materials  of the  use,  handling,
transportation,  production,  disposal,  discharge,  release,  emission, sale or
storage of, or the exposure of any person to, a Hazardous Material.
<PAGE>

                           MEMORANDUM OF UNDERSTANDING

Parties:          Cobalt Networks, Incorporated    Kifer Investment Co.

Date:             September 28, 1999

RE:               That certain Lease dated  September  28, 1999 by and between
                  Renault & Handley,  Kifer  Investment  Co.,  Lessor and
                  Cobalt Networks,  Inc., Lessee for and approximate 29,842
                  square foot industrial  building commonly know as 515 Ellis
                  Street, Mountain View, California.

It is agreed as follows:

Lessor to deliver the building in good Working condition, as follows:

         A) Electrical Wiring to be Compliant

         B) Building  Seams at Column lines C9 and B9 to be Sealed.  C) Exterior
            building lighting to be working properly.

         D) Lessor understands that the Existing Category Five (CAT 5) wiring,
            voice/data  lines are part of the  structure  and will remain with
            the building  during Cobalt's  occupancy.  Lessor to make its best
            effort  to have  Connect,  Inc.  tag end to end the CAT 5  wiring,
            voice/data  lines and leave them in operable  condition.  Further,
            Lessee  shall have the right to sever and access the two (2) eight
            inch  cable  conduits  that run  along  the back  roof line of the
            property.

Lessor  understands and has approved Lessee's tenant improvement plans to demise
the premises and Sublease a portion of the building,  per the attached  "Exhibit
A".

Lessor  agrees  that  Lessee  shall  have  full and  unrestricted  access to the
Property  for 31 days prior to lease  commencement  for the purpose of equipment
installation  and  fixturing  the Property for Lessee's  use.  Said early access
shall be  extended  rent  free to  Lessee,  but in all other  respects  shall be
governed  by the terms of this lease  including  the  payment of  utilities  and
insurance costs.

Lessor as part of the consideration for the execution of this Lease,  power-wash
the exterior or the  Premises,  clean up the landscape  area and repair  damaged
asphalt in the parking lot. Lessee is entitled to all parking designated for the
Property.

Notwithstanding anything to the contrary contained in par 10 of the above Lease,
Lessor  shall be  responsible  for  landscaping  and  parking  lot  maintenance,
including  resealing and restriping the parking areas when needed.  Lessor shall
also be responsible  for the  maintenance  of the roofing  fabric  including the
clearing of drains,  resealing of  penetrations  when  necessary and all service
calls due to water leaks. Lessor shall also pay for a service which will provide
monthly HVAC inspections and maintenance.  Lessee shall be responsible,  for all
HVAC repair as specific in par 10 of the Lease.  Lessee  agrees to pay to Lessor
for this common area maintenance (CAM) the sum of 930.00/mo.  Which sum shall be
payable with the monthly rental amount.

READ & AGREED:

Kifer Investment Co.                                  Cobalt Networks, Inc.
By                                                    By       /s/ xxx
     -------------------------------                       --------------

Date -------------------------------                  Date    10/28/99
                                                            --------------
<PAGE>

                            REVISED INSURANCE CLAUSE

This Lease Clause replaces the Insurance Clause (11.) in the Renault & Handley
Net Lease Form

11. Lessee shall not use, or permit on the Premises,  or any part thereof, to be
used,  for any purpose other than that for which the Premises are hereby Leased;
and no use shall be made or  permitted to be made on the Premises nor acts done,
which  will cause a  cancellation  of any  insurance  policy  coveting  the said
building,  or any part thereof,  or shall Lessee sell or permit to keep, used or
sold,  in or about the  Premises,  any article  which may be  prohibited  by the
standard form of fire insurance  policies.  Lessee shall,  at his whole cost and
expense,  comply with any and all requirements,  pertaining to the Premises,  of
any  insurance  organization  of  company,  necessary  for  the  maintenance  of
reasonable  fire and public  liability  insurance,  coveting  said  building and
appurtenances.

11.1 Lessee shall,  at its expense,  obtain and keep in force during the term of
this Lease a policy of comprehensive public liability insurance insuring Lessee,
Lessor,  and any third  parties  named by Lessor which may include only Lessor's
lender and property  manager,  if any, against any liability  arising out of the
condition,  use, occupancy or maintenance of the Premises.  Such insurance shall
have a combined  single limit for both bodily  injury and property  damage in an
amount no less than One  Million  and  No/100ths  Dollars  ($1,000,000.00).  The
limits of said insurance shall not limit the liability of Lessee hereunder.

11.2 Lessee shall, at its expense,  keep in force during the term of this Lease,
a policy of fire and property damage insurance in an "all risk" with a sprinkler
leakage  endorsement,  insuring  Lessee's  inventory,  fixtures,  equipment  and
personal property within the Premises for the full replacement value thereof.

11.3  Lessor  shall  maintain a policy or  policies  of fire a  property  damage
insurance in an "all risk" form,  with  sprinkler  and, at the option of Lessor,
earthquake  endorsements,  coveting  loss or damage of the  building,  including
Lessee's leasehold improvements installed with the written consent of the Lessor
at 100% full  replacement  value with such  additional  coverage as Lessor deems
advisable.

11.4 Lessee shall pay to Lessor as an additional rent,  during the term thereof,
within  twenty (20) days after receipt of an invoice  therefore,  100 percent of
the premiums for any insurance obtained by Lessor pursuant to 11.3 above. Lessor
may obtain such  insurance for the Building  separately,  or together with other
buildings and improvements  which Lessor elects to insure together under blanket
policies of insurance. In such case Lessee shall be liable for only such portion
of the premium for such blanket policies as are allocable to the Premises. It is
understood and agreed that Lessee's  obligation  under this  paragraph  shall be
prorated to reflect the Commencement Date and Expiration Date of the Lease.

11.5 Lessee and Lessor hereby waiver any and all rights of recovery  against the
other,  or against the  officers,  directors,  employees,  partners;  agents and
representative  of the other,  for loss or damage to the property of the waiving
party or the property of others  under its  control,  to the extent such loss or
damage is insured against any under insurance policy carried by Lessor or Lessee
hereunder.  Each party shall notify their respective  insurance carriers of this
waiver.
<PAGE>

                                      (Map)

                                  COBALT SCHEME
<PAGE>

Thank you for choosing to do business with us. This Agreement has the purpose of
licensing  the right to (i)  incorporate  the RSA Software into your product and
(ii) use and/or  distribute to and users the RSA Software solely as incorporated
into such products.  In return,  You agree to pay RSA the license fees described
in this  agreement  for its  attachments)  which are  typically  comprised of an
initial  payment of license  fees,  plus  on-going per unit license  fees,  but,
alternatively, may consist of annual license fee amounts or other arrangement as
described in this Agreement.  This license is for object code only.  Maintenance
and support for the RSA Software licensed,  if elected,  is under separate terms
and  conditions.  This License  Agreement is to be construed and  interpreted in
accordance with this general  purpose,  though any conflict between this general
purpose and the express terms found in this License  Agreement shall be resolved
in favor of the express terms.

Enterprise Name ("You"): Cobalt Networks, Inc.  Jurisdiction of Incorporation:DE
                         ---------------------                                --
Street Address: 555 Ellis Street
                ----------------------------------------------------------------
City: Mountain View                                   State & Zip Code: CA 94043
      --------------------------------------------------------------------------
Enterprise Legal Contact (Name & Title) : Richard Finlayson, Director of
                                          --------------------------------------
Business Development
--------------------------------------------------------------------------------

Agreement Number: 0999-COB-0-OEM-1
                 ---------------------------------------------------------------

This  LICENSE  AGREEMENT  (the  "Agreement"),  effective as of the later date of
execution  ("Effective Date"), is entered into by and between RSA Data Security,
Inc. a Delaware corporation  ("RSA"),  having a principal address et 2955 Campus
Drive, Suite 400, San Mateo, CA 94403-2507, and the Enterprise identified above

                                  1 DEFINITIONS

The  following  terms  when  used in this  Agreement  shall  have the  following
meanings:

1.1 "LICENSED  PRODUCT(S) " means one or more of Your products or product groups
identified in the attached  "Product and License Fee Exhibit"  which has been or
will be developed by You and which incorporates in any manner any portion of the
RSA Software. a Licensed Product (i) must represent a significant functional and
value  enhancement  to the RSA Software such that the primary  reason to license
such  Licensed  Product  is other  than the right to  receive  a license  to the
functionality of the RSA Software included in the Licensed  Product,  (ii) shall
not expose or,  directly or  indirectly,  pass through any APIs, and (iii) shall
not be a security add-on or "bolt-on," the primary purpose of which is providing
security to a third party's product.

1.2 "DISTRIBUTOR"  means a dealer or distributor in the business of reselling or
relicensing Licensed Products to End User Customers,  directly or through one or
more  Distributors,  by virtue of authority  granted by You.  Licensed  Products
resold by a Distributor  shall bear Your  trademarks and service marks and shall
not be privately  labeled by such  Distributor or other  parties.  a Distributor
shall have no right to add to or modify any part of the Licensed Product.

1.3 "END USER  CUSTOMER"  means a person  or an  entity  (a third  party or Your
employees solely for their internal business purposes) receiving RSA Software as
part or a Licensed  Product  from You or a  Distributor  for their  personal  or
internal use and primarily not for resale,  redistribution  or other transfer of
such Licensed Product to any other person or entity,

1.4 "RSA SOFTWARE" means RSA's proprietary  software  identified on the attached
"Product and License Fee Exhibit" (and  including only these  algorithms  listed
therewith), as further described in the User Manual(s) associated therewith.

1.5 "TERRITORY" means worldwide, subject to Section 11.6.

1.6  "UPDATES"  means  any new  version  of the  RSA  Software  designated  by a
progressing  of the release  number  (either right or left of the decimal point)
following the version initially shipped hereunder.

1.7 "USER  MANUAL"  means the most  current  version of the user  manual  and/or
reference  manual  customarily  supplied by RSA to entities  who license the RSA
Software.

                                                                     Page 1 of 6<PAGE>

                                                                   EXHIBIT 10.16

SUBLESSOR:  Cobalt Networks, Inc.,      SUBLEASED PREMISES: Approximately 10,230
            a California corporation    rentable square feet of the Premises,
                                        commonly known as 515-B Ellis Street,
                                        Mountain View, California

SUBLESSEE:  PMC-Sierra, Inc.            DATE: February 26, 2000
            a Delaware corporation

1.       PARTIES:

         This  Sublease is made and entered into as of February 26, 2000, by and
between  Cobalt  Networks,  Inc., a California  corporation  ("Sublessor"),  and
PMC-Sierra, Inc., a Delaware corporation ("Sublessee"). Pursuant to that certain
Renault  &  Handley  Industrial  &  Commercial  Real  Estate  Lease  dated as of
September 28, 1999,  entered into between Kifer  Investment Co.  ("Lessor"),  as
Lessor, and Sublessor,  as tenant, as amended by that certain First Amendment to
Lease dated as of January  27, 2000 (as  amended,  the "Master  Lease"),  Lessor
leased to Sublessor an approximately 29,842 square foot industrial building (the
"Premises")  located in Mountain  View,  California,  and commonly  known as 515
Ellis Street.  A copy of the Master Lease is attached hereto as ATTACHMENT 1 and
incorporated herein by this reference.

2.       PROVISIONS CONSTITUTING SUBLEASE:

         2.1.  MASTER  LEASE.  This  Sublease is subject to all of the terms and
conditions of the Master Lease.  Sublessee  hereby assumes and agrees to perform
all of the  obligations  of "Lessee"  under the Master  Lease to the extent said
obligations  apply to the Subleased  Premises and  Sublessee's use of the common
areas, except as specifically set forth herein. Sublessor does not assume any of
the obligations of Lessor under the Master Lease.  Sublessee  acknowledges  that
Sublessor's obligation to perform services,  provide utilities, make repairs and
maintain  insurance  shall be satisfied only to the extent that Lessor under the
Master Lease satisfies those same  obligations.  With respect to the performance
by Lessor of its obligations under the Master Lease, Sublessor's sole obligation
with  respect  thereto  shall be to request  the same,  on request in writing by
Sublessee,  and to use  reasonable  efforts  to  obtain  the same  from  Lessor;
provided,  however, Sublessor shall have no obligation to institute legal action
against Lessor.  Notwithstanding the foregoing,  Sublessor agrees to perform the
obligations  of  Sublessor  as tenant  under the Master Lease to the extent such
obligations are not assumed by Sublessee  hereunder.  Sublessee shall not commit
or permit to be committed on the  Subleased  Premises or on any other portion of
the  Premises  any act or omission  which  violates any term or condition of the
Master  Lease.  Except to the extent  waived or  consented  to in writing by the
other party or parties hereto who are affected  thereby,  neither of the parties
hereto will,  by  renegotiation  of the Master  Lease,  assignment,  subletting,
default or any other voluntary action,  avoid or seek to avoid the observance or
performance  of the terms to be observed or  performed  hereunder by such party,
but will at all times in good faith assist in carrying out all the terms of this
Sublease  and in taking all such action as may be necessary  or  appropriate  to
protect the rights of the other party or parties hereto who are affected thereby
against impairment. Nothing contained in this
<PAGE>

Section 2.1 or elsewhere in this Sublease  shall  prevent or prohibit  Sublessor
from (a)  exercising  its right to terminate  the Master  Lease  pursuant to the
terms thereof or (b) assigning its interest in this Sublease.

         2.2. INCORPORATED PROVISIONS. All of the terms and conditions contained
in the Master Lease are  incorporated  herein,  except as specifically  provided
below,  and the terms and  conditions  specifically  set forth in this  Sublease
shall constitute the complete terms and conditions of this Sublease,  except the
following paragraphs which are not incorporated into this Sublease:

         Paragraphs  1, 3, 4, 5, 6, 9, 10,  17, 22 (second  and third  sentences
only),  25 (last sentence only),  29 (third,  fourth and fifth sentences  only);
additional  paragraphs 35 and 36; revised  insurance clause 11.4;  Memorandum of
Understanding   dated  9-28-1999;   First  Addendum  to  Lease,  dated  9-28-99,
paragraphs 1 and 2; and First Amendment to Lease.

         If any  provisions  of this  Sublease  conflict with any portion of the
Master Lease as incorporated  herein, the provisions  contained in this Sublease
shall govern.

         2.3. LESSOR DEFAULT;  CONSENTS.  Notwithstanding  any provision of this
Sublease to the contrary,  (i) Sublessor  shall not be liable or  responsible in
any way for any loss, damage, cost, expense, obligation or liability suffered by
Sublessee  by reason or as the  result of any  breach,  default  or  failure  to
perform by Lessor  under the Master  Lease,  and (ii)  whenever  the  consent or
approval of Sublessor is required for a particular  act,  event or  transaction,
(A) such  consent or  approval by  Sublessor  shall be subject to the consent or
approval  of Lessor;  and (B)  should  Lessor  refuse to grant  such  consent or
approval,  under  all  circumstances,  Sublessor  shall  be  released  from  any
obligation to grant its consent or approval.

         2.4.  TERMINATION OF MASTER LEASE. If the Master Lease terminates under
the specific  provisions  under the Master Lease,  this Sublease shall terminate
and the parties shall be relieved from all  liabilities  and  obligations  under
this  Sublease  excepting  obligations  which  have  accrued  as of the  date of
termination;  except that if the Master Lease and this  Sublease  terminate as a
result of a default of one of the parties under this  Sublease,  the  defaulting
party shall be liable to the non-defaulting party for all damage suffered by the
non-defaulting party as a result of the termination of this Sublease.

         2.5. CONDITION  PRECEDENT TO VALIDITY OF SUBLEASE.  Notwithstanding any
provision of this  Sublease to the  contrary,  if Landlord  does not deliver the
Subleased  Premises to  Sublessor  by,  April 1, 2000,  Sublessor  shall have no
obligation to deliver the Subleased  Premises to Sublessee,  this Sublease shall
terminate and the parties shall be relieved from all liabilities and obligations
under this Sublease  excepting  obligations which have accrued as of the date of
termination.

         2.6. TIME FOR NOTICE. The time limits provided for in the provisions of
the Master Lease for the giving of notice, making of demands, performance of any
act, condition or covenant,  or the exercise of any right, remedy or option, are
amended for the purposes of this Sublease by  lengthening or shortening the same
in each instance by five (5) days, as appropriate,

                                       2
<PAGE>

so that notices may be given,  demands made,  or any act,  condition or covenant
performed,  or any right, remedy or option hereunder exercised,  by Sublessor or
Sublessee,  as the case may be, within the time limit relating thereto contained
in the Master  Lease.  If the Master Lease allows only five (5) days or less for
Sublessor to perform any act, or to undertake to perform such act, or to correct
any failure  relating to the Premises or this  Sublease,  then  Sublessee  shall
nevertheless  be allowed three (3) days to perform such act,  undertake such act
and/or correct such failure.

3.       SUBLEASED PREMISES AND RENT:

         3.1.  SUBLEASED  PREMISES.  Sublessor leases to Sublessee and Sublessee
leases from Sublessor  approximately  10,230  rentable square feet of space (the
"Subleased  Premises")  contained  in the  Premises  and  located at 515-B Ellis
Street,  Mountain  View,  California,  upon  all of  the  terms,  covenants  and
conditions   contained  in  this  Sublease.   The  Subleased  Premises  is  more
particularly shown on Exhibit A, attached hereto.

         3.2. RENT.  Sublessee  shall pay to Sublessor as Rent for the Subleased
Premises  the  amount  of  Thirty-Five   Thousand  Eight  Hundred  Five  Dollars
($35,805.00) per month, without deductions, offset, prior notice or demand. Rent
shall be payable by Sublessee to Sublessor in advance and in consecutive monthly
installments  on or before  the  first day of each  calendar  month  during  the
Sublease Term. If the Sublease Commencement Date or the termination date of this
Sublease  occurs  on  a  date  other  than  the  first  day  or  the  last  day,
respectively, of a calendar month, then the Rent for such partial month shall be
prorated  and the prorated  Rent shall be payable on the  Sublease  Commencement
Date or on the first day of the calendar month in which the Sublease termination
date occurs, respectively. Notwithstanding the foregoing, Sublessee shall pay to
Sublessor the first full calendar's month Rent in advance  concurrently with the
execution of this Sublease.

         3.3.  SECURITY  DEPOSIT.  In  addition  to the  Rent  specified  above,
Sublessee  shall  pay to  Sublessor  concurrently  with  the  execution  of this
Sublease cash in the amount of One Hundred Seven  Thousand Four Hundred  Fifteen
Dollars  ($107,415.00) as a non-interest bearing security deposit (the "Security
Deposit").  In the event Sublessee has performed all of the terms and conditions
of this Sublease  during the term hereof,  Sublessor  shall return to Sublessee,
within thirty (30) days after Sublessee has vacated the Subleased Premises,  the
Security Deposit less any amounts due and owing to Sublessor.

4.       RIGHT OF USE:

         Sublessee  shall use the  Subleased  Premises  only for those  purposes
permitted in the Master Lease, unless Sublessor and Lessor consent in writing to
other uses prior to the commencement thereof.

5.       SUBLANDLORD'S WORK:

         Sublandlord,  at its sole cost and expense, shall perform the following
work  ("Sublandlord's  Work") to the  Subleased  Premises  prior to the Sublease
Commencement Date:

         a.   Demise the Subleased Premises per the attached space plan, marked
              EXHIBIT A;

                                       3
<PAGE>

         b.   Paint all interior walls;

         c.   Steam clean the carpets;

         d.   Clean all HVAC vents and returns; and

         e.   Put the Subleased Premises in a broom clean condition.

         Sublessor's obligation to perform Sublandlord's Work is contingent upon
receipt of Lessor's prior written consent to perform the  Sublandlord's  Work to
the extent  required  under the terms of the Master Lease.  Notwithstanding  the
preceding, Sublessee shall take space in an "as-is" condition.

         Any other  modification  specific to Sublessee  shall be at Sublessee's
sole cost and expense and Sublessee  must get the necessary  approvals from both
Sublessor  and Lessor.  Any  improvements  specific to Sublessee or  Sublessee's
specific use of the Premises,  that trigger the Americans  with  Disability  Act
(A.D.A.) or Title 24 requirements shall be at the sole cost of Sublessee.

6.       ALTERATIONS AND ADDITIONS:

         Except for nonstructural alterations not exceeding One Thousand Dollars
($1,000.00) per work of improvement,  Sublessee shall not make any  alterations,
additions or improvements to the Subleased  Premises or any part thereof without
first obtaining the prior written consent of the Sublessor,  which consent shall
not be unreasonably withheld or delayed.  Sublessor may impose as a condition to
the  aforesaid  consent such  requirements  as  Sublessor  may  reasonably  deem
necessary in Sublessor's discretion,  including, without limitation thereto; the
manner in which the work is done, a right of approval of the  contractor by whom
the work is to be performed,  which approval shall not be unreasonably  withheld
or delayed, the times during which it is to be accomplished, and the requirement
that  prior to the  expiration  or  earlier  termination  of the  Master  Lease,
Sublessee  will remove any or all  improvements  or additions  to the  Subleased
Premises installed at Sublessee's  expense.  All such alterations,  additions or
improvements  not specified to be removed  shall,  at the  expiration or earlier
termination  of this  Sublease,  become the property of the Sublessor and remain
upon and be  surrendered  with the Subleased  Premises.  All movable  furniture,
business and trade  fixtures,  or machinery  and  equipment  shall remain in the
property of Sublessee and may be removed by Sublessee at any time during term of
this Sublease when  Sublessee is not in default beyond  applicable  cure period.
Items  which are not to be  deemed  as  movable  furniture,  business  and trade
fixtures, or machinery and equipment shall include heating, lighting, electrical
systems,  air  conditioning,  hard wall  partitioning,  carpeting,  or any other
installation  which  has  become an  integral  part of the  Subleased  Premises.
Sublessee  will at all times permit notices of  non-responsibility  to be posted
and to remain posted until the completion of alterations or additions which have
been approved by Sublessor.

7.       SUBLEASE TERM:

         7.1.     SUBLEASE TERM. The Sublease Term shall commence on (the
"Commencement Date") the later of (i) March 1, 2000 or (ii) substantial comple-
tion of Sublandlord's Work

                                       4
<PAGE>

(defined below) and end at 11:59 p.m. on February 28, 2001. In no event shall
the Sublease Term extend beyond the term of the Master Lease.

         7.2. INABILITY TO DELIVER POSSESSION.  In the event Sublessor is unable
to deliver  possession  of the Subleased  Premises by the Sublease  Commencement
Date,  Sublessor  shall not be liable for any damage caused  thereby,  nor shall
this  Sublease be void or voidable  but  Sublessee  shall not be liable for Rent
until such time as  Sublessor  offers to  deliver  possession  of the  Subleased
Premises to Sublessee,  but the term hereof shall not be extended by such delay.
If Sublessee,  with Sublessor's consent,  takes possession prior to commencement
of the Sublease  Term,  Sublessee  shall do so subject to all the  covenants and
conditions hereof and shall pay Rent for the period ending with the commencement
of the Sublease Term at the same rental as that  prescribed  for the first month
of the  Sublease  Term  prorated  at the rate of 1/30th  thereof per day. In the
event Sublessor has been unable to deliver  possession of the Subleased Premises
within  ninety (90) days after the Sublease  Commencement  Date,  Sublessee,  at
Sublessee's option, may terminate this Sublease by written notice to Sublessor.

8.       MAINTENANCE OF THE SUBLEASED PREMISES:

         8.1.     SUBLESSOR. Sublessor shall, at its sole expense, provide five
(5) day a week janitorial service and utilities during normal business hours
(Monday-Friday 8:00 a.m. - 6:00 p.m.) ("Business Hours")

         8.2.     LESSOR. Lessor, at its expense per the Master Lease, shall
maintain the exterior of the Premises and other aspects of the building not
referred to in 8.1.

9.      UTILITIES:

         9.1.     ELECTRICITY, WATER, GAS AND HEAT. Sublessor shall pay for all
electricity, water, gas, heat, and power to the Subleased Premises during Busi-
ness Hours.

         9.2.     TELEPHONE. Sublessee shall be responsible for its own tele-
phone expenses.

10.      PARKING:

         Sublessee  shall be provided  with a pro-rata  share (based on rentable
square feet of the Subleased  Premises to rentable  square feet of the Premises)
of the parking spaces leased to Sublessor  under the Master Lease,  estimated to
be approximately 3.3 spaces per 1,000 rentable square feet.

11.      TAXES:

         Sublessee shall be responsible for all taxes levied against Sublessee's
personal property and trade or business fixtures.

                                       5
<PAGE>

12.      NOTICES:

         All notices,  demands, consents and approvals which may or are required
to be given by either party to the other  hereunder shall be given in the manner
provided in the Master  Lease,  at the  addresses  shown on the  signature  page
hereof.  Sublessor  shall  notify  Sublessee  of any Event of Default  under the
Master Lease (as defined  therein) as soon as reasonably  practicable  following
Sublessor's  receipt  of  notice  from the  Lessor  of an Event of  Default.  If
Sublessor  elects to  terminate  the  Master  Lease,  Sublessor  shall so notify
Sublessee by giving at least ten (10) days' notice prior to the  effective  date
of such termination.

13.      BROKER FEE:

         Upon  execution of this Sublease,  Sublessor  shall pay Cornish & Carey
Commercial  ("Broker"),  a  licensed  real  estate  broker,  fees set forth in a
separate agreement between Sublessor and Broker. For brokerage services rendered
by  Broker to  Sublessor  in these  transactions,  the fee shall be split 50% to
Cornish & Carey Commercial and 50% to Colliers International.

14.      COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT:

         Sublessee shall be responsible for the installation and cost of any and
all  improvements,  alterations  or other work  required on or to the  Subleased
Premises or to any other  portion of the property  and/or  building of which the
Subleased Premises are a part, required or reasonably  necessary because of: (1)
Sublessee's use of the Subleased Premises or any portion thereof; (2) the use by
a Sublessee by reason of  assignment  or sublease;  or (3) both,  including  any
improvements,  alterations  or other  work  required  under the  Americans  With
Disabilities  Act of 1990.  Compliance  with the  provisions  of this Section 14
shall be a condition of  Sublessor  granting  its consent to any  assignment  or
Sublease  of all or a  portion  of  this  Sublease  and the  Subleased  Premises
described in this Sublease.

15.      COMPLIANCE WITH NONDISCRIMINATION REGULATIONS:

         It is understood  that it is illegal for Sublessor to refuse to display
or sublease the Subleased Premises,  or to assign,  surrender or sell the Master
Lease, to any person because of race,  color,  religion,  national origin,  sex,
sexual orientation, marital status or disability.

16.      HAZARDOUS SUBSTANCES:

         16.1.    DEFINITIONS. For the purposes of this Sublease, the following
terms have the following meanings:

                  a.  "Environmental  Laws"  means any and all  laws,  statutes,
ordinances  or  regulations  pertaining  to  health,  industrial  hygiene or the
environment including,  without limitation,  CERCLA (Comprehensive Environmental
Response   Compensation   and  Liability  Act  of  1980)  and  RCRA   (Resources
Conservation and Recovery Act of 1976).

                  b.     "Hazardous Substances" means asbestos or any substance,
material or waste which is or becomes designated, classified or regulated as
being "toxic" or "hazardous" or

                                       6
<PAGE>

a  "pollutant"  or which  is or  becomes  similarly  designated,  classified  or
regulated under any federal, state or local law, regulation or ordinance.

         16.2.  COMPLIANCE  WITH  ENVIRONMENTAL  LAWS.  Sublessee shall not use,
store,  release,  discharge or transport  any Hazardous  Substances  on, over or
under the Subleased  Premises or the Premises without  Sublessor's prior written
consent,  which  consent may be  withheld in  Sublessor's  sole  discretion.  In
addition,  Sublessee shall, in all respects, handle, treat, deal with and manage
any and all Hazardous  Substances in, on, under or about the Subleased  Premises
in total conformity with all applicable  Environmental Laws and prudent industry
practices regarding management of such Hazardous Substances.  Upon expiration or
earlier  termination of the Sublease Term,  Sublessee  shall cause all Hazardous
Substances placed on, under or about the Subleased  Premises by Sublessee or its
officers,   employees,  agents,  contractors  or  invitees  to  be  removed  and
transported  for use,  storage or disposal in accordance and compliance with all
applicable Environmental Laws.

         16.3.  RESPONSE TO ENVIRONMENTAL  CLAIMS.  Sublessee shall not take any
remedial  action in response to the presence of any  Hazardous  Substances in or
about the Subleased Premises,  nor enter into any settlement agreement,  consent
decree or other  compromise  in respect to any claims  relating to any Hazardous
Substances  in any way  connected  with the  Subleased  Premises  without  first
notifying  Lessor and Sublessor of Sublessee's  intention to do so and affording
Lessor and  Sublessor  ample  opportunity  to  appear,  intervene  or  otherwise
appropriately assert and protect Lessor's and Sublessor's interests with respect
thereto.

17.      RENT ABATEMENT AND DAMAGES TO PERSONAL PROPERTY:

         In the event  Sublessor,  pursuant to the terms of the Master Lease, is
entitled to and receives rent abatement,  then to the extent such rent abatement
affects the Subleased Premises, Sublessee shall be entitled to rent abatement in
an amount that the net  rentable  area of the  Subleased  Premises  bears to the
total net  rentable  area of the Master  Lease,  and only to the extent any such
abatement  applies to the  Sublease  Tenn.  In  addition,  any  amounts  paid or
credited to Sublessor under the terms of the Master Lease for damage to personal
property  shall be credited to Sublessee,  subject to the same  limitations  set
forth above.

18.      INDEMNITY:

         18.1. GENERAL INDEMNITY.  Sublessee shall indemnify, defend (by counsel
acceptable  to  Sublessor  in  Sublessor's  sole  discretion),  protect and hold
Sublessor  harmless from and against any and all liabilities,  claims,  demands,
losses,  damages,  costs and expenses (including attorneys' fees) arising out of
or  relating  to (i) the  death of or  injury  to any  person  or  damage to any
property  on or about  the  Subleased  Premises  or (ii)  Sublessee's  breach or
default under this Sublease or, to the extent  incorporated  herein,  the Master
Lease.  Sublessee's  indemnity obligations under this Sublease given in favor of
Sublessor  shall extend to Sublessor's  officers,  directors,  shareholders  and
employees  and shall  survive  the  expiration  or earlier  termination  of this
Sublease.

                                       7
<PAGE>

         18.2.  WAIVER.  With respect to any damage and  destruction,  Sublessee
waives  all rights to  terminate  this  Sublease  pursuant  to rights  otherwise
presently  or  hereafter  accorded  by  law.  Sublessee   expressly  waives  the
provisions of Subdivision 2 of Section 1932 and Subdivision 4 of Section 1933 of
the California Civil Code and successor statutes.

19.      HOLDING OVER:

         If Sublessee  holds over after the  expiration  of the Sublease Term or
earlier  termination  of this  Sublease,  with or without the express or implied
consent of Sublessor,  then, at the option of Sublessor,  Sublessee shall become
and be only a month-to-month tenant at a rent equal to one hundred fifty percent
(150%) of the Rent payable by Sublessee under this Sublease immediately prior to
such  expiration or  termination,  and otherwise  upon the terms,  covenants and
conditions  herein  specified.  Notwithstanding  any  provision  to the contrary
contained  herein,  (A)  Sublessor  expressly  reserves  the  right  to  require
Sublessee to surrender  possession of the Subleased Premises upon the expiration
of Sublease Term or upon the earlier  termination of this Sublease and the right
to assert  any  remedy at law or in equity  to evict  Sublessee  and/or  collect
damages in connection with any holding over, and (B) Sublessee shall  indemnify,
defend and hold  harmless  Sublessor  from and against any and all  liabilities,
claims,  demands,  actions,  losses, damages,  obligations,  costs and expenses,
including, without limitation, attorneys' fees (including the allocated costs of
Sublessor's  in-house  attorneys) incurred or suffered by Sublessor by reason of
Sublessee's failure to surrender the Subleased Premises on the expiration of the
Sublease Term or earlier termination of this Sublease.

20.      SIGNS:

Sublessee  shall not place on any  portion of the  Premises  any sign,  placard,
lettering  in  or  on  windows,   banners,  displays  or  other  advertising  or
communicative  material  which is visible  from the  exterior  of the  Subleased
Premises  without the prior written  approval of Sublessor,  which consent shall
not be  unreasonably  withheld or delayed,  and Lessor.  All such approved signs
shall  strictly  conform to all legal  requirements  and shall be  installed  at
Sublessee's sole expense.  Sublessee shall maintain such signs in good condition
and repair.  If Sublessee  fails to remove such sign(s) upon the  expiration  or
earlier  termination  of this  Sublease  and repair  any  damage  caused by such
removal,  Sublessor may do so at Sublessee's  expense,  which expense,  together
with interest thereon at the rate described  herein,  shall by paid by Sublessee
to Sublessor upon demand.

                                       8
<PAGE>

         IN WITNESS  WHEREOF,  the parties hereto have executed this Sublease as
of the date set forth above.

SUBLESSOR:

COBALT NETWORKS, INC.,
a California corporation

By: /s/ Stephen W. DeWirt
    ---------------------
    Name:   Stephen DeWirt
    Its:    President & CEO

Address: 515 Ellis Street
         Mountain View, California 94043

SUBLESSEE:

PMC-SIERRA, INC.,
a Delaware corporation

By: /s/ Geraldine Jones
    -------------------
     Name:  Geraldine Jones
     Its:   Vice President Human Resources
            and Administration

By: --------------------------
     Name: -------------------
     Its: --------------------

Address: 515-B Ellis Street
         Mountain View, California 94043

NOTICE TO SUBLESSOR AND SUBLESSEE: CORNISH & CAREY COMMERCIAL, IS NOT AUTHORIZED
TO  GIVE  LEGAL  OR TAX  ADVICE;  NOTHING  CONTAINED  IN  THIS  SUBLEASE  OR ANY
DISCUSSIONS  BETWEEN CORNISH & CAREY AND SUBLESSOR AND SUBLESSEE SHALL BE DEEMED
TO BE A REPRESENTATION OR  RECOMMENDATION BY CORNISH & CAREY COMMERCIAL,  OR ITS
AGENTS OR EMPLOYEES AS TO THE LEGAL EFFECT OR TAX  CONSEQUENCES OF THIS DOCUMENT
OR ANY TRANSACTION  RELATING THERETO. ALL PARTIES ARE ENCOURAGED TO CONSULT WITH
THEIR  INDEPENDENT   FINANCIAL   CONSULTANTS  AND/OR  ATTORNEYS   REGARDING  THE
TRANSACTION CONTEMPLATED BY THIS PROPOSAL.

                                       9
<PAGE>

LESSOR CONSENT

The undersigned,  Lessor under the Master Lease attached as Attachment I, hereby
consents to the  subletting of the Subleased  Premises  described  herein on the
terms and conditions  contained in this Sublease.  This Consent shall apply only
to this Sublease and shall not be deemed to be a consent to any other Sublease.

Lessor:  KIFER INVESTMENT CO.

By:      /s/ XXX                                     Date:    2/25/00
    ----------------------------------------               ----------
    Name:    General Partner
         ----------------------
    Its:

                                       10
<PAGE>

                                    EXHIBIT A

                               SUBLEASED PREMISES

                                    EXHIBIT A

                                       11
<PAGE>

                                     DIAGRAM

                                       12
<PAGE>

                                  ATTACHMENT 1

                                  MASTER LEASE

                                [To be attached]

                                       13

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