Document:

San Mateo, CA
                                                                 March 31, 2000
                                                                 $1,597,501.74

                             SECURED PROMISSORY NOTE

For  value  received,  the  undersigned,  Hypermedia  Communications,   Inc.,  a
California  corporation  ("Borrower") promises to pay MK GVD Fund ("Lender") the
principal sum of one million five hundred ninety seven thousand five hundred one
dollars and 74 cents  ($1,597,501.74),  with  interest from the date hereof at a
rate of ten percent (10%) per annum, which amount shall be secured by all of the
assets of Borrower. Said principal shall be due and payable on demand by Lender,
which  demand may be made at any time,  but in no event shall the  principal  be
paid later than one hundred eighty (180) days after the date of this Note.  This
Note may be prepaid at any time without penalty.

In the event of liquidation,  merger, sale, or winding up of the company, Lender
shall be entitled to receive,  prior and in  preference  to any other holders of
debt or equity securities,  (except as provided in item 1. below), the principal
value of this Note plus accrued interest.

The  following is a statement of the rights of the Borrower of this Note and the
conditions to which this Note is subject,  to which the Borrower and Lender,  by
the acceptance of this Note agree:

         1.  Security  Interest  - Borrower  hereby  grants to Lender a security
interest  in all assets of  Borrower  to secure  repayment  of the  indebtedness
represented  by this Note.  Borrower  hereby  represents and agrees that it will
take all actions  contemplated above including the execution of a UCC1 financing
statement,  which for the purposes of such  execution,  Borrower hereby appoints
Lender as its attorney-in-fact to execute such UCC1 financing statement.

         2. Attorneys' Fees - If any action or proceeding  shall be commenced to
enforce  this Note or any right  arising  in  connection  with  this  Note,  the
prevailing  party in such action or proceeding shall be entitled to recover from
the other party the reasonable  attorneys' fees, costs, and expenses incurred by
such  prevailing   party  in  connection  with  such  action  or  proceeding  or
negotiation to avoid such action or proceeding.  In the event that any provision
of this Note should be deemed unlawful or unenforceable, such provision shall be
struck and the remainder  hereof shall be enforced to the fullest  extent of the
law.

         3.  Governing  Law - This Note is  issued  in and shall be  interpreted
under the laws of the State of California.

Issued this 31 day of March, 2000.

                                         Hypermedia Communications, Inc.

                                         By: __________________

                                         Title: ________________TRIPLE NET BUILDING LEASE

                                     Between

                         PACIFIC SHORES DEVELOPMENT LLC,

                                       as
                                     LESSOR

                                       and

                                BROADVISION INC.
                             a Delaware corporation
                                       as
                                     LESSEE

                                       for

                                    PREMISES
                                       at
                              Pacific Shores Center
                                   Building 4
                            Redwood City, California

<PAGE>

                                    ARTICLE I
                                     PARTIES

         Section 1.01. Parties.  This Lease, dated for reference  purposes,  and
effective  as of  April  12,  2000,  is  made  by  and  between  PACIFIC  SHORES
DEVELOPMENT  LLC, or  assignee,  ("Lessor")  and  BROADVISION  INC.,  a Delaware
corporation ("Lessee").

                                   ARTICLE II
                                    PREMISES

         Section  2.01.  Demise of Premises.  Lessor hereby leases to Lessee and
Lessee leases from Lessor for the term, at the rental, and upon all of the terms
and   conditions  set  forth  herein,   Premises   consisting  of  one  building
("Building") of ten free standing, office and research and development buildings
("Buildings")   together  with  other  Common  Area   improvements,   buildings,
structural  features and amenities  described herein to be constructed by Lessor
on real  property  situated  in  Redwood  City,  County of San  Mateo,  State of
California,  more  particularly  described  in Exhibit A and  commonly  known as
Pacific  Shores Center (the  "Project").  The Building will be four stories tall
and will consist of approximately  One Hundred Fourteen Thousand Six Hundred and
Sixty-Seven  (114,667) rentable square feet, as more particularly  described and
depicted  herein in Exhibits "A" and "B." The actual  rentable square footage of
the Building (the "Rentable  Area") will be determined and certified by Lessor's
architect  by  a  method  described  as  "dripline,"   whereby  the  measurement
encompasses the outermost perimeter of the constructed building, including every
projection  thereof and all area  beneath each such  projection,  whether or not
enclosed,  with no deduction for any inward  deviation of structure and with the
measurement  being made floor by floor,  beginning from the top of the Building.
The legal parcel on which the Building is to be constructed is herein designated
as the "Property." The Building leased hereunder, commonly known as Building 4 -
Pacific Shores Center, Redwood City, California, and its appurtenances described
herein are herein designated as the "Premises."

         Section 2.02. Common Area. During the Lease Term, Lessee shall have the
non-exclusive  right to use the Common Area defined herein.  Lessor reserves the
right to modify the Common  Area,  including  reducing  the size or changing the
use,  configuration  and  elements  thereof  in its sole  discretion  (including
without  limitation,  for the purpose of construction  of parking  facilities or
additional buildings,  of any nature or size whatsoever,  and in any part of the
Project including,  without limitation,  any of the Common Area including Common
Area on the Property so long as Lessee's parking is not reduced) and to close or
restrict  access  from  time to time for  repair,  maintenance  or to  prevent a
dedication  thereof,  provided  that  (1)  any  changes  in the  Common  Area or
construction therein shall not diminish or interfere with Lessee's view from the
Premises or the natural light into the Premises,  (2) Lessee  nonetheless  shall
have access to parking and the Premises during such activities and, (3) provided
further,  that Lessor will  continue to maintain the baseball and soccer  fields
and the  amenities/athletic  facility or  replacement  items of like kind for so
long as Lessor is legally  able to do so during the Lease

                                      -2-
<PAGE>

Term. Lessor further reserves the right to establish, repeal and amend from time
to time rules and  regulations for the use of the Common Area (provided that, to
the extent  that any  conflict  between any new Rules and  Regulations  and this
Lease (including the Rules and Regulations attached hereto as Exhibit "L") would
materially and adversely  affect Lessee's use of the Premises,  this Lease shall
govern, and to grant reciprocal easements or other rights to use the Common Area
to owners of other property.  "Common Area" includes,  without  limitation,  all
portions  of the  Property  other  than  the  Building,  including  landscaping,
sidewalks,  walkways,  driveways,  curbs,  parking  lots  (including  striping),
roadways within the Project, sprinkler systems, lighting, surface water drainage
systems,  an  amenities/athletic  facility to be  available  for use by Lessee's
employees (the  "Amenities/Athletic  Facility"),  as well as baseball and soccer
fields, a water front park, and a perimeter  walking/biking  trial,  and, to the
extent  required by government  authorities  having  jurisdiction  over Lessor's
development of the Project,  amphitheater,  marine life resource center, retreat
and  conference  center,  child care  center and such  further  portions  of the
Project or  additional  or different  facilities as Lessor may from time to time
designate  or install  or make  available  for the use by Lessee in common  with
others.

         Section 2.03. Parking.  Lessor shall provide Lessee with parking spaces
within the Property in the ratio to space within the Building as required by law
which is three (3.0) spaces per one thousand (1,000) square feet of space within
the  Building.  In the event Lessor elects or is required by any law to limit or
control parking at the Premises, whether by validation of parking tickets or any
other method of assessment,  Lessee agrees to participate in such  validation or
assessment  program under such reasonable rules and regulations as are from time
to time established by Lessor.

         Section 2.04.  Construction.

         (a) Government  Approvals.  Lessor shall  diligently  pursue  obtaining
governmental  approval of a Site Plan and Building  design and  elevations  with
respect to the development of the Premises,  copies of which are attached hereto
as Exhibit "A." The parties  acknowledge  and agree that the final footprint and
elevations  of the Building may vary from those  attached as Exhibit "A" because
the plans and  specifications  will undergo a plancheck process with the City of
Redwood City (the "City") and Lessor will make such revisions as are required or
are otherwise deemed necessary or appropriate by Lessor,  provided however, that
nothing  herein  shall be deemed to relieve  Lessor from the duty to develop the
Building substantially in compliance with Exhibits "A" and "B." In the event the
City requires  material  changes to the Site Plan and Building  design  attached
hereto as Exhibit A, Lessor  shall  notify  Lessee and  provide  Lessee with the
opportunity  to review  such  changes.  In the event the  proposed  changes  are
unacceptable  to Lessee,  Lessee  shall have the right to meet with the City (in
the  presence of Lessor) to discuss the changes and  negotiate  changes that are
acceptable to Lessee and Lessor in the reasonable  discretion of each,  provided
that no  delay to the  construction  schedule  will be  caused  by same.  If the
changes to the Building  Design result in additional  square footage being added
to the Building,  any additional square footage which will increase the Load (as
defined  below) of the  Rentable  Area of the  Building as the  Building  design

                                      -3-
<PAGE>

exists on  February  15,  2000 by more than 5%,  shall  not be  included  in the
rentable  square  footage of the  Premises.  For purposes of this Lease,  "Load"
shall mean that square  footage of the Building  outside the exterior  walls and
included in Rentable Area because of  projections  from the roof of the Building
or the "dripline."

         (b) Construction of Shell Building. Lessor, utilizing Rudolph & Sletten
(or such  alternate  as Lessor in its sole  discretion  may  select)  as general
contractor  ("General  Contractor"),  shall  construct the "Building  Shell" (as
defined  in  the  attached  Exhibit  "D")  in  accordance  with  (i)  plans  and
specifications to be attached as Exhibit "B," which shall be consistent with DES
Development Progress Plan dated February 14, 2000 for structural steel for lot 6
and 6P, and (ii) all existing  applicable  municipal,  local,  state and federal
laws, statutes, rules, regulations and ordinances. Lessor shall pay all costs of
constructing the Building Shell.

         (c) Construction of Tenant Improvements.  All improvements not included
within the scope of the Building  Shell shall be deemed  "Tenant  Improvements."
Lessor,  using the General  Contractor,  shall construct the Tenant Improvements
and Lessee shall pay all costs associated with same.

         (d) Tenant  Improvement Plans and Cost Estimate If Lessor's  Contractor
Constructs  Tenant  Improvement.  Lessee shall work with  Lessor's  architect to
develop  interior  schematic  drawings and Lessee shall approve  final  interior
schematic  drawings  for the Building no later than  September  1, 2000.  Lessee
shall work with Lessor's architect to develop working drawings outlining,  among
other things,  Lessee's wall layout,  detailed  electrical and air  conditioning
requirements  and finishes  ("Working  Drawings") and Lessee shall approve final
Working  Drawings  on or before  November  24,  2000.  The cost of the  interior
schematic  drawings and Working  Drawings  shall be a Tenant  Improvement  cost.
Based on this  information,  Landlord  shall  cause the  General  Contractor  to
prepare and deliver to Lessee a budget for the Tenant  Improvements  ("Budget").
Lessee shall approve the Budget (or disapprove and modify the same with Lessor's
consent),  in writing,  within ten (10)  business days  thereafter.  The Working
Drawings  and Budget  must be  approved  by Lessor in writing  and be of quality
equal to or greater  than the  Interior  Specifications  Standards  set forth in
Exhibit "C." Once the Budget is  approved,  Lessor shall enter into a guaranteed
maximum price contract with the General  Contractor for the  construction of the
Tenant  Improvements in accordance with the approved final Working Drawings (the
"Construction Contract").  Lessee shall have no liability for costs to construct
the Tenant  Improvements  which are in excess of such  guaranteed  maximum price
except for Change Orders and any costs resulting from Lessee Delay. Lessee shall
have no liability for traffic mitigation payments.

         (e) Construction Plans. Attached as Exhibit "C" to this Lease is a Work
Letter Agreement for Tenant Improvements, and Exhibit "D," Cost Responsibilities
of Lessor and Lessee,  which  together  with this  Section  2.04,  describe  the
planning and payment  responsibilities  of the Lessor and Lessee with respect to
the construction of the Shell Building and Tenant Improvements at the Premises.

                                      -4-
<PAGE>

         (f) No Tenant  Improvement  Allowance.  Lessor shall  provide to Lessee
semi-improved  "cold" shell  facilities  as  described in Exhibit "D"  attached.
Subcontracts  for all  Tenant  Improvement  Work shall be  obtained  by a sealed
competitive  bid process  (involving  at least two qualified  bidders)  wherever
practical  and as to work done  without  such  process,  Lessor  or the  General
Contractor  shall  provide  reasonable  assurance  to  Lessee  that the cost and
expense of same is competitive in the industry for  first-class  workmanship and
materials.

         (g)  Payment  for Tenant  Improvements.  Within ten (10) days after the
Budget is approved by Lessor and Lessee,  Lessee shall deposit the entire amount
budgeted for the entire Tenant Improvement  construction schedule (together with
the cost of any Tenant Improvements  already made) in an interest bearing escrow
account with Lessor's Construction Lender the interest being credited to Lessee,
provided that, if Lessor's  Construction  Lender fails to agree in writing that,
upon any foreclosure,  Lender or any other successor in interest to Lessor, will
either apply the  deposited  amount in  accordance  with the  provisions of this
Lease or  return  same to  Lessee,  said  escrow  account  shall be opened at an
institution,  other than Lessor's Construction Lender,  pursuant to joint escrow
instructions of Lessor and Lessee providing for disbursements in accordance with
this Lease. Said construction lender (or other  institutional  escrow holder, as
the  case may be)  shall  issue  payments  from  said  account  pursuant  to the
construction  contract  for  the  Tenant  Improvements,  until  the  account  is
exhausted, whereupon any remaining payments shall be made 100% by Lessee. Lessor
shall manage the  construction of the Tenant  Improvements for a supervision fee
of 2.5% of the Budget (as such budget may change by  agreement  of the  parties)
due and payable in nine equal monthly installments beginning on the first day of
the calendar  month  following  the calendar  month in which the Budget is first
approved.

         (h) Lessee's  Fixturing  Period.  Lessor shall provide Lessee access to
the Premises  during the thirty (30) day period prior to the  Commencement  Date
("Lessee's  Fixturing  Period") for the purpose of  installing  furnishings  and
equipment,  e.g.  security  system,  furniture system and phone and data system,
provided,  that Lessee and Lessee's employees and contractors shall at all times
avoid  interfering  with  Lessor's  ongoing  work to  bring  the  Premises  to a
substantially  completed  condition.  Except for payment of Base Rent, all terms
and  provisions  of this Lease shall apply  during  Lessee's  Fixturing  Period,
including,  without  limitation,  Lessee's  indemnity and other  obligations set
forth in Sections 7.07., 7.08. and 17.22. hereof.

                                   ARTICLE III
                                      TERM

         Section 3.01.  Lease Term.

         (a)  Commencement  Date. The term of this Lease ("Lease Term") shall be
for twelve (12) years  beginning on the earlier of (i) the date a Certificate of
Occupancy  first is issued  affecting  the  Building,  or (ii) the date on which
Lessee first  occupies or conducts  business at the Premises (the  "Commencement
Date")  provided that, (i) for each day of delay by Lessee in

                                      -5-
<PAGE>

failing to approve the interior  schematic drawings or the Working Drawings when
required  under  Section  2.04(d),  or (ii) for each day of delay by  Lessee  in
failing to approve the Budget,  in writing,  within ten (10) business days after
delivery by the General Contractor as provided in Section 2.04(d),  or (iii) for
each day of  delay  caused  by any  changes  to the  approved  Working  Drawings
requested  by  Lessee,  or (iv) for each day that any other act or  omission  by
Lessee causes the  construction  schedule for Tenant  Improvements to be delayed
(collectively  "Lessee Delay"), the Commencement Date shall occur one (1) day in
advance of the date of the  Certificate of Occupancy for each such day of delay,
provided  that,  in  no  event  shall  Lessee  Delay  be  used  to  advance  the
Commencement  Date to a date earlier than August 1, 2001. For example,  if seven
(7) days of Lessee  Delay  causes the date of  issuance  of the  Certificate  of
Occupancy  to  occur  on  August  8,  2001  rather  than  August  1,  2001,  the
Commencement Date shall be August 1, 2001 for all purposes, including payment of
Base Rent and  Additional  Rent.  The Lease Term  shall  expire,  unless  sooner
terminated or extended as provided  herein,  on the date which completes  twelve
(12) years after the  Commencement  Date  occurs or is deemed to have  occurred,
e.g. if the date on which the Certificate of Occupancy is issued or deemed to be
issued for the Building is August 1, 2001, the Lease Term shall expire on August
31, 2013 and if that date is September  3, 2001,  the Lease Term shall expire on
September 2, 2013 ("Expiration  Date").  The parties shall execute a "Memorandum
of Commencement of Lease Term" when the Commencement  Date becomes known,  which
shall  include a  certification  of the  actual  Rentable  Area of the  Building
determined by the methodology  described in Section 2.01. and the actual monthly
installments  of Base Rent to be paid  pursuant to Section  4.01.,  and shall be
substantially in the form attached hereto as Exhibit "E."

         (b)  Scheduled   Commencement   Date.  Lessor  shall  use  commercially
reasonable  efforts to cause the  Certificate  of Occupancy for Building 4 to be
issued no later  than  August  1, 2001  ("Scheduled  Commencement  Date").  If a
Certificate of Occupancy is not issued for Building 4 on or before the Scheduled
Commencement  Date,  this failure shall not affect the validity of this Lease or
the  obligations  of Lessee under it. If the  Commencement  Date is adjusted for
delay from any cause, the Expiration Date shall be likewise  adjusted for a like
period.

         (c) Termination in Event of Delay.

                  (i) If for any reason Lessor has not commenced construction of
the Building Shell (i.e.  begun driving piles for the  foundation) by January 1,
2001,  then Lessee,  at its sole election,  may terminate this Lease upon giving
notice within ten (10) days thereafter.

                  (ii)  If  Lessor  is  unable  to  cause  the   issuance  of  a
Certificate  of Occupancy for the  Building,  on or before the date which is one
hundred eighty (180) days after the Scheduled  Commencement  Date (for any cause
other than Lessee Delay or Force Majeure,  Delays excused under Section 17.21.),
Lessee, at its sole election, may terminate this Lease upon giving notice within
ten (10) days thereafter.

                                      -6-
<PAGE>

                  (iii)  If  Lessor  is  unable  to  cause  the  issuance  of  a
Certificate  of  Occupancy  for the  Building,  on or before  the date  which is
eighteen  (18)  months  (extended  by any  Lessee  Delay)  after  the  Scheduled
Commencement  Date (for a cause  other than  Lessee  Delay),  of which a maximum
amount of twelve (12) months of delay may be due to Force  Majeure  Delays,  but
which date shall not otherwise be extended for Force Majeure Delays,  Lessee, at
its sole  election,  may terminate this Lease upon giving notice within ten (10)
days thereafter.

                  (iv) In the  event of any  termination  by Lessee  under  this
Section  3.01(c)  all  amounts  previously   deposited  by  Lessee  with  Lessor
(including,  without  limitation,  any prepaid rent, the Security  Deposit,  and
undisbursed Tenant  Improvement  costs) shall be returned to Lessee.  Failure to
give such notice within any specified  then (10) day time period  constitutes an
irrevocable  waiver of the  foregoing  rights to  terminate  under this  Section
3.01(c).

         Section 3.02.  Option to Extend.

         (a)  Exercise.  Lessee is given one (1) option to extend the Lease Term
("Option to Extend") for a five (5) year period  ("Extended Term") following the
date on which the initial Lease Term would otherwise expire, which option may be
exercised only by written notice  ("Option  Notice") from Lessee to Lessor given
not less than  twelve (12)  months  prior to the end of the  initial  Lease Term
("Option Exercise Date");  provided,  however,  if Lessee is in material default
under  this Lease  (beyond  the  expiration  of any  applicable  notice and cure
period) on the Option  Exercise  Date or on any day  thereafter on or before the
last  day of the  initial  Lease  Term,  the  Option  Notice  shall  be  totally
ineffective,  and this Lease shall  expire on the last day of the initial  Lease
Term, if not sooner  terminated in accordance with the terms of this Lease.  The
right of Lessee to  exercise  an Option to Extend  shall not be  affected by any
sublease or assignment of this Lease previously  entered into by Lessee pursuant
to the provisions of this Lease.

         (b) Extended  Term Rent.  In the event Lessee  exercises  its Option to
Extend  set forth  herein,  all the terms and  conditions  of this  Lease  shall
continue to apply except that the Base Rent payable by Lessee during each Option
Term shall be equal to one hundred  percent  (100%) of Fair Market Rent (defined
below),  as determined under  subparagraph  (c) below.  "Fair Market Rent" shall
mean the effective rate being charged (including periodic adjustments thereto as
applicable  during the period of the Extended  Term),  for  comparable  space in
similar buildings in the Project,  i.e. of a similar age and quality considering
any  recent  renovations  or  modernization,  and floor  plate  size or, if such
comparable   space  is  not  available,   adjustments   shall  be  made  in  the
determination of Fair Market Rent to reflect the age and quality of the Building
as contrasted to other  buildings  used for  comparison  purposes,  with similar
amenities,  taking into consideration:  size, location,  floor level,  leasehold
improvements or allowances provided or to be provided, term of the lease, extent
of  services  to  be  provided,   the  time  that  the  particular   rate  under
consideration became or is to become effective,  and any other relevant terms or
conditions applicable to both new and renewing tenants.

                                      -7-
<PAGE>

         (c)      Determination of Fair Market Rent.

                  (i)  Negotiation.  If Lessee so exercises its Option to Extend
in a timely  manner,  the parties shall then meet in good faith to negotiate the
Base Rent for the Premises for the Extended  Term,  during the first thirty (30)
days  after  the date of the  delivery  by  Lessee  of the  Option  Notice  (the
"Negotiation  Period").  If, during the Negotiation Period, the parties agree on
the Base Rent applicable to the Premises for the Extended Term, then such agreed
amount shall be the Base Rent payable by Lessee during the Extended Term.

                  (ii) Arbitration.  In the event that the parties are unable to
agree on the Base Rent for the  Premises  within the  Negotiation  Period,  then
within ten (10) days after the expiration of the Negotiation  Period, each party
shall  separately  designate  to the other in writing an  appraiser to make this
determination. Each appraiser designated shall be a member of MAI and shall have
at least ten (10) years  experience in appraising  commercial real property,  of
similar  quality and use as the Premises,  in San Mateo  County.  The failure of
either  party to appoint an appraiser  within the time  allowed  shall be deemed
equivalent to appointing the appraiser  appointed by the other party,  who shall
then  determine  the Fair Market Rent for the Premises  for the  Extended  Term.
Within  five  (5)  business  days  of  their  appointment,  the  two  designated
appraisers shall jointly designate a third similarly qualified appraiser. Within
thirty (30) days after their appointment,  each of the two appointed  appraisers
shall submit to the third appraiser a sealed envelope  containing such appointed
appraiser's  good faith  determination  of the Fair Market Rent for the Premises
for the Extended  Term;  concurrently  with such  delivery,  each such appraiser
shall deliver a copy of his or her  determination  to the other  appraiser.  The
third  appraiser   shall  within  ten  (10)  days  following   receipt  of  such
submissions,  then determine  which of the two appraisers'  determinations  most
closely  reflects  Fair Market Rent as defined  above.  The  determination  most
closely reflecting the third appraiser's determination shall be deemed to be the
Fair Market Rent for the Premises  during the Extended Term; the third appraiser
shall have no rights to adjust, amend or otherwise alter the determinations made
by the  appraiser  selected by the parties,  but must select one or the other of
such appraisers' submissions. The determination by such third appraiser shall be
final and binding upon the parties.  Said third appraiser shall,  upon selecting
the determination  which most closely  resembles Fair Market Rent,  concurrently
notify both parties  hereto.  The Base Rent for the  Extended  Term shall be the
determination  so  selected.  The  parties  shall share the  appraisal  expenses
equally.  If the Extended Term begins prior to the  determination of Fair Market
Rent,  Lessee shall pay monthly  installments  of Base Rent equal to one hundred
ten  percent  (110%) of the monthly  installment  of Base Rent in effect for the
last year of the initial  Lease Term.  Once a  determination  is made,  any over
payment or under payment shall be  reimbursed  as a credit  against,  or paid by
adding to, the monthly installment of Base Rent next falling due.

                                   ARTICLE IV
                             RENT: TRIPLE NET LEASE

         Section  4.01.  Base Rent.  Lessee  shall pay to Lessor as Base Rent an
initial monthly  installment of Four Dollars and  Twenty-Five  Cents ($4.25) per
square foot of Rentable Area as

                                      -8-
<PAGE>

determined  under Section 2.01.,  in advance,  on the first day of each calendar
month of the Lease Term,  commencing on the Commencement Date. Base Rent for any
period  during the Lease  Term  which is for less than one month  shall be a pro
rata  portion  of the  monthly  installment  (based on the  actual  days in that
month).

         Section 4.02. Rent Adjustment. The Base Rent set forth in Section 4.01.
above shall be adjusted upward by an annual compounded  increase of four percent
(4%), as of the first day of the thirteenth (13th) full calendar month following
the Commencement  Date and as of each anniversary of that date thereafter during
the Lease Term, as shown on Exhibit "E" attached hereto.

         Section 4.03.  First Payment of Base Rent. The estimated  first monthly
payment of Base Rent in the sum of Four  Hundred  Eighty-Seven  Thousand,  Three
Hundred  Thirty-Four  Dollars and Seventy-Five Cents  ($487,334.75) shall be due
within five (5) days after Lessee's  execution of this Lease. Base Rent payments
shall resume on the first day of the calendar month  immediately  succeeding the
Commencement  Date.  If the  Commencement  Date is other than the first day of a
calendar month,  the first payment of Base Rent  subsequent to the  Commencement
Date, but only that payment of Base Rent,  shall be reduced by any excess of the
first Base Rent  installment  paid in advance over the prorated  amount actually
due for such partial first month of the Lease Term.

         Section 4.04. Absolute Triple Net Lease. This Lease is what is commonly
called an  "Absolute  Triple Net Lease," it being  understood  that Lessor shall
receive the Base Rent set forth in Section  4.01.  free and clear of any and all
expenses, costs, impositions, taxes, assessments, liens or charges of any nature
whatsoever.  Lessee shall pay all rent in lawful  money of the United  States of
America to Lessor at the notice  address  stated herein or to such other persons
or at such other places as Lessor may  designate in writing on or before the due
date specified for same without prior demand, set-off or deduction of any nature
whatsoever.  It is the intention of the parties hereto that this Lease shall not
be terminable for any reason by Lessee  expressly  provided in Section 3.01, and
that,  except as herein  expressly  provided  in  Articles  III,  VIII and XIII,
concerning  delay,  destruction  and  condemnation,  Lessee shall in no event be
entitled to any abatement of or reduction in rent payable under this Lease.  Any
present or future law to the  contrary  shall not alter  this  agreement  of the
parties.

         Section 4.05. Additional Rent. In addition to the Base Rent reserved by
Section  4.01.,  Lessee  shall pay,  as  Additional  Rent (i) 100% as to amounts
applicable  solely to the Premises or Property and Lessee's  Share is to amounts
applicable  to the  Project or Common Area of all taxes,  assessments,  fees and
other impositions payable by Lessee in accordance with the provisions of Article
IX, and  insurance  premiums in accordance  with the  provisions of Article VII,
(ii)  Lessee's  Share  of  Operating   Expenses   defined  below  provided  that
notwithstanding the foregoing, prior to January 1, 2002, during the construction
phase of the Project,  Lessee shall pay 100% of Operating Expenses applicable to
the property or Premises in lieu of paying  Lessee's Share on the specific items
being  billed,  and (iii)  any other  charges,  costs  and  expenses

                                      -9-
<PAGE>

(including  appropriate  reserves  therefor) which are contemplated or which may
arise under any provision of this Lease during the Lease Term, plus a Management
Fee to  Lessor  equal  to 3% of the Base  Rent.  The  Management  Fee is due and
payable,  in advance,  with each  installment of Base Rent. All of such charges,
costs,  expenses,  Management  Fee and  all  other  amounts  payable  by  Lessee
hereunder,  shall constitute  Additional Rent, and upon the failure of Lessee to
pay any of such  charges,  costs or expenses,  Lessor shall have the same rights
and  remedies as  otherwise  provided in this Lease for the failure of Lessee to
pay Base Rent.

         Section 4.06. Security Deposit. Upon the date this Lease is executed by
Lessee, Lessee shall deposit with Lessor a Security Deposit equal to twelve (12)
month's  estimated  Base  Rent in the  amount  of Five  Million,  Eight  Hundred
Forty-Eight Thousand,  Eight Hundred One Dollars and no cents ($5,848,017.00) in
the form of an unconditional,  irrevocable letter of credit.  without documents,
with Lessor as  beneficiary,  drawable in whole or in part,  and  providing  for
payment  in San  Francisco  on  presentation  of  Lessee's  drafts  on sight and
otherwise  from  a bank  and  in a form  acceptable  to  Lessor  (the  "Security
Deposit").  The  Security  Deposit  shall be held by Lessor as security  for the
faithful performance by Lessee of all of the terms, covenants, and conditions of
this  Lease  applicable  to  Lessee.  If Lessee  defaults  with  respect  to any
provision of this Lease, including but not limited to the provisions relating to
the condition of the Premises upon Lease Termination,  Lessor may (but shall not
be required to) use, apply or retain all or any part of the Security Deposit for
the payment of any amount which  Lessor may spend by reason of Lessee's  default
or to compensate  Lessor for any loss or damage which Lessor actually suffers by
reason of Lessee's default. If any portion of the Security Deposit is so used or
applied,  Lessee shall,  within ten days after written demand therefor,  deposit
cash with Lessor in an amount  sufficient to restore the Security Deposit to its
original  amount.  Lessee's  failure to do so shall be a Default by Lessee.  The
rights of Lessor  pursuant to this Section  4.06.  are in addition to any rights
which  Lessor  may have  pursuant  to  Article  12 below.  If  Lessee  fully and
faithfully  performs  every  provision  of this Lease to be performed by it, the
Security Deposit or any balance thereof shall be returned (without  interest) to
Lessee (or,  at  Lessor's  option,  to the last  assignee of Lessee's  interests
hereunder) at Lease  expiration or termination  and after Lessee has vacated the
Premises.  Lessor  shall not be required to keep the Security  Deposit  separate
from Lessor's general funds or be deemed a trustee of same. The letter of credit
shall be  reduced  to an amount  equal to the total of three (3)  months of Base
Rent  at  the  then  current  rate,  if  Lessee  establishes  through  financial
statements prepared in accordance with generally accepted accounting  principles
and in a form acceptable to Lessor that Lessee has achieved annual revenue for a
period of at least one (1) fiscal year of at least Seven  Hundred  Fifty Million
Dollars ($750,000,000) and has further achieved quarterly operating profit of at
least One  Hundred  Million  Dollars  ($100,000,000)  for not less than four (4)
consecutive quarters.

         Section 4.07.  Operating Expenses.

         (a) Definition.  "Operating  Expenses"  shall mean and include,  to the
extent not billed as a cost or expense of the  Premises or Property  pursuant to
Article  VII or IX, all costs and  expenses  of every  kind and  nature  paid or
incurred  by  Lessor  (whether  obligated  to do so or  undertaken  at  Lessor's
discretion) in the operation,  maintenance  and replacement of the Common Areas,
including Common Area buildings and improvements  located within the Project and
including  Common Areas

                                      -10-
<PAGE>

located  on the  Property.  Such cost and  expenses  shall  include,  but not be
limited to, costs of management;  cleaning;  lighting; the costs of maintaining,
repairing and replacing all Common Area improvements  (replacing shall be deemed
to include but not be limited to the  replacement  of light poles and  fixtures,
storm and sanitary sewers,  parking lots,  driveways and roads),  repairs to and
maintenance   of   the   structural   and   non-structural   portions   of   the
amenity/athletic facility;  supplies, tools, equipment and materials used in the
operation and  maintenance of the Project;  snow removal;  parking lot striping;
removal  of trash,  rubbish,  garbage  and other  refuse;  painting;  removal of
graffiti;  painting of exterior walls;  landscaping;  providing  security to the
extent  Lessor  determines in its sole  discretion to do so (including  security
systems  and/or systems  designed to safeguard life or property  against acts of
God and/or  criminal  and/or  negligent  acts,  and the costs of  maintaining of
same); public liability,  property damage, fire insurance,  earthquake and flood
coverage,  all  risk or  special  form  insurance  coverage,  rent  interruption
insurance coverage,  the costs of excess award above insurance aggregate,  total
compensation  and benefits  (including  premiums for workers'  compensation  and
other insurance) paid to or on behalf of employees, including but not limited to
full or part time on-site management or maintenance personnel; personal property
taxes;  fire  protection and fire hydrant  charges  (including  fire  protection
system  signaling  devices,  now  or  hereafter  required,   and  the  costs  of
maintaining of same);  water and sewer  charges;  utility  charges;  license and
permit  fees  necessary  to operate  and  maintain  the  initial  cost of or the
reasonable  depreciation  of equipment  used in operating  and  maintaining  the
Common Areas and rent paid for leasing any such equipment; reasonable cost of on
or off site  storage  space of any and all items  used in  conjunction  with the
operation,  maintenance and management of the Project, including but not limited
to tools, machinery, records, decorations, tables, benches, supplies and meters;
the cost of and  installation  cost of any and all items which are installed for
the purpose of reducing Operating Expenses, increasing building or public safety
or  which  may be then  required  by  governmental  authority,  laws,  statutes,
ordinances  and/or  regulations,  a use  privilege  consisting  of Base Rent and
Operating  Expenses allocated to the  Amenities/Athletic  Facility and all costs
and expenses  arising from the operation of same.  Lessor shall apply all of the
following amounts received by Lessor to reduce Operating Expenses; (1) fees paid
by any user other than tenants of the Project  (including,  without  limitation,
the public and Lessee's  employees) for use of the  Amenities/Athletic  Facility
and any of the other Common Areas; (2) base rent and additional rent paid by the
operators of the Amenities/Athletic  Facility and any of the other Common Areas.
Lessor  agrees to use  commercially  reasonable  efforts to seek such amounts to
reduce the amount of Operating Expenses payable by Lessee hereunder,  bearing in
mind the  amenity  nature of the Common  Areas and  restrictions  imposed by the
City.

         (b)  Payment.  Lessee shall pay Lessee's  Share of  Additional  Rent in
monthly  installments on the first day of each month in an amount set forth in a
written  estimate by Lessor.  Lessor  agrees  that it will base its  estimate on
Lessor's experience in managing  office/research and development projects and in
a reasonable  manner.  Within  ninety (90) days  following the end of the period
used by Lessor in  estimating  Lessor's  cost,  Lessor shall furnish to Lessee a
statement (hereinafter referred to as "Lessor's Statement") of the actual amount
of Lessee's

                                      -11-
<PAGE>

Share  of such  Additional  Rent  for  such  period.  Within  thirty  (30)  days
thereafter,  Lessee shall pay to Lessor,  as  Additional  Rent,  or Lessor shall
remit to  Lessee,  as the case may be,  the  difference  between  the  estimated
amounts  paid by Lessee and the actual  amount of Lessee's  Share of  Additional
Rent for such period as shown by such  Statement.  Lessee's  Share of Additional
Rent for the ensuing  estimation  period  shall be  adjusted  upward or downward
based upon Lessor's Statement.

         (c) Lessee's Share.  For purposes  hereof,  "Lessee's Share" shall mean
the rentable square footage of the Building subject to this Lease at the time in
question divided by the greater of (i) 1,550,000,  (ii) at the time in question,
a number equal to the number of rentable  square feet which is then  constructed
at the Project, measured on a dripline basis.

         (d) Exclusions. For purposes of this Lease, the term Operating Expenses
shall not include (and Lessee shall have no liability for) any of the following:
school  fees  and  other  charges  imposed  under  the  Development   Agreement;
construction  costs of the  Pacific  Shores  Infrastructure  (as  defined in the
Development  Agreement);  construction  costs of any child care  facility at the
Project or payment to the City in lieu of constructing  the child care facility;
construction of any Common Area improvements;  traffic  mitigation  payments due
under  Section  13 of  the  Development  Agreement;  legal  fees,  permit  fees,
architectural  and engineering  fees related to the development and construction
of the Project;  any off-site  improvements  (other than the widening of Seaport
Boulevard as set forth below); the purchase of sanitary sewer capacity; costs to
fill  wetlands at the  Project or restore  wetlands  habitat;  costs to relocate
power lines or other utilities;  marketing costs, costs of leasing  commissions,
attorneys'  fees and other  costs  and  expenses  incurred  in  connection  with
negotiations  or disputes  with  prospective  tenants or other  occupants of the
Project;  costs  incurred  by  Landlord  in  the  repairs,   capital  additions,
alterations or  replacements  made or incurred to rectify or correct  defects in
design,   materials  or  workmanship  in  connection  with  the  Project;  costs
(including  permit,  license and  inspection  costs)  incurred in  renovating or
otherwise improving,  decorating or redecorating  rentable space for prospective
tenants or vacant rentable space;  costs incurred due to the violation by Lessor
of the terms,  covenants and  conditions of any lease or license of space in the
Project;  costs of general  overhead and general  administrative  expenses,  not
including  management  fees and building  office  expenses which are included in
operating expenses by landlords of comparable buildings;  marketing costs, legal
fees,  space  planner's  fees,  and  advertising  and  promotional  expenses and
brokerage fees incurred in connection with the original development,  subsequent
improvement,  or original or future  leasing of the Project;  any bad debt loss,
rent loss,  or reserves for bad debts or rent loss;  costs  associated  with the
operation of the business of the  partnership  or entity which  constitutes  the
Lessor, as the same are distinguished from the costs of operation of the Project
(which shall specifically  include,  but not be limited to, costs of partnership
accounting and legal matters, costs of defending any lawsuits with any mortgagee
(except  as the  actions  of the  Lessee  may be in  issue),  costs of  selling,
syndicating, financing, mortgaging or hypothecating any of the Lessor's interest
in the Project,  and costs  incurred in  connection  with any  disputes  between
Lessor and its  employees,  between  Lessor and Project  management,  or between
Lessor and other tenants or occupants,  and Lessor's general corporate  overhead
and general and administrative expenses); the wages and benefits of any employee
who does not

                                      -12-
<PAGE>

devote  substantially all of his or her employed time to the Project unless such
wages and benefits are prorated to reflect time spent on operating  and managing
the Project  vis-a-vis time spent on matters unrelated to operating and managing
the Project; provided, that in no event shall Operating Expenses for purposes of
this Lease include wages and/or  benefits  attributable  to personnel  above the
level of  Project  manager  or  Project  engineer;  interest,  charges  and fees
incurred on debt,  payments on mortgages  and amounts paid as ground  rental for
the real property underlying the Project by the Lessor; any costs covered by any
warranty,  rebate, guarantee or service contract which are actually collected by
Lessor  (which shall not prohibit  Lessor from passing  through the costs of any
such service contract if otherwise includable in Operating Expenses);  interest,
late  charges  and  tax  penalties  incurred  as  a  result  of  Lessor's  gross
negligence,  inability or  unwillingness  to make  payments or file returns when
due; any expense, to the extent Lessor receives reimbursement for such costs, to
remedy damage caused by or resulting from the gross  negligence of any licensees
in the Project, including their agents, contractors and employees;  reserves for
anticipated future expenses;  costs or repairs or other work occasioned by fire,
casualty  or other  risk to the  extent  of  proceeds  received  from  insurance
maintained  (or  obligated to be  maintained  pursuant to this Lease) by Lessor;
costs,  fines,  or fees  incurred  by Lessor due to Lessor's  violations  of any
federal,  state or local law,  statute or  ordinance,  or any rule,  regulation,
judgment or decree of any governmental rule or authority; any costs representing
an amount paid to a person, firm,  corporation or other entity related to Lessor
which is in excess of the amount  which  would have been paid in the  absence of
such relationship;  capital costs incurred to bring the Building or the Property
into  compliance  as of the  Commencement  Date  with any use  permit  or design
permit,  any  CC&R's,  underwriter's  requirements,  or Laws  applicable  to the
Premises,  the Building or the Project.  Nothing contained in this Section shall
prohibit or limit  Lessor from passing  through,  in Article IX, any one or more
specified items as part of the Community Facility District Bond.

         Section 4.08 Lessee's Right to Review Supporting Data.

                  (1) Exercise of Right by Lessee.  Provided  that Lessee is not
in default under this Lease and provided  further that Lessee strictly  complies
with the provisions of this Paragraph, Lessee shall have the right to reasonably
review  supporting  data for any  portion of a Lessor's  statement  that  Lessee
claims is  incorrect.  In order for  Lessee to  exercise  its right  under  this
Paragraph,  Lessee  shall,  within  thirty  (30) days  after  any such  Lessor's
statement is sent, deliver a written notice to Lessor specifying the portions of
the  Lessor's  statement  that are  claimed to be  incorrect,  and Lessee  shall
simultaneously  pay to Lessor all amounts due from Lessee to Lessor as specified
in the Lessor's  statement.  Except as  expressly  set forth in  subparagraph  3
below, in no event shall Lessee be entitled to withhold,  deduct,  or offset any
monetary  obligation  of  Lessee to Lessor  under the Lease  including,  without
limitation,  Lessee's obligation to make all Base Rent payments and all payments
for Additional Rent pending the completion of, and regardless of the results of,
any review  under this  Paragraph.  The right to review  granted to Lessee under
this  Paragraph may only be exercised  once for any Lessor's  statement,  and if
Lessee  fails to meet  any of the  above  conditions  as a  prerequisite  to the
exercise  of such  right,  the  right  of  Lessee  under  this  Paragraph  for a
particular Lessor's statement shall be deemed waived.

                                      -13-
<PAGE>

                  (2) Procedures  for Review.  Lessee  acknowledges  that Lessor
maintains  its  records  for the  Building  and  Project  at its  offices in San
Francisco,  and Lessee therefore agrees that any review of supporting data under
this Paragraph  shall occur at such location.  Any review to be conducted  under
this Paragraph  shall be at the sole expense of Lessee and shall be conducted by
an independent  (i.e. not then engaged by lessee for any other purposes) firm of
certified  public  accountants of national  standing.  Lessee  acknowledges  and
agrees  that any  supporting  data  reviewed  under  this  Paragraph  constitute
confidential information of Lessor, which shall not be disclosed to anyone other
than the  accountants  performing  the review and the  principals  of Lessee who
receive the results of the review.  The  disclosure of such  information  to any
other person, whether or not caused by the conduct of Lessee, shall constitute a
material breach of this Lease.

                  (3) Finding of Error.  Any errors  disclosed  by the review of
supporting data under this Paragraph shall be promptly corrected,  provided that
Lessor shall have the right to cause another review of the supporting data to be
made by an independent  (i.e. not then engaged by Lessor for any other purposes)
firm of certified  public  accountants of national  standing.  In the event of a
disagreement  between the two  accounting  firms,  the review that discloses the
least amount of  deviation  from the  Lessor's  statement  shall be deemed to be
correct and its review shall be final and binding on both Lessor and Lessee.  If
the results of the review of supporting data taking into account, if applicable,
the results of any  additional  review  caused by Lessor  reveal that Lessee has
overpaid  obligations  for a preceding  period,  the amount of such  overpayment
shall be credit against Lessee's subsequent  installment  obligations to pay its
share of  Additional  Rent.  In the event that such results show that Lessee has
underpaid  its  obligations  for  a  preceding   period,   the  amount  of  such
underpayment  shall  be paid by  Lessee  to  Lessor  with  the  next  succeeding
installment  obligation of Additional Rent or, if the Lease has  terminated,  in
cash  within  thirty  (30)  days  after the  determination  of  underpayment  is
delivered to Lessee.

Each party shall pay the cost and expense of its chosen accounting firm.

                  (4)  Effect of  Lessee's  Default.  In the event  that  Lessee
becomes in default of its  obligations  under this Lease at any time  during the
pendency of a review of records under this Paragraph, said right to review shall
immediately cease and the matters originally set forth in the Lessor's statement
shall be deemed to be correct.

                                    ARTICLE V
                                       USE

         Section 5.01.  Permitted Use and Limitations on Use. The Premises shall
be used and occupied only for office,  research and  development,  together with
such  ancillary  uses  which do not  cause  excessive  wear of the  Premises  or
increase  the  potential  liability  of Lessor,  and for no other  use,  without
Lessor's prior written  consent.  Lessee shall not use, suffer or permit the use
of the  Premises  in any  manner  that will tend to create  waste,  nuisance  or
unlawful acts. In no event shall it be  unreasonable  for Lessor to withhold its
consent as to uses which it  determines  would tend to increase  materially  the
wear of the Premises or any part thereof or increase the potential

                                      -14-
<PAGE>

liability of Lessor or decrease the marketability, financability, leasability or
value of the  Premises.  Lessee  shall not do anything in or about the  Premises
which will (i) cause  structural  injury to the  Building or  Premises,  or (ii)
cause  damage  to any  part of the  Building  except  to the  extent  reasonably
necessary  for  the   installation  of  Lessee's  trade  fixtures  and  Lessee's
Alterations,  and then only in a manner which has been first  approved by Lessor
in  writing.  Lessee  shall not  operate any  equipment  within the  Building or
Premises which will (i) materially  damage the Building or the Common Area, (ii)
overload existing electrical systems or other mechanical equipment servicing the
Building,  (iii) impair the efficient  operation of the sprinkler  system or the
heating,  ventilating or air conditioning ("HVAC") equipment within or servicing
the  Building,  or (iv) damage,  overload or corrode the sanitary  sewer system.
Lessee shall not attach, hang or suspend anything from the ceiling,  roof, walls
or  columns of the  Building  or set any load on the floor in excess of the load
limits for which such items are designed nor operate hard wheel forklifts within
the Premises.  Any dust,  fumes, or waste products  generated by Lessee's use of
the Premises  shall be contained  and disposed so that they do not (i) create an
unreasonable fire or health hazard, (ii) damage the Premises, or (iii) result in
the violation of any law. Except as approved by Lessor,  Lessee shall not change
the exterior of the  Building,  or install any  equipment or antennas on or make
any  penetrations  of the  exterior or roof of the  Building.  Lessee  shall not
conduct  on any  portion of the  Premises  any sale of any kind,  including  any
public or private auction, fire sale,  going-out-of-business sale, distress sale
or  other  liquidation  sale.  No  materials,  supplies,  tanks  or  containers,
equipment, finished products or semifinished products, raw materials, inoperable
vehicles or articles of any nature  shall be stored upon or  permitted to remain
within the outside  areas of the  Premises  except in fully  fenced and screened
areas  outside the Building  which have been  designed for such purpose and have
been approved in writing by Lessor for such use by Lessee.

         Section 5.02.  Compliance with Law.

         (a) Lessor  shall  deliver the  Premises to Lessee on the  Commencement
Date (without  regard to the use for which Lessee will use the Premises) free of
violations of any covenants or  restrictions  of record,  or any applicable law,
building  code,  regulation  or ordinance in effect on such  Commencement  Date,
including  without  limitation,  the Americans with  Disability Act, and free of
Year Two Thousand computer programming defects.

         (b) Except as provided in paragraph 5.02.(a), Lessee shall, at Lessee's
cost and expense, comply promptly with all statutes,  ordinances,  codes, rules,
regulations,  orders,  covenants and  restrictions of record,  and  requirements
applicable  to the Premises  and  Lessee's  use and  occupancy of same in effect
during any part of the Lease Term, whether the same are presently foreseeable or
not, and without regard to the cost or expense of  compliance.  In the event any
compliance under this paragraph 5.02(b) is not caused by Lessee's particular use
or Alterations  and would require Lessee to make any capital  improvement to the
Premises, Lessor shall make such capital improvement, amortize the costs thereof
(including  interest at the Agreed Rate) over the useful life of the improvement
(as  determined  by Lessor in the  reasonable  exercise

                                      -15-
<PAGE>

of its  discretion)  and charge to Lessee as Additional  Rent,  such  amortizing
portion to be paid in equal monthly installments with payments of Base Rent.

         (c) By executing this Lease,  Lessee  acknowledges that it has reviewed
and  satisfied  itself as to its  compliance,  or intended  compliance  with the
applicable zoning and permit laws,  hazardous  materials and waste requirements,
and all other  statutes,  laws,  or  ordinances  relevant  to the uses stated in
Section 5.01., above.

         Section 5.03.  Condition of Premises at Commencement  Date.  Subject to
all of the terms of this  Lease  for the  construction  of Tenant  Improvements.
Lessor shall  deliver the Building to Lessee on the  Commencement  Date with the
Building  plumbing,  lighting,  heating,  ventilating,  air  conditioning,  gas,
electrical,  and sprinkler systems and loading doors as set forth in Exhibit "D"
in proper  operating  condition and built  substantially  in accordance with the
approved  plans  therefor,  and in a  workmanlike  manner.  Except as  otherwise
provided in this Lease,  Lessee hereby  accepts the Premises in their  condition
existing  as of  the  Commencement  Date,  subject  to  all  applicable  zoning,
municipal,  county and state laws,  ordinances  and  regulations  governing  and
regulating  the  use  and  condition  of the  Premises,  and  any  covenants  or
restrictions,  liens,  encumbrances and title exceptions of record,  and accepts
this Lease  subject  thereto  and to all  matters  disclosed  thereby and by any
exhibits attached hereto.  Lessee acknowledges that neither Lessor nor any agent
of Lessor has made any  representation  or  warranty as to the present or future
suitability of the Premises for the conduct of Lessee's business.

         Section 5.04.  Defective  Condition at Commencement  Date. In the event
that it is  determined,  and Lessee  notifies  Lessor in writing within one year
after the Commencement  Date, that any of the obligations of Lessor set forth in
Section  5.02.(a) or Section  5.03.(a) were not performed,  then it shall be the
obligation of Lessor, and the sole right and remedy of Lessee,  after receipt of
written  notice from Lessee  setting  forth with  specificity  the nature of the
failed performance,  to promptly,  within a reasonable time and at Lessor's sole
cost,  correct  same.  Lessee's  failure to give such  written  notice to Lessor
within  one year  after the  Commencement  Date shall  constitute  a  conclusive
presumption that Lessor has complied with all of Lessor's  obligations under the
foregoing sections 5.02. and 5.03., and any required  correction after that date
shall be  performed by Lessee,  at its sole cost and expense.  At the end of the
first year of the Lease  Term,  Lessor  shall  promptly  assign to Lessee all of
Lessor's contractor's, and/or manufacturer's guarantees,  warranties, and causes
of action.

         Section 5.05. Building Security. Lessee acknowledges and agrees that it
assumes  sole  responsibility  for security at the Premises and the Property for
its agents, employees, invitees, licensees, contractors, guests and visitors and
will provide such systems and personnel for same including,  without limitation,
the  Property,  as it deems  necessary or  appropriate  and at its sole cost and
expense.  Lessee  acknowledges and agrees that Lessor does not intend to provide
any security system or security  personnel at the Premises,  Property or Project
including, without limitation, at the Common Areas.

                                      -16-
<PAGE>

         Section  5.06.  Rules  and  Regulations.  Lessor  may from time to time
promulgate reasonable and nondiscriminatory rules and regulations applicable for
the care and orderly management of the Premises the Common Area and the Project.
Such rules and regulations  shall be binding upon Lessor upon delivery of a copy
thereof to Lessor,  and Lessor agrees to abide by such rules and regulations.  A
copy of the initial Rules and  Regulations is attached hereto as Exhibit "L." If
there is a conflict  between the rules and regulations and any of the provisions
of this Lease,  the provisions of this Lease shall prevail.  Lessor shall not be
responsible  for the violation of any such rules and  regulations by any person,
including,  without  limitation,  Lessee  or its  employees,  agents,  invitees,
licensees, guests, visitors or contractors.

                                   ARTICLE VI
                      MAINTENANCE, REPAIRS AND ALTERATIONS

         Section 6.01.  Maintenance of Premises.

         (a)  Throughout the Lease Term,  Lessee,  at its sole cost and expense,
shall keep,  maintain,  repair and replace the  Premises  (except as provided in
6.01.(b)) and all  improvements  and  appurtenances  in or serving the Premises,
including,  without  limitation,  all interior and exterior walls, all doors and
windows, the roof membrane,  all elevators and stairways,  all wall surfaces and
floor  coverings,  all  Tenant  Improvements  and  alterations,   additions  and
improvements installed during the Lease Term, all sewer,  plumbing,  electrical,
lighting, heating, ventilation and cooling systems, fire sprinklers, fire safety
and security systems,  fixture and appliances and all wiring and glazing, in the
same good order,  condition and repair as they are in on the Commencement  Date,
or may be put in during the Lease Term, reasonable wear excepted,  provided that
wear which could be  prevented  by first class  maintenance  shall not be deemed
reasonable.

         (b) Lessor,  at its sole cost and expense,  shall repair defects in the
exterior  walls  (including  all exterior  glass which is damaged by  structural
defects in such exterior walls),  supporting  pillars,  structural  walls,  roof
structure and foundations of the Building and sewer and plumbing systems outside
the  Building,  provided  that the need for repair is not  caused by Lessee,  in
which event Lessor shall, at Lessee's sole cost and expense, repair same. Lessor
shall  replace the roof  membrane  of the  Building,  the  parking lot  surface,
landscaping,  drainage,  irrigation,  sprinkler  and sewer and plumbing  systems
outside  the  Building  systems  when the useful life of each has  expired,  and
Lessee shall pay that  portion of the cost of each  replacement,  together  with
annual interest at the Agreed Rate which shall be amortized over the useful life
of each such  replacement  applicable to the balance of the Lease Term, in equal
monthly  installments  due and payable with  installments  of Base Rent provided
that as to repairs and  replacements  within the Common  Area,  Lessee shall pay
Lessee's  Share.  Lessee shall give Lessor written notice of any need of repairs
which are the obligation of Lessor  hereunder and Lessor shall have a reasonable
time to perform same.  Should  Lessor  default as provided in Section 12.03 with
respect to its  obligation  to make any of the repairs  assumed by it  hereunder
with  respect to the  Building,  Lessee  shall  have the right to  perform  such
repairs  and Lessor  agrees that within  thirty (30) days

                                      -17-
<PAGE>

after written demand accompanied by detailed invoice(s),  it shall pay to Lessee
the cost of any such repairs  together  with accrued  interest  from the date of
Lessee's payment at the Agreed Rate.  Lessor shall not be liable to Lessee,  its
employees,  invitees,  or licensees  for any damage to person or  property,  and
Lessee's  sole  right and remedy  shall be the  performance  of said  repairs by
Lessee with right of  reimbursement  from Lessor of the  reasonable  fair market
cost of said  repairs,  not  exceeding  the sum  actually  expended  by  Lessee,
together with accrued  interest from the date of Lessee's  payment at the Agreed
Rate,  provided that nothing  herein shall be deemed to create a right of setoff
or  withholding  by Lessee of Base Rent or Additional  Rent or any other amounts
due herein.  Lessee  hereby  expressly  waives all rights  under and benefits of
Sections  1941 and 1942 of the  California  Civil Code or under any similar law,
statute or  ordinance  now or hereafter in effect to make repairs and offset the
cost of same  against  rent or to  withhold  or delay any payment of rent or any
other of its  obligations  hereunder  as a result of any default by Lessor under
this Section 6.01.(b).

         (c) Lessee agrees to keep the Premises,  both inside and out, clean and
in sanitary condition as required by the health,  sanitary and police ordinances
and regulations of any political  subdivision having  jurisdiction and to remove
all  trash and  debris  which may be found in or  around  the  Premises.  Lessee
further agrees to keep the interior surfaces of the Premises, including, without
limitation, windows, floors, walls, doors, showcases and fixtures clean and neat
in appearance.

         (d) If Lessee  refuses or  neglects  to commence  such  repairs  and/or
maintenance  for which  Lessee is  responsible  under  this  Article VI within a
thirty (30) day period (or as soon as practical  and in no event later than five
(5) days,  if the  failure to initiate  the repair  threatens  to cause  further
damage  to the  Premises)  after  written  notice  from  Lessor  and  thereafter
diligently  prosecute  the same to  completion,  then  Lessor  may (i) enter the
Premises  (except  in an  emergency,  upon at least 24  hours  advanced  written
notice) during Lessor's business hours and cause such repairs and/or maintenance
to be made and  shall  not be  responsible  to  Lessee  for any  loss or  damage
occasioned  thereby and Lessee  agrees that upon demand,  it shall pay to Lessor
the reasonable cost of any such repairs, not exceeding the sum actually expended
by Lessor,  together with accrued  interest from the date of Lessor's payment at
the Agreed Rate and (ii) elect to enter into a maintenance  contract at a market
rate for first-rate maintenance with a third party for the performance of all or
a part of Lessee's maintenance obligations,  whereupon, Lessee shall be relieved
from its obligations to perform only those  maintenance  obligations  covered by
such  maintenance  contract,  and  Lessee  shall  bear the  entire  cost of such
maintenance  contract which shall be paid in advance,  as Additional  Rent, on a
monthly basis with Lessee's Base Rent payments.

         Section  6.02.  Maintenance  of Common  Areas.  Subject to 6.01.(c) and
subject  to  Lessee  paying  Lessee's  Share of the cost  and  expense  for same
pursuant to Section 4.05 and 4.07 Lessor shall maintain,  repair and replace all
landscape,  hardscape and other  improvements  within the Common Areas and shall
operate  and  manage  the  Amenities/Athletic  Facility  and other  Common  Area
features and facilities  described in Section 2.02 including without limitation,
all landscape,  hardscape and other improvements within the outside areas of the
Premises located on

                                      -18-
<PAGE>

the  Property,  including  without  limitation,  landscaping,  curbs,  walkways,
driveways, parking areas and lighting and sprinkler systems.

         Section 6.03. Alterations,  Additions and Improvements. No alterations,
additions,  or  improvements  ("Alterations")  shall be made to the  Premises by
Lessee  without  the prior  written  consent  of Lessor  which  Lessor  will not
unreasonably withhold, provided, however, that Lessee may make Alterations which
do not affect the Building systems,  exterior appearance,  structural components
or  structural  integrity  and  which do not  exceed  collectively  One  Hundred
Thousand Dollars ($100,000) in cost within any twelve (12) month period, without
Lessor's  prior  written  consent.  As a  condition  to Lessor's  obligation  to
consider any request for consent hereunder,  Lessee shall pay Lessor upon demand
for the reasonable costs and expenses of consultants,  engineers, architects and
others  for  reviewing   plans  and   specifications   and  for  monitoring  the
construction  of any proposed  Alterations.  Lessor may require Lessee to remove
any such  Alterations  at the expiration or termination of the Lease Term and to
restore the  Premises to their prior  condition  by written  notice  given on or
before the earlier of (i) the  expiration  of the Lease Term or (ii) thirty (30)
days after termination prior to the expiration of the Lease Term of the Lease or
(iii) thirty (30) days after a written  request from Lessee for such notice from
Lessor provided,  that, if Lessee requests same from Lessor,  Lessor will notify
Lessee  within five (5) business  days after  receipt of Lessee's  request and a
copy of all plans and specifications for the proposed Alteration whether it will
require removal.  All Alterations to be made to the Premises shall be made under
the supervision of a competent,  California  licensed architect and/or competent
California  licensed  structural  engineer  (each of whom has been  approved  by
Lessor) and shall be made in accordance with plans and specifications which have
been  furnished to and approved by Lessor in writing  prior to  commencement  of
work. All Alterations  shall be designed,  constructed and installed at the sole
cost and expense of Lessee by California  licensed  architects,  engineers,  and
contractors  approved by Lessor,  in compliance  with all applicable law, and in
good and workmanlike manner. Any Alteration except furniture and trade fixtures,
shall become the property of Lessor at the expiration,  or sooner termination of
the Lease,  unless Lessor directs  otherwise,  provided that Lessee shall retain
title to all furniture and trade fixtures  placed on the Premises.  All heating,
lighting,  electrical,  air  conditioning,  full  height  partitioning  (but not
moveable,  free  standing  cubicle-type  partitions  which do not  extend to the
ceiling or connect to Building walls), drapery and carpeting  installations made
by Lessee  together  with all property  that has become an integral  part of the
Premises,  shall be and become the  property of Lessor upon the  expiration,  or
sooner termination of the Lease, and shall not be deemed trade fixtures.  Within
thirty  (30) days after  completion  of any  Alteration,  Lessee,  Lessee  shall
provide Lessor with a complete set of "as built" plans for same.

         Section 6.04.  Covenant Against Liens. Lessee shall not allow any liens
arising from any act or omission of Lessee to exist, attach to, be placed on, or
encumber  Lessor's or  Lessee's  interest  in the  Premises  or Project,  or any
portion of either, by operation of law or otherwise.  Lessee shall not suffer or
permit any lien of mechanics, material suppliers, or others to be placed against
the  Premises or  Project,  or any  portion of either,  with  respect to work or
services  performed  or claimed to

                                      -19-
<PAGE>

have been  performed  for Lessee or materials  furnished or claimed to have been
furnished to Lessee or the  Premises.  Lessor has the right at all times to post
and keep posted on the  Premises  any notice  that it  considers  necessary  for
protection  from  such  liens.   At  least  seven  (7)  days  before   beginning
construction of any  Alteration,  Lessee shall give Lessor written notice of the
expected  commencement  date of that  construction  to permit Lessor to post and
record a notice  of  nonresponsibility.  If any such  lien  attaches  or  Lessee
received notice of any such lien,  Lessee shall cause the lien to be immediately
released and removed of record.  Despite any other  provision of this Lease,  if
the lien is not  released  and  removed  within  twenty  (20) days after  Lessor
delivers notice of the lien to Lessee,  Lessor may  immediately  take all action
necessary to release and remove the lien,  without any duty to  investigate  the
validity of it. All expenses (including reasonable attorney fees and the cost of
any bond) incurred by Lessor in connection with a lien incurred by Lessee or its
removal shall be considered  Additional Rent under this Lease and be immediately
due and payable by Lessee.  Nothing  contained herein shall prohibit Lessee from
obtaining secured financing for personal property at the Premises.

         Section 6.05  Reimbursable  Capital  Expenditures.  Except for items of
capital  expenditures,  which are to be made at  Lessor's  sole cost and expense
pursuant to the first sentence of Section 6.01(b) above,  capital  expenditures,
together with interest  thereon at the Agreed Rate, for any replacement  item at
the Common Areas made by Lessor in excess of Ten Thousand  Dollars  ($10,000.00)
during the Lease Term shall be amortized  over the remaining  Lease Term for the
useful life of such  replacement  item within the numerator  being the number of
months  remaining  in the Lease  Term and the  denominator  being the  number of
months of the "useful life" of the  improvements.  Lessee shall be obligated for
such amortized portion of any such expenditure in equal monthly installments due
and payable with each installment of Base Rent.

                                   ARTICLE VII
                                    INSURANCE

         Section 7.01.  Property/Rental  Insurance  for  Premises:  At all times
during the Lease  Term,  Lessor  shall keep the  Premises  and  Project  insured
against  loss or damage by fire and those  risks  normally  included in the term
"all risk,"  including,  without  limitation,  coverage for (i)  earthquake  and
earthquake sprinkler leakage,  (ii) flood, (iii) loss of rents and extra expense
for eighteen (18) months,  including  scheduled rent increases,  (iv) boiler and
machinery,  (v) Tenant  Improvements  and (vi) fire damage legal liability form,
including waiver of subrogation.  Any deductibles  shall be paid by Lessee.  The
amount  of such  insurance  shall not be less  than  100% of  replacement  cost.
Insurance shall include a Building  Ordinance and Increased Cost of Construction
Endorsement  insuring the increased cost of reconstructing the Premises incurred
due to the need to comply with applicable statutes,  ordinances and requirements
of all municipal, state and federal authorities now in force, which or may be in
force hereafter.  Any recovery received from said insurance policy shall be paid
to Lessor and thereafter applied by Lessor to the reconstruction of the Premises
in accordance with the provisions of Article VIII below.  Lessee, in addition to
the rent and other charges provided herein,  shall reimburse Lessor for Lessee's
Share (100% if the  insurance  covers only the  Building or the Building and the
Property)of the cost of the premiums for all such insurance  described herein in
accordance  with

                                      -20-
<PAGE>

Article  IV.  Lessee  shall pay to Lessor any  deductible  (subject to the above
conditions)  owing within  fifteen (15) days after receipt of notice from Lessor
of the amount owing. To the extent  commercially  available,  Lessor's insurance
shall have a deductible  not greater than fifteen  percent (15%) for  earthquake
and five percent (5%) for the basic "all risk"  coverage.  Any  deductible  over
$100,000  payable by Lessee hereunder shall be amortized over the useful life of
the repair or replacement, and charged to Lessee as Additional Rent.

         Section 7.02.  Property  Insurance for Fixtures and  Inventory.  At all
times  during  the Lease  Term,  Lessee  shall,  at its sole  expense,  maintain
insurance  with "all risk"  coverage on any fixtures,  furnishings,  merchandise
equipment or personal property in or on the Premises, whether in place as of the
date hereof or installed  hereafter.  The amount of such insurance  shall not be
less than one hundred percent (100%) of the replacement cost thereof, and Lessor
shall not have any  responsibility nor pay any cost for maintaining any types of
such insurance. Lessee shall pay all deductibles.

         Section  7.03.  Lessor's  Liability  Insurance.  During the Lease Term,
Lessor shall maintain a policy of policies of  comprehensive  general  liability
insurance naming Lessor (and such others as designated by Lessor) against claims
and liability for bodily injury, property damage on our about the Premises, with
combined  single limit  coverage in an amount  determined  by Lessor in its sole
discretion  (which amount is currently Fifty Million Dollars  ($50,000,000.00));
provided that if such policy is a blanket policy that covers  properties  (other
than the Project)  owned by Lessor,  only that portion  allocable to the Project
shall be payable  hereunder.  Lessee,  in addition to the rent and other charges
provided  herein,  agrees to pay  Lessee's  Share of the  premiums  for all such
insurance in accordance with Article IV.

         Section  7.04.  Liability  Insurance  Carried by  Lessee.  At all times
during the Lease Term (and any holdover  period) Lessee shall obtain and keep in
force a commercial  general  liability  policy of insurance  protecting  Lessee,
Lessor  and any  Lender(s)  whose  names are  provided  to Lessee as  Additional
Insureds  against  claims and liability for bodily injury,  personal  injury and
property damage based upon involving or arising out of ownership, use, occupancy
or maintenance of the Premises.  Such insurance shall be on an occurrence  basis
providing a single limit coverage in amount of not less than Ten Million Dollars
($10,000,000) per occurrence with an Additional Lessors or Premises Endorsements
and containing an "Amendment of the Pollution Exclusion  Endorsement" for damage
caused by heat,  smoke,  fumes from a hostile fire. The limits of said insurance
required  by this  Lease as  carried  by Lessee  shall  not,  however  limit the
liability  of  Lessee  nor  relieve  Lessee  of any  obligation  hereunder.  All
insurance to be carried by Lessee shall be primary to and not contributory with,
any similar  insurance  carried by Lessor whose  insurance  shall be  considered
excess insurance only.

         Section  7.05.  Lessee to  Furnish  Proof of  Insurance.  Lessee  shall
furnish to Lessor prior to the Commencement  Date, and at least thirty (30) days
prior to the expiration  date of any policy,  certificates  indicating  that the
property  insurance and liability  insurance required to be maintained by Lessee
is in full  force and effect for the twelve  (12) month  period  following  such

                                      -21-
<PAGE>

expiration  date;  that  Lessor has been named as an  additional  insured to the
extent of contractual  liability assumed in Section 7.07.  "Indemnification" and
Section 7.08.  "Lessor as Party Defendant";  and that all such policies will not
be  canceled  unless  thirty  (30) days' prior  written  notice of the  proposed
cancellation  has been given to Lessor.  The  insurance  shall be with  insurers
approved  by  Lessor,  provided,  however,  that  such  approval  shall  not  be
unreasonably  withheld  so long  as  Lessee's  insurance  carrier  has a  Best's
Insurance Guide rating not less than A+ VIII.

         Section 7.06.  Mutual Waiver of Claims and Subrogation  Rights.  Lessor
and Lessee hereby release and relieve the other, and waive their entire claim of
recovery for loss or damage  covered by the  insurance  policies  required to be
carried by Lessor and Lessee  pursuant to this  Article  VII when such  property
constitutes  the Premises,  or is in, on or about the  Premises,  whether or not
such loss or  damage is due to the  negligence  of  Lessor or  Lessee,  or their
respective  agents,  employees,  guests,  licensees,  invitees,  or contractors.
Lessee and Lessor waive all rights of  subrogation  against each other on behalf
of, and shall obtain a waiver of all  subrogation  rights from, all property and
casualty insurers referenced in this Article VII.

         Section 7.07.  Indemnification and Exculpation.

         (a) Except as  otherwise  provided in Section  7.07.(b),  Lessee  shall
indemnify and hold Lessor free and harmless from any and all liability,  claims,
loss, damages,  causes of action (whether in tort or contract, law or equity, or
otherwise),  expenses, charges,  assessments,  fines, and penalties of any kind,
including without limitation,  reasonable attorney fees, expert witness fees and
costs,  arising by reason of the death or injury of any  person,  including  any
person who is an employee, agent, invitee, licensee,  permittee,  visitor, guest
or  contractor  of  Lessee,  or by reason of  damage  to or  destruction  of any
property,  including  property owned by Lessee or any person who is an employee,
agent, invitee, permitee,  visitor, or contractor of Lessee, caused or allegedly
caused (1) while that  person or property  is in or about the  Premises;  (2) by
some  condition  of the  Premises;  (3) by some act or omission by Lessee or its
agent, employee,  licensee,  invitee, guest, visitor or contractor or any person
in,  adjacent,  on,  or about  the  Premises  with the  permission,  consent  or
sufferance of Lessee;  (4) by any matter connected to or arising out of Lessee's
occupation  and  use of the  Premises,  or  any  breach  or  default  in  timely
observance or  performance  of any obligation on Lessee's part to be observed or
performed under this Lease.

         (b)  Notwithstanding  the provisions of Section 7.07.(a) of this Lease,
Lessee's  duty to  indemnify  and hold  Lessor  harmless  shall not apply to any
liability, claims, loss or damages arising because of Lessor's active negligence
or willful acts of misconduct.

         (c)  Lessee  hereby  waives all claims  against  Lessor for  damages to
goods, wares and merchandise and all other personal property in, on or about the
Premises  and for injury or death to persons in, on or about the  Premises  from
any cause  arising at any time to the  fullest  extent  permitted  by law. In no
event shall Lessor be liable (i) for lost profits or other consequential damages
arising  from any cause or (ii) for any  damage  which is or could be covered by
the insurance Lessee is required to carry under this Lease.

                                      -22-
<PAGE>

         Section  7.08.  Lessor  as Party  Defendant.  If by reason of an act or
omission  of  Lessee  or any  of  its  employees,  agents,  invitees,  licensee,
visitors,  guests  or  contractors,  Lessor  is  made  a  party  defendant  or a
cross-defendant to any action involving the Premises or this Lease, Lessee shall
hold  harmless and  indemnify  Lessor from all liability or claims of liability,
including all damages, attorney fees and costs of suit.

                                  ARTICLE VIII
                              DAMAGE OR DESTRUCTION

         Section 8.01.  Destruction of the Premises.

         (a) In the event of a partial  destruction  of the Premises  during the
Lease  Term from any  cause,  Lessor,  upon  receipt  of,  and to the extent of,
insurance proceeds paid in connection with such casualty, shall forthwith repair
the same, provided the repairs can be made within a reasonable time under state,
federal, county and municipal applicable law, but such partial destruction shall
in no way annul or void this  Lease,  (except as  provided  in Section  8.01.(b)
below) provided that Lessee shall be entitled to a proportionate credit for rent
equal to the payment of rental  income  insurance  received by Lessor;  provided
that if Lessor failed to carry such insurance as required by Article VII hereof,
Lessee shall  nonetheless be entitled to an abatement of rent to the same extent
as if Lessor had carried such  insurance.  Lessor shall use  diligence in making
such repairs within a reasonable  time period,  acts of God,  strikes and delays
beyond  Lessor's  control  excepted,  in which instance the time period shall be
extended accordingly, and this Lease shall remain in full force and effect, with
the rent to be  proportionately  reduced as  provided  in this  Section.  If the
Premises  are damaged by any peril  within  twelve (12) months prior to the last
day of the Lease Term (taking into account any  previously  exercised  Option to
Extend) and, in the reasonable opinion of the Lessor's architect or construction
consultant,  the restoration of the Premises cannot be  substantially  completed
within  ninety (90) days after the date of such  damage and such damage  renders
unusable more than thirty  percent  (30%) of the Premises,  Lessor may terminate
this Lease on sixty (60) days written notice to Lessee.

         (b) If the  Building is damaged or destroyed by any cause to the extent
of more than fifty  percent  (50%) of its total  Rentable  Area during the Lease
Term,  Lessor  shall notify  Lessee  within sixty (60) days after such damage or
destruction  whether it will repair the same within nine months (9)  (subject to
Force Majeure  Delays) from the date of such notice and if Lessor states that it
will not repair  within said nine months (9) (subject to Force  Majeure  Delays)
this Lease shall terminate ten (10) business days after Lessor gives its notice.
In the event of termination,  Lessee shall pay to Lessor all insurance proceeds,
if any,  received by Lessee as a result of the damage or  destruction  except to
the extent allocable to the unamortized (over the Lease Term) cost of (i) Tenant
Improvements paid for by Lessee over and above the Tenant Improvement  Allowance
and (ii) other Alterations installed therein at Lessee's sole cost and expense.

                                      -23-
<PAGE>

         Section 8.02.  Waiver of Civil Code Remedies.  Lessee hereby  expressly
waives any rights to  terminate  this Lease upon  damage or  destruction  to the
Premises,  including without limitation any rights pursuant to the provisions of
Section  1932,  Subdivisions  1 and 2 and Section  1933,  Subdivision  4, of the
California Civil Code, as amended from  time-to-time,  and the provisions of any
similar law hereinafter enacted.

         Section  8.03.  No Abatement of Rentals.  The Rentals and other charges
due under this  Lease  shall not be reduced or abated by reason of any damage or
destruction to the Premises (except to the extent of proceeds received by Lessor
from the Rental Loss  Insurance;  provided  that if Lessor  failed to carry such
insurance  as  required  by Article  VII hereof,  Lessee  shall  nonetheless  be
entitled  to an  abatement  of rent to the same  extent as if Lessor had carried
such  insurance),  and Lessor shall be entitled to all proceeds of the insurance
maintained  pursuant  to Section  7.01.  above  during the period of  rebuilding
pursuant to Section  8.01.(a) above,  or if the Lease is terminated  pursuant to
Section  8.01.(a) above.  Lessee shall have no claim against Lessor,  including,
without  limitation,  for  compensation  for  inconvenience or loss of business,
profits or goodwill during any period of repair or reconstruction.

         Section 8.04. Liability for Personal Property. In no event shall Lessor
have any  liability  for,  nor shall it be required  to repair or  restore,  any
injury or damage to Lessee's personal property or to any other personal property
or to Alterations in or upon the Premises by Lessee.

         Section 8.05. Lessee's Right to Terminate.  If the Premises are damaged
by any  peril  and  Lessor  does not  elect to  terminate  this  Lease or is not
entitled  to  terminate  this Lease  pursuant to this  Article,  then as soon as
reasonably practicable,  Lessor shall furnish Lessee with the written opinion of
Lessor's  architect or construction  consultant as to when the restoration  work
required of Lessor may be  complete.  Lessee  shall have the option to terminate
this  Lease in the  event  any of the  following  occurs,  which  option  may be
exercised  only by  delivery  to  Lessor  of a written  notice  of  election  to
terminate  within seven days after Lessee  receives  from Lessor the estimate of
the time  needed to  complete  such  restoration  (i) if the time  estimated  to
substantially complete the restoration or the actual restoration exceeds fifteen
(15) months from and after the date the architect's or construction consultant's
written opinion is delivered or (ii) if the damage occurred within twelve months
prior to the last day of the Lease Term and the time estimated to  substantially
complete the  restoration  exceeds one hundred  eighty (180) days from and after
the date such restoration is commenced.

                                   ARTICLE IX
                               REAL PROPERTY TAXES

         Section 9.01. Payment of Taxes.  Lessee shall pay Lessee's Share of all
real property taxes,  including any escaped or supplemental  tax and any form of
real estate tax or assessment, general, special, ordinary or extraordinary,  and
any license, fee, charge, excise or imposition ("real property taxes"), imposed,
assessed  or levied on or with  respect to the  Project by any  Federal,  State,
County,  City or other  political  subdivision  or public  authority  having the
direct or

                                      -24-
<PAGE>

indirect power to tax, including,  without limitation,  any improvement district
or any community facilities district, as against any legal or equitable interest
of Lessor in the Project or against the Project or any part  thereof  applicable
to the  Project for a period of time  included  within the Lease Term as well as
any  government  or private  cost  sharing  agreement  assessments  made for the
purpose of  augmenting  or  improving  the  quality of  services  and  amenities
normally  provided by government  agencies.  All such payments  shall be made at
least ten (10) days prior to the  delinquency  date for such payment or ten (10)
days after Lessee's receipt of the tax bill, whichever is later. Notwithstanding
the  foregoing,  Lessee  shall  not be  required  to pay any net  income  taxes,
franchise  taxes,  or any  succession  or  inheritance  taxes of Lessor.  If any
anytime  during  the  Lease  Term,  the  State of  California  or any  political
subdivision of the state,  including any county,  city, city and county,  public
corporation,  district,  or any other political entity or public  corporation of
this state,  levies or assesses against Lessor a tax, fee, charge or imposition,
excise on rents under the Lease,  the square footage of the Project,  the act of
entering  into this Lease,  or the  occupancy  of Lessee,  or levies or assesses
against  Lessor any other tax,  fee, or excise,  however  described,  including,
without  limitation,  a  so-called  value  added,  business  license,   transit,
commuter,  environmental  or energy  tax fee,  charge  or  excise or  imposition
related to the Project as a direct  substitution  in whole or in part for, or in
addition to, any real property taxes on the Project,  the same shall be included
in real property  taxes.  Real property taxes payable by Lessee  hereunder shall
not  include  real  property  taxes  applicable  to  other  office/research  and
development  buildings or the legal parcels on which such buildings are located,
but  Lessee  shall  pay  one  hundred  percent  (100%)  of real  property  taxes
applicable to the Property.  Notwithstanding  anything to the contrary contained
in this  Lease,  Lessee  shall  have no  obligation  to pay for any  improvement
district for  construction  of the presently  approved  Project or any community
facilities  district  except for such a district  established  for  purposes  of
constructing  the  Seaport  Boulevard  improvements  and other  improvements  as
required in the Development  Agreement ("Community Facility District Bond"). The
maximum  amount of the Community  Facility  District Bond shall be  $12,000,000;
which amount shall be  amortized  over not less than fifteen (15) years.  Lessee
shall pay only Lessee's Share of the yearly amortizing amount. Lessee shall have
no  obligation  to pay  for  the  initial  construction  of any  other  off-site
improvements,  improvements in the Common Areas or infrastructure at the Project
contemplated  as part of the initial  development of the Project,  regardless of
whether characterized as an assessment, tax, bond or operating expense.

         Section 9.02. Pro Ration for Partial  Years.  If any such taxes paid by
Lessee  shall  cover  any  period  prior to the  Commencement  Date or after the
Expiration  Date of the  Lease  Term,  Lessee's  share  of such  taxes  shall be
equitably  prorated  to cover only the period of time within the tax fiscal year
during which this Lease shall be in effect, and Lessor shall reimburse Lessee to
any extent  required.  If Lessee shall fail to pay any such taxes,  Lessor shall
have the right to pay the same in which case  Lessee  shall repay such amount to
Lessor within ten (10) days after written demand,  together with interest at the
Agreed Rate.

         Section 9.03.  Personal Property Taxes.

                                      -25-
<PAGE>

         (a) Lessee shall pay prior to delinquency  all taxes imposed,  assessed
against and levied upon trade  fixtures,  furnishings,  equipment  and all other
personal  property  of Lessee  contained  in the  Premises  or  elsewhere.  When
possible, Lessee shall cause said trade fixtures, furnishings, equipment and all
other  personal  property to be  assessed  and billed  separately  from the real
property of Lessor.

         (b) If any of Lessee's  said personal  property  shall be assessed with
Lessor's real property, Lessee shall pay Lessor the taxes attributable to Lessee
within ten (10) days  after  receipt of a written  statement  setting  forth the
taxes applicable to Lessee's property.

         (c) If Lessee  shall fail to pay any such taxes,  Lessor shall have the
right to pay the same,  in which case  Lessee  shall repay such amount to Lessor
with Lessee's next rent installment together with interest at the Agreed Rate.

                                    ARTICLE X
                                    UTILITIES

         Section 10.01. Lessee to Pay. Lessee shall pay prior to delinquency and
throughout the Lease Term, all charges for water, gas, heating,  cooling, sewer,
telephone,  electricity,  garbage, air conditioning and ventilation,  janitorial
service,  landscaping  and all other  materials  and  utilities  supplied to the
Premises.  The disruption,  failure,  lack or shortage of any service or utility
due to any cause whatsoever shall not affect any obligation of Lessee hereunder,
and Lessor  shall  faithfully  keep and  observe all the terms,  conditions  and
covenants of this Lease and pay all rent due hereunder,  all without diminution,
credit or deduction.

                                   ARTICLE XI
                            ASSIGNMENT AND SUBLETTING

         Section 11.01. Lessor's Consent Required. Except as provided in Section
11.02,  Lessee shall not  voluntarily  or by operation of law assign,  transfer,
mortgage,  sublet,  license or otherwise transfer or encumber all or any part of
Lessee's interest in this Lease or in the Premises or any part thereof,  without
Lessor's prior written consent which Lessor shall not  unreasonably  withhold or
delay. Lessor shall respond in writing to Lessee's request for consent hereunder
in  a  timely  manner  and  any  attempted   assignment,   transfer,   mortgage,
encumbrance,  subletting or licensing  without such consent  shall be void,  and
shall constitute a breach of this Lease. By way of example,  but not limitation,
reasonable  grounds  for denying  consent  include:  (i) poor credit  history or
insufficient financial strength of transferee, (ii) transferee's intended use of
the Premises is  inconsistent  with the  permitted  use or will  materially  and
adversely  affect Lessor's  interest.  Lessee shall reimburse Lessor upon demand
for Lessor's reasonable costs and expenses (including attorneys' fees, architect
fees and engineering  fees) involved in renewing any request for consent whether
or not consent is granted.

         Section  11.02.  Lessee  Affiliates.  Lessee  may  assign or sublet the
Premises,  or  any  portion  thereof,  to any  corporation  which  controls,  is
controlled  by, or is under common  control

                                      -26-
<PAGE>

with Lessee,  or to any corporation  resulting from the merger or  consolidation
with Lessee, or to any person or entity which acquires all, or substantially all
of the  assets  of  Lessee  as a going  concern  of the  business  that is being
conducted on the Premises,  provided that said assignee or sublessee assumes, in
full, the  obligations of Lessee under this Lease and provided  further that the
use to which  the  Premises  will be put does not  materially  change.  Any such
assignment  shall not, in any way, affect or limit the liability of Lessee under
the terms of this Lease.

         Section 11.03. No Release of Lessee. Regardless of Lessor's consent, no
subletting or assignment  shall release  Lessee of Lessee's  obligation or alter
the  primary  liability  of  Lessee  to pay the rent and to  perform  all  other
obligations  to be  performed by Lessee  hereunder.  The  acceptance  of rent by
Lessor  from any other  person  shall not be deemed  consent  to any  subsequent
assignment or  subletting.  In the event of default by any assignee of Lessee or
any successor of Lessee,  in the performance of any of the terms hereof,  Lessor
may proceed directly against Lessee without the necessity of exhausting remedies
against said assignee.

         Section  11.04.  Excess Rent.  In the event  Lessor shall  consent to a
sublease  or an  assignment,  Lessee  shall  pay to  Lessor  with its  regularly
scheduled  Base  Rent  payments,  fifty  percent  (50%) of all sums and the fair
market  value of all  consideration  collected  or  received  by  Lessee  from a
sublessee or assignee which are in excess of the Base Rent and  Additional  Rent
due and payable with respect to the subject space pursuant to Article IV for the
time  period  encompassed  by the  sublease  or  assignment  term,  after  first
deducting (i) reasonable leasing commissions paid by Lessee with respect to such
sublease or assignment,  (ii) tenant  improvements  made by Lessee in connection
with the  sublease or  assignment  and (iii) that  portion of the cost of Tenant
Improvements  paid by Lessee which remains  unamortized  (using an  amortization
schedule  of the first 36 months of the Lease  Term)  during any  portion of the
sublease or assignment term.

         Section 11.05. No Impairment of Security.  Lessee's  written request to
Lessor for  consent to an  assignment  or  subletting  or other form of transfer
shall be  accompanied  by (a) the name and  legal  composition  of the  proposed
transferee;  (b) the nature of the proposed  transferee's business to be carried
on in the  Premises;  (c) the  terms and  provisions  of the  proposed  transfer
agreement; and (d) such financial and other reasonable information as Lessor may
request concerning the proposed transferee.

         Section 11.06.  Lessor's Recapture Rights.

         (a) Lessor's Recapture Rights.  Notwithstanding  any other provision of
this  Article  11, in the event that  Lessee  proposes  to sublease or assign or
otherwise  transfer  any  interest  in this  Lease or the  Premises  or any part
thereof affecting (collectively with all other such subleases,  assignments,  or
transfers then in effect) more than sixty percent (60%) of the square footage of
the Rentable Area of the Building  ("Recapture Space") for more than half of the
then  remaining  Lease Term,  then Lessor shall have the option to recapture the
Recapture  Space by written notice to Lessee  ("Recapture  Notice") given within
ten (10)  business  days  after  Lessor

                                      -27-
<PAGE>

receives any notice of such proposed  assignment  or sublease or other  transfer
("Transfer  Notice").  A timely Recapture  Notice  terminates this Lease for the
Recapture Space,  effective as of the date specified in the Transfer Notice.  If
Lessor declines or fails timely to deliver a Recapture Notice, Lessor shall have
no further  right under this  Section  11.06 to the  Recapture  Space  unless it
becomes  available again after transfer by Lessee.  Notwithstanding  anything to
the  contrary  contained  herein,  Lessee shall be entitled to sublease all or a
portion  of  Premises  for all or part of the first 3 years of the Lease Term in
accordance with the terms of this Article XI, (excepting this Section 11.06) and
Lessor shall have no recapture rights in the event of such subleasing.

         (b)  Consequences  of  Recapture.  To determine the new Base Rent under
this Lease if Lessor  recaptures the Recapture Space, the then current Base Rent
(immediately before Lessor's recapture) under the Lease shall be multiplied by a
fraction, numerator of which is the square feet of the Rentable Area retained by
Lessee after Lessor's recapture and the denominator of which is the total square
feet of the Rentable Area before Lessor's recapture. The Additional Rent, to the
extent  that it is  calculated  on the  basis  of the  square  feet  within  the
Building,  shall be reduced to reflect Lessee's proportionate share based on the
square feet of the Building  retained by Lessee after Lessor's  recapture.  This
Lease as so amended shall continue  thereafter in full force and effect.  Either
party  may  require  written  confirmation  of  the  amendments  to  this  Lease
necessitated by Lessor's  recapture of the Recapture Space. If Lessor recaptures
the Recapture Space, Lessor shall, at Lessor's sole expense,  construct,  paint,
and furnish any  partitions  required to segregate the Recapture  Space from the
remaining Premises retained by Lessee.

                                   ARTICLE XII
                               DEFAULTS; REMEDIES

         Section  12.01.  Defaults.  The  occurrence  of any  one or more of the
following events shall constitute a material default and breach of this Lease by
Lessee:

         (a) The  abandonment  of the  Premises by Lessee or the  commission  of
waste at the Premises or the making of an  assignment or subletting in violation
of Article XI, provided however, abandonment shall be considered to not occur if
the Premises are maintained and occupied to the extent necessary to maintain the
insurance on each and every portion of the Premises;

         (b) The  failure  by  Lessee to make any  payment  of rent or any other
payment  required  to be made by  Lessee  hereunder,  as and when  due,  if such
failure  continues for a period of five (5) business  days after written  notice
thereof  from Lessor to Lessee.  In the event that Lessor  serves  Lessee with a
Notice to Pay Rent or Quit in the form required by applicable  Unlawful Detainer
statutes such Notice shall  constitute  the notice  required by this  paragraph,
provided  that the cure period  stated in the Notice  shall be five (5) business
days rather than the statutory three (3) days;

                                      -28-
<PAGE>

         (c)  Lessee's  failure to provide (i) any  instrument  or  assurance as
required by Section  7.05 or (ii)  estoppel  certificate  as required by Section
15.01 or (iii) any  document  subordinating  this  Lease to a  Lender's  deed of
trust,  if any such failure  continues  for five (5) business days after written
notice  of the  failure.  In the event  Lessor  serves  Lessee  with a Notice to
Perform  Covenant or Quit in the form required by applicable  Unlawful  Detainer
Statutes,  such Notice shall  constitute the notice  required by this paragraph,
provided that the cure period stated in the Notice shall be five (5) days rather
than the statutory three (3) days;

         (d) The failure by Lessee to observe or perform  any of the  covenants,
conditions  or  provisions  of this Lease to be observed or performed by Lessee,
other  than  described  in  paragraph  (a) (b) or (c)  above,  if  such  failure
continues for a period of ten (10) days after written notice thereof from Lessor
to Lessee;  provided,  however,  that if the nature of Lessee's  default is such
that more than ten (10) days are reasonably  required for its cure,  then Lessee
shall not be deemed to be in default if Lessee  commences  such cure within said
ten  (10)  day  period  and  thereafter   diligently  prosecutes  such  cure  to
completion;

         (e) (i) The making by Lessee of any general  arrangement  or assignment
for the benefit of creditors;  (ii) the filing by Lessee of a voluntary petition
in bankruptcy  under Title 11 U.S.C.  or the filing of an  involuntary  petition
against Lessee which remains  uncontested for a period of sixty days;  (iii) the
appointment of a trustee or receiver to take possession of substantially  all of
Lessee's  assets located at the Premises or of Lessee's  interest in this Lease;
or (iv) the attachment, execution or other judicial seizure of substantially all
of Lessee's  assets  located at the  Premises  or of  Lessee's  interest in this
Lease,  provided,  however,  in the event that any  provisions  of this  Section
12.01(e) is contrary to any applicable  law, such provision shall be of no force
or effect;

         (f) The  discovery  by Lessor  that any  financial  statement  given to
Lessor by Lessee,  or any  guarantor  of  Lessee's  obligations  hereunder,  was
materially false.

         (g) The occurrence of a material default and breach by Lessee under any
other Lease between  Lessee and Lessor (or any affiliate of Lessor) for Premises
in Pacific Shores Center.

         Section 12.02.  Remedies. In the event of any such material default and
breach by Lessee, Lessor may at any time thereafter, and without limiting Lessor
in the  exercise of any right or remedy  which Lessor may have by reason of such
default and breach:

         (a)  Terminate  Lessee's  right to  possession  of the  Premises by any
lawful  means  including  by way of unlawful  detainer  (and without any further
notice if a notice in  compliance  with the  unlawful  detainer  statutes and in
compliance  with  paragraphs (b), (c) and (d) of Section 12.01 above has already
been  given),  in which  case  this  Lease  shall  terminate  and  Lessee  shall
immediately surrender possession of the Premises to Lessor. In such event Lessor
shall be  entitled  to recover  from  Lessee all  damages  incurred by Lessor by
reason of  Lessee's  default  including,  but not  limited  to,  (i) the cost of
recovering  possession  of the Premises  including

                                      -29-
<PAGE>

reasonable  attorney's fees related  thereto;  (ii) the worth at the time of the
award of any unpaid rent that had been earned at the time of the termination, to
be computed by allowing  interest at the Agreed Rate but in no case greater than
the maximum amount of interest  permitted by law, (iii) the worth at the time at
the time of the award of the  amount by which the  unpaid  rent that  would have
been  earned  between  the time of the  termination  and the  time of the  award
exceeds the amount of unpaid rent that Lessee proves could  reasonably have been
avoided,  to be computed by allowing  interest at the Agreed Rate but in no case
greater than the maximum amount of interest  permitted by law, (iv) the worth at
the time of the award of the amount by which the unpaid  rent for the balance of
the Lease Term  after the time of the award  exceeds  the amount of unpaid  rent
that  Lessee  proves  could  reasonably  have been  avoided,  to be  computed by
discounting  that amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of the award plus one per cent (1%),  (v) any other amount
necessary  to  compensate  Lessor for all the  detriment  proximately  caused by
Lessee's failure to perform  obligations under this Lease,  including  brokerage
commissions and advertising expenses,  expenses of remodeling the Premises for a
new  tenant  (whether  for  the  same  or a  different  use),  and  any  special
concessions made to obtain a new tenant, and (vi) any other amounts, in addition
to or in lieu of those listed above, that may be permitted by applicable law.

         (b) Maintain  Lessee's  right to  possession  as provided in Civil Code
Section  1951.4 in which case this Lease shall continue in effect whether or not
Lessee shall have abandoned the Premises. In such event Lessor shall be entitled
to enforce all of Lessor's  rights and remedies under this Lease,  including the
right to recover the rent as it becomes due hereunder.

         (c) Pursue any other remedy now or hereafter  available to Lessor under
the laws or judicial  decisions of the state of  California.  Unpaid  amounts of
rent and other  unpaid  monetary  obligations  of Lessee under the terms of this
Lease shall bear interest from the date due at the Agreed Rate.

         Section 12.03. Default by Lessor.  Lessor shall not be in default under
this Lease unless Lessor fails to perform obligations  required of Lessor within
a  reasonable  time,  but in no event later than thirty (30) days after  written
notice by Lessee to Lessor  and to the holder of any first  mortgage  or deed of
trust covering the Premises whose name and address shall have  theretofore  been
furnished  to Lessee in  writing,  specifying  that Lessor has failed to perform
such obligation; provided, however, that if the nature of Lessor's obligation is
such that more than thirty (30) days are  required for  performance  then Lessor
shall not be in default if Lessor commences  performance  within such thirty day
period and thereafter diligently prosecutes the same to completion. In the event
Lessor does not commence  performance within the thirty (30) day period provided
herein,  Lessee may  perform  such  obligation  and will be  reimbursed  for its
expenses by Lessor  together  with interest  thereon at the Agreed Rate.  Lessee
waives any right to  terminate  this Lease or to vacate the Premises on Lessor's
default under this Lease.  Lessee's sole remedy on Lessor's default is an action
for damages or injunctive or declaratory relief.  Notwithstanding the foregoing,
nothing  herein  shall be deemed  applicable  in the event of Lessor's  delay in
delivery of the Premises.  In that  situation,  all rights and remedies shall be
determined under Section 3.01 above.

                                      -30-
<PAGE>

         Section  12.04.  Late  Charges.  Lessee hereby  acknowledges  that late
payment  by Lessee 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  ascertain.  Such costs  include,  but are not
limited to,  processing  and accounting  charges,  and late charges which may be
imposed  on 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  designated agent within five
(5) days after such amount is due and owing,  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
costs 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. In the event that a late charge
is  payable  hereunder,  whether  or not  collected,  for three (3)  consecutive
installments  of rent,  then rent shall  automatically  become  due and  payable
quarterly in advance,  rather than monthly,  notwithstanding Section 4.01 or any
other provision of this Lease to the contrary.

                                  ARTICLE XIII
                            CONDEMNATION OF PREMISES.

         Section 13.01. Total Condemnation.  If the entire Premises,  whether by
exercise  of  governmental  power  or the  sale or  transfer  by  Lessor  to any
condemnor under threat of condemnation or while proceedings for condemnation are
pending,  at any time during the Lease Term, shall be taken by condemnation such
that there does not remain a portion  suitable for occupation,  this Lease shall
then  terminate as of the date  transfer of  possession  is required.  Upon such
condemnation,  all rent shall be paid up to the date  transfer of  possession is
required,  and Lessee  shall have no claim  against  Lessor or the award for the
value of the unexpired portion of this Lease Term.

         Section 13.02. Partial Condemnation.  If any portion of the Premises is
taken by condemnation during the Lease Term, whether by exercise of governmental
power or the sale for  transfer  by  Lessor  to an  condemnor  under  threat  of
condemnation or while proceedings for condemnation are pending, this Lease shall
remain in full force and effect except that in the event a partial taking leaves
the Premises unfit for the conduct of the business of Lessee,  then Lessee shall
have the right to  terminate  this Lease  effective  upon the date  transfer  of
possession is required.  Moreover, Lessor shall have the right to terminate this
Lease  effective  on the date  transfer of  possession  is required if more than
thirty-three  percent (33%) of the total square footage of the Premises is taken
by condemnation. Lessee and Lessor may elect to exercise their respective rights
to terminate  this Lease  pursuant to this Section by serving  written notice to
the other within thirty (30) days after receipt of notice of  condemnation.  All
rent shall be paid up to the date of termination, and Lessee shall have no claim
against Lessor for the value of any unexpired portion of the Lease Term. If this
Lease shall not be canceled,  the rent after such

                                      -31-
<PAGE>

partial  taking shall be that  percentage  of the adjusted  base rent  specified
herein,  equal to the percentage which the square footage of the untaken part of
the Premises,  immediately after the taking,  bears to the square footage of the
entire Premises  immediately before the taking. If Lessee's continued use of the
Premises requires alterations and repair by reason of a partial taking, all such
alterations  and  repair  shall be made by Lessee at  Lessee's  expense.  Lessee
waives all rights it may have under  California Code of Civil Procedure  Section
1265.130 or otherwise, to terminate this Lease based on partial condemnation.

         Section  13.03.  Award to  Lessee.  In the  event of any  condemnation,
whether total or partial,  Lessee shall have the right to claim and recover from
the  condemning  authority  such  compensation  as may be separately  awarded or
recoverable  by Lessee for loss of its  business  fixtures,  moving  expenses or
equipment belonging to Lessee immediately prior to the condemnation. The balance
of any condemnation award shall belong to Lessor (including, without limitation,
any amount  attributable  to any excess of the market  value of the Premises for
the  remainder of the Lease Term over the then present value of the rent payable
for the  remainder of the Lease Term) and Lessee shall have no further  right to
recover from Lessor or the  condemning  authority for any claims  arising out of
such taking.

                                   ARTICLE XIV
                                 ENTRY BY LESSOR

         Section 14.01.  Entry by Lessor  Permitted.  Lessee shall permit Lessor
and its  employees,  agents and  contractors to enter the Premises and all parts
thereof  (i) upon  twenty-four  (24)  hours  notice  (or  without  notice  in an
emergency),  including without limitation, the Building and all parts thereof at
all reasonable times for any of the following purposes: to inspect the Premises;
to maintain the Premises (in  accordance  with the terms of this Lease;  to make
such  repairs  to the  Premises  as  Lessor  is  obligated  or may elect to make
pursuant to the terms of this Lease;  to make repairs,  alterations or additions
to any other portion of the Project and (ii) upon  twenty-four (24) hours notice
to show the  Premises  and post "To Lease"  signs for the  purposes of reletting
during the last twelve (12) months of the Lease Term  (provided  that Lessee has
failed to  exercise  its option to extend)  or  extended  Lease Term to show the
Premises  as part  of a  prospective  sale  by  Lessor  or to  post  notices  of
nonresponsibility.  Lessor shall have such right of entry  without any rebate of
rent to Lessee for any loss of  occupancy  or quiet  enjoyment  of the  Premises
hereby occasioned.

                                   ARTICLE XV
                              ESTOPPEL CERTIFICATE

         Section 15.01.  Estoppel Certificate.

         (a)  Lessee  shall at any time upon not less than  fifteen  (15)  days'
prior written notice from Lessor  execute,  acknowledge  and deliver to Lessor a
statement in writing (i) certifying,  if true, that this Lease is unmodified and
in  full  force  and  effect  (or,  if  modified,  stating  the  nature  of such
modification  and certifying,  if true,  that this Lease, as so modified,  is in
full force and

                                      -32-
<PAGE>

effect) and the date to which the rent and other charges are paid in advance, if
any, and (ii) acknowledging, if true, that there are not, to Lessee's knowledge,
any  uncured  defaults  on the part of  Lessor  hereunder,  or  specifying  such
defaults if any are claimed and (iii)  certifying  or  acknowledging  such other
matters as are requested by any prospective lender or buyer which are reasonably
related to the loan or sale transaction.  Any such statement may be conclusively
relied upon by any prospective purchaser or encumbrancer of the Premises.

         (b) Lessee's  failure to deliver such statement  within such time shall
be  conclusive  upon  Lessee (i) that this  Lease is in full  force and  effect,
without modification except as may be represented by Lessor, (ii) that there are
no uncured  defaults in Lessor's  performance,  and (iii) that not more than one
month's rent has been paid in advance.

                                  ARTICLE XVI
                               LESSOR'S LIABILITY

         Section 16.01.  Limitations on Lessor's Liability. The term "Lessor" as
used  herein  shall mean only the owner or owners at the time in question of the
fee  title of the  Premises.  In the  event  of any  transfer  of such  title or
interest,  Lessor herein named (and in case of any subsequent transfers then the
grantor)  shall be  relieved  from and  after the date of such  transfer  of all
liability as respects Lessor's obligations thereafter to be performed, except as
to any claim  Lessee may have as to any funds in the hands of Lessor or the then
grantor at the time of such transfer, including without limitation, the Security
Deposit,  in which  Lessee  has an  interest,  which  are not  delivered  to the
grantee.  The  obligations  contained  in this Lease to be  performed  by Lessor
shall, subject as aforesaid, be binding on Lessor's successors and assigns, only
during their  respective  periods of ownership.  For any breach of this Lease by
Lessor,  the  liability  of Lessor  (including  all  persons and  entities  that
comprise  Lessor,  and any successor  Lessor) and any recourse by Lessee against
Lessor shall be limited to the interest of Lessor,  and Lessor's  successors  in
interest,  in and to the Premises.  On behalf of itself and all persons claiming
by, through,  or under Lessee,  Lessee  expressly waives and releases Lessor and
each member, agent and employee of Lessor from any personal liability for breach
of this Lease.

                                  ARTICLE XVII
                               GENERAL PROVISIONS

         Section  17.01.  Severability.  The invalidity of any provision of this
Lease as determined by a court of competent jurisdiction, shall in no way affect
the validity of any other provision hereof.

         Section 17.02. Agreed Rate Interest on Past-Due Obligations.  Except as
expressly  herein  provided,  any amount  due to either  party not paid when due
shall bear  interest  at the Bank of America  prime rate plus one  percent  (1%)
("Agreed  Rate").  Payment of such interest shall not excuse or cure any default
by Lessee under this Lease. Despite any other provision of this Lease, the total
liability for interest  payments shall not exceed the limits, if any, imposed by
the usury

                                      -33-
<PAGE>

laws of the State of  California.  Any  interest  paid in excess of those limits
shall be refunded to the payor by application  of the amount of excess  interest
paid  against  any sums  outstanding  in any order that payee  requires.  If the
amount of  excess  interest  paid  exceeds  the sums  outstanding,  the  portion
exceeding  those sums shall be  refunded  in cash to the payor by the payee.  To
ascertain  whether  any  interest  payable  exceeds  the  limits  imposed,   any
nonprincipal  payment (including late charges) shall be considered to the extent
permitted  by law to be an expense or a fee,  premium,  or penalty  rather  than
interest.

         Section  17.03.  Time  of  Essence.  Time  is of  the  essence  in  the
performance of all obligations under this Lease.

         Section 17.04.  Additional Rent. Any monetary  obligations of Lessee to
Lessor under the terms of this Lease shall be deemed to be  Additional  Rent and
Lessor shall have all the rights and remedies for the  nonpayment  of same as it
would have for nonpayment of Base Rent,  except that the one year requirement of
Code  of  Civil  Procedure   Section  1161(2)  shall  apply  only  to  scheduled
installments  of Base Rent and not to any  Additional  Rent.  All  references to
"rent" (except specific references to either Base Rent or Additional Rent) shall
mean Base Rent and Additional Rent.

         Section  17.05.  Incorporation  of  Prior  Agreements,  Amendments  and
Exhibits.  This Lease (including Exhibits A, B, C, D, E, F, G, H, I, J, K, L and
M) contains all  agreements of the parties with respect to any matter  mentioned
herein. No prior agreement or understanding  pertaining to any such matter shall
be effective.  This Lease may be modified in writing only, signed by the parties
in interest at the time of the modification.  Except as otherwise stated in this
Lease,  Lessee hereby  acknowledges that neither the Lessor nor any employees or
agents of the Lessor has made any oral or written  warranties or representations
to Lessee relative to the condition or use by Lessee of said Premises and Lessee
acknowledges that Lessee assumes all  responsibility  regarding the Occupational
Safety  Health  Act,  the legal use and  adaptability  of the  Premises  and the
compliance thereof with all applicable laws and regulations in effect during the
Lease Term except as otherwise  specifically stated in this Lease. Neither party
has been  induced to enter into this Lease by, and neither  party is relying on,
any representation or warranty outside those expressly set forth in this Lease.

         Section 17.06.  Notices.

         (a)  Written  Notice.  Any notice  required  or  permitted  to be given
hereunder  shall be in  writing  and  shall be  given by a method  described  in
paragraph  (b)  below  and  shall be  addressed  to  Lessee  or to Lessor at the
addresses noted below, next to the signature of the respective  parties,  as the
case may be. Either party may by notice to the other specify a different address
for notice purposes.  A copy of all notices required or permitted to be given to
Lessor  hereunder shall be concurrently  transmitted to such party or parties at
such addresses as Lessor may from time to time hereafter  designate by notice to
Lessee,  but delay or failure of delivery  to such  person  shall not affect the
validity of the delivery to Lessor or Lessee.

                                      -34-
<PAGE>

         (b)      Methods of Delivery:

                  (i) When  personally  delivered  to the  recipient,  notice is
effective on delivery.  Delivery to the person apparently  designated to receive
deliveries  at the  subject  address  is  personally  delivered  if made  during
business hours (e.g. receptionist).

                  (ii)  When  mailed  by  certified  mail  with  return  receipt
requested,  notice is  effective on receipt if delivery is confirmed by a return
receipt.

                  (iii)   When   delivery   by   overnight    delivery   Federal
Express/Airborne/United   Parcel  Service/DHL  WorldWide  Express  with  charges
prepaid or charged to the sender's account, notice is effective on delivery if

delivery is confirmed by the delivery service.

         (c)  Refused,   Unclaimed  or  Undeliverable   Notices.  Any  correctly
addressed notice that is refused,  unclaimed, or undeliverable because of an act
or omission of the party to be notified  shall be  considered to be effective as
of the  first  date  that the  notice  was  refused,  unclaimed,  or  considered
undeliverable  by the  postal  authorities,  messenger,  or  overnight  delivery
service.

         Section  17.07.  Waivers.  No waiver of any  provision  hereof shall be
deemed a waiver of any other provision hereof or of any subsequent breach of the
same or any other provisions.  Any consent to, or approval of, any act shall not
be deemed to render  unnecessary  the obtaining of consent to or approval of any
subsequent act. The acceptance of rent hereunder by Lessor shall not be a waiver
of any  preceding  breach by  Lessee of any  provision  hereof,  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.

         Section 17.08.  Recording.  Either Lessor or Lessee shall, upon request
of the other,  execute,  acknowledge  and  deliver  to the other a "short  form"
memorandum of this Lease for recording purposes, provided that Lessee shall also
simultaneously  execute in recordable form and delivering to Lessor a Quit Claim
Deed as to its  leasehold  and any other  interest  in the  Premises  and hereby
authorizes Lessor to date and record the same only upon the expiration or sooner
termination of this Lease.

         Section 17.09.  Surrender of Possession; Holding Over.

         (a) At the  expiration  of the Lease,  Lessee  agrees to deliver up and
surrender to Lessor  possession  of the Premises  and all  improvements  thereon
broom clean and, in as good order and condition as when  possession was taken by
Lessee,  excepting  only  ordinary wear and tear (wear and tear which could have
been  avoided  by first  class  maintenance  practices  and in  accordance  with
industry  standards shall not be deemed  "ordinary").  Upon expiration or sooner
termination  of this  Lease,  Lessor may  reenter  the  Premises  and remove all
persons and  property  therefrom.  If Lessee  shall fail to remove any  personal
property  which it is entitled or obligated to remove from

                                      -35-
<PAGE>

the Premises upon the expiration or sooner  termination  of this Lease,  for any
cause  whatsoever,  Lessor,  at its  option,  may  remove  the same and store or
dispose  of them,  and  Lessee  agrees to pay to  Lessor  on demand  any and all
expenses incurred in such removal and in making the Premises free from all dirt,
litter, debris and obstruction,  including all storage and insurance charges. If
the  Premises  are not  surrendered  at the end of the Lease Term,  Lessee shall
indemnify Lessor against loss or liability  resulting from delay by Lessee in so
surrendering the Premises,  including,  without  limitation,  actual damages for
lost rent and with respect to any claims of a successor occupant.

         (b)  If  Lessee,  with  Lessor's  prior  written  consent,  remains  in
possession of the Premises after  expiration of the Lease Term and if Lessor and
Lessee have not executed an express  written  agreement as to such holding over,
then such  occupancy  shall be a tenancy  from month to month at a monthly  Base
Rent  equivalent to one hundred fifty  percent  (150%) of the monthly  rental in
effect immediately prior to such expiration,  such payments to be made as herein
provided for Base Rent. In the event of such holding  over,  all of the terms of
this Lease, including the payment of Additional Rent all charges owing hereunder
other than rent shall remain in force and effect on said month to month basis.

         Section 17.10.  Cumulative Remedies. No remedy or election hereunder by
Lessor shall be deemed  exclusive but shall,  wherever  possible,  be cumulative
with all other  remedies  at law or in  equity,  provided  that  notice and cure
periods  set forth in Article XII are  intended  to extend and modify  statutory
notice provisions to the extent expressly stated in Section 12.01.

         Section 17.11.  Covenants and Conditions.  Each provision of this Lease
to be  observed or  performed  by Lessee  shall be deemed both a covenant  and a
condition.

         Section 17.12. Binding Effect; Choice of Law. Subject to any provisions
hereof  restricting  assignment  or  subletting  by Lessee  and  subject  to the
provisions  of Article XVI,  this Lease shall bind the parties,  their  personal
representatives,  successors  and  assigns.  This Lease shall be governed by the
laws of the State of California and any legal or equitable  action or proceeding
brought  with  respect  to the Lease or the  Premises  shall be brought in Santa
Clara County, California.

         Section 17.13.  Lease to be Subordinate.  Lessee agrees that this Lease
is and  shall be,  at all  times,  subject  and  subordinate  to the lien of any
mortgage or other  encumbrances  which  Lessor may create  against the  Premises
including all renewals,  replacements and extensions thereof provided,  however,
that  regardless of any default under any such  mortgage or  encumbrance  or any
sale of the Premises under such mortgage,  so long as Lessee timely performs all
covenants and conditions of this Lease and continues to make all timely payments
hereunder,  this Lease and Lessee's possession and rights hereunder shall not be
disturbed by the mortgagee or anyone  claiming under or through such  mortgagee.
Lessee shall execute any documents subordinating this Lease within ten (10) days
after  delivery of same by Lessor so long as the Lender agrees therein that this
Lease  will  not  be  terminated  if  Lessee  is  not  in  default  following  a
foreclosure,  including, without limitation, any Subordination  Non-Distribution
and

                                      -36-
<PAGE>

Attornment Agreement ("SNDA") which is substantially in the form attached hereto
as Exhibit  "F." Lessor  shall  provide  Lessee with an SNDA with respect to any
existing lender, ground Lessor or other lien holder on the Project.

         Section 17.14. Attorneys' Fees. If either party herein brings an action
to enforce the terms hereof or to declare rights hereunder, the prevailing party
in any such  action,  on trial or  appeal,  shall be  entitled  to  recover  its
reasonable attorney's fees, expert witness fees and costs as fixed by the Court.

         Section 17.15. Signs. Lessee shall not place any sign upon the exterior
of the  Building or monument  signage on the  Premises  without  Lessor's  prior
written consent, which consent shall not be unreasonably withheld or delayed and
subject  to  approval  by the City of  Redwood.  Lessee,  at its  sole  cost and
expense, after obtaining Lessor's prior written consent, shall install, maintain
and remove prior to  expiration of this Lease (or within ten (10) days after any
earlier  termination of this Lease) all signage in full  compliance with (i) all
applicable law,  statutes,  ordinances and  regulations,  (ii) all provisions of
this Lease  concerning  Alterations,  and (iii)  Exhibit  "G." In  creating  the
signage  provision to be set forth on Exhibit "G," Lessor agrees to request from
City approval for illuminated exterior Building Signage.

         Section 17.16.  Merger.  The voluntary or other surrender of this Lease
by Lessee, or a mutual cancellation  thereof, or a termination by Lessor,  shall
not work a merger,  and shall,  at the option of  Lessor,  terminate  all or any
existing subtenancies or may, at the option of Lessor,  operate as an assignment
to Lessor of any or all of such subtenancies.

         Section 17.17.  Guarantor.  [Intentionally Omitted]

         Section 17.18. Quiet Possession. Upon Lessee timely paying the rent for
the  Premises  and  timely  observing  and  performing  all  of  the  covenants,
conditions  and  provisions  on  Lessee's  part  to be  observed  and  performed
hereunder,  Lessee  shall have quiet  possession  of the Premises for the entire
Lease Term, subject to all of the provisions of this Lease.

         Section 17.19.  Easements.  Lessor  reserves to itself the right,  from
time to time, to grant such easements,  rights and dedications that Lessor deems
necessary  or  desirable,  and to  cause  the  recordation  of  Parcel  Maps and
conditions,  covenants  and  restrictions,  so long as such  easements,  rights,
dedications, Maps and conditions, covenants and restrictions do not unreasonably
interfere  with  the use of the  Premises  by  Lessee  or  materially  increased
Lessee's actual or potential  monetary and non-monetary  obligations  under this
Lease. Lessee shall sign any of the aforementioned or other documents,  and take
such other actions,  which are reasonably necessary or appropriate to accomplish
such granting  recordation and  subordination of the Lease to same, upon request
of  Lessor,  and  failure to do so within  ten (10)  business  days of a written
request to do so shall constitute a material breach of this Lease.

                                      -37-
<PAGE>

         Section  17.20.  Authority.  Each  individual  executing  this Lease on
behalf of a corporation, limited liability company or partnership represents and
warrants that he or she is duly  authorized to execute and deliver this Lease on
behalf of such  entity  in  accordance  with a duly  adopted  resolution  of the
governing group of the entity  empowered to grant such authority,  and that this
Lease is binding upon said entity in accordance with its terms. Each party shall
provide the other with a certified copy of its  resolution  within ten (10) days
after execution hereof,  but failure to do so shall in no manner (i) be evidence
of the absence of authority or (ii) affect the representation or warranty.

         Section  17.21.  Force Majeure  Delays.  In any case where either party
hereto is  required  to do any act (other  than the  payment  of money),  delays
caused by or resulting from Acts of God or Nature,  war, civil commotion,  fire,
flood or other casualty, labor difficulties,  shortages of labor or materials or
equipment,  government  regulations,  delay by government or regulatory agencies
with respect to approval or permit process,  unusually severe weather,  or other
causes beyond such party's  reasonable control ("Force Majeure Delays") the time
during  which act shall be  completed,  shall be  deemed to be  extended  by the
period of such delay,  whether such time be  designated by a fixed date, a fixed
time or "a reasonable time."

         Section 17.22.   Hazardous Materials.

         (a)  Definition  of  Hazardous   Materials  and   Environmental   Laws.
"Hazardous Materials" means any (a) substance,  product, waste or other material
of any nature  whatsoever  which is or becomes  listed  regulated  or  addressed
pursuant to the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C.  sections  9601,  et seq.  ("CERCLA");  the  Hazardous  Materials
Transportation  Act  ("HMTA") 49 U.S.C.  section  1801,  et seq.,  the  Resource
Conservation  and Recovery Act, 42 U.S.C.  section 6901, et seq.  ("RCRA");  the
Toxic Substances  Control Act, 15 U.S.C.  sections 2601, et seq.  ("TSCA");  the
Clean Water Act, 33 U.S.C.  sections  1251, et seq.;  the  California  Hazardous
Waste  Control  Act,  Health  and  Safety  Code  sections  25100,  et seq.;  the
California  Hazardous  Substances  Account Act,  Health and Safety Code sections
26300,  et seq.; the California Safe Drinking Water and Toxic  Enforcement  Act,
Health and Safety Code sections 25249.5,  et seq.;  California Health and Safety
Code sections 25280, et seq.; (Underground Storage of Hazardous Substances); the
California  Hazardous  Waste  Management  Act,  Health and Safety Code  sections
25170.1,  et seq.;  California  Health and Safety Code sections  25501.  et seq.
(Hazardous Materials Response Plans and Inventory);  or the Porter-Cologne Water
Quality  Control Act,  California  Water Code sections  13000,  et seq.,  all as
amended,  or  any  other  federal,  state  or  local  statute,  law,  ordinance,
resolution, code, rule, regulation,  order or decree regulating,  relating to or
imposing  liability  (including,  but not  limited  to,  response,  removal  and
remediation  costs) or  standards  of  conduct  or  performance  concerning  any
hazardous,  toxic or dangerous  waste,  substance or material,  as now or at any
time hereafter may be in effect  (collectively,  "Environmental  Laws"); (b) any
substance,  product,  waste or other  material  of any nature  whatsoever  whose
presence  in and of  itself  may give rise to  liability  under any of the above
statutes  or under any  statutory  or common  law  theory  based on  negligence,
trespass,  intentional tort, nuisance, strict or absolute liability or under any
reported  decisions  of a state or federal  court,  (c)  petroleum or crude oil,
including but

                                      -38-
<PAGE>

not limited to petroleum  and  petroleum  products  contained  within  regularly
operated motor vehicles and (d) asbestos.

         (b) Lessor's Representations and Disclosures. Lessor represents that it
has provided Lessee with a description of the Hazardous  Materials on or beneath
the  Property  as  of  the  date  hereof,  attached  hereto  as  Exhibit  I  and
incorporated  herein by  reference.  Lessee  acknowledges  that in providing the
attached Exhibit I, Lessor has satisfied its obligations of disclosure  pursuant
to California Health & Safety Code Section 25359.7 which requires:

                  "Any owner of  nonresidential  real property who knows, or has
reasonable cause to believe,  that any release of hazardous  substances has come
to be located on or beneath that real property shall,  prior to the sale,  lease
or  rental of the real  property  by that  owner,  give  written  notice of that
condition to the buyer, lessee or renter of the real property."

         (c) Use of  Hazardous  Materials.  Lessee shall not cause or permit any
Hazardous Materials to be brought upon, kept or used in, on or about the Project
by Lessee, its agents,  employees,  contractors,  licensee,  guests, visitors or
invitees  without  the  prior  written  consent  of  Lessor.  Lessor  shall  not
unreasonably  withhold such consent so long as Lessee  demonstrates  to Lessor's
reasonable satisfaction that such Hazardous Materials are necessary or useful to
Lessee's  business and will be used,  kept and stored in a manner that  complies
with all applicable  Environmental  Laws. Lessee shall, at all times, use, keep,
store,  handle,  transport,  treat or dispose all such Hazardous Materials in or
about the Property in compliance with all applicable  Environmental  Laws. Prior
to the expiration or earlier termination of this Lease, Lessee shall remove from
the Property all Hazardous  Materials  used or brought onto the Property  during
the  Lease  Term  by  anyone  other  than  Lessor,  its  agents,   employees  or
contractors.

         (d) Lessee's  Environmental  Indemnity.  Lessee agrees to indemnify and
hold Lessor harmless from any liabilities,  losses, claims, damages,  penalties,
fines, attorney fees, expert fees, court costs, remediation costs, investigation
costs,  or other  expenses  resulting  from or arising out of the use,  storage,
treatment,  transportation,   release,  presence,  generation,  or  disposal  of
Hazardous  Materials on, from or about the Project,  and/or subsurface or ground
water,  from an act or omission of Lessee (or Lessee's  successor),  its agents,
employees, invitees, vendors, contractors, guests or visitors.

         (e)  Lessee's  Obligation  to Promptly  Remediate.  If the  presence of
Hazardous  Materials on the Premises after the  Commencement  Date which results
from  an act or  omission  of  Lessee  (or  Lessee's  successors),  its  agents,
employees,  invitees, vendors, contractors,  guests, or visitors also results in
contamination  or deterioration of the Property or any water or soil beneath the
Property,  Lessee shall  promptly take all action  necessary or  appropriate  to
investigate  and  remedy  that  contamination,  at its sole  cost  and  expense,
provided that Lessor's approval of such action shall first be obtained. Lessor's
approval shall not be unreasonably withheld.

                                      -39-
<PAGE>

         (f)  Notification.  Lessor and Lessee each agree to promptly notify the
other of any  communication  received from any  governmental  entity  concerning
Hazardous  Materials or the violation of  Environmental  Laws that relate to the
Property.

         (g) Lessor's  Environmental  Indemnity.  Lessor agrees to indemnify and
hold Lessee harmless from any liabilities,  losses, claims, damages,  penalties,
fines, attorney fees, expert fees, court costs, remediation costs, investigation
costs,  or other  expenses  resulting  from or arising out of the use,  storage,
treatment,  transportation,   release,  presence,  generation,  or  disposal  of
Hazardous Materials on, from or about the Premises,  and/or subsurface or ground
water  prior  to  the  Commencement  Date  or  caused  by  Lessor  (or  Lessor's
successor), its agents or employees.

         Section 17.23. Modifications Required by Lessor's Lender. If any lender
of Lessor requires a modification of this Lease that will not increase  Lessee's
cost  or  expense  or  materially  and  adversely  change  Lessee's  rights  and
obligations,  this Lease shall be so modified and Lessee shall execute  whatever
documents are required by such lender and deliver them to Lessor within ten (10)
days after the request.

         Section 17.24. Brokers.  Lessor and Lessee each represents to the other
that it has had no dealings  with any real estate  broker or agent in connection
with the negotiation of this Lease, except for the real estate brokers or agents
identified on the  signature  page hereof  ("Brokers")  and that they know of no
other real estate  broker or agent who is entitled to a  commission  or finder's
fee in connection with this Lease. Each party shall indemnify,  protect, defend,
and  hold  harmless  the  other  party  against  all  claims,  demands,  losses,
liabilities,  lawsuits,  judgments, and costs and expenses (including reasonable
attorney  fees)  for  any  leasing  commission,   finder's  fee,  or  equivalent
compensation alleged to be owing on account of the indemnifying party's dealings
with any real estate  broker or agent other than the Brokers.  The terms of this
Section 17.24 shall survive the  expiration or earlier  termination of the Lease
Term.

         Section 17.25.  Right of First Refusal to Lease Building.

         (a) If Lessor obtains all legally  required  approvals to construct one
or more  additional  Buildings on the Common Area  portions of Lots 3, 4 or 5 at
the Project, Lessee shall have a right of first offer ("Right of First Refusal")
to lease any such Building and if Lessor does not obtain such approvals,  Lessee
shall have a Right of First Refusal to lease  Building 3 to be built on Lot 3 on
Exhibit "A" ("Offer Building").

         (b) At the time Lessee  exercises the Right of First  Refusal:  (i) The
Lease  must be in full force and  effect;  (ii)  Lessee  shall not be in Default
under  the  Lease  (nor  shall  Lessee  be in  Default  under  the  Lease at the
Commencement  Date for the Offer  Building)  and  (iii)  Lessee's  then  current
financial condition,  as revealed by its most recent financial statements (which
shall  include  quarterly  and annual  financial  statements,  including  income
statements,  balance sheets,  and cash flow  statements),  must demonstrate that
either:  (1)  Lessee's  net worth is at least equal to its net worth at the time
this Lease was signed;  or (2) Lessee meets the  financial  criteria  reasonably
acceptable to Lessor.

                                      -40-
<PAGE>

         (c)  Lessor  shall not lease any Offer  Building  or  Building 3 to any
other  party ( other than  Building 3 to the  current  tenant)  unless and until
Lessor has first  offered  Building 3 or any other  Offer  Building to Lessee in
writing (the "Offer  Notice") to lease Building 3 or an Offer Building to Lessee
under the terms  that such other  party is  willing  to lease and Lessee  either
rejects  such offer or a period of ten (10)  business  days has elapsed from the
date that Lessor has delivered the Offer Notice without  Lessee having  notified
Lessor in writing of its  acceptance  of such Offer Notice and  supplied  Lessor
with  current  financial  statements  pursuant to  Paragraph b, which ever event
occurs first. The Offer Notice shall contain the following information:  (i) The
date on which the  Lessor  expects  Building 3 or the Offer  Building  to become
available;  (ii) The Base Rent; (iv) The pro rata share of Additional  Rent; and
(v) Such other  terms and  conditions  upon which the third  party is willing to
lease Building 3 or the Offer Building.

         (d) If  Lessee  timely  delivers  to  Lessor,  in  accordance  with the
conditions of this Section,  written notice of Lessee's exercise of the Right of
First Refusal (along with Lessee's financial statements pursuant to Paragraph b)
and Lessor  determines that Lessee meets all of the conditions  provided in this
Section,  then Lessor and Lessee  shall enter into a new lease for Building 3 or
the Offer Building,  as applicable,  which lease shall be on the then applicable
terms and conditions in this Lease,  as modified by the terms and conditions set
forth in the Offer Notice.

         (e) If Lessee  declines or fails to duly and timely  exercise its Right
of  First  Refusal  or  fails to meet  all of the  conditions  provided  in this
Section,  Lessor  shall  thereafter  be free to lease  Building  3 or the  Offer
Building, as applicable, in portions or in its entirety to any third-party. upon
the terms  contained  in the Offer  Notice.  In the event  Lessor has not leased
Building  3 or the  Offer  Building  within 6  months,  Lessor  shall  not lease
Building 3 or the Offer Building without  re-offering it to Lessee in accordance
with the terms hereof.  In the event Lessor  proposes lease terms more favorable
than those set forth in the Offer Notice to any third party,  Lessor shall first
offer such terms to Lessee in accordance with the procedure set forth herein.

         (f)  Within ten (10)  business  days  after the  Commencement  Date for
Building 3 or the Offer Building, as applicable, Lessor and Lessee shall confirm
the  foregoing  in a new lease  between  Lessor and  Lessee,  which  lease shall
contain all of the same terms and  conditions of this Lease,  except as modified
by the Offer Notice.

                                      -41-
<PAGE>

         (g) This  Right of First  Refusal is  personal  to the Lessee and shall
become null and void upon the  occurrence  of an  assignment  of this Lease or a
sublet of all or a major  part of the  Premises  for the  remainder  of the Term
other than to a Lessee Affiliate.

         Section  17.26.  Acknowledgment  of Notices.  Lessor has  provided  and
Lessee hereby  acknowledges  receipt of the Notices attached as Exhibits J and K
hereto,  concerning  the presence of certain uses and  operations of neighboring
parcels of land.

                                      -42-
<PAGE>

         Section 17.27.  List of Exhibits.

                                                                       Ref. Page

EXHIBIT A:   Real Property Legal Description,
                           Site Plan, and Building Elevations

EXHIBIT B:   Plans and Specifications for Shell Building

EXHIBIT C:   Work Letter Agreement for Tenant
                           Improvements and Interior Specification Standards

EXHIBIT D:   Cost Responsibilities of Lessor and Lessee

EXHIBIT E:   Memorandum of Commencement of Lease
                           Term and Schedule of Base Rent

EXHIBIT F:   SNDA

EXHIBIT G:   Signage Exhibit

EXHIBIT H:   Guaranty of Lease [Intentionally Omitted]

EXHIBIT I:   Hazardous Materials Disclosure

EXHIBIT J:   Notice to Tenants

EXHIBIT K:   Notice to Tenants

EXHIBIT L:   Rules and Regulations

                                      -43-
<PAGE>

LESSOR AND LESSEE EACH HAS  CAREFULLY  READ AND HAS REVIEWED THIS LEASE AND BEEN
ADVISED  BY LEGAL  COUNSEL  OF ITS OWN  CHOOSING  AS TO EACH TERM AND  PROVISION
CONTAINED  HEREIN  AND,  BY  EXECUTION  OF THIS LEASE,  SHOWS ITS  INFORMED  AND
VOLUNTARY CONSENT THERETO.  EACH PARTY HEREBY AGREE THAT, AT THE TIME THIS LEASE
IS EXECUTED, THE TERMS AND CONDITIONS OF THIS LEASE ARE COMMERCIALLY  REASONABLE
AND  EFFECTUATE  THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.

<TABLE>
<CAPTION>

         Executed at San Jose, California, as of the reference date.
<S>                                                           <C>
LESSOR:                                                       ADDRESS:

PACIFIC DEVELOPMENT LLC,                                      c/o Jay Paul Company
a California limited liability company                        353 Sacramento Street, Suite 1740
                                                              San Francisco, California 94111

By:  ___________________________
         Jay Paul, President

                                                              With a copy to:

                                                              Thomas G. Perkins, Esq.
                                                              99 Almaden Blvd., 8th Floor
                                                              San Jose, CA 95113
                                                              Telephone: 408- 993-9911
                                                              Facsimile:   408-286.3312

LESSEE:                                                       ADDRESS:

BroadVision Inc.
a Delaware corporation                                        585 Broadway
                                                              Redwood City, CA  94063
                                                              Facsimile:  (650) 261-5900
By:  _______________________                                  (Before Commencement Date for Building 6)

        -----------------------
         (Type or print name)                                 ATTN:  Legal Department
                                                              Pacific Shores Center

Its:                                                          Building 6
      ----------------------------------------------
                                                              Redwood City, CA
                                                              (After Commencement Date for Building 6)

</TABLE>

                                      -44-
<PAGE>

By:  ________________________

     ------------------------
       (Type or print name)

Its:  _________________________

                                BROKER EXECUTION

         By signing  below,  the  indicated  real estate  broker or agent is not
being made a party hereto,  but is signifying  its agreement with the provisions
hereof concerning brokerage.

LESSOR'S BROKER:                                  ADDRESS:

Cornish & Carey Commercial                        2804 Mission College Boulevard
                                                  Suite 120
                                                  Santa Clara, California 95054

By:  ___________________________

     ---------------------------
        (Type or print name)

Its:   Executive Vice President

LESSEE'S BROKER:                                   ADDRESS:

------------------------------                     ---------------------------

                                                   ---------------------------
By:  ___________________________

     ---------------------------
        (Type or print name)

Its:  ___________________________

                                      -45-

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