LEASE AGREEMENT

         1. Parties. This Lease, dated for reference purposes only, August 7,
1996, is made by and between South Bay/Fortran, a California limited
partnership, ("Landlord"), and 3Dfx Interactive, a California corporation
("Tenant.").

         2. Premises. Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord, upon the terms and conditions hereinafter set forth, those
certain premises (the "Premises") presently known, as of the date of this Lease,
as 4435 Fortran Court, situated in the City of San Jose, County of Santa Clara,
State of California, described as follows: for purposes of this Lease, the
rentable square footage area of the Building shall be deemed to be approximately
seventy-seven thousand eight hundred five (77,805) square feet (the "Building"),
as shown cross-hatched on the site plan (the "Site Plan") attached hereto as
Exhibit ~An. The Building is located on a larger parcel (the "Parcel")
containing other buildings (the "Buildings") as shown on the Site Plan, which
Parcel is described in Exhibit "B" attached hereto, In the event Landlord
subdivides the Parcel in the future into two (2) or more legal parcels, the term
"Parcel" shall thereafter refer to the legal parcel on which the Premise are
located. Landlord shall not be required to make any alterations, additions or
improvements to the Premises and the Premises shall be leased to Tenant in an
"as-is" condition, except Landlord shall complete, at Landlord's expense, minor,
previously planned, structural improvements and modifications required by the
Americans with Disabilities Act (ADA) with regard to the existing Premises.
Landlord shall not be responsible to pay or the cost of any improvements
required to comply with ADA which is a result of any work of improvement to the
Premises initiated or completed by Tenant. If Landlord's Work is not completed
prior to Commencement Date, Tenant shall cooperate with Landlord and Landlord's
contractor in the performance of Landlord's Work. To the extent Landlord's Work
interferes with Tenant's use of the Premises, the Monthly Installment of rent
shall be reduced during the period of such interference in proportion to the
square footage of the area of the Premises which is not usable by Tenant during
the performance of Landlord's Work.


         3. Term. The term of this Lease ("Lease Term") shall be for ten (10)
years, commencing on the earlier of (i) May 1, 1997 or (ii) the date of
termination of the existing lease between Landlord and Reply Corporation (the
"Commencement Date"), and ending ten (10) years thereafter, unless sooner
terminated pursuant to any provision hereof. Notwithstanding said scheduled
Commencement Date, If for any reason Landlord cannot deliver possession of the
Premises to Tenant on said date, Landlord shall not be subject to any liability
therefor, nor shall such failure affect the validity of this Lease or the
obligations of Tenant hereunder, but in such case Tenant shall not be obligated
to pay rent until possession of the Premises is tendered to Tenant and the
commencement and termination dates of this Lease shall be revised to conform to
the date of Landlord's delivery of possession.
<PAGE>   2
         4. Rent.

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

            B. Monthly Installment. The initial Monthly Installment of rent
payable each month during the first (1st) through the twenty-fourth (24th)
months of the Lease Term shall be the sum of Seventy Thousand Twenty-five and
no/100ths Dollars ($70,025.00) per month.

            C. Rental Adjustments. The Monthly Installment of rent payable each
month shall increase during the Lease Term as follows:

               (a) Commencing on the twenty-fifth (25th) month of the Lease Term
and continuing through the forty-eighth (48th) month of the Lease Term, the
Monthly Installment of rent payable each month shall be Seventy-Seven Thousand
Eight Hundred Five and no/100ths Dollars ($77,805.00).

               (b) Commencing on the forty-ninth (49th) month of the Lease Term
and continuing through the seventy-second (72nd) month of the Lease Term, the
Monthly Installment of rent payable each month shall be Eighty-five Thousand
Five Hundred Eighty-six and no/100ths Dollars ($85,586.00).

               (c) Commencing on the seventy-third (73rd) month of the Lease
Term and continuing through the ninety-sixth (96th) month, the Monthly
Installment of rent payable each month shall be Ninety-three Thousand Three
Hundred Sixty-six and no/100ths Dollars ($93,366.00).

               (d) Commencing on the ninety-seventh month (97th) and continuing
through the one hundred and twentieth (120th) month, the Monthly Installment of
rent payable each month shall be One Hundred One Thousand One Hundred
Forty-seven and no/100ths Dollars ($101,147.00).

            D. Late Charge. Tenant acknowledges that late payment by Tenant to
Landlord of rent and other sums due hereunder will cause Landlord to incur costs
not contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing
and accounting charges, and late charges which may be imposed on Landlord by the
terms of any mortgage or deed of trust covering the Premises. Accordingly, if
any


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<PAGE>   3
installment of rent or any other sum due from Tenant shall not be received by
Landlord within ten (10) days after such amount shall be due, Tenant shall pay
to Landlord, as additional rent, a late charge equal to five percent (5%) or
such overdue amount. The parties hereby agree that such late charge represents a
fair and reasonable estimate of the costs Landlord will incur by reason of late
payment by Tenant.

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

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

            G. Advance Payment. Concurrently with the execution of this Lease,
Tenant shall pay to Landlord the sum of Seventy Thousand Twenty-Five Dollars
($70,025.00) to be applied to the Monthly Installment of rent first accruing
under this Lease.

         5. Security Deposit. Tenant shall deposit the sum of Seventy Thousand
Twenty-Five Dollars ($70,025.00) (the "Security Deposit") upon execution of this
Lease, to secure the faithful performance by Tenant of each term, covenant and
condition of this Lease. On each date that the Monthly Installment of rent is
increased pursuant to Paragraph 4.C above, Tenant shall deposit with Landlord an
additional sum to increase the Security Deposit to an amount equal to the
Monthly Installment of rent then payable under the Lease. If Tenant shall at any
time fail to make any payment or fail to keep or perform any term, covenant or
condition on its part to be made or performed or kept under this Lease, Landlord
may, but shall not be obligated to and without waiving or releasing Tenant from
any obligation under this Lease, use, apply or retain the whole or any part of
the Security Deposit (A) to the extent of any sum due to Landlord; (B) to make
any required payment on Tenant's behalf; or (C) to compensate Landlord for any
loss, damages, attorneys' fees or expense sustained by Landlord due to Tenant's
default. In such event, Tenant shall, within five (5) days of written demand by
Landlord, remit to Landlord sufficient funds to restore the Security Deposit to
its original sum. No interest shall accrue on the Security Deposit. Landlord
shall not be required to keep the Security Deposit separate from its general
funds. Should Tenant comply with all the terms, covenants, and conditions of
this Lease and at the end of the term of this Lease leave the Premises in the
condition required by this Lease, then said Security Deposit, less any sums
owing to Landlord, shall be returned to Tenant within thirty (30) days after the
termination of this Lease and vacancy of the Premises by Tenant.


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<PAGE>   4
         6. Use of Premises. Tenant shall use the Premises only in conformance
with applicable governmental laws, regulations, rules and ordinances for the
purpose of general office, sales, manufacturing, assembly, distribution and
warehousing of electronics materials and for no other purpose. Tenant shall
indemnify, protect, defend, and hold Landlord harmless against any loss,
expense, damage, attorneys' fees or liability arising out of the failure of
Tenant to comply with any applicable law. Tenant shall not commit or suffer to
be committed, any waste upon the Premises, or any nuisance, or other acts or
things which may disturb the quiet enjoyment of any other tenant in the
buildings adjacent to the Premises, or allow any sale by auction upon the
Premises, or allow the Premises to be used for any unlawful purpose, or place
any loads upon the floor, walls or ceiling which endanger the structure, or
place any harmful liquids in the drainage system of the Building. No waste
materials or refuse shall be dumped upon or permitted to remain upon any part of
the Premises outside of the Building proper, except in trash containers placed
inside exterior enclosures designated for that purpose by Landlord. No
materials, supplies, equipment, finished products or semi-finished products, raw
materials or articles of any nature shall be stored upon or permitted to remain
on any portion of the Premises outside of the Building proper. Tenant shall
strictly comply with the provisions of Paragraph 39 below.

         7. Taxes and Assessments.

            A. Tenant's Property. Tenant shall pay before delinquency any and
all taxes and assessments, license fees and public charges levied, assessed or
imposed upon or against Tenant's fixtures, equipment, furnishings, furniture,
appliances and persona' property installed or located on or within the Premises.
Tenant shall petition the applicable taxing authority to cause said fixtures,
equipment, furnishings, furniture, appliances and personal property to be
assessed and billed separately from the real property of Landlord. If any of
Tenant's said personal property shall be assessed with Landlord's real property,
Tenant shall pay Landlord the taxes attributable to Tenant within ten (10) days
after receipt of a written statement from Landlord setting forth the taxes
applicable to Tenant's property.

            B. Property Taxes. Tenant shall pay, as additional rent, its Pro
Rata Share (as defined below) of all Property Taxes levied or assessed with
respect to the land comprising the Parcel and with respect to all buildings and
improvements located on the Parcel which become due or accrue during the term of
this Lease. Tenant shall pay such Property Taxes to Landlord within thirty (30)
days after receipt of billing. Provided that Landlord bills Tenant at least
thirty (30) days prior to the delinquency date of such Property Taxes, Tenant
shall pay such Property Taxes to Landlord at least ten (10) days prior to the
delinquency date, and if Tenant fails to do so, Tenant shall reimburse Landlord,
on demand, for all interest, late fees and penalties that the taxing authority
charges Landlord. In the event Landlord's mortgagee requires an impound for
Property Taxes, then on the first day of each month during the Lease Term,
Tenant shall pay Landlord one twelfth (1/12) of its annual share of such
Property Taxes. Tenant's liability hereunder shall be prorated to reflect the
Commencement and termination dates of this Lease. If Landlord elects to pay any
assessment imposed against the Premises or the Building in full (which
assessment could have been paid in


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<PAGE>   5
installments), the amount of any such~ assessment to be included in the
calculation of Tenant's Pro Rata Share of Property Taxes shall be limited to the
installments of the principal and interest which would have become due during
the Lease Term had Landlord elected to pay such assessment installments over the
longest period available to Landlord.

         As used in this Lease, the term "Tenant's Pro Rata Share" shall mean a
fraction, expressed as a percentage, the numerator of which is the number of
square feet of floor space contained in the Premises and the denominator of
which is the number of square feet of floor space contained in all of the
Buildings located on the Parcel. As of the Commencement Date, Tenant's Pro Rata
Share is twenty-five and eighty-five hundredths percent (25.85~).

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

            C. Proposition 13 Limitation. If, during the first three (3) years
of the Lease Term, Landlord voluntarily sells or transfers ownership of the
Premises, and if such sale or transfer causes Property Taxes to be increased to
such an extent that Tenant's Pro Rata Share of Property Taxes would exceed $1.20
per square foot of rentable area of the Premises per year, then in such case,
and only in such case, Tenant shall not be obligated to pay that portion of
Tenant's Pro Rata Share of Property Taxes which (i) exceeds $1.20 per square
foot of rentable area of the Premises per year, and (ii) is attributable to the
increase in Property Taxes caused by such sale or transfer; provided, however,
that the foregoing limitation on Tenant's obligation to pay Property Taxes shall
not apply to increases in Property Taxes resulting from (i) a transfer caused by
foreclosure (whether resulting from a judicial foreclosure, non-judicial
foreclosure or deed-in-lieu thereof) of a first


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<PAGE>   6
mortgage or first deed of trust encumbering the Premises or (ii) any sale or
transfer occurring after the first three (3) years of the Lease Term.

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

         8. Insurance.

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

            B. Liability Insurance. Tenant shall, at Tenant's expense, obtain
and keep in force during the term of this Lease a policy of comprehensive public
liability insurance insuring Landlord and Tenant against claims and liabilities
arising out of the operation, use, or occupancy of the Premises and all areas
appurtenant thereto, including parking areas. Such insurance shall be in an
amount of not less than Three Million Dollars ($3,000,000.00) for bodily injury
or death as a result of any one occurrence and Five Hundred Thousand Dollars
($500,000.00) for damage to property as a result of any one occurrence. The
insurance shall be with companies approved by Landlord, which approval Landlord
agrees not to withhold unreasonably. Tenant shall deliver to Landlord, prior to
possession, and at least thirty (30) days prior to the expiration thereof, a
certificate of insurance evidencing the existence of the policy required
hereunder and such certificate shall certify that the policy (1) names Landlord
as an additional insured, (2) shall not be cancelled or altered without thirty
(30) days prior written notice to Landlord, (3) insures performance of the
indemnity set forth in Paragraph 8.A above, (4) the coverage is primary and any
coverage by Landlord is in excess thereto and (5) contains a cross-liability
endorsement.

         Landlord may maintain a policy or policies of comprehensive general
liability insurance insuring Landlord (and such others as are designated by
Landlord), against liability for personal


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<PAGE>   7
injury, bodily injury, death and damage to property occurring or resulting from
an occurrence in, on or about the Premises or the Common Area, with such limits
of coverage as Landlord may from time to time determine are reasonably necessary
for its protection. The cost of any such liability insurance maintained by
Landlord shall be a Common Area Charge and Tenant shall pay, as Additional Rent,
Tenant's Pro Rata Share of such cost to Landlord as provided in Paragraph 12
below.

            C. Property Insurance. Landlord shall, as a Common Area Charge,
obtain and keep in force during the term of this Lease a policy or policies of
insurance covering loss or damage to the Premises and the Buildings, in the
amount of the full replacement value thereof, providing protection against those
perils included within the classification of "all risk" insurance, plus a policy
of rental income insurance in the amount of one hundred percent (100%) of twelve
(12) months rent (including, without limitation, sums payable as Additional
Rent), plus, at Landlord's option, flood insurance and earthquake insurance, and
any other coverages which may be required from time to time by Landlord's
mortgagee. Tenant shall have no interest in nor any right to the proceeds of any
insurance procured by Landlord on the Premises. The full cost of such insurance
procured and maintained by Landlord shall be a Common Area Charge and Tenant
shall pay, as Additional Rent, Tenant's Pro Rata Share of such cost to Landlord
pursuant to Paragraph 12 below. Tenant acknowledges that such insurance procured
by Landlord shall contain a deductible which reduces Tenant~s cost for such
insurance and, in the event of loss or damage, Tenant shall be required to pay
to Landlord the amount of such deductible.

         Notwithstanding the foregoing, Tenant shall not be required to pay that
portion of the annual cost of earthquake insurance which exceeds forty cents
(40(cent)) per $100.00 of insured value.

         D. Tenant's Insurance. Tenant acknowledges that the insurance to be
maintained by Landlord on the Premises pursuant to Subparagraph C above will not
insure any of Tenant's property. Accordingly, Tenant, at Tenant's own expense,
shall maintain in full force and effect on all of its fixtures, equipment,
leasehold improvements and personal property in the Premises, a policy of "All
Risk" coverage insurance to the extent of at least ninety percent (90%) of their
insurable value.

         E. Mutual Waiver of Subrogation. Tenant and Landlord hereby mutually
waive their respective rights of recovery against each other of any loss of or
damage to the property of either party, to the extent such loss or damage is
insured by any insurance policy required to be maintained by this Lease or
otherwise in force at the time of such loss or damage. Each party shall obtain
any special endorsements, if required by the insurer, whereby the insurer waives
its right of subrogation against the other party hereto. The provisions of this
Subparagraph 8.E shall not apply in those instances in which the waiver of
subrogation would cause either party's insurance coverage to be voided or
otherwise made uncollectible; provided, however, if either party's insurance
carrier is not willing to waive its right of subrogation or if either party's
insurance carrier notifies such party that such waiver of subrogation would
cause such party's insurance coverage to be voided or made uncollectible, such
party shall notify the other party of such fact, in which case, the other party
shall


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<PAGE>   8
not be required to obtain such waiver of subrogation from its insurance carrier.
Each party shall use its best efforts to obtain such waiver of subrogation from
its insurance carrier.

         9.  Utilities. Tenant shall pay for all water, gas, light, heat, power,
electricity, telephone, trash pick-up, sewer charges and all other services
supplied to or consumed on the Premises, and all taxes and surcharges thereon.
In addition, the cost of any utility services supplied to the Common Area or not
separately metered to the Premises shall be a Common Area Charge and Tenant
shall pay its share of such costs to Landlord as provided in Paragraph 12 below.
Landlord shall not take any action or knowingly consent to any action by a third
party which cuts-off or interrupts utility service to the Premises.

         10. Repairs and Maintenance.

             A. Landlord's Repairs. Subject to provisions of Paragraph :6,
Landlord shall (i) keep and maintain the exterior roof, structural elements and
exterior walls of the Building in good order and repair and (ii) repair any
defects in Landlord's Work (as defined in Paragraph 2 above), including the
failure to perform Landlord's Work in compliance with applicable Laws in effect
at the time of such construction. Landlord shall not, however, be required to
maintain, repair or replace the interior surface of exterior walls, nor shall
Landlord be required to maintain, repair or replace windows, doors, skylights or
plate glass. Landlord shall have no obligation to make repairs under this
Subparagraph until a reasonable time after receipt of written notice from Tenant
of the need for such repairs. Tenant shall reimburse Landlord, as Additional
Rent, within thirty (30) days after receipt of billing, for the cost of such
repairs and maintenance which are the obligation of Landlord hereunder, provided
however, that Tenant shall not be required to reimburse Landlord for the (i)
cost of maintenance and repairs of the structural elements of the Building
unless such maintenance or repair is required because of the negligence or
willful misconduct of Tenant or its employees, agents or invitees; or (ii) any
amounts paid or payable by Landlord in connection with the repair of any defects
in Landlord's Work (as defined in Paragraph 2); or (iii) any cost for which
Landlord is reimbursed by any third party, including, without limitation, by
insurance or condemnation proceeds; or (iv) any amounts paid or payable by
Landlord in connection with the repairs or maintenance necessitated by (a)
negligence or willful misconduct of Landlord or its Agents; (b) Landlord's
failure to perform any of the Landlord's obligations under this Lease; or (c)
the occurrence of any damage or destruction or condemnation as provided in
Paragraphs 16 and 17, respectively (except with respect to payment by Tenant of
Tenant's Pro Rata Share of any deductible); and (v) costs pertaining to
Hazardous Materials (as defined in Paragraph 39) which are not the
responsibility of Tenant under Paragraph 39 of this Lease. As used herein, the
term 'structural elements of the Building" shall mean and be limited to the
foundation, footings, floor slab (but not flooring), structural walls, and roof
structure (but not roofing or roof membrane).

             B. Tenant's Repairs. Except as expressly provided in Subparagraph A
above, Tenant shall, at its sole cost, keep and maintain the entire Premises and
every part thereof, including without limitation, the windows, window frames,
plate glass, glazing, skylights, truck doors, doors


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<PAGE>   9
and all door hardware, the walls and partitions, and the electrical, plumbing,
lighting, heating, ventilating and air conditioning systems and equipment in
good order, condition and repair. The term "repair' shall include replacements,
restorations and/or renewals when necessary as well as painting. Tenant's
obligation shall extend to all alterations, additions and improvements to the
Premises, and all fixtures and appurtenances therein and thereto. Tenant shall,
at all times during the Lease Term, have in effect a service contract for the
maintenance of the heating, ventilating and air conditioning ("HVAC") equipment
with an HVAC repair and maintenance contractor approved by Landlord. The HVAC
service contract shall provide for periodic inspection and servicing at least
once every three (3) months during the term hereof, and Tenant shall provide
Landlord with a copy of such contract and all periodic service reports. Tenant
shall not be responsible for any repairs or maintenance to the Premises
necessitated by (i) the negligence or willful misconduct of Landlord or its
agents; (ii) the failure of Landlord to perform any of Landlord's obligations
under this Lease; or (iii) the occurrence of any damage or destruction or
condemnation as provided in Paragraphs 16 and 17, respectively, except as
otherwise provided in Paragraph 16 below. Should Tenant fail to make repairs
required of Tenant hereunder within thirty (30) days after receipt of written
notice of the need thereof from Landlord to Tenant, or if such repairs cannot be
made within such thirty (30) day period, then such additional time as may be
necessary to make such repairs provided Tenant has commenced such repairs within
the thirty (30) day period and is diligently pursuing the repairs to completion,
Landlord, in addition to all other remedies available hereunder or by law and
without waiving any alternative remedies, may, following written notice to
Tenant, make the same, and in that event, Tenant shall reimburse Landlord as
Additional Rent for the reasonable cost of such maintenance or repairs within
fifteen (15) days after receipt of written demand from Landlord.

         Landlord shall have no maintenance or repair obligations whatsoever
with respect to the Premises except as expressly provided in Paragraphs 10.A,
10.C an 11. Tenant hereby expressly waives the provisions of Subsection 1 of
Section 1932 and Sections 1941 and 1942 of the Civil Code of California and all
rights to make repairs at the expense of Landlord as provided in Section 1942 of
said Civil Code. Landlord shall not be liable for any damages arising from any
act or neglect of any other tenant, if any, of the Buildings or the Parcel.

             C. Replacement of Roof Membrane and/or HVAC Equipment.
Notwithstanding anything contained in Paragraph 10.A above to the contrary, if
the roof membrane of the Building requires replacement during the Lease Term,
then Landlord shall perform such replacement and Tenant shall pay to Landlord,
within thirty (30) days after receipt of billing, as Additional Rent, a fraction
of the cost of such replacement, which fraction shall have as its numerator the
number of calendar months then remaining in the Lease Term at the time of such
replacement and shall have as its denominator one hundred eighty (180) months.
Notwithstanding anything in Subparagraph 10.B to the contrary, if any HVAC
equipment requires replacement during the first year of the Lease Term, then
Landlord shall perform such replacement at its sole cost and expense. If any
HVAC equipment requires replacement after the first year of the Lease Term, then
Tenant shall perform such replacement at its sole cost and expense.


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<PAGE>   10
         11. Common Area. Subject to the terms and conditions of this Lease and
such rules and regulations as Landlord may from time to time prescribe, Tenant
and Tenant's employees, invitees and customers shall, in common with other
occupants of the Parcel, and their respective employees, invitees and customers,
and others entitled to the use thereof, have the nonexclusive right to use the
access roads, parking areas and facilities provided and designated by Landlord
for the general use and convenience of the occupants of the Parcel, which areas
and facilities are referred to herein as "Common Area. This right shall
terminate upon the termination of this Lease. Landlord reserves the right from
time to time to make changes in the shape, size, location, amount and extent of
the Common Area provided that no area located outside the Parcel shall be
included within the Common Areas and provided that such changes do not adversely
affect Tenant's access to or use of the Premises. Landlord further reserves the
right to promulgate such reasonable rules and regulations relating to the use of
the Common Area, and any part or parts thereof, as Landlord may deem appropriate
for the best interest of the occupants of the Parcel. The rules and regulations
shall be binding upon Tenant upon delivery of a copy of them to Tenant, and
Tenant shall abide by them and cooperate in their observance. Such rules and
regulations may be amended by Landlord from time to time, with or without
advance notice, and all amendments shall be effective upon delivery of a copy of
them to Tenant. Tenant shall have the non-exclusive use of no more than three
hundred (300) of the parking spaces in the Common Area as designated from time
to time by Landlord. Tenant shall not at any time park or permit the parking of
Tenant's trucks or other vehicles, or the trucks or other vehicles of others,
adjacent to loading areas so as to interfere in any way with the use of such
areas, nor shall Tenant at any time park or permit the parking of Tenant's
vehicles or trucks, or the vehicles or trucks of Tenant's suppliers or others,
in any portion of the Common Area not designated by Landlord for such use by
Tenant. Tenant shall not abandon any inoperative vehicles or equipment on any
portion of the Common Area. Tenant shall make no alterations, improvements or
additions to the Common Area.

         Landlord shall operate, manage, insure, maintain and repair the Common
Area in good order, condition and repair. The manner in which the Common Area
shall be maintained and the expenditures for such maintenance shall be at the
reasonable business discretion of Landlord. The cost of such repair,
maintenance, operation, insurance and management, including without limitation,
maintenance and repair of landscaping, irrigation systems, paving, sidewalks,
fences, and lighting, shall be a Common Area Charge and Tenant shall pay to
Landlord its share of such costs as provided in Paragraph 12 below.

         12. Common Area Charges. Tenant shall pay to Landlord, as Additional
Rent, within thirty (30) days after receipt of billing but not more often than
once each calendar month, an amount equal to its Pro Rata Share of the Common
Area Charges as defined in Paragraphs 8.B, 8.C, 9, 11 and 13 of this Lease.
Tenant acknowledges and agrees that the Common Area Charges shall include an
additional three percent (31) of the actual expenditures in order to compensate
Landlord for accounting, management and processing services. Tenant shall have
the right to review Landlord's books and records in order to confirm that only
those charges which are permitted under this Lease


                                      -10-
<PAGE>   11
are being passed through to Tenant provided that Tenant completes such review
within ninety (90) days after receipt of a billing invoice from Landlord.

         13. Alterations. Tenant shall not make, or suffer to be made, any
alterations, improvements or additions in, on, about or to the Premises or any
part thereof, without the prior written consent of Landlord and without a valid
building permit issued by the appropriate governmental authority; provided,
however, Tenant may make non-structural alterations to the interior of the
Premises costing less than Fifty Thousand Dollars ($50,000.00) without obtaining
the prior written consent of Landlord provided that such alterations do not
change the use of the Premises. As a condition to giving such consent, Landlord
may require that Tenant agree to remove any such alterations, improvements or
additions at the termination of this Lease, and to restore the Premises to their
prior condition. Unless Landlord requires that Tenant remove any such
alterations, improvement or addition, any alteration, addition or improvement to
the Premises, except movable furniture and trade fixtures not affixed to the
Premises, shall become the property of Landlord upon termination of the Lease
and shall remain upon and be surrendered with the Premises at the termination of
this Lease. Without limiting the generality of the foregoing, all heating,
lighting, electrical (including all wiring, conduit, outlets, drops, buss ducts,
main and subpanels), air conditioning, partitioning, drapery, and carpet
installations made by Tenant regardless of how affixed to the Premises, together
with all other additions, alterations and improvements that have become an
integral part of the Building, shall be and become the property of the Landlord
upon termination of the Lease, and shall not be deemed trade fixtures, and shall
remain upon and be surrendered with the Premises at the termination of this
Lease.

         If, during the Lease Term, any non-structural alteration, addition or
change of any sort to all or any portion of the Premises (other than the fire
sprinkler system) is required by law, regulation, ordinance or order of any
public agency, Tenant shall promptly make the same at its sole cost and expense.
If, during the Lease Term, any structural or fire sprinkler system alteration,
addition or change of any sort to all or any portion of the Premises (other than
the fire sprinkler system) is required by law, regulation, ordinance or order of
any public agency because of (i) Tenant's particular use or change of use of the
Premises, (ii) Tenant's application for a new permit or governmental approval,
or (iii) Tenant's construction or installation of leasehold improvements or
trade fixtures, Tenant shall promptly make the same at its sole cost and
expense. If, during the Lease Term, any structural or fire sprinkler system
alteration, addition or change of any sort to all or any portion of the Premises
is required by law, regulation, ordinance or order for any reason other than
those described in the immediately preceding sentence, Landlord shall promptly
make the same at its sole cost and expense. If, during the Lease Term, any
alteration, addition or change to the Common Area is required by law,
regulation, ordinance or order of any public agency, Landlord shall make the
same and the cost of such alteration, addition or change shall be a Common Area
Charge and Tenant shall pay its share of said cost to Landlord as provided in
Paragraph 12 above.


                                      -11-
<PAGE>   12
         14. Acceptance of the Premises. By entry and taking possession of the
Premises pursuant to this Lease, Tenant accepts the Premises as being in good
and sanitary order, condition and repair and accepts the Premises in their
condition existing as of the date of such entry, and Tenant further accepts the
tenant improvements to be constructed by Landlord, if any, as being completed in
accordance with the plans and specifications for such improvements, except for
punch list items. Tenant acknowledges that neither the Landlord nor Landlord's
agents has made any representation or warranty as to the suitability of the
Premises to the conduct of Tenant's business. Any agreements, warranties or
representations not expressly contained here n shall in no way bind either
Landlord or Tenant, and Landlord and Tenant expressly waive all claims for
damages by reason of any statement, representation, warranty, promise or
agreement, if any, not contained in this Lease. This Lease constitutes the
entire understanding between the parties hereto and no addition to, or
modification of, any term or provision of this Lease shall be effective until
set forth in a writing signed by both Landlord and Tenant.

         15. Default.

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

                1. Default in the payment when due of any installment of rent or
other payment required to be made by Tenant hereunder, where such default shall
not have been cured within three (3) days after written notice of such default
is given to Tenant;

                2. Tenant's failure to perform any other term, covenant or
condition contained in this Lease where such failure shall have continued for
thirty (30) days after written notice of such failure is given to Tenant;
provided, however, if such failure reasonably requires more than thirty (30)
days to cure, Tenant shall not be deemed in default if Tenant commences to cure
such failure within said thirty (30) day period and thereafter diligently
prosecutes such cure to completion;

                3. Tenant's assignment of its assets for the benefit of its
creditors;

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

                5. Tenant or any guarantor of Tenant's obligations hereunder
shall commence any case, proceeding or other action seeking reorganization,
arrangement, adjustment, liquidation, dissolution or composition of it or its
debts under any law relating to bankruptcy,


                                      -12-
<PAGE>   13
insolvency, reorganization or relief of debtors, or seek appointment of a
receiver, trustee, custodian, or other similar official for it or for all or any
substantial part of its property;

                6. Tenant or any such guarantor shall take any corporate action
to authorize any of the actions set forth in Clause 5 above; or

                7. Any case, proceeding or other action against Tenant or any
guarantor of Tenant's obligations hereunder shall be commenced seeking to have
an order for relief entered against it as debtor, or seeking reorganization,
arrangement, adjustment, liquidation, dissolution or composition of it or its
debts under any law relating to bankruptcy, insolvency, reorganization or relief
of debtors, or seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its property, and
such case, proceeding or other action (i) results in the entry of an order for
relief against it which is not fully stayed within seven (7) business days after
the entry thereof or (ii) remains undismissed for a period of forty-five (45)
days.

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

                1. Recovery of Rent. Landlord shall be entitled to keep this
Lease in full force and effect (whether or not Tenant shall have abandoned the
Premises) and to enforce all of its rights and remedies under this Lease,
including the right to recover rent and other sums as they become due, plus
interest at the Permitted Rate (as defined in Paragraph 33 below) from the due
date of each installment of rent or other sum until paid.

                2. Termination. Landlord may terminate this Lease by giving
Tenant written notice of termination. On the giving of the notice all of
Tenant's rights in the Premises and the Building and Parcel shall terminate.
Upon the giving of the notice of termination, Tenant shall surrender and vacate
the Premises in the condition required by Paragraph 34, and Landlord may
re-enter and take possession of the Premises and all the remaining improvements
or property and eject Tenant or any of Tenant's subtenants, assignees or other
person or persons claiming any right under or through Tenant or eject some and
not others or eject none. This Lease may also be terminated by a judgement
specifically providing for termination. Any termination under this paragraph
shall not release Tenant from the payment of any sum then due Landlord or from
any claim for damages or rent previously accrued or then accruing against
Tenant. In no event shall any one or more of the following actions by Landlord
constitute a termination of this Lease:

                   a. maintenance and preservation of the Premises;

                   b. efforts to relet the Premises;


                                      -13-
<PAGE>   14
                   c. appointment of a receiver in order to protect Landlord's
interest hereunder;

                   d. consent to any subletting of the Premises or assignment of
this Lease by Tenant, whether pursuant to provisions hereof concerning
subletting and assignment or otherwise; or

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

                3. Damages. In the event this Lease is terminated pursuant to
Subparagraph 15.B.2 above, or otherwise, Landlord shall be entitled to damages
in the following sums:

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

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

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

                   d. any other amount necessary to compensate Landlord for all
detriment proximately caused by Tenant's failure to perform Tenant's obligations
under this Lease, or which in the ordinary course of things would be likely to
result therefrom including, without limitation, the following: (i) expenses for
cleaning, repairing or restoring the Premises; (ii) real estate broker's fees,
advertising costs and other expenses of reletting the Premises fairly allocable
to the balance of the Lease Term; (iii) costs of carrying the Premises such as
taxes and insurance premiums thereon, utilities and security precautions; (iv)
expenses in retaking possession of the Premises; and (v) attorneys, fees and
court costs.

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


                                      -14-
<PAGE>   15
             C. Landlord's Default. In the event of failure by Landlord to
perform any of its obligation under this Lease, Tenant shall notify Landlord of
such failure. Landlord shall have thirty (30) days within which to cure such
failure or if such failure is of such a nature that it cannot be reasonably
cured within said thirty (30) day period, then such additional time; as may be
required to cure such failure provided Tenant has commenced to cure such failure
within the thirty (30) day period and diligently pursues such cure to
completion. If Landlord fails to cure or commence to cure, as the case may be,
such failure within the time set forth above, then Tenant, following written
notice from Tenant to Landlord, may, but shall not be obligated to, perform such
obligations. Landlord shall reimburse Tenant for all reasonable costs incurred
by Tenant pursuant to the previous sentence within fifteen (15) days following
written demand thereof by Landlord.

         16. Destruction. In the event that any portion of the Premises are
destroyed or damaged by an uninsured peril, Landlord or Tenant may, upon written
notice to the other, given within thirty (30) days after the occurrence of such
damage destruction, elect to terminate this Lease; provided, however, that
either party may, within thirty (30) days after receipt of such notice, elect to
make any required repairs and/or restoration at such party's sole cost and
expense, in which event this Lease shall remain in full force and effect, and
the party having made such election to restore or repair shall thereafter
diligently proceed with such repairs and/or restoration. In the event neither
parr~ elects to terminate this Lease as provided in the foregoing sentence, then
Landlord shall be deemed to have elected to restore or repair the Premises at
Landlord's sole cost and expense, in which event this Lease shall remain in full
force and effect and Landlord shall thereafter diligently proceed with such
repairs and/or restoration. For purposes of this paragraph, the term "uninsured
peril" shall not include a peril which would have been covered by Landlord if
Landlord had carried the insurance required under the terms of this Lease.

         In the event the Premises are damaged or destroyed from any insured
peril to the extent of fifty percent (50~) or more of the then replacement cost
of the Premises, Landlord may, upon written notice to Tenant, given within
thirty (30) days after the occurrence of such damage or destruction, elect to
terminate this Lease. If Landlord does not give such notice in writing within
such period, Landlord shall be deemed to have elected to rebuild or restore the
Premises, in which event Landlord shall, at its expense, promptly rebuild or
restore the Premises to their condition prior to the damage or destruction and
Tenant shall pay to Landlord upon commencement of reconstruction the amount of
any deductible from the insurance policy.

         In the event the Premises are damaged or destroyed from any insured
peril to the extent of less than fifty percent (50~) of the then replacement
cost of the Premises, Landlord shall, at Landlord's expense, promptly rebuild or
restore the Premises to their condition prior to the damage or destruction and
Tenant shall pay to Landlord upon commencement of reconstruction the amount of
any deductible from the insurance policy.

         In the event that, pursuant to the foregoing provisions, Landlord is to
rebuild or restore the Premises, Landlord shall, within thirty (30) days after
the occurrence of such damage or destruction,


                                      -15-
<PAGE>   16
provide Tenant with written notice of the time required for such repair or
restoration. If such period is longer than two hundred one hundred eighty (180)
days from the issuance of a building permit, Tenant may, within thirty (30) days
after receipt of Landlord's notice, elect to terminate the Lease by giving
written notice to Landlord of such election, whereupon the Lease shall
immediately terminate. If the repairs or restoration are not completed within
two hundred seventy (270) days after the date of the damage or destruction,
Tenant may elect to terminate this Lease by giving written notice to Landlord of
such election, whereupon the Lease shall immediately terminate. The period of
time for Landlord to complete the repair or restoration shall be extended for
delays caused by the fault or neglect of Tenant or because of acts of God, acts
of publication, labor disputes, strikes, fires, freight embargoes, rainy or
stormy weather, inability to obtain materials, supplies or fuels, acts of
contractors or subcontractors, or delay of contractors or subcontractors due to
such causes, or other contingencies beyond the control of Landlord. Landlord's
obligation to repair or restore the Premises shall not include restoration of
Tenant's trade fixtures, equipment, merchandise, or any improvements,
alterations or additions made by Tenant to the Premises.

         Landlord and Tenant shall each have the right to terminate this Lease
if (a) the damage to the Premises occurs at any time during the last eighteen
(18) months of the Lease Term and (b) it is estimated that the necessary repairs
will take more than sixty (60) days to complete from the date of the damage.

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

         17. Condemnation.

             A. Definition of Terms. For the purposes of this Lease, the term
(1) "Taking" means a taking of the Premises or damage to the Premises related to
the exercise of the power of eminent domain and includes a voluntary conveyance,
in lieu of court proceedings, to any agency, authority, public utility, person
or corporate entity empowered to condemn property; (2) "Total Taking" means the
taking of the entire Premises or so much of the Premises as to prevent or
substantially impair the use thereof by Tenant for the uses herein specified;
provided, however, in no event shall a Taking of less than ten percent (101) of
the Premises be deemed a Total Taking; (3) "Partial Taking" means the taking of
only a portion of the Premises which does not constitute a Total Taking; (4)
"Date of Taking" means the date upon which the title to the Premises, or a
portion thereof, passes to and vests in the condemnor or the effective date of
any order for possession if issued prior to the date title vests in the
condemnor; and (5) "Award" means the amount of any award made, consideration
paid, or damages ordered as a result of a Taking.


                                      -16-
<PAGE>   17
             B. Rights. The parties agree that in the event of a Taking all
rights between them or in and to an Award shall be as set forth herein and
Tenant shall have no right to any Award except as set forth herein.

             C. Total Taking. In the event of a Total Taking during the term
hereof (1) the rights of Tenant under the Lease and the leasehold estate of
Tenant in and to the Premises shall cease and terminate as of the Date of
Taking; (2) Landlord shall refund to Tenant any prepaid rent and any unapplied
Security Deposit; (3) Tenant shall pay Landlord any rent or charges due Landlord
under the Lease, each prorated as of the Date of Taking; (4) Tenant shall
receive from Landlord those portions of the Award attributable to (i) trade
fixtures of Tenant, (ii) unamortized value of leasehold improvements made to the
Premises by Tenant (amortized on a straight line basis over the Lease Term), and
(iii) good will and moving expenses of Tenant; and (5) the remainder of the
Award shall be paid to and be the property of Landlord.

             D. Partial Taking. In the event of a Partial Taking during the term
hereof (1) the rights of Tenant under the Lease and leasehold estate of Tenant
in and to the portion of the Premises taken shall cease and terminate as of the
Date of Taking; (2) from and after the Date of Taking the Monthly Installment of
rent shall be an amount equal to the product obtained by multiplying the Monthly
Installment of rent immediately prior to the Taking by a fraction, the numerator
of which is the number of square feet contained in the Premises after the Taking
and the denominator of which is the number of square feet contained in the
Premises prior to the Taking; (3) Tenant's Pro Rata Share shall be recalculated
as provided in Paragraph 8 above; and (4) Tenant shall receive from the Award
the portions of the Award attributable to (i) trade fixtures of Tenant; (ii)
unamortized value of leasehold improvements made to the Premises by Tenant; and
(iii) good will of Tenant and (iv) the remainder of the Award shall be paid to
and be the property of Landlord.

         18. Mechanics' Lien. Tenant shall (A) pay for all labor and services
performed for, materials used by or furnished to, Tenant: or any contractor
employed by Tenant with respect to the Premises; (B) indemnify, defend, protect
and hold Landlord and the Premises harmless and free from any liens, claims,
liabilities, demands, encumbrances, or judgements created or suffered by reason
of any labor or services performed for, materials used by or furnished to,
Tenant or any contractor employed by Tenant with respect to the Premises; (C)
give notice to Landlord in writing five (5) days prior to commencement of any
construction in the Premises or delivery of materials to be used in such
construction; and (D) permit Landlord to post a notice of nonresponsibility in
accordance with the statutory requirements of California Civil Code Section 3094
or any amendment thereof. In the event Tenant is required to post an improvement
bond with a public agency in connection with the above, Tenant agrees to include
Landlord as an additional obligee.

         19. Inspection of the Premises. Tenant shall permit Landlord and its
agents to enter the Premises at any reasonable time for the purpose of
inspecting the same, performing Landlord's maintenance and repair
responsibilities, posting a notice of non-responsibility for alterations,
additions or repairs and at any time within ninety (90) days prior to expiration
of this Lease, to place


                                      -17-
<PAGE>   18
upon the Premises, ordinary "For Lease" or "For Sale" signs. Except in the event
of an emergency, Landlord agrees that prior to any such entry onto the Premises,
Landlord shall (a) give at least twenty-four (24) hours notice, (b) be
accompanied by an employee of Tenant at all times while on the Premises provided
that Tenant provides such employee on a reasonable basis, (c) comply with
Tenant's reasonable security procedures, and (d) not unreasonably interfere with
Tenant's use of the Premises.

         20. Compliance with Laws. Subject to the provisions Oc Paragraph 12
above, Tenant shall comply with all of the requirements of all municipal,
county, state and federal authorities now in force, or which may hereafter be in
force, pertaining to the use and occupancy of the Premises, and shall faithfully
observe all municipal, county, state and federal law, statutes or ordinances now
in force or which may hereafter be in force. The judgement of any court of
competent jurisdiction or the admission of Tenant in any action or proceeding
against Tenant, whether Landlord be a party thereto or not, that Tenant has
violated any such ordinance or statute in the use and occupancy of the Premises
shall be conclusive of the fact that such violation by Tenant has occurred.

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

             A. Priority. This Lease is subject and subordinate to Security
Instruments existing as of the Commencement Date. However, if any Lender so
requires, this Lease shall become prior and superior to any such Security
Instrument. Tenant agrees to promptly execute a Subordination, Non-Disturbance
and Attornment Agreement with Landlord's current Lender, Comerica
Bank-California, in the form attached hereto as Exhibit "E" (the "Comerica
SNA").

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

             C. Documents. Tenant shall execute any reasonable document or
instrument required by Landlord or any Lender to make this Lease either prior or
subordinate to a Security Instrument, which may include such other matters as
the Lender customarily requires in connection with such agreements, including
provisions that the Lender, if it succeeds to the interest of Landlord under
this Lease, shall not be (i) liable for any act or omission of any prior
landlord (including Landlord), (ii) subject ~o any offsets or defenses which
Tenant may have against any prior landlord


                                      -18-
<PAGE>   19
(including Landlord), (iii) bound by any rent or Additional Rent paid more than
one (1) month in advance of its date due under this Lease unless the Lender
receives it from Landlord, (iv) liable for any defaults on the part of Landlord
occurring prior to the time that the Lender takes possession of the Premises in
connection with the enforcement of its Security Instrument, (v) liable for the
return of any Security Deposit unless such deposit has been delivered to Lender,
or (vi) bound by any agreement or modification of the Lease made without the
prior written consent of Lender. Tenant's failure to execute any such document
or instrument within twenty (20) days after written demand therefor shall
constitute a default by Tenant. Tenant's obligation to execute and deliver any
subordination agreement to any future Lender shall be conditioned upon such
Lender agreeing that in the event of foreclosure of the Security Instrument in
question, such Lender shall recognize the tenancy of Tenant on the terms and
conditions contained in this Lease so long as Tenant is not in default under
this Lease. Landlord shall not request Tenant to execute a subordination
agreement more often than two times in a twelve (12) month period. Tenant agrees
that any proposed subordination agreement which is substantially similar to the
Comerica SNA shall be deemed a reasonable document or instrument.

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

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

         22. Holding Over. This Lease shall terminate without further notice at
the expiration of the Lease Term. Any holding over by Tenant after expiration
shall not constitute a renewal or extension or give Tenant any rights in or to
the Premises except as expressly provided in this Lease. Any holding over after
the expiration with the consent of Landlord shall be construed to be a tenancy
from month to month, at one hundred fifty percent (1501) of the monthly rent for
the last month of the Lease Term, and shall otherwise be on the terms and
conditions herein specified insofar as applicable.

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


                                      -19-
<PAGE>   20
                           511 Division Street
                           Campbell CA 95008

         and the address of Tenant is:

                           3Dfx Interactive
                           411 Clyde Avenue
                           Mountain View, CA 94043
                           Attn: Mr. Gary Martin, CFO/VP Admin.

After the Commencement Date, the address of Tenant shall be at the Premises.
Either party may, by notice given in accordance with this paragraph, specify a
different address for notice purposes.

         24. Attorneys' Fees. In the event either party shall bring any action
or legal proceeding for damages for any alleged breach of any provision of this
Lease, to recover rent or possession of the Premises, to terminate this Lease,
or to enforce, protect or establish any term or covenant of this Lease or right
or remedy of either party, the prevailing party shall be entitled to recover as
a part of such action or proceeding, reasonable attorneys' fees and court costs,
including attorneys' fees and costs for appeal, as may be fixed by the court or
jury. The term "prevailing party" shall mean the party who received
substantially the relief requested, whether by settlement, dismissal, summary
judgement, judgement, or otherwise.

         25. Nonassignment.

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

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

             B. Transferee Information Required. If Tenant desires to assign its
interest in this Lease or sublet the Premises, or transfer any interest of
Tenant therein, or permit the use of the Premises by another party (hereinafter
collectively referred to as a "Transfer"), Tenant shall give Landlord at least
ten (10) days prior written notice of the proposed Transfer and of the terms of
such proposed Transfer, including, but not limited to, the name and legal
composition of the proposed


                                      -20-
<PAGE>   21
transferee, a financial statement of the proposed transferee, the nature of the
proposed transferee's business to be carried on in the Premises, the payment to
be made or other consideration to be given to Tenant on account of the Transfer,
and such other pertinent information as may be requested by Landlord, all in
sufficient detail to enable Landlord to evaluate the proposed Transfer and the
prospective transferee.

             C. Landlord's Rights. It is the intent of the parties hereto that
this Lease shall confer upon Tenant only the right to use and occupy the
Premises, and to exercise such other rights as are conferred upon Tenant by this
Lease. The parties agree that this Lease is not intended to have a bonus value
nor to serve as a vehicle whereby Tenant may profit by a future Transfer of this
Lease or the right to use or occupy the Premises as a result of any favorable
terms contained herein, or future changes in the market for leased space. It is
the intent of the parties that any such bonus value that may attach to this
Lease shall be and remain the exclusive property of Landlord. Accordingly, in
the event Tenant seeks to Transfer its interest in this Lease or the Premises,
Landlord shall have the following options, which may be exercised at its sole
choice without limiting Landlord in the exercise of any other right or remedy
which Landlord may have by reason of such proposed Transfer:

                (1) Except as otherwise set forth in Paragraph 25.D below, in
the event of a proposed assignment of this Lease or a proposed sublease of the
entire Premises for the remaining Lease Term, Landlord may elect to terminate
this Lease effective as of the proposed effective date of such proposed
assignment or sublease and release Tenant from any further liability hereunder
accruing after such termination date by giving Tenant written notice of such
termination within twenty (20) days after receipt by Landlord of Tenant's notice
of intent to assign or sublease as provided above. If Landlord makes such
election to terminate this Lease, Tenant shall surrender the Premises, in
accordance with Paragraph 34, on or before the effective termination date; or

                (2) Landlord may consent to the proposed Transfer on the
condition that Tenant agrees to pay to Landlord, as Additional Rent, fifty
percent (50~) of any and all rents or other consideration (including key money)
received by Tenant from the transferee by reason of such Transfer in excess of
the rent payable by Tenant to Landlord under this Lease (less any brokerage
commissions, tenant improvement costs, and advertising expenses incurred by
Tenant in connection with the Transfer). Tenant expressly agrees that the
foregoing is a reasonable condition for obtaining Landlord's consent to any
Transfer; or

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

             D. Permitted Transfers. Notwithstanding the foregoing, Tenant may,
without Landlord's prior written consent and without Subparagraph B above being
applicable, assign its interest in the Lease or sublet the Premises or a portion
thereof to (i) Tech Farm; (ii) a subsidiary, affiliate, division or corporation
which controls or is controlled by or under common control with


                                      -21-
<PAGE>   22
Tenant; (iii) a successor corporation related to Tenant by merger,
consolidation, non-bankruptcy reorganization or government action; or (iv) a
purchaser of substantially all of the Tenant's assets; provided that, in each
instance described above, (a) the transferee (other than in the case of a
sublease) assumes the obligations of the Tenant under this Lease in a written
instrument delivered to Landlord; (b) the transferor tenant remains liable as a
primary obligor for the obligations of Tenant under this Lease; and provided,
further, in the case of (iii) and (iv) above, the tangible net worth (determined
in accordance with generally accepted accounting principles) of the transferee
tenant is no less than Tenant's tangible net worth immediately prior to the date
of such Transfer.

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

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

         28. Landlord Loan or Sale. Tenant agrees promptly following request by
Landlord to (A) execute and deliver to Landlord any documents, including
estoppel certificates presented to Tenant by Landlord, (i) certifying that this
Lease is unmodified and in full force and effect (or, if modified, specifying
such modification and certifying that the Lease as so modified is in full force
and effect) and the date to which the rent and other charges are paid in
advance, if any, and (ii) acknowledging that there are not, to Tenant~s
knowledge, any uncured defaults on the part of Landlord hereunder or specifying
such defaults, if any, that are claimed, and (iii) evidencing the status of the
Lease as may be required either by a lender making a loan to Landlord to be
secured by a deed of trust or mortgage covering the Premises or a purchaser of
the Premises from Landlord and (B) to deliver to Landlord the financial
statement of Tenant with an opinion of a certified public accountant, including
a balance sheet and profit and loss statement, for the last completed fiscal
year all prepared in accordance with generally accepted accounting principles
consistently applied. Landlord agrees to sign a confidentiality agreement with
respect to Tenant's financial statements whereby none of the information
contained in the statements can be released to any person or entity without
first obtaining Tenant's consent and such person or entity signs a similar
confidential agreement, provided, however, Landlord can release such information
to its lender or potential lender to any respective purchaser of the Premises
provided such person signs a similar confidentiality agreement. If Tenant
becomes a public company, the financial statements filed with the SEC as part of
a 10Q or 10K shall satisfy the foregoing requirement for delivery of a financial
statement. Tenant's failure to deliver an estoppel certificate promptly
following such request shall be an Event of Default under this Lease. Landlord
shall not request Tenant to execute an estoppel certificate more often than
twice in any twelve (12) month period.


                                      -22-
<PAGE>   23
         29. Surrender of Lease Not Merger. The voluntary or other surrender of
this Lease by Tenant, or a mutual cancellation thereof, shall not work a merger
and shall, at the option of Landlord, terminate all or any existing subleases or
subtenants, or operate as an assignment to Landlord of any or all such subleases
or subtenants.

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

         31. General.

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

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

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

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


                                      -23-
<PAGE>   24
             E. Joint and Several Liability. If Tenant is more than one person
or entity, each such person or entity shall be jointly and severally liable for
the obligations of Tenant hereunder.

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

             G. Agent. As used herein the term "Agent" shall mean, with respect
to either Landlord or Tenant, its respective agents, employees, contractors (and
their subcontractors), and invitees (and in the case of Tenant, its subtenants).

         32. Sign. Tenant shall not place or permit to be placed any sign or
decoration on the Parcel or the exterior of the Building without the prior
written consent of Landlord. Tenant, upon written notice by Landlord, shall
immediately remove any sign or decoration that Tenant has placed or permitted to
be placed on the land or the exterior of the Building without the prior written
consent of Landlord, and if Tenant fails to so remove such sign or decoration
within five (5) days after Landlord's written notice, Landlord may enter upon
the Premises and remove said sign or decoration and Tenant agrees to pay
Landlord, as additional rent upon demand, the cost of such removal. At the
termination of this Lease, Tenant shall remove any sign which it has placed on
the Parcel or Building and shall repair any damage caused by the installation or
removal of such sign. Notwithstanding the foregoing, Tenant may; at its sole
cost and expense, install its sign on the monument located on the Parcel in
front of the building provided Tenant obtains all necessary governmental permits
and complies with all governmental ordinances.

         33. Interest on Past Due Obligations. Any Monthly Installment of rent
or any other sum due from Tenant under this Lease which is received by Landlord
after the date the same is due shall bear interest from said due date until
paid, at an annual rate equal to the lesser of (the "Permitted Rate"): (1) ten
percent (10%); or (2) five percent (5%) plus the rate established by the Federal
Reserve Bank of San Francisco, as of the twenty-fifth (25th) day of the month
immediately preceding the due date, on advances to member banks under Section 13
and 13 (a) of the Federal Reserve Act, as now in effect or hereafter from time
to time amended. Payment of such interest shall not excuse or cure any default
by Tenant. In addition, Tenant shall pay all costs and attorneys' fees incurred
by Landlord in collection of such amounts.

         34. Surrender of the Premises. On the last day of the term hereof, or
on the sooner termination of this Lease, Tenant shall surrender the Premises to
Landlord in their condition existing as of the Commencement Date of this Lease,
ordinary wear and tear, fire or other casualty, and damage from the acts of God
excepted, with the air conditioning and heating equipment serviced and repaired
by a reputable and licensed service firm. Tenant shall remove all of Tenant's
personal


                                      -24-
<PAGE>   25
property and trade fixtures from the Premises, and all property not so removed
shall be deemed abandoned by Tenant. Tenant, at its sole cost, shall repair any
damage to the Premises caused by the removal of Tenant's personal property,
machinery and equipment, which repair shall include, without limitation, the
patching and filling of holes and repair of structural damage. If the Premises
are not so surrendered at the termination of this Lease, Tenant shall undemnify,
defend, protect and hold Landlord harmless from and against loss or liability
resulting from delay by Tenant in so surrendering the Premises including without
limitation, any claims made by any succeeding tenant or losses to Landlord due
to lost opportunities to lease to succeeding tenants.

         35. Authority. The undersigned parties hereby warrant that they have
proper authority and are empowered to execute this Lease on behalf of Landlord
and Tenant, respectively.

         36. Public Record. This Lease is made subject to all matters of public
record affecting title to the property of which the Premises are a part.

         37. Brokers. Landlord and Tenant each represent and warrant to the
other party that it has solely dealt with Richard B. Flynn and Grubb & Ellis
Commercial Real Estate respecting this transaction. Landlord shall pay a real
estate commission to Grubb & Ellis pursuant to the terms of a separate
agreement. Each party agrees to indemnify and hold the other harmless from and
against any brokerage commission or fee, obligation claim, damage (including
attorneys' fees) paid or incurred respecting any broker claim (other than Grubb
& Ellis) claiming through such party or with which/whom such party has dealt. It
is hereby acknowledged that one or more of Landlord's partners may be real
estate brokers.

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

             A) If, as a consequence of a default by Landlord under this Lease,
Tenant recovers a money judgment against Landlord, such judgment shall be
satisfied only with the proceeds of sale received upon execution of such
judgment and levied thereon against the right, title and interest of Landlord in
the Parcel and/or the Buildings, and out of rent or other income from such
property, and out of any insurance proceeds, and out of cash proceeds received
by Landlord from the prior sale or other disposition of all or any part of
Landlord's right, title or interest in the Parcel and/or the Buildings and no
partner or officer of any partner of Landlord shall be liable for any
deficiency.

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

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


                                      -25-
<PAGE>   26
             D) No partner of Landlord shall be required to answer or otherwise
plead to any service of process;

             E) No judgment will be taken against any partner of Landlord;

             F) Any judgment taken against any partner of Landlord may be
vacated and set aside at any time nunc pro tune;

             G) No writ of execution will ever be levied-against the assets of
any partner of Landlord;

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

         39. Hazardous Material.

             A. Definitions. As used herein, the term "Hazardous Material" shall
mean any substance: (i) the presence of which requires investigation or
remediation under any federal, state or local statutes, regulation, ordinance,
order, action, policy or common law; (ii) which is or becomes defined "hazardous
waste," "hazardous substance," pollutant or contaminant under any federal, state
or local statute, regulation, rule or ordinance or amendments thereto including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Section 9601 et seq.) and/or the Resource Conservation
and Recovery Act (42 U.S.C. Section 6901 et seq.); (iii) which is toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic, or otherwise hazardous and is or becomes regulated by any
governmental authority, agency, department, commission, board, agency, or
instrumentality of the United States, the State of California or any political
subdivision thereof; (iv) the presence of which on the Premises causes or
threatens to cause a nuisance upon the Premises or to adjacent properties or
poses or threatens to pose a hazard to the health or safety of persons on or
about the Premises; (v) the presence of which on adjacent properties could
constitute a trespass to Landlord or Tenant; (vi) without limitation which
contains gasoline, diesel fuel, or other petroleum hydrocarbons; (vii) without
limitation which contains polychlorinated biphenyls (PCBs), asbestos or urea
formaldehyde foam insulation; or (viii) without limitation radon gas.

         B. Landlord's Indemnity. Landlord shall indemnify, defend, protect and
hold Tenant harmless from and against all liabilities, claims, penalties, fines,
response costs and other expenses (including, but limited to, reasonable
attorneys, fees and consultants, fees and costs) arising out of, resulting from,
or caused by any Hazardous Material used, generated, discharged, transported to
or from, stored or disposed of by Landlord or its Agents in, on, under, over,
through or about the Premises and/or the surrounding real property.


                                      -26-
<PAGE>   27
         C. Permitted Use. Subject to the compliance by Tenant with the
provisions of Subparagraphs D, E, F, G, I, J and K below, Tenant shall be
permitted to use and store on the Premises those Hazardous Materials listed in
EXHIBIT "C" attached hereto in the quantities attached set forth in EXHIBIT "C".
Tenant shall also be permitted to use and store on the Premises standard office
supplies in such quantities used in the normal course of general office use
without complying with the provisions of Subparagraph D below.

         D. Hazardous Materials Management Plan. Prior to Tenant using,
handling, transporting or storing any Hazardous Material at or about the
Premises (including, without limitation, those listed in EXHIBIT "C"), Tenant
shall submit to Landlord a Hazardous Materials Management Plan ("HMMP") for
Landlord's review and approval, which approval shall not be unreasonably
withheld. The HMMP shall describe: (i) the quantities of each material to be
used, (ii) the purpose for which each material is to be used, (iii) the method
of storage of each material, (iv) the method of transporting each material to
and from the Premises and within the Premises, (v) the methods Tenant will
employ to monitor the use of the material and to detect any leaks or potential
hazards, and (vi) any other information any department of any governmental
entity (city, state or federal) requires prior to the issuance of any required
permit for the Premises or during Tenant's occupancy of the Premises. Landlord
may, but shall have no obligation to review and approve the foregoing
information and HMO, and such review and approval or failure to review and
approve shall not act as an estoppel or otherwise waive Landlord's rights under
this Lease or relieve Tenant of its obligations under this Lease. If Landlord
determines in good faith by inspection of the Premises or review of the HMMP
that the methods in use or described by Tenant do not meet standard industry
practices to prevent or eliminate the existence of environmental hazards, then
Tenant shall not use, handle, transport, or store such Hazardous Materials at or
about the Premises unless and until such methods are upgraded to standard
industry practices and added to an approved HMMP. Once approved by Landlord,
Tenant shall strictly comply with the HMMP and shall not change its use,
operations or procedures with respect to Hazardous Materials without submitting
an amended HMMP for Landlord's review and approval as provided above.

             E. Use Restriction. Except as specifically allowed in Subparagraph
C above, Tenant shall not cause or permit any Hazardous Material to be used,
stored, generated, discharged, transported to or from, or disposed of in or
about the Premises, or any other land or improvements in the vicinity of the
Premises. Without limiting the generality of the foregoing, Tenant, at its sole
cost, shall comply with all Laws relating to the storage, use, generation,
transport, discharge and disposal by Tenant or its Agents of any Hazardous
Material. If the presence of any Hazardous Material on the Premises caused or
permitted by Tenant or its Agents results in contamination of the Premises or
any soil, air, ground or surface waters under, through, over, on, in or about
the Premises, Tenant, at its expense, shall promptly take all actions necessary
to return the Premises and/or the surrounding real property to the condition
existing prior to the appearance of such Hazardous Material.


                                      -27-
<PAGE>   28
             F. Tenant Indemnity. Tenant shall defend, protect, hold harmless
and indemnify Landlord and its Agents and Lenders with respect to all actions,
claims, losses (including, diminution in value of the Premises), fines,
penalties, fees, (including, but not limited to, reasonable attorneys' and
consultants' fees and costs) costs, damages, liabilities, remediation costs,
investigation costs, response costs and other expenses arising out of, resulting
from, or caused by any Hazardous Material used, generated discharged,
transported to or from, stored, or disposed of by Tenant or its Agents in, on,
under, over, through or about the Premises and/or the surrounding real property.
Tenant shall not suffer any lien to be recorded against the Premises as a
consequence for the disposal of any Hazardous Material on the Premises by Tenant
or its Agents, including any so called state, federal or local "super fund" lien
related to the "clean up" of any Hazardous Material in, over, on, under through,
or about the Premises.

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

             H. Assignment and Subletting. It shall not be unreasonable for
Landlord to withhold its consent to any proposed assignment or subletting if (i)
the proposed assignee's or subtenants' anticipated use of the Premises involves
the storage, generation, discharge, transport, use or disposal of any Hazardous
Material not permitted under Subparagraph C above; (ii) if the proposed assignee
or subtenant has been required by any prior landlord, lender, or governmental
authority to "clean up" or remediate any Hazardous Material and has failed to
promptly do so; (iii) if the proposed assignee or subtenant is subject to
investigation or enforcement order or proceeding by any governmental authority
in connection with the use, generation, discharge, transport, disposal or
storage of any material amount of Hazardous Material; provided that (ii) and
(iii) will not apply in the case of a Fortune 500 Company.

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


                                      -28-
<PAGE>   29
Hazardous Materials in, on, over, under, through or around the Premises as the
direct result of the acts or omissions of Tenant or its Agents.

             J. Right to Appoint Consultant. Landlord shall have the right to
appoint a consultant to conduct an investigation to determine whether any
Hazardous Material is being used, generated, discharged, transported to or from,
stored or disposed of in, on, over, through, or about the Premises, in
compliance with the approved HMMP and all applicable Laws. If Tenant has
violated any Law or covenant in this Lease regarding the use, storage or
disposal of Hazardous Materials on or about the Premises, Tenant shall
reimburse Landlord for the cost of such investigation. Tenant, at its expense,
shall comply with all reasonable recommendations of the consultant required to
conform Tenant's use, storage or disposal of Hazardous Materials to the
requirements of applicable Law or to fulfill the obligations of Tenant
hereunder.

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

             L. Existing Environmental Reports. Tenant hereby acknowledges that
it has received, read and reviewed the reports and test results described in
Exhibit "D" attached hereto and made a part hereof (the "Existing Environmental
Reports").

         M. Provisions Survive Termination. The provisions of this Paragraph 39
shall survive the expiration or termination of this Lease.

         N. Controlling Provisions. The provisions of this Paragraph 39 are
intended to govern the rights and liabilities of the Landlord and Tenant
hereunder respecting Hazardous Materials to the exclusion of any other
provisions in this Lease that might otherwise be deemed applicable. The
provisions of this Paragraph 39 shall be controlling with respect to any
provisions in this Lease that are inconsistent with this Paragraph 39.

         40. Quiet Enjoyment. Landlord covenants that Tenant upon performing the
terms, conditions and covenants of this Lease shall have the peaceful, quiet,
possession, use and enjoyment of the Premises without interference on the part
of Landlord or any party claiming by, through, or under Landlord and Landlord
shall defend Tenant in such peaceful and quiet possession, use and enjoyment of
the Premises against any such claims.


                                      -29-
<PAGE>   30
         IN WITNESS WHEREOF, the parties have executed this Agreement on the
dates set forth below.

LANDLORD:                                   TENANT:

SOUTH BAY/FORTRAN,                          3Dfx INTERACTIVE,
a California limited partnership            a California corporation

         SBC&D CO., INC.,                   By: ______________________________
         a California corporation
                                            Title: ___________________________
By: ______________________________
                                            Date: ____________________________
Name: ____________________________

Title: ___________________________

Date: ____________________________


                                      -30-
<PAGE>   31
                                   EXHIBIT "A"

                                 [description?]



                                      -31-
<PAGE>   32
                                  EXHIBIT "B"

LEGAL DESCRIPTION:


All that real property situate in the City of San Jose, County of Santa Clara,
State of California, described as follows:

Beginning at the Southwesterly corner of that certain 31.74 acre tract of land
described in the deed from The first National Bank of San Jose, a corporation,
to F. W. Zanker and Curtner Zanker, dated May 5, 1939, recorded May 8, 1939 in
Book 934 Official Records, page 16, Santa Clara County Records, in the Northerly
line Alviso-Milpitas Road, thence from said point of beginning N. 89 deg. 35' E.
630.30 feet to the Southeasterly corner thereof; thence along the Easterly line
of said 31.74 acre tract for the three following courses and distances: N. 1
deg. 13' E. 768.90 feet, N. 0 deg. 57 E. 597.96- feet and N. 0 deg. 31' E.
149.97 feet to the Southeasterly corner of that certain 9.316 acre tract of land
described in the deed from F. W. Zanker, et al, to B. S. Brazil, a single man,
dated October 25, 1943, recorded November 16, 1943 in Book 1176 Official
Records, page 21, Santa Clara County Records; thence S. Sg deg. 35' W. along the
Southerly line of said 9.316 acre tract 651.78 feet to the Southwesterly corner
thereof in the Westerly line of said 31.74 acre tract; thence S. 0 deg. 08' W.
along said last mentioned line 1512.88 feet to the point of beginning.

Excepting therefrom that portion; hereof conveyed to the City of San Jose, a
municipal corporation, recorded September 2, 1S85 in Book J82B, page 17ig,
Official Records, described as follows:

Beginning at the Southeasterly corner of that certain 31.74 acre tract of land
described in the deed from The First National Bank of San Jose, a corporation,
to f. W. Zanker and Curtner Zanker, dated May 5, 1929, recorded May 8, 1939 in
Book 934 Official Records, page 16, Santa Clara County Records, said point being
on the Northerly line of Alviso-Milpitas Road, thence leaving said point of
beginning along the Easterly line of said 31.74 acre parcel N. 1 deg. 1;' E.
30.00 feet to the true point of beginning of the parcel herein being described;
thence leaving said true point of beginning and said Easterly line along the
following courses and distances; from a tangent bearing of N. 8e deg. 47' 00" W.
along a curve to the right with a radius of 50.00 feet, through a central angle
of 126 deg. 52' 12. for an arc length of 110.71 feet to a point on reverse
curvature; from a tangent bearing of N. 38 deg. 05' 12E. along a curve to the
left with a radius of 50.00 feet, through a central angle of 36 deg. 52' 12" for
an arc length of 32.18 feet; N. 1 deg. 13' (cent)0~ E. 361.13 feet; N. 0 deg.
57' 00~ E. 597.g3 feet; N. 0 deg. 31' 52- E. 18.6g feet; along a tangent curve
to the left with a radius of 40.00 feet, through a central angle of 90 deg. 56'
58- for an arc length of 63.50 feet to a point on a line parallel with and
distant 90.00 feet Southerly, measured at right angles from the Southerly line
of that certain 9.316 acre parcel of land described 1n the deed from f. W.
Zanker, et al, to B. S. Brazi1, recorded November 16, 1943 in Book 1176 of
Official Records, at page 21, Santa Clara County Records; thence along said
parallel line, S. 89 deg. 34' 54- W. 579.9g feet to a point on the Westerly line
of said 31.74 acre parcel of land; thence leaving said parallel line along said
Westerly line, N.


                                      -32-
<PAGE>   33
0 deg. 06' 10- E. 90.00 feet to the Southwesterly corner of the hereinabove
described 9.316 acre parcel; thence leaving said Westerly line along the
Southerly line of said 9.316 acre parcel, N. 89 deg. 34' 54~ E. 651.24 feet to
the Southeasterly corner thereof, said corner lying in said Easterly line of the
hereinabove described 31.74 acre parcel; thence along said Easterly line the
following course and distances: S. 0 deg. 31 52 W. 149.98 feet; S. 0 deg. 57'
00" W. 598.11 feet and S. 1 deg. 13' 00" W. 598.11 feet and S. 1 deg. 13' 00" W.
471.20 feet to the true point of beginning.

ALSO EXCEPTING THEREFROM all that portion conveyed to the State of California by
Grant Deed recorded August 31, 19g4 in 6Ook N 579, Page 2028, Official Records,
described as follows:

Being a portion of that certain parcel of land described in the Deed from Ray H.
Collishaw and Earlyn R. Collishaw, husband and wife, to William L. Marocco, a
single man, recorded May 4, 1982 in Book G 762 of Official Records at Page 218,
Santa Clara County Records.

Beginning at the southeast corner of said parcel conveyed to Marocco; thence
from said Point of Beginning, along the southerly line of said parcel conveyed
to Marocco N. 8g(degree) 01' 16" W. 626.45 feet to the southwest corner of said
parcel conveyed to Marocco; thence along the westerly line of said parcel
conveyed to Marocco N. 1(degree) 13 13 E. 227.77 feet; thence leaving said
westerly line, from a tangent bearing of S. 67(degree) 46 42 E., along a curve
to the right with a radius of 275.00 feet, through a central angle of 18(degree)
08' 37" for an arc length of 87.08 feet; thence S. cgo 38' 05 E., 103.64 feet:
thence along a tangent curve to the left with a radius of 275.00 feet, through a
central angle of 34(degree) 57' 21- for an arc length of 167.78 feet; thence S.
84(degree) 35' 25E. 318.58 feet to a point in the easterly line of said parcel
conveyed to Marocco; thence along said easterly line S. 2(degree) 20 03' W.,
31.97 feet to the Point of Beginning.

AR8 No. 15-30-9 & 9.1


                                      -33-
<PAGE>   34
                                   EXHIBIT "C"

                  HAZARDOUS MATERIALS MANAGEMENT PLAN ("HMMP")

                  (To be Provided by Tenant prior to Occupancy)



                                      -34-
<PAGE>   35
                                   EXHIBIT "D"

1.       ATT report dated July 9, 1992: Preliminary (Phase I) Environmental Site
         Assessment Update for the Property at 4405 - 4445 Fortran Court, San
         Jose, CA (Project No. 929368).

2.       SECOR International Incorporated report dated July 10, 1995: Phase I
         Environmental Site Assessment Report - 4405, 4415, 4425, 4435 and 4445
         Fortran Drive, San Jose, CA (Job No. 70076-001-01).

3.       SECOR International Incorporated report dated July 24, 1995: Technical
         Report Soil Sampling and Grab Groundwater Sampling - 4405-4445 Fortran
         Drive, San Jose, CA

4.       ProTech Consulting and Engineering Asbestos Survey and Evaluation
         report dated October 25, 1995, Report #AA95-559, conducted at 4415 1445
         Fortran Drive, San Jose, CA.

5.       Clayton Environmental Consultants' export dated January 8, 1996, Site
         Visit and File Review for 4405 and 4413 Fortran Drive, San Jose, CA.
         (Project No. 63877.00).


                                      -35-
<PAGE>   36
                                                                       EXHIBIT C

                           TENANT ESTOPPEL CERTIFICATE


To:      CarrAmerica Realty Corporation
         1700 Pennsylvania Avenue, N.W.
         Washington, D.C.  2006
         Attention: Tom Levy

Re:      Property Address:     4405-4445 Fortran Court
                               San Jose, CA 95134

         Premises at Property: 4435 Fortran Court (the "Premises")

The undersigned tenant (the "Tenant") hereby certifies as of the date set forth
below to you as follows:

1)       Tenant is a tenant at the Property under a lease (the "Lease") dated
         August 7, 1996, for the Premises; the Lease has not been canceled,
         modified, assigned, extended or amended except as follows: N/A; and
         there are no other agreements, written or oral, affecting or relating
         to Tenant's lease of the Premises or any other space at the Property.

2)       All base rent, rent escalations and additional rent under the Lease has
         been paid through N/A, 19___. There is no prepaid rent, except
         $70,025.00, and the amount of security deposit is $70,025.00. Tenant
         currently has no right to any future rent abatement under the Lease.
         Except increases in real estate taxes which may occur as a result of
         the sale of the property are subject to the limitations set forth in
         Section 7.C of the Lease and the rental abatement rights set forth in
         Section 2 of the Lease.

3)       Lease will take possession of the Premises, consisting of 77,805 square
         feet, on May 1, 1997 and commence to pay rent on May 1, 1997. Base rent
         will be payable in the amount of $70,025.00 per month, and Tenant will
         be billed on a monthly basis for operating expenses actually incurred
         by the Landlord.

4)       The Lease terminates on April 30, 2007, and Tenant has the following
         renewal option(s): none. The renewal options for the following periods
         have been exercised: N/A.

5)       All work to be performed for Tenant under the Lease has been performed
         as required under the Lease and has been accepted by Tenant, except
         structural work referenced in Paragraph 2 of Lease, and all allowances
         to be paid to Tenant, including allowances for tenant improvements,
         moving expenses or other items, have been paid.


                                       C-1
<PAGE>   37
6)       The Lease is: (a) in full force and effect; (b) free from default and
         free from any event which could become a default under the Lease; and
         (c) Tenant has no claims against the landlord or offsets or defenses
         against rent, and there are no disputes with the landlord.

7)       The Tenant has received no notice of prior sale, transfer or
         assignment, hypothecation or pledge of the Lease or of the rents
         payable thereunder, except: none.

8)       Tenant shall take full possession of the Premises under the Lease dated
         August 7, 1996, on May 1, 1997, and Tenant has not assigned the Lease
         or sublet any part of the Premises, and Tenant is currently in
         possession of 31,572 square feet of the Premises under a Sublease dated
         July 31, 1996, with Reply Corporation.

9)       The base year for pass-through of operating expenses and taxes is N/A,
         or the base amount for taxes is N/A, and the base amount for operating
         expenses is N/A.

10)      The Tenant has the following expansion rights or options for the
         Property: none.

11)      The Tenant has no rights or options to purchase the Property.

12)      The Tenant has no right to remove any property from the Premises except
         for its personal property and trade fixtures.

13)      The Tenant is not insolvent or bankrupt and is not contemplating
         seeking relief under any insolvency or bankruptcy statutes.

         The undersigned has executed this Estoppel Certificate with the
knowledge and understanding that CarrAmerica Realty Corporation is acquiring the
Property in reliance on this Estoppel Certificate and that the undersigned will
be bound by this Estoppel Certificate. The statements contained herein may be
relied upon by CarrAmerica Realty Corporation, and any mortgagee of the Property
and their respective successors and assigns.

         Dated this 25th day of March 1997.

                                   3Dfx Interactive, a California corporation


                                   By: ______________________________________

                                   Title: ___________________________________


                                       C-2

Source: OneCLE Business Contracts.