400 41st Street (Bay City, MI) Lease Agreement - Larry Shackley and Concentric Network Corp.


                             Amended and Restated

                                LEASE AGREEMENT

                                by and between

             Mr. Larry Shackley of Bay City, Michigan  (Landlord)

                                      and

                   Concentric Network Corporation  (Tenant)

 
                               TABLE OF CONTENTS



                                                                                  PAGE
                                                                                  ----
                                                                               
LEASE AGREEMENT..................................................................... 1

1.   DEFINITIONS.................................................................... 1
          1.1   Agreed Interest Rate................................................ 1
          1.2   Building............................................................ 1
          1.3   Effective Date...................................................... 1
          1.4   Hazardous Material.................................................. 1
          1.5   Law................................................................. 1
          1.6   Lease............................................................... 1
          1.7   Lease Term.......................................................... 1
          1.8   Leasehold Improvements.............................................. 2
          1.9   Lender.............................................................. 2
          1.10  Monthly Rent........................................................ 2
          1.11  Outside Areas....................................................... 2
          1.12  Premises............................................................ 2
          1.13  Permitted Use....................................................... 2
          1.14  Private Restrictions................................................ 2
          1.15  Real Property Taxes................................................. 2
          1.16  Tenant's Minimum Liability Insurance Coverage....................... 2
          1.17  Trade Fixtures...................................................... 2

2.   DEMISE, TERM AND OPTION TO EXTEND.............................................. 2
          2.1   Demise of Premises.................................................. 2
          2.2   Options to Extend Lease Term........................................ 2

3.   RENT........................................................................... 3
          3.1   Monthly Rent........................................................ 3
          3.2   Payment of Rent..................................................... 3
          3.3   Past Due Monthly Rent............................................... 3

4.   USE OF PREMISES................................................................ 3
          4.1   Compliance with Laws and Private Restrictions....................... 3
          4.2   Use of Premises..................................................... 3
          4.3   Parking and Reservation of Rights................................... 3
          4.4   Hazardous Materials................................................. 4

5.   TRADE FIXTURES AND LEASEHOLD IMPROVEMENTS...................................... 4
          5.1   Leasehold Improvements.............................................. 4
          5.2   Liens............................................................... 4

6.   REPAIR AND MAINTENANCE......................................................... 4
          6.1   Tenant's Obligation to Maintain..................................... 4
          6.2   Landlord's Obligation to Maintain................................... 5

7.   UTILITIES...................................................................... 5

8.   REAL PROPERTY TAXES............................................................ 5
          8.1  Tenant's Obligation to Reimburse..................................... 5
          8.2  Taxes on Tenant's Property........................................... 5
          8.3  Tax Contest.......................................................... 5


                                      -i-

 
                               TABLE OF CONTENTS
                                  (CONTINUED)



                                                                                  PAGE
                                                                                  ----
                                                                                
9.   INSURANCE...................................................................... 5
          9.1   Tenant's Insurance.................................................. 5
          9.2   Landlord's Insurance:............................................... 6
          9.3   Release and Waiver of Subrogation................................... 6

10.  INDEMNITY...................................................................... 6
          10.1  Indemnification of Landlord......................................... 6
          10.2  Indemnification of Tenant........................................... 6

          11.   DAMAGE & DESTRUCTION................................................ 6
          11.1  Landlord's Duty to Restore.......................................... 6
          11.2  Landlord's Right to Terminate....................................... 7
          11.3  Tenant's Right to Abatement and Termination......................... 7

12.  CONDEMNATION................................................................... 7
          12.1  Taking of Premises.................................................. 7
          12.2  Restoration Following the Taking.................................... 7
          12.3  Abatement of Rent................................................... 7
          12.4  Temporary Taking:................................................... 7
          12.5  Division of Condemnation Award...................................... 8

13.  DEFAULT AND REMEDIES........................................................... 8
          13.1  Events of Tenant's Default.......................................... 8
          13.2  Landlord's Remedies................................................. 8
          13.3  Rights Upon Termination............................................. 9
          13.4  Landlord's Default and Tenant's Remedies............................ 9
          13.5  Waiver.............................................................. 9

14.  ASSIGNMENT AND SUBLETTING......................................................10
          14.1  By Tenant...........................................................10
          14.2  By Landlord.........................................................10

15.  TERMINATION....................................................................10
          15.1  Surrender of the Premises...........................................10
          15.2  Holding Over........................................................10

16.  RIGHT OF FIRST REFUSAL TO PURCHASE.............................................10
          17.   GENERAL PROVISIONS..................................................11
          17.1  Landlord's Right to Enter...........................................11
          17.2  Estoppel Certificates...............................................11
          17.3  Reimbursable Expenditures...........................................11
          17.4  Notices.............................................................11
          17.5  Attorneys' Fees.....................................................11
          17.6  Corporate Authority.................................................11
          17.7  Miscellaneous.......................................................11
          17.8  Brokerage Commissions...............................................12


                                      ii

 
                               TABLE OF CONTENTS
                                  (CONTINUED)



                                                                                          PAGE
                                                                                          ----
                                                                                                       
                 17.9   Memorandum of Lease................................................ 12
                 17.10  Subordination...................................................... 12
                 17.11  Quiet Possession................................................... 12
                 17.12  Entire Agreement................................................... 12




Exhibit A -    Legal Description
Exhibit B -    Exceptions to Title


                                     -iii-

 
                     AMENDED AND RESTATED LEASE AGREEMENT



     THIS AMENDED AND RESTATED LEASE AGREEMENT ('Lease'), dated October 7, 1996
for reference purposes only, is made by and between  Mr. Larry Shackley of Bay
City, Michigan  ('Landlord') and Concentric Network Corporation, a Delaware
corporation, formerly known as Concentric Research Corporation ('Tenant').

                                    RECITALS

A.   Pursuant to that certain lease agreement dated August 27, 1993 ('Master
Lease'), Thomas and Patricia Volk (the 'Volks') leased the Premises (as defined
in Section 1) to Landlord.  Pursuant to that certain lease agreement dated
August 27, 1993 ('Original Lease'), Landlord subleased the Premises to Tenant.

B.   On or about _________, 1996, Landlord purchased a fee ownership interest in
the Premises from the Volks.

C.   Landlord and Tenant desire to supersede and entirely replace the Original
Lease with this Lease.

     NOW THEREFORE, in consideration of the premises and mutual covenants set
forth herein, the parties hereto agree as follows:

1.   DEFINITIONS:  Any term that is given a special meaning by this Section 1 or
     -----------                                                                
by any other provision of this Lease (including any exhibits attached hereto)
shall have such meaning when used in this Lease or any addendum or amendment
hereto.

     1.1  Agreed Interest Rate:  'Agreed Interest Rate'  means an interest rate
          --------------------                                                  
of either ten percent (10%) per annum or the maximum applicable rate permitted
by Law, whichever is less.

     1.2  Building:  'Building' means that certain approximately 6,000 square
          --------                                                           
foot building located on the Premises.

     1.3  Effective Date:  'Effective Date' means the date by which the last
          --------------                                                    
signatory to this Lease whose execution is required to make it binding on the
parties hereto shall have executed this Lease, provided that the executed Lease
has been mutually delivered.

     1.4  Hazardous Material:  'Hazardous Material' means any material or
          ------------------                                             
substance that is now or hereafter prohibited or regulated by any Law or that is
now or hereafter designated by any governmental autho  rity to be radioactive,
toxic, hazardous or otherwise a danger to health, reproduction or the
environment

     1.5  Law:  'Law' means any judicial decision, statute, constitution,
          ---                                                            
ordinance, resolution, order, or other requirement of any municipal, county,
state, federal, or other government agency or authority having jurisdiction over
the parties to this Lease or the Premises or both, in effect either at the
Effective Date of this Lease or any time during the Lease Term.

     1.6  Lease:  'Lease' means this printed lease and Exhibits 'A ' and 'B'
          -----                                        ---------------------
attached hereto and made a part hereof, as the same may be amended in accordance
with this Lease from time to time.

     1.7  Lease Term:  'Lease Term' means that period of time commencing on the
          ----------                                                           
Effective Date and ending on December 31, 1997, unless extended or sooner
terminated as provided herein.

                                       1

 
     1.8  Leasehold Improvements:   'Leasehold Improvements' means all
          ----------------------                                      
improvements, additions, alterations, and fixtures installed in or on the
Premises by Tenant at its expense which are not Trade Fixtures.

     1.9  Lender:   'Lender' means (i) any beneficiary, mortgagee, secured
          ------                                                          
party, or other holder of any deed of trust, mortgage or other written security
device or agreement affecting the Premises, and the note or other obligations
secured by it, and (ii) the lessor under any underlying ground lease under which
Landlord holds an interest in the Premises.

     1.10 Monthly Rent:   'Monthly Rent' means rent payable by Tenant pursuant
          ------------                                                        
to Paragraph 3.1.

     1.11 Outside Areas:  'Outside Areas' means all areas and facilities within
          -------------                                                        
the Premises, other than the Building (including the parking areas, driveways,
pedestrian sidewalk, landscaped areas, trash enclosures, and the like).

     1.12 Premises:  'Premises' means that real property situated in the City of
          --------                                                              
Bay City, County of Bay, with all improvements now or hereafter located thereon
commonly known as 400 41st Street, Bay City, Michigan 48708, as more
particularly described on Exhibit 'A.'

     1.13 Permitted Use:  'Permitted Use' means the use of the Premises for
          -------------                                                    
general office, manufacturing, research and development, assembly, shipping,
storage, and all other legal uses.

     1.14 Private Restrictions:   'Private Restrictions' means all covenants,
          --------------------                                               
conditions and restrictions, private agreements, reciprocal easement agreements
and any other instruments (herein 'encumbrances') affecting the use of the
Premises recorded as of the Effective Date and all encumbrances recorded after
the Effective Date.

     1.15 Real Property Taxes:  'Real Property Taxes' means all real property
          -------------------                                                
taxes, assessments, and other charges imposed by any governmental or quasi-
governmental authority, which are levied or assessed against the Premises.
Notwithstanding the foregoing, the term 'Real Property Taxes' shall not include
estate, inheritance, transfer, gift or franchise taxes of Landlord or any
federal or state income tax.

     1.16 Tenant's Minimum Liability Insurance Coverage:   'Tenant's Minimum
          ---------------------------------------------                     
Liability Insurance Coverage' means One Million Dollars ($1,000,000).

     1.17 Trade Fixtures:   'Trade Fixtures' means anything affixed to the
          --------------                                                  
Building or Outside Areas by Tenant at its expense for purposes of trade,
manufacture, ornament, or domestic use (except replacement of similar work or
material owned and installed by Landlord) which can be removed without injury to
the Building or Outside Areas.

2.   DEMISE, TERM AND OPTION TO EXTEND:
     --------------------------------- 

     2.1  Demise of Premises:  Landlord hereby leases to Tenant, and Tenant
          ------------------                                               
leases from Landlord, for the Lease Term upon the terms and conditions of this
Lease, the Premises.  This Lease shall supersede and entirely replace the
Original Lease.  Landlord warrants that (i) the Premises are only subject to
those Private Restrictions and other exceptions to title disclosed in Exhibit
'B' hereto, (ii) the Premises are presently in compliance with all Laws and
Private Restrictions, and (iii) Tenant's conduct of its business operations as
they are presently being conducted on the Premises will not violate any Laws or
Private Restrictions.

     2.2  Options to Extend Lease Term:  Landlord grants to Tenant one (1)
          ----------------------------                                    
option ('Option') to extend the Lease Term, for an additional term of twelve
(12) months ('Option Term'), commencing on December 31, 1997.  To exercise the
Option, Tenant must give Landlord notice in writing by United States Certified
Mail, return receipt requested, of its intention to exercise the Option on or
before November 1, 1997.  All terms and conditions of this Lease shall continue
to apply during the Option Term.

                                       2

 
3.   RENT:
     ---- 

     3.1  Monthly Rent:  Commencing on November 1, 1996 and continuing
          ------------                                                
throughout the Lease Term, Tenant shall pay to Landlord without offset or
deduction or type whatsoever except as expressly provided herein, Monthly Rent,
equal to the following:

               November, 1996-December, 1996       $3,500
               January, 1997-December, 1997        $3,730

If Tenant exercises the Option, then the Monthly Rent for the Option Term shall
be $4,200.

     3.2  Payment of Rent:  All rent required to be paid in monthly installments
          ---------------                                                       
shall be paid in advance on the first day of each calendar month during the
Lease Term.  All rent shall be paid in lawful money of the United States, to
Landlord at its address for notices as set forth below or at such other place as
Landlord may designate from time to time by written notice to Tenant.  Tenant's
obligation to pay rent shall be prorated during any partial month of the Lease
Term.

     3.3  Past Due Monthly Rent:  If any Monthly Rent is past due and Tenant
          ---------------------                                             
fails to pay such rent within ten (10) days after Tenant has received a written
notice of delinquency from Landlord, then such past due rent shall thereafter
bear interest until paid at the rate of ten percent (10%) or the maximum
interest rate permitted by Law, whichever is lower.

4.   USE OF PREMISES:
     --------------- 

     4.1  Compliance with Laws and Private Restrictions:  Tenant shall not use
          ---------------------------------------------                       
or permit any person to use the Premises in any manner which violates any Laws
or Private Restrictions.  At the Commencement Date, the Premises shall conform
to all requirements of covenants, conditions, restrictions and encumbrances
('CC&R's'), all underwriter's requirements, and all rules, regulations,
statutes, ordinances, laws and building codes, (collectively, 'Laws') applicable
thereto.  Tenant shall not be required to construct or pay the cost of complying
with any CC&R's, underwriter's requirements or Laws requiring construction of
improvements in the Premises which are properly capitalized under general
accounting principles, unless such compliance is necessitated solely because of
Tenant's particular use of the Premises.

     4.2  Use of Premises:  Tenant may use the Premises for any Permitted Use.
          ---------------                                                      
Landlord represents and warrants that Tenant's use of the Premises is and will
be permitted by all Laws, CC&R's, and fire underwriter's requirements and that
electricity, water, janitorial, heating, ventilating, air conditioning and other
services, at the levels generally provided for office uses in comparable
buildings in the vicinity of the Premises, will be available to Tenant at all
times during the Lease term.  If the Premises should become unsuitable for
Tenant's use as a consequence of fire, casualty, exercise of eminent domain,
cessation of utilities or other services required to be provided to the Premises
by Landlord, or the presence of any Hazardous Material, which does not result
from Tenant's use, storage or disposal of such material in violation of
applicable law in or about the Premises, then Tenant shall be entitled to an
abatement of rent to the extent of the interference with Tenant's use of the
Premises occasioned thereby.  If such interference cannot be corrected or the
damage resulting there  from repaired so that the Premises will be reasonably
suitable for Tenant's intended use within one hundred twenty (120) days
following the occurrence of such event, then Tenant also shall be entitled to
terminate this Lease by delivery of written notice to Landlord at any time after
the occurrence of such event.

     4.3  Parking and Reservation of Rights: Without charge, Tenant shall have
          ---------------------------------                                   
the exclusive use of all parking spaces located on the Premises.

                                       3

 
     4.4  Hazardous Materials:
          ------------------- 

          4.4.1  Tenant's Responsibility:  Tenant, at its sole cost, shall
                 -----------------------                                  
comply with all Laws relating to the storage, use, disposal, emission, or
release of any Hazardous Material by Tenant or its agents, employees or
contractors.  If Hazardous Materials stored, used, disposed of, emitted, or
released on or about the Premises by Tenant or its agents, employees or
contractors results in contamination or deterioration of water or soil, then
Tenant shall promptly take any and all action necessary to clean up such
contamination as required by Law.  At any time prior to the expiration of the
Lease Term, Tenant shall have the right to conduct appropriate tests of water
and soil and to deliver to Landlord the results of such tests to demonstrate
that no contamination has occurred as a result of Tenant's use of the Premises.
Tenant shall be solely responsible for, and shall defend, indemnify and hold
Landlord and its shareholder, officers, and directors harmless from and against,
all claims, costs and liabilities, including attorneys' fees and costs, to the
extent arising out of or the disposal or release of Hazardous Materials on or
about the Premises by Tenant or its agents, employees, or contractors or the
removal, clean-up and restoration work and materials required hereunder to
return the Property to its condition existing prior to the appearance of any
such Hazardous Materials.

          4.4.2  Landlord's Obligation.  Except as stated in Subparagraph 4.4.1,
                 ---------------------                                          
above, and notwithstanding anything to the contrary in any other section of the
Lease, Tenant shall have no responsibility for and Landlord shall be solely
responsible for, and shall defend, indemnify and hold Tenant and its
shareholders, officers, directors, successors and assigns, harmless from and
against, all claims, costs and liabili  ties, including attorneys' fees and
costs, arising out of the presence at any time of any Hazardous Material on or
about the Premises during the Lease Term (including, without limitation, all
Hazardous Materials identified in that certain 'Soil Feasibility Analysis and
Soil Remediation Corrective Action Plan' dated November 21, 1994, prepared by
Peerless Environmental Services, Inc.).  Upon demand by Tenant, Landlord shall
promptly take any and all action necessary to investigate and remediate any such
Hazardous Material contamination as required by Law.

5.   TRADE FIXTURES AND LEASEHOLD IMPROVEMENTS:
     ----------------------------------------- 

     5.1  Leasehold Improvements:   Tenant may construct any Leasehold
          ----------------------                                      
Improvement which does not affect the structural parts or exterior of the
Building without Landlord's prior approval.  Any other Leasehold Improvements
may be made only after obtaining Landlord's consent, which consent shall not be
unreasonably withheld or delayed.  Landlord shall be deemed to have consented to
any Leasehold improvement, if Landlord has not reasonably withheld its consent
to any Leasehold Improvement within fifteen (15) days of Tenant's request for
Landlord's consent to the Leasehold Improvement.  All Leasehold Improvements
constructed at Tenant's cost shall remain the property of Tenant during the
Lease Term and may be removed from the Premises at any time.  Landlord shall
have no lien or other interest whatsoever in any Leasehold Improvement and
within ten (10) days following Tenant's request, Landlord shall execute
documents in reasonable form to evidence Landlord's waiver of any right, title,
lien, or interest in Lessee's Leasehold Improvements located in the Premises.
Tenant shall restore all damage to the Premises caused by any removal of
Tenant's Leasehold Improvements.  Within ten (10) days following a request by
Tenant, Landlord shall inform Tenant whether it reserves the right to have any
Leasehold Improvement installed by Tenant removed from the Premises by Tenant
upon termination of the Lease.

     5.2  Liens: Tenant shall keep the Premises free from any liens arising out
          -----                                                                
of any work performed, materials furnished, or obligations incurred by Tenant,
its agents, employees or contractors relating to the Premises.  If any claim of
lien is recorded, Tenant shall bond against or discharge the same within twenty
(20) days after written notice to Tenant that the same has been recorded against
the Premises and/or the Property.

6.   REPAIR AND MAINTENANCE:
     ---------------------- 

     6.1  Tenant's Obligation to Maintain: Except as otherwise provided in
          -------------------------------                                 
Section 11 (restoration of damage caused by fire and other perils) and in
Paragraph 6.2 (Landlord's maintenance obligations), Tenant shall, at all times
during the Lease Term, keep and maintain the Premises in good order, condition,
and repair.

                                       4

 
     6.2  Landlord's Obligation to Maintain: Landlord shall perform and
          ---------------------------------                            
construct, and Tenant shall have no responsibility to perform or construct, any
repair, maintenance or improvement (i) necessitated by the acts or omissions of
Landlord or its respective agents, employees or contractors, (ii) occasioned by
fire, acts of God or other casualty or by the exercise of the power of eminent
domain, (iii) required as a consequence of any violation of Law or construction
defect in the Premises as of the Effective  Date, (iv) for which Landlord has a
right of reimbursement from others, (v) which could be treated as a 'capital
expenditure' under generally accepted accounting principles, (vi) to the
structural parts of the Premises and the Building (including the walls, floors,
ceilings, roof, bearing walls, demising walls and foundations), necessary to
maintain a water-tight roof membrane, and to all utility systems servicing the
Premises.

7.   UTILITIES:  Tenant shall promptly pay, as the same become due, all charges
     ---------                                                                 
for water, gas, electricity, telephone, sewer service, waste pick-up, and any
other utilities, materials or services furnished at the request of or used by
Tenant in the Premises.

8.   REAL PROPERTY TAXES:
     ------------------- 

     8.1  Tenant's Obligation to Reimburse:  Tenant shall within thirty (30)
          --------------------------------                                  
days after Landlord's written demand, shall pay the Real Property Taxes to the
extent such Real Property Taxes are directly related to periods occurring during
the Lease Term.  If any assessment is levied against the Premises, Landlord may
elect to either pay the assessment in full or allow the assessment to go to
bond.  If Landlord pays the assessment in full, Tenant shall pay to Landlord
each time payment of Real Property Taxes is made a sum equal to that which would
have been payable (as both principal and interest) had Landlord allowed the
assessment to go to bond. Notwithstanding anything contained herein, Tenant
shall not be obligated to pay any increase in Real Property Taxes caused by a
reassessment of the Premises following a 'change in ownership' caused by a
transfer by Landlord of its interest in the Premises.

     8.2  Taxes on Tenant's Property:  Tenant shall pay before delinquency any
          --------------------------                                          
and all taxes, assessments, license fees, and public charges levied, assessed,
or imposed against Tenant or Tenant's estate in this Lease or the property of
Tenant situated within the Premises.

     8.3  Tax Contest:  If Tenant shall desire in good faith to contest or
          -----------                                                     
otherwise review by appropriate legal or administrative proceeding any Real
Property Tax, Tenant may withhold payment of the Real Property Tax being
contested if, but only if, both (i) non-payment is permitted during the pendency
of such proceedings without the foreclosure of any tax lien or the imposition of
any fine or penalty and (ii) Tenant shall obtain and furnish a bond sufficient
to protect Landlord's interest in the Premises.  At the request of Tenant,
Landlord shall cooperate with Tenant in any contest or other proceedings which
Tenant may desire to bring pursuant to this paragraph.  Within ten (10) days
after the final determination of the amount due from Tenant with respect to the
Real Property Tax contested, Tenant shall pay the amount so determined to be
due, together with all costs, expenses and interest, whether or not this Lease
shall have then expired or terminated.


9.   INSURANCE:
     --------- 

     9.1  Tenant's Insurance:  At all times Tenant shall maintain in full force
          ------------------                                                   
and effect during the Lease Term the policies of insurance described below.
Copies of duly executed certificates for such policies shall be provided to
Landlord upon Landlord's request.

          9.1.1  Liability Insurance:  A policy or policies of comprehensive
                 -------------------                                        
general liability insurance, including property damage, against liability for
personal injury, bodily injury, death, and damage to property occurring in or
about, or resulting from an occurrence in or about, the Premises with combined
single limit coverage of not less than $1,000,000, naming Landlord as an
additional insured, containing a cross liability endorsement.

                                       5

 
          9.1.2  Casualty Insurance:  A policy or policies of fire and property
                 ------------------                                            
damage insurance insuring the personal property, inventory, and trade fixtures
of Tenant within the Premises.  The proceeds from any of such policies shall be
used for the repair or replacement of such items so insured if the Lease is not
terminated, or to Tenant if the Lease is terminated.

     9.2  Landlord's Insurance:  At all times Landlord shall maintain:
          --------------------                                        

          9.2.1  A policy or policies of fire and property damage insurance in
standard 'all risk' form insuring Landlord against loss from physical damage to
the Building and the Premises with coverage of not less than one hundred percent
(100%) of the full replacement cost thereof.

          9.2.2  Tenant shall within thirty (30) days after its receipt of a
detailed invoice from Landlord, reimburse Landlord for the costs of the
foregoing policy, prorated as necessary to cover only the periods during the
Lease Term.

     9.3  Release and Waiver of Subrogation:  Notwithstanding anything to the
          ---------------------------------                                  
contrary in the Lease, the parties hereto release each other, and their
respective agents, employees, subtenants, and contractors, from any liability
for injury to any person or damage to property that arises out of or incident to
any peril covered by insurance carried by the parties or out a peril of the type
to be covered by the insurance required to be carried under the terms of this
Lease, whether due to the negligence of Landlord or Tenant or their respective
agents, employees, contractors, or invitees, or any other cause.  Each party
shall cause each insurance policy obtained by it to provide that the insurer
waives all right of recovery by way of subrogation against the other party and
its agents and employees in connection with any injury or damage covered by such
policy.

 10. INDEMNITY:
     --------- 

     10.1 Indemnification of Landlord:  Tenant shall hold harmless, indemnify
          ---------------------------                                        
and defend Landlord and its employees and agents, with competent counsel
reasonably satisfactory to Landlord, from all liability, penalties, losses,
damages, costs, expenses, causes of action, claims and/or judgments arising by
reason of any death, bodily injury, personal injury or property damage to the
extent resulting from the negligent act or omission of Tenant, its agents,
contractors, or employees, a breach by Tenant of this Lease, or a violation by
Tenant of any Law or Private Restriction.

     10.2 Indemnification of Tenant:  Landlord shall hold harmless, indemnify
          -------------------------                                          
and defend Tenant and its employees and agents, with competent counsel
reasonably satisfactory to Tenant, from all liability, penalties, losses,
damages, costs, expenses, causes of action, claims and/or judgments arising by
reason of any death, bodily injury, personal injury or property damage to the
extent resulting from the negligent act or omission of Landlord, or its agents
contractors, or employees, a breach by Landlord of this Lease, or a violation by
Landlord of any Law or Private Restriction.


11.  DAMAGE & DESTRUCTION:
     -------------------- 

     11.1 Landlord's Duty to Restore:  If the Premises or the Building is
          --------------------------                                     
damaged by any peril, Landlord shall restore the same to substantially the same
condition existing immediately prior to such damage, unless the Lease is
terminated by Landlord pursuant to paragraph 11.2 or by Tenant pursuant to
paragraph 11.3.  If the Lease is not terminated, all insurance proceeds
available from the fire and property damage insurance to be carried by Landlord
pursuant to paragraph 9.2 shall be paid to an independent depository and
disbursed as the restoration work progresses.  If this Lease is terminated
pursuant to either paragraph 11.2 or 11.3, then all insurance proceeds available
from insurance carried by Landlord shall be paid to Landlord.

                                       6

 
     11.2 Landlord's Right to Terminate:  Landlord shall have the option to
          -----------------------------                                    
terminate this Lease in the event any of the following occurs, which option may
be exercised only by delivery to Tenant of a written notice of election to
terminate within thirty (30) days after the date of such damage:

          11.2.1    The Building is damaged by any peril both (i) not covered by
the type of insurance Landlord is required to carry pursuant to paragraph 9.2
and (ii) not actually covered by valid and collectible insurance actually
carried by Landlord and in force at the time of such damage or destruction, to
such an extent that the estimated cost to restore the Building exceeds ten
percent (10%) of the then actual replacement cost thereof; or

          11.2.2    The Premises are damaged by any peril during the last twelve
(12) months of the Lease Term and the restoration of the Premises cannot be
substantially completed within sixty (60) days after the date of such damage;
provided, however, that Landlord may not terminate this Lease pursuant to this
Subparagraph 11.2.2 if Tenant, at the time of such damage, has an express
written option to further extend the term of this Lease and Tenant exercises
such option to so further extend the Lease Term within thirty (30) days
following the delivery to Tenant of Landlord's written termination notice.

     11.3 Tenant's Right to Abatement and Termination:  If all or any portion of
          -------------------------------------------                           
the Premises or the Building should become unsuitable for Tenant's use as a
consequence of fire, casualty, cessation of utilities not caused by Tenant for a
period exceeding ten (10) days, or the presence of any Hazardous Material not
released, emitted or discharged to the Premises by Tenant or its agents,
employees or contractors, then Tenant shall be entitled to an abatement of all
Monthly Rent payable hereunder to the extent of the interference with Tenant's
use of the Premises occasioned thereby and, if such interference cannot be
corrected or the damage resulting therefrom repaired so that the Premises will
be reasonably suitable for Tenant's intended use within ninety (90) days
following the occurrence of such event, then Tenant also shall be entitled to
terminate this Lease by delivery of written notice of termination to Landlord at
any time prior to cessation of the interfering event or restoration of the
Premises.

12.  CONDEMNATION:
     ------------ 

      12.1  Taking of Premises:  If all or any part of the Premises or the
            ------------------                                            
Building is taken by means of (i) any taking by the exercise of the power of
eminent domain, whether by legal proceedings or otherwise, (ii) a voluntary sale
or transfer by Landlord to any condemnor under threat of condemnation or while
legal proceedings for condemnation are pending, or (iii) any taking by inverse
condemnation (a 'Condemnation'), and any portion of the Premises or the Building
cannot be reconstructed within a reasonable period of time and thereby made
reasonably suitable for Tenant's continued occupancy for the Permitted Use, then
Tenant shall have the option to terminate this Lease.  Any such option to
terminate by Tenant must be exercised within a reasonable period of time, to be
effective as of the date that possession of the Premises is taken by the
condemnor.

     12.2 Restoration Following the Taking:  If any part of the Premises or the
          --------------------------------                                     
Building is taken by Condemnation and this Lease is not terminated, then
Landlord shall make all repairs and alterations that are reasonably necessary to
make that which is not taken a complete architectural unit reasonably suitable
for Tenant's occupancy for the Permitted Use.

     12.3 Abatement of Rent:  Except in the case of a temporary taking, if any
          -----------------                                                   
portion of the Premises is taken by Condemnation and this Lease is not
terminated, then as of the date possession is taken, the Monthly Rent shall be
reduced in the same proportion that the value of the Premises so taken (less any
addition thereto by reason of any reconstruction) bears to the value of the
remainder of the Premises.

     12.4 Temporary Taking:  If any portion of the Premises is temporarily taken
          ----------------                                                      
by Condemnation and such taking affects Tenant's ability to use the Premises for
the Permitted Use, then Tenant shall have the option to terminate this Lease,
effective on the date possession is taken by the condemnor.

                                       7

 
     12.5 Division of Condemnation Award:  Tenant shall be entitled to receive
          ------------------------------                                      
any damages awarded by the court in connection with a Condemnation for leasehold
improvements installed in the Premises at Tenant's expense, Tenant's moving
costs and lost goodwill.  The entire balance of the award shall be the property
of Landlord.


13.  DEFAULT AND REMEDIES:
     ---------------------

     13.1 Events of Tenant's Default:  Tenant shall be in default of its
          --------------------------                                    
obligations under this Lease if any of the following events occurs:

          13.1.1    Tenant fails to pay any Monthly Rent when due and such
failure is not cured within five (5) days after Landlord notifies Tenant in
writing that such nonpayment was not made when due; or

          13.1.2    Tenant fails to perform any term, covenant, or condition of
this Lease (except those requiring the payment of money to Landlord) and Tenant
fails to cure such default within thirty (30) days after delivery of written
notice from Landlord specifying the nature of such default where such default
could reason  ably be cured within said thirty (30) day period, or fails to
commence such cure within said thirty (30) day period and thereafter
continuously with due diligence prosecute such cure to completion where such
default could not reasonably be cured within said thirty (30) day period; or

          13.1.3    Tenant shall have made a general assignment of its assets
for the benefit of its creditors; or

          13.1.4    Tenant shall have sublet the Premises or assigned its
interest in the Lease in violation of the provisions contained herein; or

          13.1.5    Tenant shall have permitted the sequestration or attachment
of, or execution on, or the appointment of a custodian or receiver with respect
to, all or any substantial part of the property of Tenant or any property
essential to the conduct of Tenant's business, 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; or

          13.1.6    A court shall have made or entered any decree or order with
respect to Tenant, or Tenant shall have submitted to or sought a decree or order
(or a petition or pleading shall have been filed in connection therewith) which:
(i) grants or constitutes (or seeks) an order for relief, appointment of a
trustee, or confirmation of a reorganization plan under the bankruptcy laws of
the United States; (ii) approves as properly filed (or seeks such approval of) a
petition seeking liquidation or reorganization under said bankruptcy laws or any
other debtor's relief law or statute of the United States or any state thereof;
or (iii) otherwise directs (or seeks) the winding up or liquidation of Tenant;
and such petition, decree or order shall have continued in effect for a period
of thirty (30) or more days.

     13.2 Landlord's Remedies:  In the event of any default by Tenant, Landlord
          -------------------                                                  
may, at Landlord's election, terminate this Lease by giving Tenant written
notice of termination, in which event this Lease shall terminate on the date set
forth for termination in such notice.  Any termination under this subparagraph
shall not relieve Tenant from its obligation to pay sums then due Landlord or
from any claim against Tenant for damages or rent previously accrued or then
accruing.  In no event shall any one or more of the following actions by
Landlord, in the absence of a written election by Landlord to terminate this
Lease, constitute a termination of this Lease:

          13.2.1    Appointment of a receiver or keeper in order to protect
Landlord's interest hereunder;

                                       8

 
          13.2.2    Consent to any subletting of the Premises or assignment of
this Lease by Tenant, whether pursuant to the provisions hereof or otherwise; or

          13.2.3    Any other action by Landlord or Landlord's agents intended
to mitigate the adverse effects of any breach of this Lease by Tenant, including
without limitation any action taken to maintain and preserve the Premises or any
action taken to relet the Premises or any portions thereof, for the account of
Tenant and in the name of Tenant.

    13.3. Rights Upon Termination:  In the event Landlord terminates this
          -----------------------                                        
Lease, Landlord shall be entitled, at Landlord's election, to damages in an
amount as set forth below:

          13.3.1    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,
computed by discounting such amount at the prime rate published in the Wall
                                                                       ----
Street Journal at the time of award plus one percent (1%); and
--------------                                                

          13.3.2    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.

          13.3.3    Notwithstanding anything to the contrary set forth in
this Lease, Landlord shall use its best efforts to mitigate any damages
resulting from any default by Tenant, and Tenant shall not in any event be
liable for any damages reasonably mitigable by Landlord.  Landlord waives any
right of distraint, distress for rent or landlord's lien that may arise at law.

     13.4 Landlord's Default and Tenant's Remedies:  In the event Landlord fails
          ----------------------------------------                              
to perform any of its obligations under this Lease and fails to cure such
default within thirty (30) days after written notice from Tenant specifying the
nature of such default where such default could reasonably be cured within said
thirty (30) day period, or fails to commence such cure within said thirty (30)
day period and thereafter continuously with due diligence prosecute such cure to
completion where such default could not reasonably be cured within said thirty
(30) day period, then Tenant shall have the following remedies:

          13.4.1    Tenant may proceed in equity or at law to compel Landlord to
perform its obligations and/or to recover damages proximately caused by such
failure to perform (except to the extent Tenant has waived its right to damages
resulting from injury to person or damage to property as provided herein).

          13.4.2    Tenant may cure any default of Landlord at Landlord's cost.
If Tenant at any time by reason of Landlord's default reasonably pays any sum or
does any act that requires the payment of any sum, the sum paid by Tenant shall
be immediately due from Landlord to Tenant at the time the sum is paid, and
shall bear interest at the Agreed Interest Rate from the date the sum is paid by
Tenant until Tenant is reimbursed by Landlord.  Any such amount shall be payable
by Landlord to Tenant within ten (10) days following Tenant's written demand for
payment and if not so paid, may be offset against the next installments of
Monthly Rent payable by Tenant to Landlord under the Lease.

     13.5 Waiver:  One party's consent to or approval of any act by the other
          ------                                                             
party requiring the first party's consent or approval shall not be deemed to
waive or render unnecessary the first party's consent to or approval of any
subsequent similar act by the other party.  The receipt by Landlord of any rent
or payment with or without knowledge of the breach of any other provision hereof
shall not be deemed a waiver of any such breach unless such waiver is in writing
and signed by Landlord.  No delay or omission in the exercise of any right or
remedy accruing to either party upon any breach by the other party under this
Lease shall impair such right or remedy or be construed as a waiver of any such
breach theretofore or thereafter occurring.  The waiver by either party of any
breach of any provision of this Lease shall not be deemed to be a waiver of any
subsequent breach of the same or any other provisions herein contained.

                                       9

 
14.  ASSIGNMENT AND SUBLETTING:
     ------------------------- 

     14.1 By Tenant:  The following provisions shall apply to any assignment
          ---------                                                         
or subletting by Tenant:

          14.1.1    Tenant shall not sublet the Premises or assign or encumber
its interest in this Lease, without Landlord's prior written consent, which
consent shall not be unreasonably withheld or delayed. Landlord shall be deemed
to have consented to any proposed assignment or subletting if it has not
reasonably withheld its consent to any such proposed assignment or subletting
within fifteen (15) days of Tenant's request for consent.

          14.1.2    Consent by Landlord to one or more assignments or
encumbrances of this Lease or to one or more sublettings of the Premises shall
not be deemed to be a consent to any subsequent assignment, encumbrance, or
subletting.

          14.1.3    Notwithstanding the foregoing, Tenant may assign this Lease
or sublet all or a portion of the Premises without Landlord's consent (i) to a
parent, subsidiary, or an entity under common control with Tenant, (ii) in
connection with the transfer of stock of Tenant, or (iii) in connection with the
sale of substantially all of Tenant's assets located in the Premises.

     14.2 By Landlord:  Landlord and its successors in interest shall have the
          -----------                                                         
right to transfer their interest in the Building.  As used herein, the term
'Landlord' shall mean the Landlord originally named herein, but following any
transfer of its interest in the Premises and the Property, the term 'Landlord'
shall thereafter mean the transferee of such interest.

15.  TERMINATION:
     ----------- 

     15.1  Surrender of the Premises:  Immediately prior to the expiration or
           -------------------------                                         
upon the earlier termination of this Lease, Tenant shall remove all Leasehold
Improvements installed in the Premises by Tenant (which Landlord has not agreed
may remain in the Premises), trade fixtures and other personal property, repair
all damage caused by the installation and removal of such property, and vacate
and surrender the Premises to Landlord in good condition, reasonable wear and
tear, condemnations, perils and Hazardous Materials not placed on or about the
Premises by Tenant, its agents, employees or contractors excepted.

      15.2 Holding Over:  Any holding over after the expiration of the Lease
           ------------                                                     
Term and with the written consent of Landlord shall be construed to be a tenancy
from month to month on the same terms and conditions herein specified insofar as
applicable.

16.  RIGHT OF FIRST REFUSAL TO PURCHASE:  If at any time during the Lease Term,
     ----------------------------------                                        
Landlord elects to sell the Premises, Tenant shall have the right of first
refusal to meet any bona fide offer to purchase the Premises received by
Landlord from any party on the same terms and conditions of such offer.
Landlord shall promptly provide Tenant with a copy of any such offer and Tenant
shall have sixty (60) days after its receipt of the offer to agree in writing to
purchase the Premises on the same terms and conditions stated in the offer.  If
Tenant does not indicate in writing its agreement to purchase the Premises on
the terms contained in the offer within said sixty (60) day period, then
Landlord thereafter shall have the right to sell the Premises to such party  on
the same terms and conditions stated in the offer.  If Landlord does not sell
the Premises within ninety (90) days after the expiration of said sixty (60) day
period, or if terms and conditions of the offer to purchase the Premises are
changed, then any further transaction shall be deemed a new offer to purchase
the Premises and the provisions of this paragraph shall again be applicable.
Notwithstanding the foregoing, Landlord may, without Tenant's right of first
refusal, sell the Premises to Amos Weiss.  Should Amos Weiss become the owner of
the Premises, and should he during the Lease Term elect to sell the Premises,
then the provisions of this Section 16 shall apply to any bona fide offer to
purchase received by Mr. Weiss.

                                      10

 
17.  GENERAL PROVISIONS:
     ------------------ 

          17.1 Landlord's Right to Enter:  Landlord or its agents may enter the
               -------------------------                                       
Premises at any reasonable time for the purpose of (i) inspecting the same, (ii)
posting notices of nonresponsibility, (iii) supplying any service to be provided
by Landlord to Tenant, (iv) making necessary alterations, additions or repairs,
(v) performing Tenant's obligations when Tenant has failed to do so within
thirty (30) days after written notice from Landlord, and/or (vi) in case of an
emergency.  However, Landlord may not so enter the Premises until it has first
given Tenant at least forty-eight (48) hours prior written notice of its
intention to do so (except in case of an emergency) and complies with all of
Tenant's security regulations.  If Tenant so elects, Landlord shall be
accompanied by a representative Tenant during any such entry.  Landlord shall
not have the right to open or inspect confidential files or safes, and Landlord
shall not disclose to others any confidential information regarding Tenant's
business learned by Landlord during any such entry into the Premises.

     17.2 Estoppel Certificates:  Each party agrees, following any request by
          ---------------------                                              
the other, promptly to execute and deliver an estoppel certificate upon which
the requesting party and any others it designates may rely (i) certifying that
this Lease is unmodified and in full force and effect, or, if modified, stating
the nature of such modification and certifying that this Lease, as so modified,
is in full force and effect, (ii) stating the date to which the rent and other
charges are paid in advance, if any, (iii) acknowledging that there are not, to
the certifying party's knowledge, any uncured defaults on the part of the other
party hereunder, or if there are stating their nature, and (iv) certifying such
other information about the Lease as may be reasonably required by the
requesting party.

     17.3 Reimbursable Expenditures:  Any expenditure by a party permitted or
          -------------------------                                          
required under this Lease, for which such party is entitled to demand and does
demand reimbursement from the other party, shall be limited to the actual cost
to the demanding party of the goods and/or services giving rise to such
expenditure, which cost shall not exceed the fair market value of such goods
and/or services; shall be reasonably incurred; and shall be substantiated by
documentary evidence available for inspection and review by the other party or
its representative during normal business hours.

     17.4 Notices:  Any notice required or desired to be given regarding this
          -------                                                            
Lease shall be in writing and may be personally served, or in lieu of personal
service may be given by mail.  If given by mail, such notice shall be deemed to
have been given (i) on the third business day after mailing if such notice was
deposited in the United States mail, certified and postage prepaid, addressed to
the party to be served at its address set forth below its signature, and (ii) in
all other cases when actually received.  Either party may change its address by
giving notice of same in accordance with this paragraph.

     17.5 Attorneys' Fees:  In the event either party shall bring any action or
          ---------------                                                      
legal proceeding for an alleged breach of any provision of this Lease, to
recover rent, to terminate this Lease or to otherwise enforce, protect or
establish any term or covenant of this Lease or right of either party, the
prevailing party shall be entitled to recover as a part of such action or
proceedings, or in a separate action brought for that purpose, reasonable
attorneys' fees and court costs as may be fixed by the court.

     17.6 Corporate Authority:  Each individual executing this Lease on behalf
          -------------------                                                 
of a corporation represents and warrants that he or she is duly authorized to
execute and deliver this Lease on behalf of said corporation and that this Lease
is binding upon said corporation in accordance with its terms.

     17.7 Miscellaneous:  Should any provision of this Lease prove to be invalid
          -------------                                                         
or illegal, such invalidity or illegality shall in no way affect, impair or
invalidate any other provision hereof, and such remaining provisions shall
remain in full force and effect. This Lease shall be governed by the laws of the
State of Michigan.  Time is of the essence with respect to the performance of
every provision of this Lease in which time of performance is a factor. Any
executed copy of this Lease shall be deemed an original for all purposes.  This
Lease shall, subject to the provisions regarding assignment, apply to and bind
the respective heirs, successors, executors, administrators and assigns of
Landlord and Tenant.  The language in all parts of this Lease shall in all cases
be construed as a 

                                      11

 
whole according to its fair meaning, and not strictly for or against either
Landlord or Tenant. The captions used in this Lease are for convenience only and
shall not be considered in the construction or interpretation of any provision
hereof. When the context of this Lease requires, the neuter gender includes the
masculine, the feminine, a partnership or corporation or joint venture, and the
singular includes the plural. The terms 'shall', 'will', and 'agree' are
mandatory. The term 'may' is permissive. When a party is required to do
something by this Lease, it shall do so at its sole cost and expense without
right of reimbursement from the other party unless specific provision is made
therefor. Whenever one party's consent or approval is required to be given as a
condition to the other party's right to take any action pursuant to this Lease,
then such consent or approval shall not be unreasonably withheld or delayed.
Landlord shall not become or be deemed a partner or a joint venturer of Tenant
by reason of this Lease.

     17.8 Brokerage Commissions:  Each party warrants to the other that it has
          ---------------------                                               
not had any dealings with any real estate brokers or salesmen or incurred any
obligations for the payment of real estate brokerage commissions or finder's
fees which would be earned or due and payable by reason of the execution of this
Lease.

     17.9 Memorandum of Lease:  At Tenant's request, Landlord shall execute in
          -------------------                                                 
recordable form, a 'Memorandum of Lease' referencing the Lease and setting forth
the true and legal description and assessor's parcel number of the Property in a
form reasonably acceptable to Lessee, and which Memorandum of Lease shall be
recorded in the Official Records of Bay County, Michigan.

    17.10 Subordination:  The following provisions shall govern the
          -------------                                            
relationship of this Lease and any underlying lease, mortgage or deed of trust
which now or hereafter affects the Premises, and any renewal, modification,
consolidation, replacement or extension thereof (collectively, 'Security
Instruments'), which have been or may hereafter be executed affecting the
Premises:

          17.10.1  This Lease shall not be subject or subordinate to any
existing or future Security Instruments unless the holder of the Security
Instrument in question executes a recognition and nondisturbance agreement which
(i) provides that this Lease shall not be terminated so long as Tenant is not in
default under this Lease and (ii) recognizes all of Tenant's rights hereunder;
and

     17.11 Quiet Possession:  Tenant shall peacefully have, hold and enjoy
           ----------------                                               
the Premises, subject to the other terms of this Lease, provided that Tenant
pays the Monthly Rent and performs all of Tenant's covenants and agreements
contained in this Lease.  This covenant and the other covenants of Landlord
contained in this Lease shall be binding upon Landlord and its successors only
with respect to breaches occurring during its and their respective ownerships of
Landlord's interest hereunder.

     17.12 Entire Agreement:  The Lease and the documents referred to herein
           ----------------                                                 
constitute the entire agreement between the parties, and there are no binding
agreements or representations between the parties except as expressed herein.
No subsequent change or addition to this Lease shall be binding unless in
writing and signed by the parties hereto.

                                      12

 
     IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease with the
intent to be legally bound thereby, to be effective as of the Commencement Date
of this Lease.


AS LANDLORD:                              AS TENANT:

/s/ Larry Shackley                        Concentric Network Corporation, a
-------------------------------           Delaware corporation
         Larry Shackley                   

                                          By: /s/ Donald C. Schutt
                                             --------------------------------
                                          Its: Vice President                
                                              -------------------------------
                                                                             
Address for Notices:                      Address for Notices:               
3783 Mackinaw Road                        10590 N. Tantau Ave.               
-------------------------------           -----------------------------------
Bay City, MI 48706                        Cupertino, CA 95014                
-------------------------------           -----------------------------------
October 7, 1996                           October 7, 1996                    
-------------------------------           -----------------------------------

 
                                  EXHIBIT 'A'

                               Legal Description

                                [to be attached]

 
                                  EXHIBIT 'B'

                              Exceptions to Title

                                [to be attached]