<PAGE>   1
                                                                     EX - 10.34


                     Dated the      day of               1997
                     ----------------------------------------


                              JUGADA COMPANY LIMITED

                                  (as Landlord)

                                       AND


                       VALENCE SEMICONDUCTOR DESIGN LIMITED

                                    (as Tenant)

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

                               TENANCY AGREEMENT

                                       of

                     Workshops Nos. 1, 2, 3, 4, 5, 6, 7 and 8
                     on the 19th Floor of APEC Plaza, No.49
                     Hoi Yuen Road, Kwun Tong, Kowloon, Hong
                     Kong

                     Term:   A term of 3 years from 1st
                             January 1998 to 31st December
                             2000

                     Rental: HK$99,124.90 per month
                             exclusive of rates, management
                             fee and central chilled water
                             charges

                     Deposit: HK$359,979.90

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



                            JOHNSON STOKES & MASTER,

                               SOLICITORS, & C.,

                                 HONG KONG SAR.


                           Ref: PPOH/782115/6/CH/gfs
                           PC/RTD21352.DOC   (181157)
<PAGE>   2
                                   SECTION I

                                   AGREEMENT

Parties                AN AGREEMENT made this     day of          One Thousand
                       Nine Hundred and Ninety-Seven

                       BETWEEN (i) the Company detailed as the Landlord in Part
                       I of the Schedule hereto (hereinafter called "the
                       Landlord" which expression shall include its successors
                       and assigns) of the one part and (ii) the person firm or
                       company detailed as the Tenant in Part I of the Schedule
                       hereto (hereinafter called "the Tenant" which expression
                       shall include its successors and permitted assigns) of
                       the other part.

                       WHEREBY IT IS AGREED as follows:

                       1.    Agreement:

Premises               1.01  The Landlord shall let and the Tenant shall take
                             ALL THOSE the premises (hereinafter referred to as
                             "the Premises") forming part of the building now
                             known as APEC Plaza, No. 49 Hai Yuto Road, Kwun
                             Tong, Kowloon, Hong Kong (hereinafter referred to
                             as "the Building") erected on ALL that piece or
                             parcel of land registered in the Land Registry as
                             Kwun Tong Inland Lot No. 732 which said Premises
                             are more particularly described and set out in Part
                             II of the Schedule attached hereto Together with
                             the use in
<PAGE>   3
                                      -2-



                              common with the Landlord and all others having the
                              like right of the entrances staircases landings
                              passages and public toilets in the Building in so
                              far as the same are necessary for the proper use
                              and enjoyment of the Premises and except in so far
                              as the Landlord may from time to time restricts
                              such use. And together with the use in common as
                              aforesaid of the escalators and air cooling
                              services in the Building (if any and whenever the
                              same shall be operating) for the term set forth in
                              Part III of the Schedule hereto(hereinafter "the
Term Rent                     Term") YIELDING AND PAYING therefor throughout the
and other Charges             Term such rent and other charges as are from time
                              to time payable or ascertainable in accordance
                              with the provisions set out in Part IV and Part V
                              of the Schedule hereto and in this Agreement (all
                              of which payments are unless the context otherwise
                              requires or provides hereinafter included in the
                              term "the Rent") which sums shall be payable
                              exclusive of rates and other outgoings and in
                              advance clear of all deductions on the first day
                              of each calendar month the first and last of such
                              payments to be apportioned according to the number
User                          of days in the month included in the Term. The
                              Tenant agrees to use the Premises only for the
                              purpose set forth in Part VII of the
<PAGE>   4
                                     - 3 -

                                   Schedule hereto and not for any other
                                   purpose and in the event that the user of
                                   the Premises designated in Part VII of the
                                   Schedule hereto shall specify the sale or
                                   supply thereat of any particular class or
                                   kind of goods or services the Tenant shall
                                   not use the Premises for the sale or
                                   provision of any other class or kind of
                                   goods services or other purpose whatsoever
                                   without the express permission of the
                                   Landlord in writing.

                                   SECTION II

                             RENT AND OTHER CHARGES

                        2.         The Tenant agrees with the Landlord as
                                   follows:

Rent                    2.01       To pay throughout the Term on the days and
                                   in the manner hereinbefore provided for
                                   payment thereof and in banknotes if so
                                   required by the Landlord such calendar
                                   monthly rent as is payable in accordance
                                   with the provisions of Part IV of the
                                   Schedule hereto;

Management fee          2.02       To pay on the days and in the manner
and central chilled                hereinbefore provided the management fee and
water charges                      central chilled water charges as
                                   respectively set forth in Part V of the
                                   Schedule for the
<PAGE>   5
                                     - 4 -

                                   provision of management services for the
                                   Premises and for the supply of chilled water
                                   for use by the Tenant in connection with its
                                   air-conditioning installation Provided
                                   always that the rate of the said management
                                   fee and central chilled water charges shall
                                   be subject to review by the Manager of the
                                   Building in accordance with the provisions
                                   in the Deed of Mutual Covenant and
                                   Management Agreement relating to the
                                   Building. The Manager's determination of the
                                   new rate of the said management fee and
                                   central chilled water charges shall (save in
                                   the case of manifest error) be conclusive.

                                   All running, operating, maintenance, cleaning
                                   and repair costs associated with the use of
                                   fan coil units or other air handling plant
                                   installed at the Premises will be borne by
                                   the Tenant in addition to the management fee
                                   and central chilled water charges. The
                                   electric power for such fan coil units or
                                   other air handling plant installed within or
                                   exclusively for the Premises shall be
                                   connected to the Tenant's electricity supply
                                   meter and the Tenant shall pay direct to the
                                   supply authority or contractor for the
                                   electric power thereby consumed.
<PAGE>   6
                                   - 5 -

Rates                   2.03       To pay and discharge all rates taxes and
                                   assessments duties impositions charges and
                                   outgoings of an annual or recurring nature
                                   now or hereafter to be imposed or levied on
                                   the Premises or upon the owner or occupier in
                                   respect thereof by the Government of Hong
                                   Kong or other lawful authority (Crown Rent
                                   and Property Tax alone excepted). Without
                                   prejudice to the generality of this clause
                                   the Tenant shall within 15 days from the date
                                   of receiving a demand in writing for the same
                                   either from the Landlord or from the Hong
                                   Kong Government pay all rates imposed on the
                                   Premises in the first place to the Landlord
                                   who shall settle the same with the Hong Kong
                                   Government. In the event of the rates imposed
                                   not being individually assessed in respect of
                                   the Premises, the Tenant shall pay a part
                                   thereof in the same proportion as the gross
                                   floor area of the Premises bears to the gross
                                   floor area of the Building or part thereof so
                                   assessed, and in the event of the Premises
                                   not yet having been assessed to rates, the
                                   Tenant shall on the signing hereof and before
                                   it shall be entitled to possession of the
                                   Premises at the commencement of the Term and
                                   thereafter on each of the usual quarter days
                                   until the rates have been so assessed pay to
                                   the Landlord on account of the
<PAGE>   7
                                     - 6 -


                    Tenant's liability under this Clause a sum equal to the
                    rates for that quarter (or a proportionate part thereof)
                    which would be charged by the Hong Kong Government on the
                    basis of a rateable value equal to twelve months rent
                    payable by the Tenant (such estimated rates to be paid on
                    monthly basis in advance): Provided that upon assessment by
                    the Hong Kong Government of the rates payable in respect of
                    the Premises the total amount paid by the Tenant to the
                    Landlord shall be adjusted accordingly and any surplus
                    shall be refunded by the Landlord and any deficiency shall
                    be made good by the Tenant.

Utility     2.04    To pay and discharge all deposits and charges in respect of
Charges &           gas water electricity air-conditioning and telephone as may
Deposits            be shown by or operated from the Tenants own metered
                    supply or by accounts rendered to the Tenant in respect of
                    all such utilities consumed on or in the Premises


<PAGE>   8
                                     - 7 -


                                  SECTION III


                              TENANT'S OBLIGATIONS


                        3.  The Tenant hereby covenants undertakes and agrees
                        with the Landlord as follows:

Compliance with         3.01    To obey observe and comply with and to
Ordinances                      indemnify the Landlord against the breach of all
                                ordinances, regulations, by-laws, rules and
                                requirements of any Governmental or other
                                competent authority relating to the use and
                                occupation of the Premises, or to any other act,
                                deed, matter or thing done, permitted, suffered
                                or omitted therein or thereon by the Tenant or
                                any employee, agent or licensee of the Tenant
                                and without prejudice to the foregoing to obtain
                                any licence approval or permit required by any
                                Governmental or other competent authority in
                                connection with the Tenant's use or occupation
                                of the Premises prior to the commencement of the
                                Tenant's business and to maintain the same in
                                force and in all respects comply with the terms
                                thereof during the currency of this tenancy and
                                to indemnify the Landlord against the
                                consequences of any breach of this provision.

Fitting Out the       3.02 (a)  To fit out the interior of the Premises in
Interior of the                 accordance with such




<PAGE>   9
                                      -8-

Premises                      plans and specifications including but not limited
                              to electrical and mechanical layout, P & D design,
                              etc. as shall have been first submitted by the
                              Tenant to and approved in writing by the Landlord
                              in a good and proper workmanlike fashion. Such
                              fitting out works must not be commenced before
                              such plans and specifications have been approved
                              by the Landlord.

                         (b)  The Tenant shall pay to the Landlord on demand all
                              mechanical, engineering and structural engineering
                              consultant's fees incurred by the Landlord in
                              connection with the consideration and approval of
                              the Tenant's Plans or any modifications or
                              amendments thereof.

Installation of     3.03      To make its own arrangements with the Hong Kong
Telephone Cables              Telephone Company Limited with regard to the
                              installation of telephones or other communications
                              systems within the Premises, but the installation
                              of telephone and communications lines outside the
                              Premises must be in the common ducting provided
                              for that purpose and in all respects be in
                              accordance with the Landlord's directions;

Good Repair of      3.04      To keep all the interior parts of the Premises
Interior                      including the flooring and interior plaster or
<PAGE>   10
                                      -9-

                              other finishing material or rendering to walls
                              floors and ceilings and the shopfront external
                              grilles or shutters to the Premises and the
                              Landlord's fixtures and fittings therein and all
                              additions (whether of the Landlord or the Tenant)
                              thereto including (without limitation and wherever
                              the same shall be installed in or upon the
                              Premises) all escalators doors windows electrical
                              installations and wiring light fittings suspended
                              ceiling fire fighting apparatus and
                              air-conditioning plant and ducting exhaust ducts,
                              scrubber and carbon filters, grease traps and all
                              pipes plumbing and drainage facilities and all
                              painting, papering and decoration thereof in good
                              clean tenantable substantial and proper repair and
                              condition and as may be appropriate from time to
                              time properly painted and decorated cleansed
                              cleared or replaced and so to maintain the same at
                              the expense of the Tenant and to deliver up the
                              same and all fittings, fixtures and additions
                              therein and thereto other than tenant's fixtures
                              and fittings to the Landlord at the expiration or
                              sooner determination of the said term in like
                              condition and without prejudice to the generality
                              of the foregoing during the last year of the term
                              hereby reserved if reasonably required by the
                              Landlord
<PAGE>   11
                                      -10-

                              to repaint and decorate the interior of the
                              Premises;

Cleaning of Grease  3.05      To clean and clear every grease trap (if any, and
Trap                          whether within or outside the Premises) serving
                              the Premises or used by the Tenant as often as is
                              necessary to ensure the free, uninterrupted and
                              efficient working of the drainage and sewage
                              facilities serving the Building. The Landlord
                              shall be entitled from time to time to require the
                              Tenant to do such cleaning and clearing at such
                              regular intervals as may be prescribed by the
                              Landlord. If default shall be made by the Tenant
                              in fulfilling its obligations under this Clause
                              the Landlord shall be entitled to do such cleaning
                              and clearing, entering the Premises whenever
                              necessary and the cost thereof shall be a debt due
                              from the Tenant to the Landlord and be recoverable
                              forthwith by action;

Installation of   3.06        To install all wires pipes and cables and other
wires, cables                 services serving the Premises and through the
services                      ducts trunkings and conduits in the Building
                              provided by the Landlord for such purposes and at
                              all times in accordance with the Landlord's
                              directions and not to install any such wires pipes
                              cables or other services without first providing
                              the Landlord with full particulars and a
<PAGE>   12
                                     - 11 -

                                        fully detailed plan and diagram of such
                                        intended installation and obtaining the
                                        Landlord's consent in regard thereto.

Replacement of           3.07           To pay to or reimburse the Landlord the
Windows                                 cost of replacing all broken or damaged
                                        windows or shopfront glass whether the
                                        same be broken or damaged by the
                                        negligence of the Tenant or owing to
                                        circumstances beyond the control of the
                                        Tenant;

Repair of Electrical     3.08           To repair or replace as so required by
Installations                          the appropriate utility company or
                                        authority under the terms of the
                                        Electricity Supply Ordinance or any
                                        statutory modification or reenactment
                                        thereof or Regulations made thereunder
                                        by duly authorised contractor, statutory
                                        undertaker or authority as the case may
                                        be all the electricity wiring
                                        installations and fittings within the
                                        Premises and the wiring from the
                                        Tenant's meter or meters to and within
                                        the same;

Good Repair of Toilets   3.09           At the expense of the Tenant to maintain
and Water Apparatus                     all toilets and sanitary and water
                                        apparatus as are located within the
                                        Premises (or elsewhere if used
                                        exclusively by the Tenant its employees
                                        invitees and licensees) in good clean
                                        and tenantable state and in proper
                                        repair and condition at all times during
                                        the said Term to the satisfaction of the
                                        Landlord and

<PAGE>   13
                                     - 12 -

                                        in accordance with the Regulations of
                                        the Public Health or Government
                                        Authority concerned;

Cleaning & Cleaning     3.10            To keep the Premises including
Contractors                             external windows lights and shopfront
                                        glass at all times in a clean and
                                        sanitary state and condition, and for
                                        the better observance hereof the Tenant
                                        shall only employ as cleaners of the
                                        Premises such persons or firms as shall
                                        be nominated by the Landlord. Such
                                        Cleaners shall be employed at the
                                        expense of the Tenant;

Cleaning of Drains      3.11            To pay on demand to the Landlord the
                                        cost properly incurred by the Landlord
                                        in cleansing and clearing any of the
                                        drains choked or stopped up owing to
                                        improper or careless use by the Tenant
                                        or his employees invitees or licensees;

To Permit Landlord       3.12           To permit the Landlord its agents and
To Enter & View                         all persons authorised by it with or
                                        without workmen or others and with or
                                        without appliances at all reasonable
                                        times to enter upon the Premises to view
                                        the condition thereof and upon prior
                                        notice to the Tenant to take inventories
                                        of the fixtures and fittings therein and
                                        to carry out any work or repair required
                                        to be done provided that in the event of
                                        an emergency the Landlord its servants
                                        or agents may
<PAGE>   14
                                     - 13 -


                                        enter without notice and forcibly if
                                        need be;

To Execute Repair on    3.13            To make good all defects and wants of
Receipt of Notice                       repair to the Premises for which the
                                        Tenant may be liable within the space of
                                        one month from the receipt of written
                                        notice from the Landlord to repair amend
                                        and make good the same, and if the
                                        Tenant shall fail to execute such works
                                        or repairs as aforementioned to permit
                                        the Landlord to enter upon the Premises
                                        and execute the same and the cost
                                        thereof shall be a debt due from the
                                        Tenant to the Landlord and be
                                        recoverable forthwith by action;

Inform Landlord          3.14           To give prompt notice to the Landlord or
of Damage                               its agent of any damage that may be
                                        suffered to the Premises and of any
                                        accident to or defects in the water and
                                        gas pipes (if any) electrical wiring or
                                        fittings fixtures or other services or
                                        facilities within the Premises;

Protection from          3.15           To take all necessary and appropriate
Typhoon                                 precautions to protect the interior of
                                        the Premises from storm or typhoon
                                        damage;

Indemnification of       3.16           To be wholly responsible for any loss
Landlord                                damage or injury caused to any person
                                        whomsoever or to any property whatsoever
                                        directly or indirectly through the
                                        defective or damaged


<PAGE>   15
                                     - 14 -


                                        condition or operation of any part of
                                        the interior of the Premises or any
                                        machinery or plant or any fixtures or
                                        fittings or wiring or piping therein for
                                        the repair of which the Tenant is
                                        responsible hereunder or in any way
                                        caused by or owing to the spread of fire
                                        smoke or fumes or the leakage or
                                        overflow of water of whatsoever origin
                                        from the Premises or any part thereof or
                                        through the act default or neglect of
                                        the Tenant his servants agents
                                        contractors licensees partners or
                                        customers and to make good the same by
                                        payment or otherwise and to indemnify
                                        the Landlord against all costs claims
                                        demands actions and legal proceedings
                                        whatsoever made upon the Landlord by any
                                        person in respect of any such loss
                                        damage or injury as aforesaid and all
                                        costs and expenses incidental thereto;

Air-conditioning         3.17           Where any plant machinery or equipment
of Premises                             for cooling or circulating air is
                                        installed in or about the Premises
                                        (whether by the Landlord or the Tenant)
                                        the Tenant will to the extent of the
                                        Tenant's control over the same at all
                                        times use and regulate the same to
                                        ensure that the air-condition plant is
                                        employed to best advantage in the
                                        conditions from time to prevailing and
                                        without prejudice to the generality of
                                        the foregoing will operate and maintain
<PAGE>   16
                                     - 15 -


                                        such plant within the Premises as the
                                        Landlord may reasonably determine to
                                        ensure a reasonably uniform standard of
                                        air cooling or conditioning throughout
                                        the Building;

Refuse & Garbage         3.18           To be responsible for the removal of
Removal                                 refuse and garbage from the Premises to
                                        such location as shall be specified by
                                        the Landlord from time to time and to
                                        use only that type of refuse container
                                        as is specified by the Landlord from
                                        time to time. In the event of the
                                        Landlord providing a collection service
                                        for refuse and garbage the same shall be
                                        used by the Tenant to the exclusion of
                                        any other similar service and the use of
                                        such service provided by the Landlord
                                        shall be at the sole cost of the Tenant;

Service Entrance         3.19           To load and unload goods only at such
                                        times and through such entrances and by
                                        such service lifts (if any) as shall be
                                        designated by the Landlord for this
                                        purpose from time to time;

Common Areas             3.20           To pay to or reimburse to the Landlord
                                        the cost of repairing any damage caused
                                        to any part of the common areas of the
                                        Building occasioned by the Tenant his
                                        licensees employees agents or
                                        contractors or any other person
<PAGE>   17

                                     - 16 -


                                        claiming through or under the Tenant;

Contractors Employees    3.21           To be liable for any act default
Invitees & Licensees                    negligence or omission of the Tenant's
                                        contractors, employees invitees or
                                        licensees as if it were the act default
                                        negligence or omission of the Tenant and
                                        to indemnify the Landlord against all
                                        cost claims demands expenses or
                                        liability to any third party in
                                        connection therewith;

Directory Boards         3.22           To pay the Landlord immediately upon
                                        demand the cost of affixing repairing or
                                        replacing as necessary the Tenant's name
                                        in lettering to the directory boards at
                                        the Building;

Regulations              3.23           To obey and comply with such Regulations
                                        as may from time to time be made or
                                        adopted by the Landlord in accordance
                                        with Section X hereof;

Security Systems         3.24           To ensure that its own security system
                                        within and at the entrance of the
                                        Premises is at all times compatible with
                                        and linked up to the security system for
                                        the Building provided and operated by
                                        the Landlord (if any);

Yield Up Premises        3.25           To yield up the Premises with all
& Handover                              fixtures fittings and additions therein
                                        and thereto at the

<PAGE>   18
                                     - 17 -


                                        expiration or sooner determination of
                                        this Agreement in good clean and
                                        tenantable repair and condition in
                                        accordance with the stipulations
                                        hereinbefore contained together with all
                                        keys giving access to all parts of the
                                        Premises Provided That where the Tenant
                                        has made any alterations or installed
                                        any fixtures fittings or additions in or
                                        to the Premises and notwithstanding
                                        that the Landlord's consent for so doing
                                        may have been obtained or have been
                                        given or be deemed to have been given
                                        the Landlord may at its sole discretion
                                        require the Tenant at the Tenant's sole
                                        cost and expense to reinstate or remove
                                        or do away with all or any such
                                        alterations fixtures fittings or
                                        additions or any part or portion thereof
                                        and to make good and repair in a proper
                                        and workmanlike manner any damage to the
                                        Premises and the Landlord's fixtures and
                                        fittings therein as a result thereof
                                        before delivering up the Premises to the
                                        Landlord.
<PAGE>   19
                                     - 18 -


                                   SECTION IV

                             LANDLORD'S OBLIGATIONS

                         4.             The Landlord agrees with the Tenant as
                                        follows:

Quiet Enjoyment          4.01           To permit the Tenant duly paying the
                                        Rent rates and other charges and the
                                        service charge hereby agreed to be paid
                                        on the days and in manner herein
                                        provided for payment of the same and
                                        observing and performing the agreements
                                        stipulations terms conditions and
                                        obligations herein contained to have
                                        quiet possession and enjoyment of the
                                        Premises during the said term without
                                        any interruption by the Landlord or any
                                        person lawfully claiming under or
                                        through or in trust for the Landlord;

Crown Rent               4.02           To pay the Crown Rent and Property Tax
                                        attributable to or payable in respect of
                                        the Premises;

Air-conditioning         4.03           To use reasonable endeavours to maintain
                                        the escalators, fire services equipment,
                                        security installations and
                                        air-conditioning plant and water
                                        chilling apparatus and other services
                                        provided within the Building not within
                                        the Premises in proper working order and
                                        condition;

<PAGE>   20
                                     - 19 -


Chilled Water            4.04      (a)  Subject to Section VI Sub-clause 6.01(i)
Supply                                  hereof to provide a supply of chilled
                                        water to the Premises for the purposes
                                        of the Tenant's air-conditioning during
                                        the normal business hours to be decided
                                        by the Manager of the Building whose
                                        decision shall be final and conclusive;

                                   (b)  Subject to Section VI Sub-clause 6.01(i)
                                        hereof the Landlord shall, at the
                                        absolute discretion of the Landlord,
                                        supply the Tenant with a supply of
                                        chilled water to the Premises for the
                                        purposes of the Tenant's
                                        air-conditioning during hours outside
                                        the normal business hours upon request
                                        being made by the Tenant to the
                                        Landlord. The cost for such additional
                                        hours of chilled water supply from time
                                        to time shall be determined by the
                                        Landlord or the building manager whose
                                        decision shall be final and notified to
                                        the Tenant from time to time and shall
                                        be paid by the Tenant to the Landlord
                                        with the rent and other charges payable
                                        under this Tenancy Agreement and shall
                                        be recoverable by the Landlord as part
                                        of the air-conditioning and management
                                        charges hereunder.
<PAGE>   21

                                     - 20 -


Obligation Where         4.05           In the event that the Landlord is not
Landlord not owner                      the owner of the whole of the Building,
of Whole Building                       the obligations of the Landlord under
                                        Section IV Sub-Clauses 4.03 and 4.04
                                        hereof shall be deemed to have been
                                        modified so that the Landlord shall only
                                        be under an obligation to use reasonable
                                        endeavors to procure that the manager
                                        appointed under the Deed of Mutual
                                        Covenant or any Sub-Deed of Mutual
                                        Covenant affecting the Building or the
                                        incorporated owners of the Building
                                        shall do the things referred to in such
                                        Sub-Clauses to the extent that they are
                                        within the power and duty of the manager
                                        or incorporated owners and the Landlord
                                        shall not be liable to the Tenant or any
                                        other person for the failure on the part
                                        of the manager or incorporated owners to
                                        do any such things;

Rights Reserved          4.06           It is hereby agreed and expressly
to the Landlord                         confirmed that the following rights are
                                        excepted and reserved to the Landlord
                                        (its successors and assign and all
                                        person having the like right) throughout
                                        the said Term:

                                        (a)  the right of free and uninterrupted
                                             passage and running of water, soil,
                                             gas, drainage, electricity and all
                                             other services or supplies through
                                             such sewers,

<PAGE>   22
                                     - 21 -


                                             watercourses, conduits, pipes,
                                             wires, cables and ducts as are now
                                             or may hereafter be in, on or under
                                             the Premises and serving or capable
                                             of serving the Building or any
                                             adjoining or neighbouring property
                                             TOGETHER WITH the right to enter
                                             upon the Premises to inspect repair
                                             replace or maintain any such
                                             sewers, watercourses conduits,
                                             pipes, wires, cables and ducts
                                             Provided That in the exercise of
                                             this latter right the Landlord
                                             shall cause as little damage or
                                             inconvenience to the Tenant as
                                             possible and forthwith make good
                                             any damage caused;

                                        (b)  the full and free right and liberty
                                             to enter upon the Premises in the
                                             circumstances in which the
                                             covenants by the Tenant contained
                                             in these presents permit such entry
                                             and in particular but without
                                             prejudice to the generality of the
                                             foregoing the right to enter into
                                             and upon the Premises at all times
                                             for the purpose of obtaining access
                                             to and egress from any machinery or
                                             switch rooms or the like remaining
                                             under the control of the Landlord
                                             and located on
<PAGE>   23
                                     - 22 -


                                             any of the floors of the Building
                                             on which any portion of the
                                             Premises is situated;

                                        (c)  the right from time to time on
                                             giving reasonable notice to the
                                             Tenant (such notice not to be
                                             required in case of emergency or
                                             breakdown) and causing as little
                                             inconvenience to the Tenant as
                                             reasonably possible to suspend the
                                             air-conditioning system, lifts,
                                             escalators, electric power, water
                                             supply and any other building
                                             service provided in or serving the
                                             Building for the purpose of
                                             servicing, maintaining, repairing,
                                             renewing, improving or replacing
                                             the same and any of them;

                                        (d)  the right from time to time and
                                             without the necessity of joining
                                             the Tenant or any other person to
                                             enter into such Deed of Mutual
                                             Covenant or Sub-Deed of Mutual
                                             Covenant or Management Agreement
                                             affecting the Building or any part
                                             thereof as the Landlord shall deem
                                             appropriate.
<PAGE>   24
                                     - 23 -


                                   SECTION V

                         RESTRICTIONS AND PROHIBITIONS




                    5.        The Tenant hereby agrees with the Landlord as
                    follows:

Installation &      5.01 (a)  Not without the previous written consent of the
Alterations                   Landlord to erect install or alter any fixtures
                              partitioning or other erection or installation in
                              the Premises or to make suffer or permit to be
                              made any alterations or additions to the
                              electrical wiring installation air-conditioning
                              plant or ducting (if any) and lighting fixtures
                              or any part thereof or other Landlord's fixtures
                              nor without the like consent to install or permit
                              or suffer to be installed any plant equipment
                              apparatus or machinery including any safe or
                              other object which imposes a weight on any part
                              of the flooring in excess of that for which it
                              was designed. The Landlord shall be entitled to
                              prescribe the maximum weight and permitted
                              location of safes and other heavy equipment and
                              to require that the same stand on supports of such
                              dimensions and material to distribute the weight
                              as the Landlord may deem necessary. All
                              reasonable and proper fees incurred by the
                              Landlord in obtaining the approval of its
                              architects to the
<PAGE>   25
                                     - 24 -


                              location of heavy objects shall be borne by the
                              Tenant and payment therefor may be imposed as a
                              pre-requisite to the Tenant receiving such
                              consent;

                         (b)  Not to install any air-conditioning plant or
                              equipment of any kind on or within or at any part
                              of the Premises without the prior consent of the
                              Landlord in writing AND the Tenant shall comply
                              with the directions and instructions of the
                              Landlord regarding installation and shall at its
                              own expense be responsible for their periodic
                              inspection maintenance and repair and for the
                              replacement of defective wiring and the Tenant
                              shall be strictly liable for any damage caused by
                              the installation operation defect or removal of
                              such units;

                         (c)  Not to make or permit or suffer to be made any
                              alterations in or additions to the mechanical or
                              electrical installations in the Building nor to
                              install or permit or suffer to be installed any
                              equipment, apparatus or machinery which exceeds
                              the loading of the electrical installations in
                              the Building nor to install or permit or suffer
                              to be installed any equipment, apparatus or
                              machinery which exceeds the loading of the
                              electrical main or wiring or which
<PAGE>   26
                                     - 25 -



                                        consumes electricity not metered through
                                        the Tenant's separate meter;

                                    (d) Not to make or permit or suffer to be
                                        made any alterations to any installation
                                        or fixture so as to affect or be likely
                                        to affect the supply of water,
                                        electricity or other utility or service
                                        to or in the Building;

                                    (e) In carrying out any approved work
                                        hereunder the Tenant its servants,
                                        agents, contractors and workmen shall
                                        obey and comply with all reasonable
                                        instructions and directions which may
                                        be given by the Landlord, its Project
                                        Manager or other authorised represen-
                                        tatives in connection with the carrying
                                        out of such work;

                                    (f) Any fees or expenses incurred by the
                                        Landlord in connection with the giving
                                        of consents hereunder shall be borne by
                                        the Tenant;

Injury to Main Walls            5.02    Not without the previous written
                                        consent of the Landlord to cut maim
                                        or injure or permit or suffer to be
                                        cut maimed or injured any doors,
                                        windows walls beams structural
                                        members or other part of the fabric
                                        of the Premises;

Alterations to                  5.03    Not to affix anything or paint or make
Exterior                                any alteration whatsoever to the
                                        exterior of the Premises save as

<PAGE>   27
                                     - 26 -

                                   provided in Section V Clause 5.07 hereof;

Obstructions to          5.04      Not to block up darken or obstruct or
Outside Windows                    obscure any shop front window or any other
                                   window or lights belonging to the Premises
                                   without having obtained the express written
                                   consent of the Landlord which consent may be
                                   given subject to such conditions as the
                                   Landlord may in its absolute discretion
                                   consider to fit to impose;

Not to erect gates       5.05      Not without the prior written consent of the
or grilles                         Landlord to erect or install doors, gates,
                                   metal grilles, shutters or other similar
                                   installation whatsoever whether temporary or
                                   permanent at the doorway or entrance to the
                                   Premises or at any of the fire exits
                                   therefrom or erect any such doors or metal
                                   grille or shutter or gate that might in any
                                   way contravene the regulations from time to
                                   time in force of the Fire Services
                                   Department or other competent authority
                                   concerned, nor in any other respect to
                                   contravene the said regulations;

Noise                    5.06      Not to cause or produce or suffer or permit
                                   to be produced on or in the Premises any
                                   sound or noise (including sound produced by
                                   broadcasting from Rediffusion, Television,
                                   Radio and any apparatus
<PAGE>   28
                                     - 27 -

                                   or instrument capable of producing or
                                   reproducing music and sound) or any
                                   vibration or resonance or other form of
                                   disturbance or other acts or things in or on
                                   the Premises which is or are or may be a
                                   nuisance to the tenants or occupiers of
                                   adjacent or neighbouring premises or to
                                   users and customers of the same or to the
                                   Landlord and in the event of the Tenant's
                                   permitted business use of the Premises as
                                   defined in Part VII of the Schedule hereto
                                   requiring any sound or noise to be produced
                                   or reproduced within the Premises or any
                                   part thereof to install and maintain to the
                                   satisfaction of the Landlord appropriate
                                   and adequate sound absorbing and insulating
                                   material so as to prevent such sound or
                                   noise from escaping from the Premises and
                                   from becoming a nuisance or annoyance to
                                   other tenants or occupiers of the Building
                                   or any part thereof or any adjoining or
                                   adjacent premises.

Signs               5.07           Save as permitted pursuant to Clause 3.22
                                   hereof not to exhibit or display on or affix
                                   to the exterior of the Premises or on the
                                   interior face of the curtain wall and window
                                   of the Premises any writing sign signboard
                                   or other device whether illuminated or not
                                   nor to affix any writing sign signboard or
                                   other device in at or above any common
<PAGE>   29
                                     - 28 -

                                   area lobby landing or corridor of the
                                   Building. Provided always that the Tenant
                                   shall be entitled to have its name and
                                   business displayed in lettering and/or
                                   characters to a design and standard of
                                   workmanship approved by the landlord (which
                                   approval shall not be unreasonably withheld)
                                   on a signboard upon the front of the
                                   Premises.

                                   If the Tenant carries on business under a
                                   name other than its own name it shall be
                                   entitled to have that name displayed
                                   aforesaid but the Tenant shall not be
                                   entitled to change the business name without
                                   the previous written consent of the Landlord
                                   (which consent shall not be unreasonably
                                   withheld) and without prejudice to the
                                   foregoing the Landlord may in connection
                                   with any application for consent under this
                                   clause require the Tenant to produce such
                                   evidence as it shall think fit to show that
                                   no breach of Section V Clause 5.21 hereof
                                   has taken place or is about to take place;

Auction & Sales          5.08      Not to conduct or permit any auction fire
                                   bankruptcy close-out or similar sale of
                                   things or properties of any kind to take
                                   place on the Premises Provided that this
                                   provision shall not preclude the conduct of
                                   genuine periodic seasonal or promotional
                                   sales where the permitted user of
<PAGE>   30
                                     - 29 -


                                   the Premises includes shop or retail uses;

Illegal Immoral or        5.09     Not to use or cause permit or suffer to be
Improper Use                       used any part of the Premises for gambling
                                   or for any illegal immoral or improper
                                   purposes or in any way so as to cause
                                   nuisance or annoyance inconvenience or
                                   damage or danger to the Landlord or the
                                   tenants or occupiers of adjacent or
                                   neighbouring Premises;

No Touting               5.10      Not to tout or solicit or procure or permit
                                   any touting or soliciting for business or
                                   the distribution of any pamphlets notices or
                                   advertising matter outside the Premises or
                                   anywhere within the Building by any of the
                                   Tenant's servants agents or licensees;

Sleeping or              5.11      Not to use the Premises or any part thereof
Domestic Use                       as sleeping quarters or as domestic premises
                                   within the meaning of any ordinance for the
                                   time being in force or to allow any person
                                   to remain on the Premises overnight unless
                                   with the Landlord's prior permission in
                                   writing;

Storage of               5.12      Not to keep or store or cause or permit or
Dangerous Goods                    suffer to be kept or stored any extra
                                   hazardous or dangerous goods within the
                                   meaning of the Dangerous Goods Ordinance and
                                   the regulations thereunder or any
<PAGE>   31
                                     - 30 -


                      Statutory modification or reenactment thereof;

User          5.13    Not to use the Premises for any purpose other than the
                      purpose specified in Part VII of the Schedule hereto;

Obstructions  5.14    Not to place or leave or suffer or permit to be placed or
in Passages           left by any contractor employee invitee or licensee of the
                      Tenant any boxes furniture articles or rubbish in the
                      entrances or any of the staircases passages or landings
                      of the Building used in common with other tenants or the
                      Landlord or otherwise encumber the same;

Parking &     5.15    Not to park in obstruct or otherwise use nor permit to be
Loading               parked in obstructed or otherwise used by any employee
                      agent or licensee of the Tenant those areas of the
                      Building allocated to parking the movement of or access
                      for vehicles or designated as loading/unloading areas
                      other than in accordance with the Regulations made from
                      time to time by the Landlord;

Goods &       5.16    Not to place expose or leave or permit to be placed
Merchandise           exposed or left for display sale or otherwise any goods
Outside the           or merchandise whatsoever upon or over the ground outside
Premises              the Premises;


<PAGE>   32
                                     - 31 -

Free Standing Signs      5.17 Not to place expose or leave or permit to be
                              placed exposed or left any free standing signs
                              upon or over the ground outside the Premises or in
                              any of the staircases passages or landings of the
                              Building used in common with other Tenants or the
                              Landlord;

Preparation of Food &    5.18 Not to cause or permit any offensive or unusual
Prevention of Odours          odours arising out of the preparation of food upon
                              the Premises (if so permitted under the terms of
                              Part VII of the Schedule) to emanate from the
                              Premises so as to cause in the Landlord's opinion
                              a nuisance to other occupiers or users of the
                              Building;

Food by Serviceways      5.19 Not to permit or allow any food stuffs or food
                              containers to be brought onto or removed from the
                              Premises except by way of service entrances
                              service exits and (if any) service lifts or
                              otherwise as may be directed by the Landlord from
                              time to time;

Animals, Pets &          5.20 Not to keep or permit or suffer to be kept any
Infestation                   pets animals or livestock inside the Premises and
                              to take all such reasonable steps and precautions
                              to the satisfaction of the Landlord as shall be
                              necessary to prevent the Premises or any part
                              thereof from becoming infested by termites rats
                              mice roaches or any
<PAGE>   33
                                     - 32 -


                         other pests or vermin and for the better observance
                         hereof the Landlord may require the Tenant at the
                         Tenant's cost to employ such pest extermination
                         contractors as the Landlord may nominate and at such
                         intervals as the Landlord may direct;

Alienation               5.21 Not to assign underlet or otherwise part with the
                              possession of the Premises or any part thereof in
                              any way whether by way of subletting lending
                              sharing or other means whereby any person or
                              persons not a party to this Agreement obtains the
                              use or possession of the Premises or any part
                              thereof irrespective of whether any rental or
                              other consideration is given for such use or
                              possession and in the event of any such transfer
                              sub-letting sharing assignment or parting with the
                              possession of the Premises (whether for monetary
                              consideration or not) this Agrement shall
                              absolutely determine and the Tenant shall
                              forthwith vacate the Premises on notice to that
                              effect from the Landlord. The Tenancy shall be
                              personal to the Tenant named in the Schedule to
                              this Agreement and without in any way limiting the
                              generality of the foregoing the following acts and
                              events shall unless approved in writing by the
<PAGE>   34
                                     - 33 -


                         Landlord be deemed to be breaches of this clause:-

                         (i)  In the case of a tenant which is a partnership the
                              taking in of one or more new partners whether on
                              the death or retirement of an existing partner or
                              otherwise;

                        (ii)  In the case of a tenant who is an individual
                              (including a sole surviving partner of a
                              partnership tenant) the death insanity or
                              disability of that individual to the intent that
                              no right to use possess occupy or enjoy the
                              Premises or any part thereof shall vest in the
                              executors administrators personal representatives
                              next of kin trustee or committee of any such
                              individual;

                        (iii) In the case of a tenant which is a corporation any
                              take-over reconstruction amalgamation merger
                              voluntary liquidation or change in the person or
                              persons who owns or own a majority of its voting
                              shares or who otherwise has or have effective
                              control thereof;

                        (iv)  The giving by the Tenant of a Power of Attorney or
                              similar authority whereby the donee of
<PAGE>   35
                                     - 34 -


                                   the Power obtains the right to use possess
                                   occupy or enjoy the Premises or any part
                                   thereof or does in fact use possess occupy or
                                   enjoy the same;

                              (v)  The change of the Tenant's business name
                                   without the previous written consent of the
                                   Landlord which consent the Landlord may give
                                   or withhold at its discretion;

Breach of Crown Lease         5.22 Not to cause suffer or permit any
                                   contravention of the negative or restrictive
                                   provisions of the Crown Lease or Conditions
                                   of Grant under which the Landlord holds the
                                   Premises or any Deed of Mutual Covenant or
                                   any Sub-Deed of Mutual Covenant affecting the
                                   Building and to indemnify the Landlord
                                   against any such breach;

Breach of Insurance           5.23 Not to cause or suffer or permit to be done
Policy                             any act or thing whereby the policy or
                                   policies of insurance on the Premises against
                                   damage by fire or liability to Third Parties
                                   for the time being subsisting may become void
                                   or voidable or whereby the rate of premium or
                                   premiums thereon may be increased, and to
                                   repay to the Landlord on demand all sums paid
                                   by the Landlord by way of increased premium
                                   or premiums thereon and all
<PAGE>   36
                                     - 35 -


                              expenses incurred by the Landlord in and about any
                              renewal of such policy or policies arising from or
                              rendered necessary by a breach of this Clause;

Prohibited Names         5.24 Not without the previous written consent of the
                              Landlord to name or include in the name of the
                              business or company operated by the Tenant the
                              name of the Building or any name similar thereto
                              and not at any time to change the name of the
                              business or company to include any such name as
                              aforesaid.

Locks                    5.25 Not without the previous written consent of the
                              Landlord (such consent not to be unreasonably
                              withheld) to alter the existing locks, bolts and
                              fittings on the entrance doors to the Premises nor
                              to install any additional locks, bolts or fittings
                              thereon.

Tenant's Association     5.26 Not to form or organise or attempt or make any
                              effort to form or organise any tenant's
                              association or union jointly with any tenants of
                              the Building for whatever objects or purposes
                              during the continuance of the tenancy.

Overload                 5.27 Not to place on any part of floors of the Premises
                              any article, machinery, goods or merchandise which
                              may cause the maximum floor
<PAGE>   37
                                      -36-

                                        loading-bearing capacity thereof to be
                                        exceeded.

                                   SECTION VI

                                   EXCLUSIONS

                                   6.   IT IS HEREBY FURTHER EXPRESSLY
                                   AGREED AND DECLARED that the Landlord shall
                                   not in any circumstances be liable to the
                                   Tenant or any other person whomsoever :-

Breakdown of             6.01 (1)  In respect of any loss of profit or of
Lifts, Air-Conditioning,           business or loss of life or loss, injury or
Utilities                          damage to person or property or for any
                                   disruption or inconvenience caused to or
                                   suffered or sustained by the Tenant or any
                                   other person caused by or through or in any
                                   way owing to or arising out of or connected
                                   with any defect in or breakdown or suspension
                                   of service of the lifts air-conditioning
                                   system, electric power or water supplies, or
                                   any other building service provided in or
                                   serving the Building, or

Fire and overflow             (ii) In respect of any loss of profit or of
of water                           business or loss of life or loss injury or
                                   damage to person or property or for any
                                   disruption or inconvenience caused to or
                                   suffered or sustained by the Tenant or any
                                   other person caused by or through or
<PAGE>   38
                                      - 37 -


                                   in any way owing to or arising out of or
                                   connected with any escape of fumes smoke fire
                                   or any other substance or thing or the
                                   overflow of water from anywhere within the
                                   Building, or

Security                     (iii) For the security or safekeeping of the
                                   Premises or any contents therein and in
                                   particular but without prejudice to the
                                   generality of the foregoing the provision by
                                   the Landlord of watchmen and caretakers or
                                   any mechanical or electrical systems of alarm
                                   of whatever nature shall not create any
                                   obligation on the part of the Landlord as to
                                   the security of the Premises or any contents
                                   therein and the responsibility for the safety
                                   of the Premises and the contents thereof
                                   shall at all times rest with the Tenant,

                              nor shall the rent hereinbefore mentioned or other
                              charges payable hereunder or any part thereof
                              abate or cease to be payable on account of any of
                              the foregoing.


                                  SECTION VII

                               ABATEMENT OF RENT

Suspension of Rent            7.01 If the Premises or the Building or any part
in case of Fire                    thereof shall at any time during the tenancy
                                   be destroyed or
<PAGE>   39
                                      - 38 -


                                   damaged or become inaccessible owing to fire
                                   water storm typhoon defective construction
                                   white ants earthquake subsidence of the
                                   ground or any calamity beyond the control of
                                   the Landlord so as to render the Premises
                                   unfit for commercial use or inaccessible and
                                   the policy or policies of insurance effected
                                   by the Landlord shall not have been vitiated
                                   or payment of policy monies refused in whole
                                   or in part in consequence of any act or
                                   default of the Tenant or if at any time
                                   during the continuance of this Tenancy the
                                   Premises or the Building shall be condemned
                                   as a dangerous structure or a demolition
                                   order or closing order shall become operative
                                   in respect of the Premises or the Building
                                   then the rent hereby reserved or a fair
                                   proportion thereof according to the nature
                                   and extent of the damage sustained or order
                                   made shall be suspended until the Premises or
                                   the Building shall again be rendered
                                   accessible and fit for commercial use
                                   Provided that should the Premises or the
                                   Building not have been reinstated in the
                                   meantime either the Landlord or the Tenant
                                   may at any time after six months from the
                                   occurrence of such damage or destruction or
                                   order give to the other of them notice in
                                   writing to determine this present tenancy and
                                   thereupon the same and
<PAGE>   40
                                      - 39 -


                                   everything herein contained shall cease and
                                   be void as from the date of the occurrence of
                                   such destruction or damage or order or of the
                                   Premises becoming inaccessible or unfit for
                                   commercial use but without prejudice to the
                                   rights and remedies of either party against
                                   the other in respect of any antecedent claim
                                   or breach of the agreements stipulations
                                   terms and conditions herein contained or of
                                   the Landlord in respect of the rent payable
                                   hereunder prior to the coming into effect of
                                   the suspension.


                                  SECTION VIII

                                    DEFAULT

                         8.        It is hereby expressly agreed and declared as
                         follows:

Default                  8.01      If the Rent and/or the management fee and/or
                                   the central chilled water charges and/or any
                                   other sums payable hereunder or any part
                                   thereof shall be in arrear for fifteen (15)
                                   days after the same shall become payable
                                   (whether formally demanded or not) or if
                                   there shall be any breach or non-performance
                                   of any of the stipulations conditions or
                                   agreements herein contained and on the part
                                   of the Tenant to be




<PAGE>   41
                                      - 40 -

                                   observed or performed which the Tenant shall
                                   fail to rectify or take all necessary steps
                                   towards rectification within a period of 15
                                   days of being advised in writing of the
                                   breach or if the Tenant shall stop or suspend
                                   payment of its debts or be unable to or admit
                                   inability to pay its debts as they fall due
                                   or enter into any scheme of arrangements with
                                   its creditors or have any encumbrancer take
                                   possession of any of its assets in
                                   circumstances in which the Landlord shall
                                   have reasonable grounds for believing that
                                   the ability of the Tenant to pay the rentals
                                   and other charges hereby reserved and to
                                   observe and perform its obligations under
                                   this Agreement shall have been prejudiced or
                                   put at risk or have a receiving order made
                                   against it or in such circumstances as
                                   aforesaid fail to satisfy any judgment that
                                   may be given in any action against it after
                                   final appeal or if the Tenant shall become
                                   bankrupt or being a corporation go into
                                   liquidation (save for the purposes of
                                   amalgamation or reconstruction) or if the
                                   Tenant shall suffer any execution to be
                                   levied upon the Premises or otherwise on the
                                   Tenant's goods or if in such circumstances as
                                   aforesaid the Tenant shall suspend or cease
                                   or threaten to suspend or cease to
<PAGE>   42
                                     - 41 -


                                        carry on its business or should any
                                        event occur or proceedings be taken with
                                        respect to the Tenant in any
                                        jurisdiction to which the Tenant is
                                        subject which has an effect equivalent
                                        or similar to any of the events or
                                        circumstances described above then and
                                        in any such case it shall be lawful for
                                        the Landlord at any time thereafter to
                                        re-enter on and upon the Premises or any
                                        part thereof in the name of the whole
                                        and thereupon this Agreement shall
                                        absolutely determine but without
                                        prejudice to any right or action by the
                                        Landlord in respect of any outstanding
                                        breach or non-observance or
                                        non-performance by the Tenant of any of
                                        the terms of this Agreement. A written
                                        notice served by the Landlord on the
                                        Tenant in manner hereinafter provided to
                                        the effect that the Landlord thereby
                                        exercises the power of determination
                                        and/or re-entry hereinbefore contained
                                        shall be a full and sufficient exercise
                                        of such power without physical entry on
                                        the part of the Landlord notwithstanding
                                        any statutory or common law provision to
                                        the contrary. All costs and expenses
                                        including any legal costs and fees
                                        incurred by the Landlord in demanding
                                        payment of the rent and other charges
                                        aforesaid (if the Landlord elects to
                                        demand) or the extent of any loss to the
                                        Landlord
<PAGE>   43
                                     - 42 -


                                        arising out of this Clause shall be
                                        paid by the Tenant and shall be
                                        recoverable from the Tenant as a debt or
                                        be deductable by the Landlord from any
                                        deposit held by the Landlord hereunder;

Interest                        8.02    Notwithstanding anything herein
                                        contained in the event of default in
                                        payment of rent or other monies payable
                                        by the Tenant hereunder for a period of
                                        14 days from the date when payment is
                                        due (whether formally demanded or not)
                                        the Tenant shall pay to the Landlord on
                                        demand daily interest on all such sums
                                        outstanding at the rate of 1.5% per
                                        calendar month calculated from the date
                                        on which the same shall be due for
                                        payment (in accordance with the
                                        provisions contained in that behalf
                                        herein) until the date of payment as
                                        liquidated damages and not as penalty
                                        provided that the demand and/or receipt
                                        by the Landlord of interest pursuant to
                                        this Clause shall be without prejudice
                                        to and shall not affect the right of the
                                        Landlord to exercise any other right or
                                        remedy hereof (including but without
                                        prejudice to the generality of the
                                        foregoing the right of re-entry)
                                        exercisable under the terms of this
                                        Agreement;

Acceptance of Rent              8.03    The acceptance of any rent by the
                                        Landlord hereunder shall not be
<PAGE>   44
                                     - 43 -


                                   deemed to operate as a waiver by the
                                   Landlord of any right to proceed against the
                                   Tenant in respect of any breach
                                   non-observance or non-performance by the
                                   Tenant of any of the agreements stipulations
                                   terms and conditions herein contained and on
                                   the part of the Tenant to be observed and
                                   performed;

Acts of Employees        8.04      For the purpose of these presents any act
Invitees & Licensees               default neglect or omission of any guest,
                                   visitor, servant, contractor, employee,
                                   agent, invitee or licensee of the Tenant
                                   shall be deemed to be act default neglect or
                                   omission of the Tenant;

Distraint                8.05      For the purpose of Part III of the Landlord
                                   and Tenant (Consolidation) Ordinance
                                   (Chapter 7) and of this Agreement, the Rent
                                   payable in respect of the Premises shall be
                                   and be deemed to be in arrear if not paid in
                                   advance at the times and in the manner
                                   hereinbefore provided for payment thereof.

                                   SECTION IX

                                    DEPOSIT

Deposit                  9.01      The Tenant shall on the signing hereof
                                   deposit with the Landlord the sum or sums
                                   specified in Part VI of the Schedule hereto
                                   (being the equivalent of three months' rent
                                   and
<PAGE>   45
                                     - 44 -

                                   management fee and central chilled water
                                   charges at the rates payable therefor at the
                                   commencement of the Term) to secure the due
                                   observance and performance by the Tenant of
                                   the agreements stipulations terms and
                                   conditions herein contained and on the part
                                   of the Tenant to be observed and performed
                                   which said deposit shall be held by the
                                   Landlord throughout the currency of this
                                   Agreement free of any interest to the Tenant
                                   with the right for the Landlord (without
                                   prejudice to any other right or remedy
                                   hereunder) to deduct therefrom the amount of
                                   any Rent rates and other charges payable
                                   hereunder and any costs expenses loss or
                                   damage sustained by the Landlord as the
                                   result of any non-observance or
                                   non-performance by the Tenant of any of the
                                   said agreements stipulations obligations or
                                   conditions. In the event of any deduction
                                   being made by the Landlord from the said
                                   deposit in accordance herewith during the
                                   currency of this Agreement the Tenant shall
                                   forthwith on demand by the Landlord make a
                                   further deposit equal to the amount so
                                   deducted and failure by the Tenant so to do
                                   shall entitle the Landlord forthwith to
                                   re-enter upon the Premises and to determine
                                   this Agreement as hereinbefore provided.
<PAGE>   46
                                     - 45 -

Increase in Deposit      9.02      The amount of the deposit shall be increased
                                   following each and any increase in rent or
                                   the management fee and central chilled water
                                   charges provided for herein to a sum equal
                                   to three (3) months' rent and management fee
                                   and central chilled water charges at the
                                   rates payable therefor at the date or dates
                                   of such increase becoming effective, and the
                                   Tenant shall make payment accordingly and
                                   the provisions of this Section IX shall
                                   apply to such further deposits.

Repayment of Deposit     9.03      Subject as aforesaid the said deposit and
                                   any further deposits paid shall be refunded
                                   to the Tenant by the Landlord without
                                   interest within thirty days after the
                                   expiration or sooner determination of this
                                   Agreement and delivery of vacant possession
                                   to the Landlord and after settlement of the
                                   last outstanding claim by the Landlord
                                   against the Tenant for any arrears of Rent
                                   rates and other charges and for any breach
                                   non-observance or non-performance of any of
                                   the agreements stipulations terms and
                                   conditions herein contained and on the part
                                   of the Tenant to be observed or performed
                                   whichever shall be the later.
<PAGE>   47
                                      -46-


                                   SECTION X

                                  REGULATIONS

Introduction of          10.01     The Landlord shall be entitled from time to
Regulations                        time and by notice in writing to the Tenant
                                   to make introduce and subsequently amend
                                   adopt or abolish if necessary such
                                   Regulations as it may consider necessary for
                                   the proper operation and maintenance of the
                                   Building.

Conflict                 10.02     Such Regulations shall be supplementary to
                                   the terms and conditions contained in this
                                   Agreement and shall not in any way derogate
                                   from such terms and conditions. In the event
                                   of conflict between such Regulations and the
                                   terms and conditions of this Agreement the
                                   terms and conditions of this Agreement shall
                                   prevail.

Exclusion of Liability   10.03     The Landlord shall not be liable for any loss
                                   or damage howsoever caused arising from any
                                   non-enforcement of the Regulations or
                                   non-observance thereof by any third party.


                                   SECTION XI

                        INTERPRETATION AND MISCELLANEOUS

Name of Building         11.01     The Landlord reserves the right to name the
                                   Building with any such name






<PAGE>   48
                                      -47-


                                   or style as it in its sole discretion may
                                   determine and at any time and from time to
                                   time to change alter substitute or abandon
                                   any such name without thereby becoming liable
                                   to compensate the Tenant for any loss expense
                                   or inconvenience caused to the Tenant as a
                                   consequence thereof provided that the
                                   Landlord shall give the Tenant and the Postal
                                   and other relevant Government Authorities not
                                   less than three months notice of its
                                   intention so to do.

Alterations to the       11.02     The Landlord reserves the right from time to
Building                           time to improve extend add to or reduce the
                                   Building or in any manner whatsoever alter or
                                   deal with the Building (other than the
                                   Premises) Provided always that in exercising
                                   such right the Landlord will endeavor to
                                   cause as little inconvenience to the Tenant
                                   as it is practicable in the circumstances and
                                   make good any damage caused to the Premises
                                   within a reasonable period of time.

Functions & Display      11.03     Notwithstanding anything herein contained or
                                   implied to the contrary the Landlord may
                                   permit any person or organization to hold any
                                   functions or exhibitions or display any
                                   merchandise in any part or parts of the
                                   common areas of the Building at such times
                                   and upon such terms
<PAGE>   49
                                      -48-


                                   and conditions as the Landlord may in its
                                   absolute discretion think fit.

Public Address System    11.04     Notwithstanding anything herein contained or
                                   implied to the contrary the Landlord may
                                   provide and install a public address system
                                   throughout the common areas of the Building
                                   and may play relay or broadcast or permit any
                                   other person to play relay or broadcast
                                   recorded music or public announcements
                                   thereon.

Condonation Not A        11.05     No condoning excusing or overlooking by the
Waiver                             Landlord of any default breach or
                                   non-observance or non-performance by the
                                   Tenant at any time or times of any of the
                                   agreements stipulations terms and conditions
                                   herein contained shall operate as a waiver of
                                   the Landlord's right hereunder in respect of
                                   any continuing or subsequent default breach
                                   or non-observance or non-performance or so as
                                   to defeat or affect in any way the rights and
                                   remedies of the Landlord hereunder in respect
                                   of any such continuing or subsequent default
                                   or breach and no waiver by the Landlord shall
                                   be inferred from or implied by anything done
                                   or omitted by the Landlord, unless expressed
                                   in writing and signed by the Landlord. Any
                                   consent given by the Landlord shall operate
                                   as a


<PAGE>   50
                                     - 49 -


                                        consent only for the particular matter
                                        to which it relates and shall in no way
                                        be considered as a waiver or release of
                                        any of the provisions hereof nor shall
                                        it be construed as dispensing with the
                                        necessity of obtaining the specific
                                        written consent of the Landlord in the
                                        future, unless expressly so provided.

Letting Notices &             11.06     During the three months immediately
Entry                                   before the expiration or sooner
                                        determination of the said Term of
                                        tenancy the Tenant shall permit all
                                        persons having written authority to
                                        enter and view the Premises and every
                                        part thereof at all reasonable times
                                        PROVIDED FURTHER that the Landlord shall
                                        be at liberty to affix and maintain
                                        without interference upon any external
                                        part of the Premises a notice stating
                                        that the Premises are to be let and such
                                        other information in connection
                                        therewith as the Landlord shall
                                        reasonably require during the
                                        aforementioned period of 3 months.

Service of Notice             11.07     Any notice required to be served on the
                                        Tenant shall be sufficiently served if
                                        delivered to or despatched by registered
                                        post or left at the Premises or at the
                                        last known address of the Tenant. Any
                                        notice required to be served on the
                                        Landlord shall be sufficiently

<PAGE>   51
                                     - 50 -


                                        served if delivered or despatched by
                                        registered post to its registered office
                                        from time to time. A notice sent by
                                        registered post shall be deemed to be
                                        given at the time and date of posting.

Gender                        11.08     In this Agreement if the context
                                        otherwise permits or requires words
                                        importing the singular number shall
                                        include the plural number and vice versa
                                        and words importing the masculine
                                        feminine or neuter gender shall include
                                        the other of them and references to
                                        person shall include bodies corporate or
                                        unincorporate.

Marginal Notes,               11.09     The Marginal Notes Headings and index
Headings & Index                        are intended for guidance only and do
                                        not form part of this Agreement nor
                                        shall any of the provisions of this
                                        Agreement be construed or interpreted
                                        by reference thereto or in any way
                                        affected or limited thereby.

Stamp Duty & Costs            11.10     The legal costs of and incidental to the
                                        preparation execution and completion of
                                        this Agreement shall be borne by the
                                        Landlord and the Tenant in the manner
                                        stipulated in Part VIII of the Schedule
                                        hereto. The stamp duty and registration
                                        fee (if any) on this Agreement shall be
                                        borne by the parties hereto in equal
                                        shares.
<PAGE>   52
                                     - 51 -


Deed of Mutual                11.11     The Tenant shall observe and comply with
Covenant and Management                 and perform all the covenants terms and
Agreement                               provisions in the Deed of Mutual
                                        Covenant or Sub-Deed of Mutual Covenant
                                        or Management Agreement (if any)
                                        relating to the Building so far as they
                                        relate to the Premises and shall
                                        indemnify the Landlord against the
                                        breach non-observance or non-performance
                                        thereof.

                                        In the event that under any such Deed of
                                        Mutual Covenant or Sub-Deed of Mutual
                                        Covenant or Management Agreement the
                                        supply of chilled water and/or the
                                        operation and/or the management of the
                                        Building or the right, power or duty
                                        thereto shall be controlled by or vested
                                        in a manager the Tenant shall pay all
                                        air-conditioning and service charge and
                                        all management and maintenance charges
                                        relating to the Premises as may be
                                        payable under such Deed of Mutual
                                        Covenant or Sub-Deed of Mutual Covenant
                                        or Management Agreement.

No Fine                       11.12     The Tenant acknowledges that no fine
                                        premium key money construction money or
                                        other consideration has been paid or
                                        will be payable by the Tenant to the
                                        Landlord for the grant of this tenancy.

Exclusion of                  11.13     This Agreement sets out the full
<PAGE>   53
                                     - 52 -


Warranties                              the agreement reached between the
                                        parties and no other representations
                                        have been made or warranties given
                                        relating to the Building or the
                                        Premises.

Joint & Several              11.14      Where more than one person is included
Liability                               in the expression "the Tenant" all such
                                        persons shall be jointly and severally
                                        liable for the performance and
                                        observance of the terms, conditions and
                                        agreements contained herein and on the
                                        part of the Tenant to be performed and
                                        observed.

Special Conditions            11.15     The parties hereto further agree that
                                        they shall respectively be bound by and
                                        entitled to the benefit of the Special
                                        Conditions set out in Part IX of the
                                        Schedule hereto.

AS WITNESS the hands of the parties hereto the day and year first above written.
<PAGE>   54
                                     - 53 -


                        THE SCHEDULED ABOVE REFERRED TO

                                     PART I

The Landlord      :      JUGADA COMPANY LIMITED whose registered office is
                         situate at 45th Floor, Sun Hung Kai Centre, 30 Harbour
                         Road, Hong Kong.

The Tenant        :      VALENCE SEMICONDUCTOR DESIGN LIMITED

                         [CHINESE IDEOGRAMS] whose registered office is situate
                         at Flat A, 13th Floor, Summit Industrial Building, 9
                         Sun yip Street, Chai Wan, Hong Kong.

                                    PART II
                                  The Premises

All Those WORKSHOP NOS.1, 2, 3, 4, 5, 6, 7 and 8 on the NINETEENTH FLOOR of
APEC PLAZA, No.49 Hoi Yuen Road, Kwun Tong, Kowloon erected on All That piece
or parcel of land registered in the Land Registry as Kwun Tong Inland Lot
No.731.

                                    PART III
                                    The Term

A term of 3 years commencing on the 1st day of January 1998 and expiring on the
31st day of December 2000.

                                    PART IV
                           The Calendar Monthly Rent

HONG KONG DOLLARS NINTY NINE THOUSAND ONE HUNDRED TWENTY FOUR AND CENTS NINETY
ONLY (HK$99,124.90) payable in advance on the first day of each and every
calendar month clear of all deductions exclusive of rates, management fee and
central chilled water charges.
<PAGE>   55
                                     - 54 -


                                     PART V
                               The Management Fee

HONG KONG DOLLARS ELEVEN THOUSAND ONE HUNDRED SEVENTY NINE AND CENTS FIFTY ONLY
(HK$11,179.50) per calendar month, payable monthly in advance on the first day
of each and every calendar month.

                       The Central Chilled Water Charges

HONG KONG DOLLARS NINE THOUSAND SIX HUNDRED EIGHTY EIGHT AND CENTS NINETY ONLY
(HK$9,688.90) per calendar month, payable monthly in advance on the first day
or each and every calendar month.

                                    PART VI
                                  The Deposit

HONG KONG DOLLARS THREE HUNDRED FIFTY NINE THOUSAND NINE HUNDRED SEVENTY NINE
AND CENTS NINETY ONLY (HK$359,979.90) being the equivalent of three (3)
calendar months' rent, management fee and central chilled water charges.

                                   PART VIII
                                      User

Restricted to use for industrial purpose provided that the Tenant shall obtain
all necessary licences and approval required by any Government Authority in
connection with such use and provided that the Landlord does not warrant that
the Premises are fit to be used for such purpose or any particular purpose.
<PAGE>   56
                                     - 55 -



                                   PART VIII
                                  Legal Costs

The legal costs of and incidental to the preparation execution and completion
of this Agreement shall be borne by the Landlord and the Tenant in equal shares.

                                    PART IX
                               Special Conditions

1.        Not withstanding anything herein contained, it is hereby agreed that
a portion of the deposit required to be paid by the Tenant to the Landlord
pursuant to Clause (9.01) of Section IX and Part VI of the Schedule to this
Agreement, in the sum of HK$238,404.00 shall be transferred from the existing
deposit held by the Landlord from the Tenant under a Tenancy Agreement of
Workshops Nos.1, 2, 3, 4, 5, 6 and 7 on the Nineteenth Floor of the Building
dated the 7th day of February 1996 ("the existing Tenancy Agreement") on the
commencement of the term hereby created, provided always that if for any reason
the said existing deposit shall be less than HK$238,404.00, then the shortfall
shall be paid by the Tenant to the Landlord on or before such commencement.

2.        Provided always that if the existing Tenancy Agreement shall be
determined under the proviso for re-entry therein contained or by reason of any
breach of any of the terms and conditions therein contained and on the Tenant's
part to be observed and performed, then the Landlord shall have the right to
forthwith determine this Agreement and the term hereby created whereupon this
Agreement shall become absolutely null and void but without prejudice to any
right of remedy of the Landlord under the existing Tenancy Agreement or to any
right or remedy of the Landlord in respect of any antecedent breach by the
Tenant.
<PAGE>   57
                                     - 56 -


3.        The Landlord reserves its right of free and uninterrupted passage
egress from and ingress to the common services of the Building in or under
above or through Workshops Nos.1, 2, 3, 4, 5, 6 and 7 on the Nineteenth Floor
of the Building. In particular, but without affecting the generality of the
aforesaid, the Landlord shall have the right to install, affix, erect or permit
to be installed, affixed or erected any ariel, transmitter or other
telecommunication cable wiring or equipment on or above the false ceiling or
otherwise over or under Workshops Nos.1, 2, 3, 4, 5, 6 and 7 on the Nineteenth
Floor of the Building and the Tenant shall permit the Landlord or its
authorized agent or contractor to enter Workshops Nos.1, 2, 3, 4, 5, 6 and 7 on
the Nineteenth Floor of the Building to install affix erect maintain or repair
such ariel transmitter cable wiring or equipment at all reasonable time upon
prior appointment and shall not remove, alter or otherwise cause damage to such
ariel transmitter cable wiring or equipment at Workshops Nos.1, 2, 3, 4, 5, 6,
7 and 8 on the Nineteenth Floor of the Building and shall indemnify the
Landlord against all claims demands actions proceeding loss or damages costs
and expenses arising from the breach of this provision by the Tenant.

4.        Vacant possession of Workshop No. 8 on the Nineteenth Floor of the
Building will be delivered to the Tenant with its current conditions and with
all fittings and fixtures upon commencement date of the term.
<PAGE>   58
                                     - 57 -


SIGNED by                              )
                                       )
                                       )
                                       )
for and on behalf of Jugada            )
                                       )
Company Limited in the presence        )
                                       )
of/whose signature is verified by:-    )




SIGNED by Wan Wah Tong, Thomas         )    For and on behalf of
                                       )    VALENCE SEMICONDUCTOR DESIGN LIMITED
for and on behalf of the Tenant in     )
                                       )    /s/ Wan Wah Tong, Thomas
the presence of :-                     )    ------------------------------------
                                                 Authorized Signature(s)
 /s/ Cham Tze Kwong, Reivlin
----------------------------------
     Cham Tze Kwong, Reivlin
      E849233(2)



RECEIVED on or before the day and year            )
                                                  )
first above written of and from the Tenant        )
                                                  )
the above mentioned deposit of HONG KONG          )    HK$359,979.90
                                                  )    -------------
DOLLARS THREE HUNDRED FIFTY NINE THOUSAND         )
                                                  )
NINE HUNDRED SEVENTY NINE AND CENTS NINETY        )
                                                  )
ONLY (of which a sum of HK$238,404.00 is          )
                                                  )
transferred from the existing Tenancy             )
                                                  )
Agreement as aforesaid).                          )


SIGNATURE(S) is/are verified by :-