<PAGE>   1
                                                                        EX-10.33


                      Dated this 1st day of September 1995




                        HONG KONG INDUSTRIAL TECHNOLOGY
                               CENTRE CORPORATION


                                      and


                      VALENCE SEMICONDUCTOR DESIGN LIMITED



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

                               TENANCY AGREEMENT

                                       of

                        Unit 413 on the Fourth Floor of

                     Hong Kong Industrial Technology Centre


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




                                  DENTON HALL
                              10/F HUTCHISON HOUSE
                                10 HARCOURT ROAD
                                    CENTRAL
                                   HONG KONG
                             Ref.: RMSK/GPKL/H:4414
                                     L:1158
<PAGE>   2
THIS TENANCY AGREEMENT   is made the 1st day of September
                         One thousand nine hundred and ninety-five


Parties   BETWEEN HONG KONG INDUSTRIAL TECHNOLOGY CENTRE CORPORATION whose
          registered office is situate at 1st floor, Hong Kong Industrial
          Technology Centre, 72 Tat Chee Avenue, Kowloon, Hong Kong (hereinafter
          called "the Landlord" which expression shall include its successors in
          title and assigns) of the one part and the party whose particulars are
          set out in the First Schedule (hereinafter called "the Tenant") of the
          other part.

          NOW IT IS HEREBY AGREED as follows:

Premises  1.   The Landlord shall let and the Tenant shall take ALL THOSE
               PREMISES more particularly described in Part I of the Second
               Schedule and for identification purposes only shown and coloured
               pink on the plan annexed hereto ("the Premises") forming part of
               HONG KONG INDUSTRIAL TECHNOLOGY CENTRE ("the Building"), situate
               at the junction of Tat Chee Avenue and Fa Po Street, Kowloon,
               Hong Kong and erected on all that piece or parcel of ground
               registered in the Land Registry as New Kowloon Inland Lot No.
               6128.

Term      2.   The Tenant shall hold the Premises for the term set out in Part
               II of the Second Schedule ("the Term") together with the right to
               use in common with the Landlord and all others having the like
               right the entrance(s) passages staircases landings accessways and
               lifts (if any and whenever the same shall be operating) of the
               Building without causing any obstruction thereto and so far as
               the same is necessary for the proper enjoyment of the Premises
               Subject To all easements and similar rights and privileges which
               the Premises are or may be subject to.

Tenant's  3.   The Tenant hereby covenants and agrees with the Landlord as
Obligations    follows:

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Rent and       3.01  To pay to the Landlord or such person(s) as the Landlord
Management           may direct the rent set out in Part I of the Third Schedule
Fees                 ("the Rent") and the management fees set out in Part II of
                     the Third Schedule ("the Management Fees") in advance
                     without any deduction on the first day of each and every
                     calendar month throughout the Term, the first and last of
                     such payments to be apportioned according to the number of
                     days in the calendar month in which the Term commence or
                     ends.

Cost-of       3.02   To pay to the Landlord or such person(s) as the Landlord
Additional           may direct the costs of additional air-conditioning
Air-                 services (if any) and the cost of chilled water supply for
Conditioning         the purpose of cooling the Tenant's equipment (if any) at
Services             such time and in such manner as provided in clause 5.10
                     hereof.

Rates, etc.   3.03   To pay and discharge all rates taxes assessments duties
                     impositions charges and outgoings whatsoever 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 sub-clause the Tenant shall pay all
                     rates imposed on the Premises in the first place to the
                     Landlord who shall settle the same with the Hong Kong
                     Government and in the event of the Premises not yet having
                     been separately assessed to rates the Tenant shall until
                     such time as the Premises are assessed to rates pay to the
                     Landlord quarterly and in advance a sum equal to the rates
                     which would have been charged by the Hong Kong Government
                     for each quarter on the basis of a rateable value equal to
                     twelve months rent payable by the Tenant hereunder, any
                     overpayment or underpayment by the Tenant shall be
                     adjusted and credited to the account of the Tenant or (as
                     the case may be) paid by the Tenant to the Landlord
                     immediately upon the separate assessment in respect of the
                     Premises having been made in accordance with the Rating
                     Ordinance (Cap. 116).

                                      -2-
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Utility       3.04   To pay and discharge all utility deposits and charges
Charges and          including without limitation deposits and charges in
Deposits             respect of gas water electricity facsimile and telephone
                     as may be shown by or operated from the Tenant's own
                     metered supplies or by accounts rendered to the Tenant by
                     the appropriate utility companies or otherwise in respect
                     of all such utilities consumed on or in the Premises.

House rules   3.05   To obey and comply with and to indemnify the Landlord
and                  against any breach of such house rules and regulations as
Regulations          may from time to time be adopted by the Landlord or such
                     person as may from time to time be appointed by the
                     Landlord as the manager of the Building ("the Manager") in
                     accordance with Clause 5.17 hereof.

No Breach of  3.06   Not to do or permit or suffer to be done any act, deed,
Crown Grant          matter or thing whatsoever which may amount to a breach of
or Deed of           the covenants terms and conditions respectively contained
Mutual               in Agreement and Conditions of Grant No.12221 (including
Covenants            any modification or variation thereto) and the Deed of
                     Mutual Covenants (if any) and Sub-Deed of Mutual Covenants
                     (if any) affecting the Building and to fully indemnify the
                     Landlord against the consequences of any such breach.

Compliance    3.07   To obey and comply with all ordinances, regulations,
with                 bye-laws, rules and requirements of any Governmental or
Ordinances           other competent authority relating to the use and
                     occupation of the Premises by the Tenant 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 and occupation of the
                     Premises and to maintain in force and observe and comply
                     with the terms of the same during the continuance of this
                     tenancy and to indemnify the Landlord against the
                     consequences of any breach of this provision.

                                      -3-
<PAGE>   5

Fitting Out         3.08 (i)  To fit out the Premises at its own costs and
Decoration                    expenses and before the commencement of any
Refurbishing                  fitting-out works or other decoration refurbishing
Renovation and                or renovation works or repairs which are the
Repairs                       responsibility of the Tenant hereunder, at its own
                              costs and expenses to prepare and submit to the
                              Landlord for approval ten full sets of suitable
                              drawings plans and specifications of the works to
                              be carried out by the Tenant together with
                              schematic sketches showing the Tenant's design and
                              layout proposal (hereinafter collectively called
                              "the Tenant's Plans"). The Tenant's Plans shall,
                              without limitation:

                              (a)  include detailed drawings, plans and
                                   specifications of all partitionings and floor
                                   coverings;

                              (b)  include detailed drawings, plans and
                                   specifications of all electrical
                                   installations or (as the case may be) any
                                   changes thereof;

                              (c)  include detailed drawings, plans and
                                   specifications of any proposed amendments,
                                   additions or alterations;

                              (d)  include details of all lighting fixtures;

                              (e)  show in complete details the decorative
                                   architectural mechanical and electrical
                                   components; and

                              (f)  comply with all relevant ordinances,
                                   regulations and bye-laws from time to time
                                   issued by the Government of Hong Kong.

                              The Landlord will consider the Tenant's Plans and
                              may in its absolute discretion accept reject or
                              require the Tenant to modify the Tenant's Plans or
                              any part of them as it thinks fit. The Landlord
                              will notify the Tenant of its decision within 30
                              days of receiving the Tenant's Plans.


                                      -4-

<PAGE>   6
          (ii)  To modify amend and re-submit those plans as requested by the
                Landlord within 30 days of receiving the Landlord's request.

          (iii) Upon submission of the Tenant's Plans to pay to the Landlord a
                vetting fee at the rate as specified in Part V of the Third
                Schedule and if the Tenant's Plans are subsequently amended or
                modified whether pursuant to the Landlord's request or
                otherwise, to pay to the Landlord such further vetting fees as
                may be demanded by the Landlord.

          (iv)  To be solely responsible for compliance with all applicable
                codes ordinances and other regulations for all works performed
                by or on behalf of the Tenant on the Premises, and the
                Landlord's or the Landlord's agent's or representative's
                approval of plans drawings specifications or calculations
                contained in the Tenant's Plans shall not constitute any
                implication representation or certification by the Landlord that
                the Tenant's Plans are in compliance with the said codes
                ordinances and other regulations and the Landlord's approval
                thereof shall be without prejudice to the right of the Landlord
                to require the Tenant to stop, remove, or dismantle at the cost
                of the tenant any Tenant's works which, in the opinion of the
                Landlord, may prejudice the safety or security of the Building
                or any part thereof, or may contravene any ordinance,
                regulation, rule or requirement of any governmental or competent
                authority. In instances where more than one standard may be
                applicable in approving the Tenant's Plans, the strictest
                standard shall apply.

          (v)   Not to commence any fitting-out decoration refurbishing
                renovation or repair works before receiving notice in writing
                from the Landlord that such works may be commenced and
                thereafter to commence such works as soon as practicable and
                carry such works to completion expeditiously.

                                     - 5 -
<PAGE>   7
          (vi)   Not to make any subsequent variation or modification to the
                 Tenant's Plans as approved by the Landlord without the previous
                 approval in writing of the Landlord.

          (vii)  To employ only such contractor(s) as may from time to time be
                 nominated by the Landlord to carry out any fitting-out
                 decoration refurbishing renovation or repair works on the
                 Premises. In the absence of such nominated contractor(s), the
                 Tenant shall, upon the Landlord's approval of the Tenant's
                 Plans and prior to the commencement of any of the proposed
                 works by the Tenant, submit to the Landlord a list of
                 contractors to be appointed for such proposed works. The
                 Landlord after receiving such list may in its absolute
                 discretion approve or reject the same or nominate such
                 contractor(s) in place of any of those listed in the said list
                 as the Landlord shall think fit. All such nominated or approved
                 contractors shall be employed directly by the Tenant and shall
                 for the purpose of this Agreement be treated as the servants
                 employees agents or contractors of the Tenant and the Landlord
                 shall not in any way be held responsible for any loss or damage
                 of whatsoever nature directly or indirectly caused by or
                 arising from such employments.

          (viii) To ensure that all works are carried out strictly in accordance
                 with the Tenant's Plans as approved by the Landlord and in a
                 good and proper workmanlike fashion using good quality
                 materials and without causing any damage to any part of the
                 Building or any disturbance or annoyance to the Landlord or the
                 tenants or occupiers of adjacent or neighbouring premises and
                 observe all house rules and regulations and fitting-out guides
                 as may from time to time be made imposed adopted or amended by
                 the Landlord or the Manager and to ensure that all contractors
                 and workmen employed by him shall co-operate fully with the
                 Landlord, the Manager or their respective authorised
                 representatives.

                                     - 6 -
<PAGE>   8
Installation   3.09 Further to and without prejudice to sub-clause 3.08 of this
of Wires            Clause:-
Cables
and Services

                    (i)  To install all wires pipes and cables and other
                         services serving the Premises in and through the 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 fully detailed plans and drawings of
                         such intended installation and obtaining the Landlord's
                         prior written consent as provided in sub-clause 3.08.

                    (ii) To provide to the Landlord full coloured drawings of
                         all electrical wiring to be installed by the Tenant
                         within or serving or connected to the Premises and/or
                         within the ducts, trunkings or conduits provided by the
                         Landlord within the Building for the installation of
                         electrical and/or fibre-optical or other wires or
                         cables or means of passing receiving or transmitting
                         information and all telephone and other service wires
                         conduits and cables installed by or at the order of the
                         Tenant and to clearly label and in accordance with any
                         directions given by the Landlord colour-code all such
                         wires conduits and cables to identify the same as being
                         the Tenant's and if required by the Landlord at the
                         expiration or sooner determination of the Term at the
                         Tenant's expense to remove the same from all ducts
                         conduits or trunkings within the Building taking care
                         not to disturb damage or interfere with any wires
                         cables or other means of communication belong to the
                         Landlord or to other tenants or occupiers of any part
                         or parts of the Building that may have been installed
                         within any such ducts conduits or trunkings and making
                         good any damage caused by the Tenant in so doing and
                         the Tenant will indemnify and hold the Landlord
                         harmless against any claim action or demand that may be
                         brought by any person suffering any loss

                                     - 7 -
<PAGE>   9
                         or damage or interference with business or
                         inconvenience directly or indirectly caused by or
                         arising from the Tenant's actions in complying with its
                         obligations under this sub-clause 3.09.

Installation        3.10 Subject to sub-clauses 3.08 and 3.09 of this Clause to
of Telephone             make its own arrangements with regard to the
Cables                   installation of telephones or other communication
                         systems in the Premises, but the installation of
                         telephone and communication lines outside the Premises
                         must be in the common ducting provided in the Building
                         for that purpose and in all respects in accordance with
                         the Landlord's directions.

Good Repair of      3.11 At its own expenses to well and sufficiently paint
Interior                 maintain and keep in good clean tenantable substantial
                         and proper repair and condition (fair wear and tear
                         excepted) to the satisfaction of the Landlord the
                         non-structural interior of the Premises including
                         without limitation the flooring and interior plaster or
                         other finishing material or rendering to walls floors
                         and ceilings and all the Landlord's fixtures fittings
                         and additions therein or thereto including without
                         limitation all doors, windows, light fittings, fire
                         fighting apparatus, ducts, air-conditioning units and
                         fan coils and all waste drains, water and other pipes
                         and sanitary apparatus and fittings therein and all
                         painting papering and decoration thereof.

Repair of           3.12 To repair or replace such electrical wiring, piping
Electrical               installations and fittings in the Premises and such
Wiring and               wiring from the Tenant's meter(s) to the Premises as
Installations            the same may become dangerous or be required to be
                         repaired or replaced by any appropriate utility company
                         or any governmental or other competent authority.

Permitting          3.13 To permit the Landlord its agents and all persons
Landlord to              authorised by the Landlord with or without workmen or
Enter and View           others and with or without appliances at all reasonable
                         times and upon prior notice (save in the case of an
                         emergency) to enter into the Premises to view the
                         condition thereof and to test the Tenant's electrical
                         wiring piping and/or other installations and to take
                         inventories of the

                                     - 8 -
<PAGE>   10
                         Landlord's fixtures and fittings therein and to give or
                         leave notice in writing to the Tenant or upon the
                         Premises of all defects and want of repair there found
                         if such repair is the responsibility of the Tenant
                         hereunder or 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 enter without
                         notice and forcibly if need be.

Execution of        3.14 At its own expenses, to make good all defects and wants
Repair on                of repair to the Premises for which the Tenant may be
Receipt of               liable upon receipt of written notice from the Landlord
Notice                   to repair and make good the same and within such period
                         as may be stipulated in the said written notice, and to
                         pay all reasonable costs (including fees of
                         professional consultants) incurred by the Landlord in
                         the preparation and service of such notice, 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 expenses thereof
                         shall be a debt due from the Tenant to the Landlord and
                         be recoverable forthwith by action.

Paying Cost of      3.15 To pay to or reimburse the Landlord the cost of
Replacing                replacing all broken or damaged windows of the Premises
Broken Windows           (or elsewhere if used exclusively by the Tenant)
                         whether the same be broken or damaged by the negligence
                         of the Tenant or otherwise.

To Reimburse        3.16 To pay or reimburse the Landlord immediately on demand
Landlord for             the costs of repairing or making good any part of the
Making Good              Building or any of the lifts or other services and
Damage to                facilities installed therein or any property of the
Building                 Landlord that may be damaged by reason of any act
                         default or neglect on the part of the Tenant its agents
                         servants invitees licensees employees contractors
                         guests or visitors.

Giving Notice       3.17 To give notice in writing to the Landlord or the
to the                   Manager of any damage that the Premises may suffer and
Landlord on              of any accident to or defects in the structure of the
Damage                   Premises, the water pipes, gas pipes, electrical wiring
                         or installations, fixtures, fittings or other utility
                         supply equipment provided by the Landlord directly once
                         the tenant becomes aware of any such damage accident or
                         defect.

                                     - 9 -
<PAGE>   11
No Structural           3.18    Not to make any structural alterations to the
Alterations                     Premises or the Building or to erect, install or
                                alter any fixtures partitioning or make or carry
                                out any works to the Premises or the Building or
                                make any alterations, installations in or
                                additions to the air-conditioning system and/or
                                electrical wiring and/or gas piping and/or fire
                                fighting system and/or apparatus or any security
                                system or install any equipment apparatus or
                                machinery which requires any additional
                                electrical wiring gas mains piping without the
                                prior written consent of the Landlord which
                                consent the Landlord may grant or withhold at
                                its absolute discretion and if granted the
                                Landlord may impose such conditions as it shall
                                think fit.

Not to Maim or          3.19    Not without the prior written consent of the
Injure                          Landlord to cut, maim, injure, drill into, mark
                                or deface or permit or suffer to be cut,
                                maimed, injured, drilled into, marked or defaced
                                any doors, windows, walls, beams,
                                air-conditioner ducts, structural members or any
                                parts of the fabric of the Premises nor any of
                                the plumbing or sanitary apparatus or
                                installation included therein.

Not to Erect            3.20    Not without the prior written consent of the
Gates or                        Landlord to erect or install doors, gates,
Grilles                         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 door
                                or 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.

No Additional           3.21    Not to alter the existing locks, bolts and
Locks                           fittings on the entrance of the Premises or
                                install any additional locks, bolts or fittings
                                thereon without obtaining the prior written
                                approval of the Landlord.

Installation            3.22    During the continuance of the Term, before
of Machinery                    installing any machinery in the Premises to
                                submit to a consultant appointed by the Landlord
                                for approval full particulars and information
                                regarding such



                                     - 10 -
<PAGE>   12
                         machinery as intended to be installed in the Premise
                         including but without limitation the type and weight
                         thereof, together with a general layout plan of such
                         machinery showing the actual position at which each
                         article of machinery is intended to be placed and to
                         install such machinery in accordance with the layout
                         plans after written approval by the Landlord's
                         consultant has been obtained. The Tenant shall not
                         without the prior written approval of the Landlord's
                         consultant alter the position of any of the machinery
                         installed as previously approved by the Landlord's
                         consultant or replace any of such installed machinery
                         with another, unless the new machinery is in all
                         respects identical to the one to be substituted. The
                         Tenant shall bear and pay the vetting or approval fees
                         of the Landlord's consultant.

Anti-Vibration      3.23 (i)  At its own expenses to mount and equip any
or Anti-                      machinery liable to produce vibration with
Dumping                       anti-vibration absorbers and anti-dumping
Absorbers for                 absorbers of such types and designs as first
Machinery                     approved of in writing by the Landlord's
                              consultant and shall at its own expenses comply
                              with all directions and orders of the Landlord for
                              eliminating and reducing vibrations and dumping
                              produced by the operation and running of any of
                              the machinery installed at the Premises.

Operation of             (ii) In operating and running any machinery installed
Machinery                     in the Premises to do all acts and things required
                              by and conform with all ordinances, by-laws and
                              regulations applicable thereto and also all orders
                              and directions (if any) from time to time given by
                              the Urban Council and any other competent
                              authority.

Not to Exceed       3.24 Not without the prior written consent of the Landlord
Maximum Floor            to install or permit or suffer to be installed upon the
Loading                  Premises or any part thereof any equipment, apparatus
Capacity                 or machinery which imposes a weight on any part of the
                         flooring in excess of that for which it is designed and
                         the Landlord shall be entitled to prescribe the maximum
                         weight and permitted location within the Premises of
                         safes


                                      -11-
<PAGE>   13


                      and other heavy equipment, apparatus or machinery and to
                      require the same to stand on supports of such dimensions
                      and material to distribute the weight as the Landlord may
                      deem necessary.

Not to Cause    3.25  To duly observe and comply with all laws, rules and
Electro-              regulations in relation to electro-magnetic interference
Magnetic              from time to time in force including but without
Interference          limitation to those laws, rules and regulations prescribed
                      by the Office Of Telecommunication Authority and not to
                      carry out or suffer or permit to be carried out any work
                      process or operation of whatsoever nature in the Premises
                      which may cause any electro-magnetic interference to the
                      Landlord or other tenants or occupiers of any adjoining or
                      neighbouring premises and the Tenant shall indemnify the
                      Landlord and such other tenants or occupiers for any
                      damage or loss suffered as a result of the Tenant's breach
                      of this sub-clause.

Anti-Nuisance   3.26  The Tenant shall not do or permit or suffer anything to be
                      done at any time in or upon the Premises or any part
                      thereof which may be or become a nuisance or annoyance or
                      which may cause damage or inconvenience to the Hong Kong
                      Government or to the owners or occupiers of any adjoining
                      or neighbouring lot or lots or premises. In particular,
                      the Tenant shall not 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
                      Television, Radio and any apparatus 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 or become a nuisance or annoyance to the
                      Landlord or the tenants or occupiers of adjacent or
                      neighbouring premises and the Tenant shall take all such
                      necessary measures as may be required by and to the
                      satisfaction of the Director of Environmental Protection
                      to ensure that the operation of all plant and equipment
                      installed or used on the Premises will not make any noise
                      which causes disturbance or annoyance to the residents or
                      occupiers of any adjourning premises or lot or lots or to
                      the



                                      -12-
<PAGE>   14
                      general public. The decision of the Director of
                      Environmental Protection as to whether any such plant and
                      equipment are causing disturbance or annoyance as
                      aforesaid shall be final and binding on the Tenant.

No Discharge    3.27  Except with the prior written consent of the Director of
or Pollutant          Environmental Protection, not to, in or upon the Premises,
or Noxious,           install any machinery, furnace or boiler or any other
Harmful or            equipment or use any fuel or any method or process of
Corrosive             manufacture or treatment that might in any circumstances
Matter                result in the discharge or emission of any pollutant or
                      any noxious, harmful or corrosive matter, whether it be in
                      the form of gas, smoke, liquid, solid or otherwise.



Compliance      3.28  To comply with and observe all Ordinances, Bye-laws,
with                  Regulations and rules for the time being in force in Hong
Legislation           Kong governing the control of any form of pollution,
Regarding             including air, noise, water and waste pollution and the
Pollution             protection of the environment and to comply with EPD
                      Advice Note 2/89 "Application of the environmental impact
                      assessment process to major private sector projects"
                      issued by the Environmental Protection Department and any
                      subsequent amendment thereto.

Discharge into  3.29  (i) Not to discharge directly or indirectly or cause or
Sewers, etc.              permit or suffer to be discharged into any public
                          sewer, storm water drain, channel, streamcourse or sea
                          any trade effluent or foul or contaminated water or
                          cooling or hot water without the prior written consent
                          of the Director of Environmental Protection, who may
                          as a condition of granting his consent require the
                          Tenant to provide, operate and maintain at the
                          Tenant's own expense, within the Premises or otherwise
                          and to the satisfaction of the Director of
                          Environmental Protection suitable works for the
                          treatment and disposal of such trade effluent or foul
                          or contaminated or cooling or hot water.



                                      -13-
<PAGE>   15
To Reimburse         (iii)  Not to pass or allow to pass into the drains pipes
Landlord for                gutters ducts or watercourses channels of the
Cleaning                    Premises or the Building ("the conduits") any
Drains                      noxious or deleterious effluent or other substance
                            which may cause any obstruction or deposit in or
                            injury to the conduits and to pay on demand to the
                            Landlord the cost incurred by the Landlord  in
                            repairing cleansing and clearing any of the
                            conduits damaged choked or stopped up owing to the
                            improper or careless use of any toilet or water or
                            sanitary or drainage equipment by the Tenant or its
                            employees invitees contractors or licensees.

Removal of    3.30   Not to permit any sewage, waste water or effluent
Waste Matters        containing sand, cement, silt or any other suspended or
                     dissolved material to flow from the Premises onto any
                     adjoining land or allow any waste matter which is not
                     part of the final product from waste processing plants to
                     be deposited anywhere within the Building and/or the land
                     on which the Building stands and to have all such matter
                     removed from the Building and/or the land on which the
                     Building stands in a proper manner to the satisfaction of
                     the Director of Environmental Protection.

Disposal of   3.31   To be responsible for the removal of refuse and garbage
Garbage              from the Premises to such location as shall be specified
                     by the Landlord from time to time and to use only such
                     type of refuse container as shall be 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 Tenant shall bear an
                     appropriate proportion of the cost of such service.


Cleaning and  3.32   To keep the Premises including without limitation all
Cleaning             windows at all times in a clean and sanitary state and
Contractors          condition and for the better observance hereof the Tenant
                     shall only employ as cleaners of the Premises such persons
                     or firms as may be nominated or approved by the Landlord.
                     Such cleaners shall be employed by and at the expense of
                     the Tenant.

                                      -14-
<PAGE>   16
Not to        3.33   Not to use or permit or suffer to be used any lavatory
Misuse               facilities whether shared with other tenants or occupiers
Lavatories           of the Building or reserved exclusively for the use of the
                     Tenant for any purpose other than that for which they are
                     intended and not to throw or permit or suffer to be thrown
                     into any W.C. pan, urinal, basin sink or other lavatory
                     fitting any foreign or deleterious substance of any kind
                     and to keep such lavatory facilities clean tidy and in a
                     hygienic condition at all times during the Term and in the
                     Landlord's absolute discretion either to make good any
                     breakage, blockage or damage of any such lavatory
                     facilities resulting from the breach by the Tenant of this
                     sub-clause or to pay to the Landlord on demand the cost of
                     making good such breakage, blockage or damage.

Infestation   3.34   At the Tenant's expenses to take all such 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 other pests or vermin and for the better observance
                     hereof the Landlord may require the Tenant to employ at
                     the Tenant's cost such pest extermination contractors as
                     the Landlord may nominate at such intervals as the
                     Landlord may direct.

Fuel          3.35   The Tenant shall not use any fuel on the Premises other
                     than town gas, liquefied petroleum gas, natural gas,
                     kerosene or other conventional liquid fuel with a sulphur
                     content not exceeding 0.5% by weight and a viscosity of
                     not more than 6 centistokes at 40 degree Celsius, or a
                     conventional solid fuel with a sulphur content not
                     exceeding 1% by weight.

Storage of    3.36   Not to use the Premises for the manufacture of goods or
Merchandise          merchandise or for the storage of goods or merchandise
and                  other than in small quantities consistent with the nature
Hazardous            of the Tenant's trade or business by way of samples and
Goods                exhibits and not to keep or store or cause permit or
                     suffer to be kept or stored any arms ammunitions gun-powder
                     salpetre petrol kerosene liquified petroleum gas butane
                     gas or other explosive or combustible substances or
                     dangerous hazardous or prohibited goods within the meaning
                     of the Dangerous

                                      -15-
<PAGE>   17
                                Goods Ordinance (Cap.295) and the regulations
                                made thereunder or any statutory modification or
                                re-enactment thereof from time to time in force
                                (save those which are solely and exclusively for
                                the business of the Tenant and approved by the
                                Landlord and duly authorized by the Police
                                Department and any other government department
                                as may be necessary) or unlawful goods and shall
                                not at any time during the Term use or allow the
                                Premises or any part thereof to be used in any
                                way entailing a fine forfeiture or penalty
                                against the Landlord under any law in force in
                                Hong Kong.

Restriction on          3.37    Except with the prior written consent of the
Use of Water                    Water Authority, no water from Government mains
Supply                          and/or the mains maintained by the Landlord
                                shall be used for any heating, cooling or
                                humidification purpose.

User                    3.38    Not to use the Premises for any purpose other
                                than for such purposes as stated in the Fourth
                                Schedule and unless with the prior written
                                consent of the Landlord not to change the use
                                thereof or to carry on any other trade or
                                business therein, and in particular but without
                                prejudice to the generality of the foregoing,
                                not to use or allow the Premises or any part
                                thereof to be used as domestic premises within
                                the meaning of any ordinance for the time being
                                in force or as sleeping quarters or for any
                                religious purpose or the performance of any
                                religious ceremony.


No Illegal or           3.39    Not to use or cause suffer or permit to be used
Immoral Use                     the Premises or any part thereof for any illegal
                                immoral or improper purposes.

Security                3.40    To ensure that its own security system within
System                          and at the entrance of the Premises (if any) is
                                at all times compatible with the security system
                                for the Building (if any) provided and operated
                                by the Landlord.

Protection              3.41    To take all necessary and appropriate
from Typhoon                    precautions to protect the interior of the
                                Premises from heavy rainfall storm or typhoon
                                damage.



                                     - 16 -
<PAGE>   18
No Auction              3.42    Not to conduct or allow any auction to be held
                                on the Premises without the Landlord's prior
                                written approval.

No Pets or              3.43    Not to keep or permit or suffer to be kept any
Animals                         pets, livestock or animals in the Premises
                                without the prior written approval of the
                                Landlord.

No Preparation          3.44    Not to prepare or permit or suffer to be
of Food and                     prepared any food in the Premises or cause or
Prevention of                   permit any offensive or unusual odours to be
Odours                          produced upon, permeate through or emanate from
                                the Premises.


Signs                   3.45    Not to paint affix display or exhibit any
                                writing sign signboard or other device whether
                                illuminated or not upon or outside the windows
                                or external walls of the Premises or inside the
                                Premises which may be visible from outside or in
                                at or above any common area landings or
                                corridors of the Building except the display of
                                a name plate of the Tenant in such form and size
                                as may be previously approved by the Landlord at
                                the entrance of the Premises.

Directory               3.46    To pay the Landlord immediately upon demand the
Boards                          cost of affixing repairing or replacing as
                                necessary the name of the Tenant in lettering to
                                the directory board (if any) at the entrance(s)
                                ton the Building and to the directory board (if
                                any) on the floor on which the Premises are
                                situated.

Obstructions            3.47    Not to block up, darken or obstruct or obscure
to Outside Windows              any of the windows or lights belonging to the
                                Premises.

Obstructions            3.48    Not to place or leave or suffer or permit to be
in Passages                     placed or left by any contractor employee
                                invitee licensee or agent of the Tenant any
                                boxes furniture articles or rubbish in any
                                passage ways lift staircases landings entrances
                                exits of the Building used in common with other
                                tenants and occupiers and/or the Landlord or
                                otherwise obstruct or encumber the same, and if
                                any such obstruction or encumbrance shall happen
                                and the Tenant shall fail to remove the



                                     - 17 -
<PAGE>   19
                         same immediately upon request by the Landlord either to
                         the Tenant or to the person then in charge of the
                         Premises on the Tenant's behalf the Landlord his
                         employee servant or agents may remove or dispose of the
                         same at the Tenant's expenses without incurring any
                         liability whether contractual or tortious to the Tenant
                         or any other person whomsoever.

Fire-               3.49 To install all necessary fire fighting equipments at
Prevention               the Tenant's expenses and take all necessary fire
                         precautions and in general to comply with all
                         directives from time to time given by the Fire Services
                         Department.

Access for          3.50 (i)  At his own expense and to the satisfaction of the
Fire Service                  Director of Fire Services to provide in the
Appliances                    Premises suitable means of access for the passage
and Personnel                 of fire service appliances and fire service
                              personnel to any part of the Building and at all
                              times permit such fire service personnel and fire
                              service appliances the free and uninterrupted use
                              of such means of access and shall maintain such
                              means of access and keep the same free from
                              obstruction.

                         (ii) To permit the Director of Fire Services, his
                              officers, servants or agents at all reasonable
                              times with or without notice to enter upon the
                              Premises or any part thereof for the purpose of
                              inspecting the same so as to ensure that the
                              relevant requirements referred to in sub-clause
                              (i) of this Clause have been complied with.

Parking             3.51 Not to park any vehicle or otherwise use or permit any
                         vehicle to be parked or otherwise used by any employee
                         agent licensee or contractor of the Tenant at any place
                         other than in accordance with the house rules and
                         regulations from time to time made by the Landlord or
                         the Manager.

Loading and         3.52 To load and unload furniture, machinery, goods,
Unloading of             merchandise, raw materials or other large objects only
Goods                    at such places and at such times and through such
                         entrances and by such cargo/service lifts as

                                      -18-
<PAGE>   20
                              shall be designated by the Landlord for the
                              purpose of loading and unloading and to use the
                              loading and unloading ares designated by the
                              Landlord only for the purpose of loading and
                              unloading. The Tenant shall not use the passenger
                              lifts for the conveyance of furniture, machinery,
                              goods, merchandise, raw materials or other large
                              objects or load or permit or suffer to be loaded
                              into any cargo/service lift or passenger lift in
                              the Building a weight greater than such lift is
                              designed or permitted to carry.

Not to Assign          3.53   Not to assign underlet or otherwise part with the
or Underlet                   possession of the Premises or any part thereof in
                              any way whether by way of sub-letting lending
                              sharing or other means whereby any person or
                              persons not a party to this Tenancy 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 Tenancy
                              Agreement shall at the Landlord's discretion
                              absolutely determine and the Tenant shall
                              forthwith vacate the Premises on notice to that
                              effect from the Landlord. The tenancy hereby
                              created shall be personal to the Tenant named in
                              the First Schedule of this Tenancy Agreement  and
                              without in any way limiting the generality of the
                              foregoing each of the following acts and events
                              shall unless approved in writing by the Landlord
                              be deemed to be a breach 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;


                                      -19-
<PAGE>   21
     (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 the Power of Attorney 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; and

     (v)    The change of the Tenant's business name.


Yielding Up           3.54   To yield up the Premises with all the Landlord's
                              fixtures fittings and additions therein and
                              thereto at the expiration or sooner determination
                              of this Tenancy Agreement in good clean tenantable
                              substantial and proper repair and condition (fair
                              wear and tear excepted) 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 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 as
                              shall be directed by the Landlord and to make good
                              and repair in a proper and workmanlike manner any
                              damage to the Premises and the Landlord's fixtures
                              fittings and additions therein and thereto as a
                              result of such reinstatement or removal before
                              delivering up the Premises to the Landlord.

Injury or             3.55    To be wholly responsible for any loss damage or
Damage to                     injury or death caused to any person whomsoever or
Person and                    to any property whatsoever directly or indirectly
Property and                  through the defective or damaged condition or
Insurance                     operation of any part of the interior of the
                              Premises or any machinery plant fixtures or
                              fittings or wiring or piping therein

                                      -20-
<PAGE>   22
                      for the repair of which the Tenant is responsible
                      hereunder or in any way caused by or owing to the spread
                      of fire fumes or smoke or the leakage or overflow of water
                      of whatsoever origin from the Premises or any part thereof
                      as a result of the act default or neglect of the Tenant
                      its servants agents licensees contractors employees guests
                      invitees visitors or customers and to make good the same
                      by payment or otherwise and to indemnify the Landlord
                      against all losses damages costs claims demands actions
                      and legal proceedings whatsoever made upon or against the
                      landlord by any person in respect of any such loss damage
                      or injury or death and all costs and expenses incidental
                      thereto AND for the better observance of the Tenant's
                      obligations in regard to the foregoing TO INSURE or at the
                      discretion of the Landlord to permit the Landlord at the
                      Tenant's expense and in the name of the Tenant to effect
                      and maintain insurance cover to the satisfaction of the
                      Landlord with such reputable insurance company as shall be
                      nominated or approved by the Landlord in respect of all
                      such risks as aforesaid including without limitation
                      adequate fire, water and third party insurance in respect
                      of the Premises (including without limitation the full
                      replacement value of all furniture fixtures fittings goods
                      chattels samples personal effects contents and stock
                      therein) and the Policy of Insurance so effected to be
                      endorsed to show the interest of the Landlord therein and
                      to be in such amount as may be determined by the Landlord
                      and to contain a provision that the insurance cover
                      thereby effected and the terms and conditions thereof may
                      not be altered modified restricted or cancelled without
                      the express prior written consent of the Landlord and in
                      the event of such insurance being effected by the Tenant
                      itself in pursuance of its obligations hereunder whenever
                      required so to do by the Landlord to produce to the
                      Landlord as and when required by the Landlord such policy
                      of insurance together with a receipt for the last payment
                      of premium.

Tenant Liable  3.56   To be liable for any act default negligence or omission
for its               of the Tenant's agents, contractors, employees, invitees,
Employees,            guests, visitors, servants or licensees as if it were the
etc.                  act default negligence or omission of the Tenant and to
                      indemnify the Landlord



                                      -21-
<PAGE>   23
                      against all losses damages costs claims demand expenses or
                      liability arising directly or indirectly from the
                      aforesaid act default negligence or omission. For the
                      purpose of this Tenancy Agreement any act default neglect
                      or omission of any quest visitor servant contractor
                      employee agent invitee or licensee of the Tenant shall be
                      deemed to be the act default neglect or omission of the
                      Tenant.

Not to Render  3.57   Not to cause or suffer or permit to be done any act or
Insurance             thing whereby the policy or policies of insurance on
Policy Void           the Premises or the Building against damage by fire or
                      any other insured risks or liability to third parties for
                      the time being subsisting may become void or voidable or
                      whereby the rate of premium or premia thereon may be
                      increased, and to repay to the Landlord on demand all
                      sums paid by the Landlord by way of increased premium or
                      premia thereon and all 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
                      sub-clause by the Tenant.

           4. The Landlord hereby agrees with the Tenant as follows :-

Quiet
Enjoyment      4.01   That the Tenant duly paying the rent rates management
                      fees and other payments hereby stipulated on the days and
                      in the manner herein provided for payment of the same and
                      performing and observing the Tenant's agreements,
                      covenants, stipulations, terms, conditions and
                      obligations herein contained may peaceably hold and enjoy
                      the Premises without any interruption by the Landlord or
                      any person lawfully claiming through under or in trust for
                      the Landlord.

Pay Crown Rent 4.02   To pay all Crown rent and property tax payable in respect
                      of the Premises.

Roof and       4.03   To maintain and keep the main structure roofs main
Main Structure        electricity supply cables main drains water pipes main
                      walls and exterior window frames of the Building therein
                      and all concealed electrical installations and wirings
                      and pipings of the Landlord in the Premises in a proper
                      and substantial state of repair and condition


                                     - 22 -
<PAGE>   24

               Provided that the Landlord shall not be liable for breach of
               this sub-clause unless and until written notice of any defect or
               want of repair thereof shall have been given to the Landlord by
               the Tenant and the Landlord shall have failed to take
               reasonable steps to repair or remedy the same within a
               reasonable period after the service on it of such notice.

      5. Provided Always that and it is hereby expressly agreed as follows:-

Default  5.01  If the Rent and/or the rates and/or the Management Fees and/or
               any other moneys payable hereunder or any part thereof shall be
               in arrear for fifteen (15) days after the same shall have become
               payable (whether formally demanded or not) or if there shall be
               any breach or non-performance or non-observance of any of the
               stipulations conditions terms and agreements herein contained
               and on the part of the Tenant to be observed or performed 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 arrangement with its creditors or
               have an encumbrancer taking 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 Tenancy Agreement shall have
               been prejudiced or put at risk or have a receiving order made
               against it or in such circumstance as aforesaid fail to satisfy
               any judgement that may be given in any action against it after
               final appeal or go into liquidation (save for the purposes of
               amalgamation or reconstruction) or become bankrupt or if the
               Tenant shall suffer 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 carry on its business or should any event
               occur or proceeding 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



                                     - 23 -
<PAGE>   25
                    re-enter on and upon the Premises or any part thereof in the
                    name of the whole and thereupon this Tenancy Agreement shall
                    absolutely determine but without prejudice to any right of
                    action or other remedy of the Landlord against any breach,
                    non-observance or non-performance by the Tenant of any of
                    the terms of this Tenancy 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 incurred by the Landlord in
                    demanding payment of the Rent, rates, Management Fees and
                    other charges payable hereunder (if the Landlord elects to
                    demand) and in exercising its rights and/or remedies or in
                    attempting to do so shall be paid by the Tenant and shall be
                    recoverable from the Tenant as a debt.

Interest   5.02.    Notwithstanding anything herein contained in the event of
                    default in payment of the Rent and/or rates and/or the
                    Management Fees and/or other monies payable by the Tenant
                    hereunder or any part thereof for a period of fifteen (15)
                    days from the date when such 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 monthly rate of two per cent (2%)
                    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 sub-clause shall be without prejudice to and shall not
                    affect the right of the Landlord to exercise any other
                    right or remedy hereof or otherwise (including but without
                    prejudice to the generality of the foregoing the right of
                    re-entry exercisable under the terms of this Tenancy
                    Agreement).

                                      -24-
<PAGE>   26


Condonation    5.03   No condoning, excusing or overlooking by the Landlord of
Not a Waiver          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
                      rights 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 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.

Acceptance of  5.04   The acceptance of any of the Rent by the Landlord shall
Rent                  not be 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.

Distraint      5.05   For the purposes of Part III of the Landlord and Tenant
                      (Consolidation) Ordinance ((Cap. 7)) and of these
                      presents, 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 herein provided for
                      payment thereof.

Deposit        5.06   The Tenant shall on the signing hereof deposit with the
                      Landlord the sum or sums specified in Part III of the
                      Third Schedule hereto being the aggregate of THREE (3)
                      months' Rent and THREE (3) months' Management Fees to
                      secure the due observance and performance by the Tenant of
                      the agreements stipulations obligations terms and
                      conditions herein contained and on the part of the Tenant
                      to be



                                      -25-
<PAGE>   27
                    observed and performed which said deposit shall be held by
                    the Landlord throughout the currency of this Tenant
                    Agreement free of any interest to the Tenant with the right
                    for the Landlord (without prejudice to any other right or
                    remedy hereunder or otherwise) to deduct therefrom the
                    amount of any Rent rates Management Fees and other charges
                    payable hereunder in case of default on the part of the
                    Tenant in making any of such payments 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 terms and
                    conditions. In the event of any deduction being made by the
                    Landlord from the said deposit in accordance herewith during
                    the currency of this Tenancy Agreement the Tenant shall
                    forthwith on demand by the Landlord make a further deposit
                    with the Landlord 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 Tenancy Agreement as hereinbefore provided.

Increase    5.07    By reasons of any increase in the costs of providing the
of                  necessary services to the Premises and/or managing the
Management          Building, the Landlord and/or the Manager shall be entitled
Fees                at any time and from time to time to increase the
                    Management Fees after giving the Tenant one month's notice
                    of such increase. The Landlord's and/or the Manager's
                    assessment of any increase in the said costs shall be
                    conclusive.

Increase in 5.08    If and whenever the Management Fees shall be increased
Deposit             pursuant to sub-clause 507 of this Clause, the amount of
                    the said deposit shall be increased accordingly following
                    such increase in the Management Fees so as to bring at all
                    times the amount of the said deposit equal to the aggregate
                    of THREE (3) months' Rent and THREE (3) months' Management
                    Fees for the time being payable by the Tenant hereunder and
                    the Tenant shall make payment to the Landlord of such
                    additional sum as shall be required to bring the said
                    deposit up to the appropriate amount within fifteen (15)
                    days from the date of the Tenant's receipt of the
                    Landlord's or the Manager's notice of increase of the
                    Management Fees as aforesaid.


                                     - 26 -

<PAGE>   28
Refund of           5.09 Subject as aforesaid the said deposit and any further
Deposit                  deposits paid shall be refunded to the Tenant by the
                         Landlord without interest within fifteen (15) days
                         after the expiration or sooner determination of this
                         Tenancy Agreement and delivery of vacant possession of
                         the Premises to the Landlord or after settlement of the
                         last outstanding claim by the Landlord against the
                         Tenant for any arrears of Rent rates Management Fees
                         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.

Air-                5.10 (i)  The Landlord shall provide and maintain
conditioning                  air-conditioning for the Premises during the hours
                              referred to in Part IV of the Third Schedule
                              hereto ("the Normal Air-Conditioning Hours")
                              whenever the air-conditioning system shall be
                              operating. The costs of such air-conditioning
                              shall be included in the management fees payable
                              by the Tenant as set out in Part II of the Third
                              Schedule hereto. If the Tenant shall require a
                              supply of air-conditioning outside the Normal
                              Air-Conditioning Hours, the same will be supplied
                              by the Landlord on reasonable advance notice to
                              the Landlord and at such costs per hour and per
                              square feet of gross floor area of the Premises as
                              the Landlord may in its absolute discretion from
                              time to time charge.

                         (ii) If the Tenant shall require a supply of chilled
                              water for the purpose of cooling its equipment,
                              the same will be suppled by the Landlord on
                              reasonable advance notice to the Landlord and at
                              such costs as the Landlord may in its absolute
                              discretion from time to time charge based on the
                              Tenant's actual consumption of such chilled water.

                        (iii) The Tenant shall pay the costs of such additional
                              air-conditioning services and/or such chilled
                              water supply immediately upon receipt of the
                              demand note therefor which may be rendered at such
                              intervals as the Landlord may in its absolute
                              discretion decide.

                                     - 27 -

<PAGE>   29
Exclusion of        5.11 The Landlord and/or the Manager shall not in any
Landlord's               circumstances other than those arising from their
Liability                respective gross negligence or wilful default be under
                         any liability whatsoever to the Tenant or the Tenant's
                         agents, contractors, servants, visitors, guests,
                         employees, licensees, invitees or any other person
                         whomsoever in respect of any loss of profit or of
                         business or loss of life or loss, injury or damage to
                         person or property or for any disruption or
                         inconvenience or for the security or safekeeping of the
                         Premises or any contents therein 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 anything whatsoever including
                         (without limitation) :-

                         (i)  any failure breakdown malfunction defect
                              interruption of or in or to the operation of or
                              non-availability of any common services and
                              facilities fire-fighting equipment or system or
                              lifts or any other services rendered or to be
                              rendered to the Tenant or such other person;

                         (ii) any act neglect or default of the other tenants
                              and occupiers of the Building and their respective
                              visitors guests licensees invitees employees
                              contractors servants and agents;

                        (iii) any failure breakdown malfunction defect or
                              interruption of or in the supply of gas
                              electricity water or air-conditioning to the
                              Premises or any part of the Building;

                         (iv) any fire storm tempest flood typhoon heavy
                              rainfall landslide subsidence of the ground Act of
                              God or other inevitable accident escape of fire
                              smoke fumes or any other substance or thing or
                              overflow or leakage of water or electric current
                              from or through any part of the Premises or the
                              Building or otherwise or the dropping or falling
                              of any article or vibrations from any part of the
                              Building;

                                      -28-
<PAGE>   30
                         (v)  any defective or damaged condition of the Premises
                              the Building or part(s) thereof or the Landlord's
                              fixtures and fittings and additions therein and
                              thereto;

                         (vi) any use of the Premises any designated car parking
                              space or other areas or parts of the Building; and

                        (vii) the provision by the Landlord or the Manager of
                              watchmen and caretakers (if any),

                    nor shall any of the Rent rates Management Fees and any
                    other sums reserved to be payable by the Tenant hereunder
                    abate or cease to be payable on account thereof.

Notice to be        5.12 The Landlord shall not in any event be liable to the
Given to                 Tenant in respect of any failure of the Landlord to
Landlord on              perform any of its obligations to the Tenant hereunder
Failure to               unless and until the Tenant has notified the Landlord
Perform                  such failure and the Landlord has failed within a
Obligations              reasonable length of time to remedy the same and then
                         in such case the Landlord shall be liable to compensate
                         the Tenant only for loss or damage sustained by the
                         Tenant after such reasonable time shall have lapsed.

No compensation     5.13 The Tenant shall not be entitled to any compensation or
or Abatement             abatement of the Rent if the light and/or air to the
of Rent                  Premises is in any way obstructed by adjoining
                         buildings or otherwise.

Power to Enter      5.14 In the event of fire, typhoon or any other
in Emergency             contingencies or emergencies which in the opinion of
                         the Landlord may cause or threaten to cause damage or
                         injury to the Premises and/or any part of the Building,
                         the Landlord shall have power in the absence of the
                         Tenant to break open any doors or windows of the
                         Premises and to do such other things as may be
                         necessary to prevent the Premises and/or any part of
                         the Building from being damaged or injured or further
                         damaged or injured and in such event the Landlord shall
                         not be answerable to the Tenant for any loss or damage
                         which the Tenant may sustain thereby.

                                     - 29 -
<PAGE>   31
Abatement of        5.15 If the Premises or the Building or any part thereof
Rent and                 shall at any time during the Term be destroyed or
Management               damaged or become inaccessible owing to fire water
Fees                     storm typhoon defective construction white ants
                         earthquake subsidence of the ground act of God force
                         majeure or any calamity beyond the control of the
                         Landlord so as to render the Premises unfit for use or
                         inaccessible and the same is in no way attributable
                         directly or indirectly to any act neglect or default of
                         the Tenant its agents guests invitees visitors servants
                         employees contractors or licensees or if at any time
                         during the continuance of this tenancy the Premises or
                         the Building or any part thereof 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 or any part thereof then the Rent and
                         Management Fees 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 shall again be rendered accessible and fit
                         for use PROVIDED THAT the Landlord shall be under no
                         obligation to repair or reinstate the Premises or the
                         Building if, in its opinion, it is not reasonably
                         economical or practicable so to do and PROVIDED FURTHER
                         THAT in circumstances when the whole or substantially
                         the whole of the Premises have been rendered
                         inaccessible or unfit for use and should the Premises
                         not have been reinstated in the meantime either the
                         Landlord or the Tenant may at any time after two (2)
                         months from the occurrence of such damage or
                         destruction or order give to the other of them notice
                         in writing to determine this Tenancy Agreement and
                         thereupon the same and 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 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 and Management Fees payable
                         hereunder prior to the coming into effect of the
                         suspension.



                                     - 30 -




<PAGE>   32
No Warranty as      5.16 The Landlord does not in any way warrant that the
to Fitness               Premises are fit or suitable for the operation of the
                         trade business or activities of the Tenant and the
                         Tenant shall make his own investigation and enquiries
                         in this connection. In the event of any governmental
                         authority in any way prohibiting the use of the
                         Premises for the trade business or activities for the
                         time being carried on by the Tenant, the Landlord shall
                         have power to determine the Term hereby created at any
                         time by giving notice to the Tenant of a length and
                         effect equivalent to that of the notice (if any) given
                         by the relevant governmental authority (and if such
                         governmental notice is subsequently extended the
                         Landlord's said notice to the Tenant shall be extended
                         pro tanto). On the expiration of such notice by the
                         Landlord to the Tenant the Term of this tenancy shall
                         accordingly be determined and the Landlord shall not be
                         required to pay any compensation for the loss of profit
                         or goodwill or loss or damage of any kind to the Tenant
                         for such determination provided that nothing in this
                         sub-clause shall prejudice the continuation of the Term
                         granted hereunder if the prohibition aforesaid shall be
                         waived by the relevant governmental authority during
                         the notice period.

Introduction        5.17 (i)  The Landlord and/or the Manager shall be entitled
of House                      from time to time and by notice to the Tenant to
Rules and                     make introduce and subsequently amend adopt or
Regulations                   abolish if necessary such house rules and
                              regulations as it may reasonably consider
                              necessary for the proper operation management and
                              maintenance of the Building.

Conflict                 (ii) Such rules and regulations shall be supplementary
                              to the terms and conditions contained in this
                              Tenancy Agreement and shall not in any way
                              derogate from such terms and conditions. In the
                              event of conflict between such rules and
                              regulations and the terms and conditions of this
                              Tenancy Agreement the terms and conditions of this
                              Tenancy Agreement shall prevail.


                                     - 31 -
<PAGE>   33
Name of             5.18 The Landlord reserves the right to rename the Building
Building                 with any such name 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 governmental authorities not less than
                         three months' notice of its intention to so do.

Alterations to     5.19  Without prejudice to any provisions herein contained
the Building             the Landlord reserves the right from time to time to
                         improve extend add to or reduce the Building or in any
                         manner whatsoever and to alter or deal with the
                         Building (other than the Premises) Provided always
                         that in exercising such right the Landlord will
                         endeavour to cause as little inconvenience to the
                         Tenant as is practicable in the circumstances and make
                         good any damage caused to the Premises within a
                         reasonable period of time.

Letting or         5.20  During the three (3) months immediately preceding the
Sale Notices             expiration or sooner determination of the Term the
and Entry                Landlord shall be at liberty to affix and place
                         without interference upon any external part of the
                         Premises a notice or notices stating that the Premises
                         are to be let and/or sold and such other information
                         in connection therewith as the Landlord shall require
                         and the Tenant shall permit persons with written
                         authority from the Landlord or the Landlord's agents
                         at reasonable times of the day upon prior appointment
                         to enter and view the Premises or any part or parts
                         thereof.

Notice             5.21  Any notice required to be served under this Tenancy
                         Agreement shall be in writing and any notice to be
                         served on the Tenant shall be sufficiently served if
                         sent by pre-paid registered post to or left at the
                         Tenant's registered office or principal place of
                         business in Hong Kong or the Premises and any notice
                         to be served on the Landlord shall be sufficiently
                         served if sent to the Landlord by pre-paid registered
                         post to or left at the Landlord's registered office in
                         Hong Kong. A notice delivered by hand is duly served
                         at the time of delivery and a notice sent by
                         registered post shall be deemed to be duly served
                         forty-eight (48) hours after the date of posting.

                                     - 32 -
<PAGE>   34
No Fine or              5.22    The Tenant hereby expressly declares that for
Premium or                      the grant of the Term no premium key money or
Key Money                       consideration money or other valuable
                                consideration other than the Rent and other
                                payments herein expressly reserved and expressed
                                to be payable has been paid or will be payable
                                by the Tenant to the Landlord or any other
                                person.

Costs and               5.23    (i) The Tenant shall bear half of Messrs. Denton
Stamp Duty                          Hall, the Landlord's solicitors' scale
                                    charge as stipulated by the Law Society of
                                    Hong Kong for the preparation and
                                    completion of this Agreement.
                                    Notwithstanding the above, it is expressly
                                    declared by the parties that Messrs. Denton
                                    Hall is acting as solicitors for the
                                    Landlord only and the Tenant is advised to
                                    seek independent legal advice on the
                                    approval of this Agreement.

                               (ii) The stamp duty and registration fees
                                    payable on this Agreement and their
                                    counterparts shall be borne by the
                                    Landlord and the Tenant in equal shares.

Special                 5.24    The parties hereto shall respectively be bound
Conditions                      by and entitled to the benefit of the Special
                                Conditions (if any) set forth in the Fifth
                                Schedule.

Fixtures and            5.25    The Landlord shall provide those fixtures and
Fittings                        fittings details of which are listed in the
                                Sixth Schedule hereto.

Marginal Notes          5.26    The marginal notes, headings and index (if any)
                                are intended for guidance only and do not form a
                                part of this Tenancy Agreement nor shall any of
                                the provisions of this Tenancy Agreement be
                                construed or interpreted by reference thereto or
                                in any way affected or limited thereby.

Interpretation          5.27    In this Tenancy Agreement if the context 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 others of them.



                                     - 33 -
<PAGE>   35
Entire                  5.28    This Tenancy Agreement sets out the full
Agreement                       agreement between the parties. No warranties or
                                representations express or implied of any kind
                                other than those set out herein (if any) are or
                                have been made or given by the Landlord or by
                                anybody on his behalf and if any such warranties
                                or representations express or implied have been
                                made, the same are withdrawn or deemed to have
                                been withdrawn immediately before the execution
                                of this Tenancy Agreement.

                        AS WITNESS the hands of the parties hereto the day and
                year first above written.




                                     - 34 -

<PAGE>   36
                                 FIRST SCHEDULE
                                 --------------


The Tenant
----------

Name                     :    VALENCE SEMICONDUCTOR DESIGN LIMITED



Registered Office        :    Flat A, 13th Floor, Summit Industrial Building.
                              9 Sun Yip Street, Chai Wan, Hong Kong



Business Registration No.:    18907543-001-05-95-1



                                SECOND SCHEDULE
                                ---------------



                                     Part I
                                     ------

The Premises             :    Unit 413 on the Fourth Floor of the Hong Kong
                              Industrial Technology Centre


                                    Part II
                                    -------

The Term                 :    Three (3) years starting on the 1st day of
                              September 1995 and ending on the 31st day of
                              August 1998 (both days inclusive)







                                      -35-
<PAGE>   37
                                 THIRD SCHEDULE
                                 --------------



                                     Part I
                                     ------


The Rent                 :    HONG KONG DOLLARS NINETY THOUSAND THREE HUNDRED
                              AND FIFTY-FIVE AND CENTS FIFTY ONLY (HK$90,355.50)
                              per month exclusive of rates, management fees and
                              other outgoings


                                    Part II
                                    -------


Management Fees          :    HONG KONG DOLLARS SIXTEEN THOUSAND AND TWENTY-ONE
                              AND CENTS EIGHTY ONLY (HK$16,021.80) per month


                                    Part III
                                    --------


The Deposit              :    HONG KONG DOLLARS THREE HUNDRED AND NINETEEN
                              THOUSAND ONE HUNDRED AND THIRTY-ONE AND CENTS
                              NINETY ONLY (HK$319,131.90)


                                    Part IV
                                    -------

Normal Air-Conditioning  :    Monday - Friday : 8:00 a.m. - 6:00 p.m.
Hours                         Saturday        : 8:00 a.m. - 2:00 p.m.
                              Sunday and      : no air-conditioning will be
                              Public Holiday    provided


                                     Part V
                                     ------


Vetting Fee              :    HK$1.60 per square foot of the total gross floor
                              area of the Premises or HK$3,000.00 whichever is
                              the greater







                                      -36-
<PAGE>   38
                      FOURTH SCHEDULE
                      ---------------
                 (1)  Subject to Paragraph (2) of this Fourth Schedule, to use
                      the Premises as an office only.

                 (2)  To provided technical know-how, support, exhibitions and
                      seminars to local manufactures for Add-on-Cards,
                      Motherboards, MUC applications for telecommunication and
                      consumer products, and to provide full design services
                      for ASIC systems from specifications to prototype
                      delivery and to develop sophisticated ASICs for local OEM
                      and ODM electronic products manufacturers to improve
                      reliability, shorten manufacturing cycle and reduce
                      component handling and cost.  The Tenant plans to employ
                      12 staff to begin with at the Premises.  7 of whom would
                      be involved in the abovementioned activities and the
                      remaining balance would be in marketing and
                      administration.




                                     - 37-
<PAGE>   39
                                 FIFTH SCHEDULE

                               Special Conditions

(1)    Rent-free Period :-
       The Tenant shall be entitled to a rent-free period of 45 days starting
       from the commencement of the Term Provided Always that during the said
       rent-free period, the Tenant shall be responsible for and shall pay all
       the Management Fees, rates, utility charges, additional air-conditioning/
       chilled water supply charges and all other outgoings payable in respect
       of the Premises under the terms of this Agreement.

(2)    Restriction of Gross Floor Area by Director of Industry :-
       (a)    The Tenant hereby declares that he is fully aware of the
              existence and implications of Special Condition (12)(b) in the
              Particulars and Conditions of Grant of New Kowloon Inland Lot
              No.6128 which provides, inter alia, that the Director of Industry
              may in his absolute discretion from time to time during the term
              thereby granted restrict the proportion of the gross floor area
              of the Building which may be underlet by the Landlord and in that
              event may stipulate that any underletting by the Landlord shall
              be for a term not exceeding three (3) years.

       (b)    In the event the Director of Industry shall exercise his power
              under the said Special Condition (12)(b) to restrict the gross
              floor area of the Building as aforesaid the Landlord shall be
              entitled upon giving reasonable notice at any time after the date
              of this Agreement and/or during the Term to require the Tenant to
              vacate and surrender :-

              (i)    a part of the Premises - the Tenant shall then at the
                     direction of the Landlord vacate such part of the Premises
                     within a reasonable period and deliver vacant possession
                     of the same to the Landlord, this Agreement shall remain
                     in full force and effect with respect to that part of the
                     Premises not required to be surrendered by the Tenant. In
                     the event of a partial surrender the rent for the
                     remaining part of the Premises shall be reduced on a
                     pro-rata basis for the remainder of the Term and a
                     pro-rata refund of the rental deposit shall be made by the
                     Landlord to the Tenant; or
              (ii)   the whole of the Premises - the Tenant shall vacate the
                     whole of the Premises within a reasonable period and
                     deliver vacant possession of the same to the Landlord,
                     this Agreement shall become null and void but without
                     prejudice to either party's right of action against the
                     other for any breach of the terms and covenants of this
                     Agreement prior to termination.

                                      -38-
<PAGE>   40
                     Provided Always that in the event of a requirement for the
                     Tenant to vacate a part of the Premises the Tenant shall at
                     its absolute discretion be entitled to surrender the whole
                     of the Premises in which event the provisions of sub-clause
                    (b)(ii) of this Condition shall apply.

(3)    Debris Removal Charge :-
       Upon the signing of this Agreement, the Tenant shall pay to the Landlord
       a debris removal charge which shall be HK$1.00 per share foot of the
       total gross floor area of the Premises or HK$2,000.00 whichever is the
       greater. The debris removal charge shall not be refundable to the Tenant
       in any circumstances.

                                      -39-
<PAGE>   41
                                 SIXTH SCHEDULE

Fixtures and Fittings

1. Screed floor finishing

2. Perimeter dry wall, mini-blind on windows (where applicable)

3. Ceiling tile in lay in grid

4. Fluorescence lighting fixture, main circuit control board

5. Air diffuser and fan coil unit(s)

The fixtures and fittings listed above will be in accordance with the standard
laid down by the Landlord for such items.

                                      -40-
<PAGE>   42
<TABLE>
<S>                                        <C>
SIGNED BY Dr. James Liu                 )
          CEO                           )  For and on behalf of
for and on behalf of the Landlord in the)  HONG KONG INDUSTRIAL TECHNOLOGY
presence of :- Stanley Au               )  CENTRE CORPORATION
               GM/FAD
                                           /s/ James Liu
           /s/ Stanley Au                  -------------------------------------
                                                            Authorized Signature




SIGNED BY WAN WAH TONG, THOMAS,         )  For and on behalf of
          MANAGING DIRECTOR             )  VALENCE SEMICONDUCTOR DESIGN LIMITED
for and on behalf of the Tenant in the  )
presence of :-                          )  /s/ Wan Wah Tong, Thomas
           /s/ Cham Tze Kwong, Reivlin     -------------------------------------
                                                            Authorized Signature






Received the day and year first above   )  For and on behalf of
written of and from the Tenant the sum  )  HONG KONG INDUSTRIAL TECHNOLOGY CENTRE
of HONG KONG DOLLARS THREE HUNDRED AND  )  CORPORATION
NINETEEN THOUSAND ONE HUNDRED AND       )
THIRTY-ONE AND CENTS NINETY ONLY        )  /s/ James Liu
being the deposit payable herein        )  -------------------------------------
                                                            Authorized Signature
                                         HK$319,131.90




                                           -------------------------------------
                                                                     the Landord
</TABLE>

                                      -41-
<PAGE>   43



                            [BLUEPRINT OF PROPERTY]



                                      -42-