Document:

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                                                                   EXHIBIT 10.19

                                                   File No _____________________

                             INDUSTRIAL SPACE LEASE

                               (MULTI-TENANT NET)

                THIS LEASE, dated March 17, 1999 for reference purposes only, is
made by and between RENCO BAYSIDE INVESTORS, a California Limited Partnership
("Landlord"), and Virage Logic Corp., a California Corporation ("Tenant"), to be
effective and binding upon the parties as of the date the last of the designated
signatories to this Lease shall have executed this Lease (the "Effective Date of
this Lease").

                                    ARTICLE 1
                                   REFERENCES

        1.1 REFERENCES: All references in this Lease (subject to any further
clarifications contained in this Lease) to the following terms shall have the
following meaning or refer to the respective address, person, date, time period,
amount, percentage, calendar year or fiscal year as below set forth:

                A. Tenant's Address for Notices:      46501 Landina Parkway
                                                      Fremont, California 94538

                B. Tenant's Representative:           Mr. Adam Kablanian

                              Phone Number:           510.360.8000

                C. Landlord's Address for Notices:    285 Oakmead Parkway
                                                      Sunnyvale, California
                                                      94086

                D. Landlord's Representative:         William Neidie

                                Phone Number:         408-730-5500

                E. Intended Commencement Date:        July 1, 1999

                F. Intended Term:                     Three Years and three
                                                      months

                G. Lease Expiration Date:             September 30, 2002

                H. Tenant's Punchlist Period:         One business day from
                                                      delivery of Premises to
                                                      Tenant

                I. First Month's Prepaid Rent:        $26,219.70

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                J. Last Month's Prepaid Reni:         None

                K. Tenant's Security Deposit:         $58,490.10

                L. Late Charge Amount:                10% of the late amount(s)

                M. Tenant's Required Liability
                   Coverage:                          $3,000,000.00 single limit

                N. Tenant's Number of Parking Spaces: Sixty Seven (67)

                O. Brokers:                           Willis & Company

                P. Project or Property: That certain real property situated in
the City of Fremont, County of Alameda State of California, as presently
improved with one (1) building, which real property is shown on the Site Plan
attached hereto as Exhibit "A" and is commonly known as or otherwise described
as follows:

                                    Renco 4 I
                           4650146515 Landing Parkway
                             Fremont, CA 94538-6421

                Q. Building: That certain Building within the Project in which
the Leased Premises are located, which Building is shown outlined in red on
Exhibit "A" hereto.

                R. Common Areas: The "Common Areas" shall mean those areas
within the Project which are located outside the buildings and which are
provided and designated by Landlord from time to time for general use by tenants
of the Project including driveways, pedestrian walkways, parking spaces,
landscaped areas and enclosed trash disposal areas.

                S. Leased Premises: That certain space which is a portion of the
Building, which space is shown outlined in red on the Floor Plan attached hereto
as Exhibit "B" consisting of approximately 20,169 square feet of gross leasable
area and, for purposes of this Lease, agreed to contain said number of square
feet. The Leased Premises are commonly known as or otherwise described as
follows:

                              46501 Landing Parkway
                                   Fremont, CA

                T. Base Monthly Rent: The term "Base Monthly Rent" shall mean
the following:

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$26,219.70 shall be due and payable on or before the first day of the 1st month
of the lease term, with a like sum to be due and payable on or before the first
day of each month thereafter, through and including the 12th month of the lease
term.

$27,228.15 shall be due and payable on or before the first day of the 13th month
of the lease term, with a like sum to be due and payable on or before the first
day of each month thereafter, through and including the 24th month of the lease
term.

$28,236.60 shall be due and payable on or before the first day of the 25th month
of the lease term, with a like sum to be due and payable on or before the first
day of each month thereafter, through and including the 36th month of the lease
term.

$29,245.05 shall be due and payable on or before the first day of the 37th month
of the lease term, with a like sum to be due and payable on or before the first
day of each month thereafter, through and including the 39th month of the lease
term.

                U. Permitted Use: The term "Permitted Use" shall mean the
following:

Office, research and development, assembly, storage and sale of Tenant's
products.

                V. Exhibits: The term "Exhibits" shall mean the Exhibits to this
Lease which are described as follows:

                Exhibit "A" - Site Plan showing the Project and delineating the
                              Building in which the Leased Premises are located.

                Exhibit "B" - Floor Plan outlining the Leased Premises.

                Exhibit "C" - Acceptance Agreement

                Exhibit "D" - Tenant Improvements

                W. Addenda: The term "Addenda" shall mean the Addendum (or
Addenda) to this Lease which is (or are) described as follows: none.

                                    ARTICLE 2
                      LEASED PREMISES, TERM AND POSSESSION

        2.1 DEMISE OF LEASED PREMISES: Landlord hereby leases to Tenant and
Tenant hereby leases from Landlord for Tenant's own use in the conduct of
Tenant's business and not for purposes of speculating in real estate, for the
Lease Term and upon the terms and subject to the conditions of this Lease, that
certain interior space described in Article 1(s) as the Leased Premises,
reserving and excepting to Landlord the exclusive right to all profits to be
derived from any assignments or sublettings by Tenant during the Lease Term by
reason of the appreciation in the fair market rental value of the Leased

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Premises. Landlord further reserves the right to install, maintain, use and
replace ducts, wires, conduits and pipes leading through the Leased Premises in
locations which will not materially interfere with Tenant's use of the Leased
Premises. Tenant's lease of the Leased Premises, together with the appurtenant
right to use the Common Areas as described in Article 2.2 below, shall be
conditioned upon and be subject to the continuing compliance by Tenant with (i)
all the terms and conditions of the Lease, (ii) all Laws governing the use of
the Leased Premises and the Project, (iii) all Private Restrictions, easements
and other matters now of public record respecting the use of the Leased Premises
and the Project, and (iv) all reasonable rules and regulations from time to time
established by Landlord.

        2.2 RIGHT TO USE COMMON AREAS: As an appurtenant right to Tenant's right
to the use of the Leased Premises, Tenant shall have the non-exclusive right to
use the Common Areas in conjunction with other tenants of the Project and their
invitees, subject to the limitations on such use as set forth in Article 4, and
solely for the purposes for which they were designed and intended. Tenant's
right to use the Common Areas shall terminate concurrently with any termination
of this Lease.

        2.3 LEASE COMMENCEMENT DATE AND LEASE TERM: The term of this Lease shall
begin, and the Lease Commencement Date shall be deemed to have occurred, on the
Intended Commencement Date (as set forth in Article 1) unless either (i)
Landlord is unable to deliver possession of the Leased Premises to Tenant on the
Intended Commencement Date, in which case the Lease Commencement Date shall be
as determined pursuant to Article 2.4 below or (ii) Tenant enters into
possession of the Leased Premises prior to the Intended Commencement Date, in
which case the Lease Commencement Date shall be as determined pursuant to
Article 2.7 below (the "Lease Commencement Date") . The term of this Lease shall
end on the Lease Expiration Date (as set forth in Article 1), irrespective of
whatever date the Lease Commencement Date is determined to be pursuant to the
foregoing sentence. The Lease Term shall be that period of time commencing on
the Lease Commencement Date and ending on the Lease Expiration Date (the "Lease
Term").

        2.4 DELIVERY OF POSSESSION: Landlord shall deliver to Tenant possession
of the Leased Premises on or before the Intended Commencement Date (as set forth
in Article 1) in their presently existing condition, broom clean, unless
Landlord shall have agreed, as a condition to Tenant's obligation to accept
possession of the Leased Premises, pursuant to an Exhibit or Addenda attached to
and made a part of this Lease to modify existing interior improvements or to
make, construct and/or install additional specified improvements within the
Leased Premises, in which case Landlord shall deliver to Tenant possession of
the Leased Premises on or before the Intended Commencement Date as so modified
and/or improved. If Landlord is unable to so deliver possession of the Leased
Premises to Tenant on or before the Intended Commencement Date, for whatever
reason, Landlord shall not be in default under this Lease, nor shall this

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Lease be void, voidable or cancelable by Tenant until the lapse of one hundred
twenty days after the Intended Commencement Date (the "delivery grace period");
however, the Lease Commencement Date shall not be deemed to have occurred until
such date as Landlord notifies Tenant that the Leased Premises are Ready for
Occupancy. Additionally, the delivery grace period above set forth shall be
extended for such number of days as Landlord may be delayed in delivering
possession of the Leased Premises to Tenant by reason of Force Majeure or the
actions of Tenant. If Landlord is unable to deliver possession of the Leased
Premises to Tenant within the described delivery grace period (including any
extensions thereof by reason of Force Majeure or the actions of Tenant), then
Tenant's sole remedy shall be to cancel and terminate this Lease, and in no
event shall Landlord be liable to Tenant for such delay. Tenant may not cancel
this Lease at any time after the date Landlord notifies Tenant the Leased
Premises are Ready for Occupancy.

        2.5 ACCEPTANCE OF POSSESSION: Tenant acknowledges that it has inspected
the Leased Premises and is willing to accept them in their existing condition,
broom clean, unless Landlord shall have agreed, as a condition to Tenant's
obligation to accept possession of the Leased Premises, pursuant to an Exhibit
or Addenda attached to and made a part of this Lease to modify existing interior
improvements or to make, construct and/or install additional specified
improvements within the Leased Premises, in which case Tenant agrees to accept
possession of the Leased Premises when Landlord has substantially completed such
modifications or improvements and the Leased Premises are Ready for Occupancy.
If Landlord shall have so modified existing improvements or constructed
additional improvements within the Leased Premises for Tenant, Tenant shall,
within Tenant's Punchlist Period (as set forth in Article 1) which shall
commence on the date that Landlord notifies Tenant that the Leased Premises are
Ready for Occupancy, submit to Landlord a signed copy of the Acceptance
Agreement attached hereto as Exhibit "D" together with a punchlist of all
incomplete and/or improper work performed by Landlord. Upon the expiration of
Tenant's Punchlist Period, Tenant shall be conclusively deemed to have accepted
the Leased Premises in their then-existing condition as so delivered by Landlord
to Tenant, except as to those items reasonably set forth in the punchlist
submitted to Landlord prior to the expiration of said period. Landlord agrees to
correct all items reasonably set forth in Tenant's punchlist, provided that such
punchlist was submitted to Landlord within Tenant's Punchlist Period.
Additionally, Landlord agrees to place in good working order all existing
plumbing, lighting, heating, ventilating and air conditioning systems within the
Leased Premises and all man doors and roll-up truck doors serving the Leased
Premises to the extent that such systems and/or items are not in good operating
condition as of the date Tenant accepts possession of the Leased Premises;
provided that, and only if, Tenant notifies Landlord in writing of such failures
or deficiencies within five business days from the date Tenant so accepts
possession of the Leased Premises.

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        2.6 SURRENDER OF POSSESSION: Immediately prior to the expiration or upon
the sooner termination of this Lease, Tenant shall remove all of Tenant's signs
from the exterior of the Building and shall remove all of Tenant's equipment,
trade fixtures, furniture, supplies, wall decorations and other personal
property from the Leased Premises, and shall vacate and surrender the Leased
Premises to Landlord in the same condition, broom clean, as existed at the Lease
Commencement Date. Landlord, at Tenant's expense, shall retain a mechanical
contractor to service all heating, ventilation and air conditioning equipment,
and Tenant shall pay the cost to restore (or replace as required), said
equipment to good working order. Tenant shall pay the cost of restoring or
replacing all trees, shrubs, plants, lawn and ground cover, and repair (or
replace as required) all paved surfaces of the Property, and otherwise satisfy
all requirements to repair any damage or wear to the Leased Premises, Building,
Common Areas, Outside Areas, and/or Property. Tenant shall repair all damage to
the Leased Premises caused by Tenant or by Tenant's removal of Tenant's property
and all damage to the exterior of the Building caused by Tenant's removal of
Tenant's signs. Tenant shall patch and refinish, to Landlord's reasonable
satisfaction, all penetrations made by Tenant or its employees to the floor,
walls or ceiling of the Leased Premises, whether such penetrations were made
with Landlord's approval or not. Tenant shall clean, repair or replace all
stained or damaged ceiling tiles, wall coverings and clean or replace as may be
required floor coverings to the reasonable satisfaction of Landlord. Tenant
shall replace all burned out light bulbs and damaged light lenses, and clean and
repaint all painted walls. Tenant shall repair all damage caused by Tenant to
the exterior surface of the Building and the paved surfaces of the outside areas
adjoining the Leased Premises and, where necessary, replace or resurface same.
Additionally, Tenant shall, prior to the expiration or sooner termination of
this Lease, remove any improvements constructed or installed by Tenant which
Landlord requests be so removed by Tenant and repair all damage caused by such
removal. If the Leased Premises are not, surrendered to Landlord in the
condition required by this Article at the expiration or sooner termination of
this Lease. Landlord may, at Tenant's expense, so remove Tenant's signs,
property and/or improvements not so removed and make such repairs and
replacements not so made or hire, at Tenant's expense, independent contractors
to perform such work. Tenant shall be liable to Landlord for all coats incurred
by Landlord in returning the Leased Premises to the required condition, plus
interest on all costs incurred from the date paid by Landlord at the then
maximum rate of interest not prohibited by Law until paid, payable by Tenant to
Landlord within ten days after receipt of a statement therefore from Landlord,
and Tenant shall be deemed to have impermissibly held over until such time as
such required work is completed, and Tenant shall pay Base Monthly Rent and
Additional Rent in accordance with the terms of Section 13.2 (Holding Over)
until such work is completed. Tenant shall indemnify Landlord against loss or
liability resulting from delay by Tenant in so surrendering the Leased Premises,
including, without limitation, any claims made by any succeeding tenant or any
losses to Landlord due to lost opportunities to lease to succeeding tenants.

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        2.7 PRIOR OCCUPANCY: Landlord and Tenant acknowledge that Tenant will be
in possession of the Premises, prior to the Lease Commencement Date, under the
terms of a sublease with a prior tenant of Landlord. As such, Landlord and
Tenant agree that the Lease Commencement Date shall be the Intended Commencement
Date.

                                    ARTICLE 3
                    RENT, LATE CHARGES AND SECURITY DEPOSITS

        3.1 BASE MONTHLY RENT: Commencing on the Lease Commencement Dated (as
determined pursuant Article 2.3 above) and continuing throughout the Lease Term,
Tenant shall pay to Landlord, without prior demand therefore, in advance on the
first day of each calendar month, as base monthly rent, the amount set forth as
"Base Monthly Rent" in Article 1 (the Base Monthly Rent").

        3.2 ADDITIONAL RENT: Commencing on the Lease Commencement Date (as
determined pursuant to Article 2.3 above) and continuing throughout the Lease
Term, in addition to the Base Monthly Rent, Tenant shall pay to Landlord as
additional rent (the "Additional Rent") the following amounts:

                A. Tenant's Proportionate Share of all Building Operating
Expenses (as defined in Article 13). Payment shall be made by whichever of the
following methods (or combination of methods) is (are) from time to time
designated by Landlord:

                        (1) Landlord may bill to Tenant, on a periodic basis not
more frequently than monthly, Tenant's Proportionate Share of such expenses (or
group of expenses) as paid or incurred by Landlord, and Tenant shall pay such
share of such expenses within ten days after receipt of a written bill therefore
from Landlord; and/or

                        (2) Landlord may deliver to Tenant Landlord's reasonable
estimate of any given expense (or group of expenses, such as Landlord's
Insurance Costs or Real Property Taxes) which it anticipates will be paid or
incurred for the ensuing calendar or fiscal year, as Landlord may determine, and
Tenant shall pay its Proportionate Share of such expenses for such year in equal
monthly installments during such year with the installments of Base Monthly
Rent. Landlord reserves the right to change from time to time the method of
billing Tenant its Proportionate Share of such expenses or the periodic basis on
which such expenses are billed.

                B. Landlord's share of the consideration received by Tenant upon
certain assignments and sublettings as required by Article 7;

                C. Any legal fees and coats that Tenant is obligated to pay or
reimburse to Landlord pursuant to Article 13; and

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                D. Any other charges or reimbursements due Landlord from Tenant
pursuant to the terms of this Lease.

        3.3 YEAR-END ADJUSTMENTS: If Landlord shall have elected to charge
Tenant its Proportionate Share of the Building Operating Expenses (or any group
of such expenses) on an estimated basis in accordance with the provisions of
Article 3.2A(2) above, Landlord shall furnish to Tenant within three months
following the end of the applicable calendar or fiscal year, as the case may be,
a statement setting forth (i) the amount of such expenses paid or incurred
during the just ended calendar or fiscal year, as appropriate, and (ii) Tenant's
Proportionate Share of such expenses for such period. If Tenant shall have paid
more than its Proportionate Share of such expenses for the stated period,
Landlord shall, at its election, either (i) credit the amount of such
overpayment toward the next ensuing payment or payments of Additional Rent that
would otherwise be due or (ii) refund in cash to Tenant the amount of such
overpayment. If such year-end statement shall show that Tenant did not pay its
Proportionate Share of any such expenses in full, then Tenant shall pay to
Landlord the amount of such underpayment within ten days from Landlord's billing
of same to Tenant. The provisions of this Article shall survive the expiration
or sooner termination of this Lease.

        3.4 LATE CHARGE AND INTEREST ON RENT IN DEFAULT: Tenant acknowledges
that the late payment by Tenant of any monthly installment of Base Monthly Rent
or any Additional Rent will cause Landlord to incur certain coats and expenses
not contemplated under this Lease, the exact amounts of which are extremely
difficult or impractical to fix. Such costs and expenses will include, without
limitation, administration and collection costs and processing and accounting
expenses. Therefore, if any installment of Base Monthly Rent is not received by
Landlord from Tenant within six calendar days after the same becomes due, Tenant
shall immediately pay to Landlord a late charge in an amount equal to the amount
set forth in Article 1 as the "Late Charge Amount," and if any Additional Rent
is not received by Landlord within six calendar days after same becomes due,
Tenant shall immediately pay to Landlord a late charge in an amount equal to ten
percent of the Additional Rent not so paid. Landlord and Tenant agree that this
late charge represents a reasonable estimate of such costs and expenses and is
fair compensation to Landlord for its loss suffered by reason of Tenant's
failure to make timely payment. In no event shall this provision for a late
charge be deemed to grant to Tenant a grace period or extension of time within
which to pay any rental installment or prevent Landlord from exercising any
right or remedy available to Landlord upon Tenant's failure to pay each rental
installment due under this Lease when due, including the right to terminate this
Lease. If any rent remains delinquent for a period in excess of six calendar
days, then, in addition to such late charge, Tenant shall pay to Landlord
interest on any rent that is not so paid from said sixth day at the then maximum
rate of interest not prohibited by Law until paid.

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        3.5 PAYMENT OF RENT: All rent shall be paid in lawful money of the
United States, without any abatement, deduction or offset for any reason
whatsoever, to Landlord at such address as Landlord may designate from time to
time. Tenant's obligation to pay Base Monthly Rent and all Additional Rent shall
be prorated at the commencement and expiration of the Lease Term. The failure by
Tenant to pay any Additional Rent as required pursuant to this Lease when due
shall be treated the same as a failure by Tenant to pay Base Monthly Rent when
due, and Landlord shall have the same rights and remedies against Tenant as
Landlord would have if Tenant failed to pay the Base Monthly Rent when due.

        3.6 PREPAID RENT: Upon signing this Lease, Tenant shall immediately pay
to Landlord the amount set forth in Article 1 as "First Month's Prepaid Rent" as
prepayment of rent for credit against the first installment(s) of Base Monthly
Rent due hereunder. Additionally, Tenant has paid to Landlord the amount set
forth in Article 1 as "Last Month's Prepaid Rent" as prepayment of rent for
credit against the last installment(s) of Base Monthly Rent due hereunder,
subject, however, to the provisions of Article 3.7 below.

        3.7 SECURITY DEPOSIT: Upon signing this Lease, Tenant shall immediately
deposit with Landlord the amount set forth in Article 1 as the "Security
Deposit" as security for the performance by Tenant of the terms of this Lease to
be performed by Tenant, and not as prepayment of rent. Landlord may apply such
portion or portions of the Security Deposit as are reasonably necessary for the
following purposes: (i) to remedy any default by Tenant in the payment of Base
Monthly Rent or Additional Rest or a late charge or interest on defaulted rent;
(ii) to repair damage to the Leased Premises caused by Tenant; (iii) to clean
and repair the Leased Premises following their surrender to Landlord if not
surrendered in the condition required pursuant to the provisions of Article 2;
and (iv) to remedy any other default of Tenant to the extent permitted by Law
including, without limitation, paying in full on Tenant's behalf any sums
claimed by materialmen or contractors of Tenant to be owing to them by Tenant
for work done or improvements made at Tenant's request to the Leased Premises.
In this regard, Tenant hereby waives any restriction on the uses to which the
Security Deposit may be applied as contained in Section 1950.7(c) of the
California Civil Code and/or any successor statute. In the event the Security
Deposit or any portion thereof is so used, Tenant shall pay to Landlord,
promptly upon demand, an amount in cash sufficient to restore the Security
Deposit to the full original sum. If Tenant fails to promptly restore the
Security Deposit and if Tenant shall have paid to Landlord any sums as "Last
Month's Prepaid Rent," Landlord may, in addition to any other remedy Landlord
may have under this Lease, reduce the amount of Tenant's Last Month's Prepaid
Rent by transferring all or portions of such Last Month's Prepaid Rent to
Tenant's Security Deposit until such Security Deposit is restored to the amount
set forth in Article 1. Landlord shall not be deemed a trustee of the Security
Deposit. Landlord may use the Security Deposit in Landlord's ordinary business
and shall not be required to segregate it

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from its general accounts. Tenant shall not be entitled to any interest on the
Security Deposit. If Landlord transfers the Building during the Lease Term,
Landlord may pay the Security Deposit to any subsequent owner in conformity with
the provisions of Section 1950.7 of the California Civil Code and/or any
successor statute, in which event the transferring landlord shall be released
from all liability for the return of the Security Deposit. Tenant specifically
grants to Landlord (and hereby waives the provisions of California Civil Code
Section 1950.7 to the contrary) a period of sixty days following a surrender of
the Leased Premises by Tenant to Landlord within which to return the Security
Deposit (less permitted deductions) to Tenant, it being agreed between Landlord
and Tenant that sixty days is a reasonable period of time within which to
inspect the Leased Premises, make required repairs, receive and verify workmen's
billings therefore, and prepare a final accounting with respect to such deposit.
In no event shall the Security Deposit, or any portion thereof, be considered
prepaid rent.

In the event that Tenant shall not have been in default of any of the terms and
conditions of this Lease during the first twelve (12) months of the Lease Term,
Landlord shall return the sum of $29,245.05 of Tenant's Security Deposit such
that commencing upon the second year of the Lease Term, Tenant's Security
Deposit shall be the sum of $29,245.05.

                                    ARTICLE 4
                     USE OF LEASED PREMISES AND COMMON AREAS

        4.1 PERMITTED USE: Tenant shall be entitled to use the Leased Premises
solely for the "Permitted Use" as set forth in Article 1 and for no other
purpose whatsoever. Tenant shall continuously and without interruption use the
Leased Premises for such purpose for the entire Lease Term. Any discontinuance
of such use for a period of thirty consecutive calendar days shall be, at
Landlord's election, a default by Tenant under the terms of this Lease. Subject
to the limitations contained in this Article 4, Tenant shall have the right to
use the Common Areas, in conjunction with other tenants and during normal
business hours, solely for the purposes for which they were intended and for no
other purposes whatsoever. Tenant shall not have the right to use the exterior
surfaces of exterior walls, the area beneath the floor or the area above the
ceiling of the Leased Premises.

        4.2 GENERAL LIMITATIONS ON USE: Tenant shall not do or permit anything
to be done in or about the Leased Premises, the Building, the Common Areas or
the Project which does or could (i) interfere with the rights of other tenants
or occupants of the Building or the Project, (ii) jeopardize the structural
integrity of the Building or (iii) cause damage to any part of the Building or
the Project. Tenant shall not operate any equipment within the Leased Premises
which does or could (i) injure, vibrate or shake the Leased Premises or the
Building, (ii) damage, overload, corrode, or impair the efficient operation of
any electrical, plumbing, sewer, heating, ventilating or air conditioning

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systems within or servicing the Leased Premises or the Building or (iii) damage
or impair the efficient operation of the sprinkler system (if any) within or
servicing the Leased Premises or the Building. Tenant shall not install any
equipment or antennas on or make any penetrations of the exterior walls or roof
of the Building. Tenant shall not affix any equipment to or make any
penetrations or cuts in the floor, ceiling or walls of the Leased Premises.
Tenant shall not place any loads upon the floors, walls, ceiling or roof systems
which could endanger the structural integrity of the Building or damage its
floors, foundations or supporting structural components. Tenant shall not place
any explosive, flammable or harmful fluids, including Hazardous Materials, or
other waste materials in the drainage systems of the Building or the Project.
Tenant shall not drain or discharge any fluids in the landscaped areas or across
the paved areas of the Project. Tenant shall not use any areas located outside
the Leased Premises for the storage of its materials, supplies, inventory or
equipment, and all such materials, supplies, inventory and equipment shall at
all times be stored within the Leased Premises. Tenant shall not commit nor
permit to be committed any waste in or about the Leased Premises, the Common
Areas or the Project.

        4.3 NOISE AND EMISSIONS: All noise generated by Tenant in its use of the
Leased Premises shall be confined or muffled so that it does not interfere with
the businesses of or annoy other tenants of the Building or the Project. All
dust, fumes, odors and other emissions generated by Tenant's use of the Leased
Premises shall be sufficiently dissipated in accordance with sound environmental
practices and exhausted from the Leased Premises in such a manner so as not to
interfere with the businesses of or annoy other tenants of the Building or the
Project, or cause any damage to the Leased Premises or the Building or any
component part thereof or the property of other tenants of the Building or the
Project.

        4.4 TRASH DISPOSAL: Tenant shall provide trash and garbage disposal
facilities inside the Leased Premises for all of its trash, garbage and waste
requirements and shall cause such trash, garbage and waste to be regularly
removed from the Leased Premises at Tenant's sole cost. Tenant shall keep all
areas outside the Leased Premises and all fire corridors and mechanical
equipment rooms in or about the Leased Premises free and clear of all trash,
garbage, waste and boxes containing same at all times.

        4.5 PARKING: Tenant is allocated, and Tenant and its employees and
invitees shall have the non-exclusive right to use, not more than the number of
parking spaces set forth in Article 1 as "Tenant's Number of Parking Spaces."
Tenant shall not, at any time, use or permit its employees or invitees to use
more parking spaces than the number so allocated to Tenant. Tenant shall not
have the exclusive right to use any specific parking space, and Landlord
reserves the right to designate from time to time the location of the parking
spaces allocated for Tenant's use. In the event Landlord elects or is required
by any Law to limit or control parking within the Project, whether by validation
of parking tickets or any other method, Tenant agrees to participate in such
validation or other

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program as reasonably established by Landlord. Tenant shall not, at any time,
park or permit to be parked any trucks or vehicles adjacent to entryways or
loading areas within the Project so as to interfere in any way with the use of
such areas, nor shall Tenant, at any time, park or permit the parking of
Tenant's trucks or other vehicles, or the trucks and vehicles of Tenant's
suppliers or others, in any portion of the Common Areas not designated by
Landlord for such use by Tenant. Tenant shall not, at any time, park or permit
to be parked any recreational vehicles, inoperative vehicles or equipment on any
portion of the common parking area or other Common Areas of the Project. Tenant
agrees to assume responsibility for compliance by its employees and invitees
with the parking provisions contained herein. If Tenant or its employees park
any vehicle within the Project in violation of these provisions, then Landlord
may charge Tenant, as Additional Rent, and Tenant agrees to pay, as Additional
Rent, Fifty Dollars per day for each day or partial day that each such vehicle
is illegally parked, or parked in any area other than that designated. Tenant
hereby authorizes Landlord, at Tenant's sole expense, to tow away from the
Project and store until redeemed by its owner any vehicle belonging to Tenant or
Tenant's employees parked in violation of these provisions.

        4.6 SIGNS: Tenant shall not place or install on or within any portion of
the Leased Premises, the Building, the Common Areas or the Project any sign
(other than a business identification sign first approved by Landlord in
accordance with this Article), advertisements, banners, placards or pictures
which are visible from the exterior of the Leased Premises. Tenant shall not
place or install on or within any portion of the Leased Premises, the Building,
the Common Areas or the Project any business identification sign which is
visible from the exterior of the Leased Premises until Landlord shall have first
approved in writing the location, size, content, design, method of attachment
and material to be used in the making of such sign. Any signs, once approved by
Landlord, shall be installed only in strict compliance with Landlord's approval,
at Tenant's expense, using a person first approved by Landlord to install same.
Landlord may remove any signs (not first approved in writing by Landlord),
advertisements, banners, placards or pictures so placed by Tenant on or within
the Leased Premises, the Building, the Common Areas or the Project and charge to
Tenant the cost of such removal, together with any costs incurred by Landlord to
repair any damage caused thereby, including any cost incurred to restore the
surface upon which such sign was so affixed to its original condition. Tenant
shall remove any such signs, repair any damage caused thereby, and restore the
surface upon which the sign was affixed to its original condition, all to
Landlord's reasonable satisfaction, upon the termination of this Lease.

        4.7 COMPLIANCE WITH LAWS AND PRIVATE RESTRICTIONS: Tenant shall not use
or permit any person to use the Leased Premises in any manner which violates any
Laws or Private Restrictions. Tenant shall abide by and shall promptly observe
and comply with, at its sole cost and expense, all Laws and Private Restrictions
respecting the use and occupancy of the Leased Premises, the Building, the
Common Areas or the Project and shall defend with competent counsel, indemnify
and hold

                                       12
<PAGE>   13

Landlord harmless from arty claims, damages or liability resulting from Tenant's
failure to do so.

        4.8 COMPLIANCE WITH INSURANCE REQUIREMENTS: With respect to any
insurance policies carried by Landlord in accordance with the provisions of this
Lease, Tenant shall not conduct (nor permit any other person to conduct) any
activities within the Leased Premises, or store, keep or use anything within the
Leased Premises which (i) is prohibited under the terms of any of such policies,
(ii) could result in the termination of the coverage afforded under any of such
policies, (iii) could give to the insurance carrier the right to cancel any of
such policies, or (iv) could cause an increase in the rates (over standard
rates) charged for the coverage afforded under any of such policies. Tenant
shall comply with all requirements of any insurance company, insurance
underwriter, or Board of Fire Underwriters which are necessary to maintain, at
standard rates, the insurance coverages carried by either Landlord or Tenant
pursuant to this Lease.

        4.9 LANDLORD'S RIGHT TO ENTER: Landlord and its agents shall have the
right to enter the Leased Premises during normal business hours and subject to
Tenant's reasonable security measures for the purpose of (i) inspecting the
same; (ii) supplying any services to be provided by Landlord to Tenant; (iii)
showing the Leased Premises to prospective purchasers, mortgagees or tenants:
(iv) making necessary alterations, additions or repairs; (v) performing any of
Tenant's obligations when Tenant has failed to do so after giving Tenant
reasonable written notice of its intent to do so; and (vi) posting notices of
non-responsibility or "For Lease" or "For Sale" signs. Additionally, Landlord
shall have the right to enter the Leased Premises at times of emergency. Any
entry into the Leased Premises or portions thereof obtained by Landlord in
accordance with this Article shall not under any circumstances be construed or
deemed to be a forcible or unlawful entry into, or a detainer of, the Leased
Premises, or an eviction, actual or constructive, of Tenant from the Leased
Premises or any portion thereof.

        4.10 CONTROL OF COMMON AREAS: Landlord shall at all times have exclusive
control of the Common Areas. Landlord shall have the right, without the same
constituting an actual or constructive eviction and without entitling Tenant to
any reduction in or abatement of rent, to: (i) temporarily close any part of the
Common Areas to whatever extent required in the opinion of Landlord's counsel to
prevent a dedication thereof or the accrual of any prescriptive rights therein;
(ii) temporarily close all or any part of the Common Areas to perform
maintenance or for any other reason deemed sufficient by Landlord; (iii) change
the shape, size, location, number and extent of improvements within the Common
Areas including, without limitation, changing the location of driveways,
entrances, exits, parking spaces, parking areas, sidewalks, directional or
locator signs, or the direction of the flow of traffic; and (iv) to make
additions to the Common Areas including, without limitation, the construction of
parking

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<PAGE>   14

structures. Landlord shall have the right to change the name or address of the
Building. Tenant, in its use of the Common Areas, shall keep the Common Areas
free and clear of all obstructions created or permitted by Tenant. If, in the
opinion of Landlord, unauthorized persons are using any of the Common Areas by
reason of, or under claim of, the express or implied authority or consent of
Tenant, then Tenant, upon demand of Landlord, shall restrain, to the fullest
extent then allowed by Law, such unauthorized use, and shall initiate such
appropriate proceedings as may be required to so restrain such use. Nothing
contained herein shall affect the right of Landlord at any time to remove any
unauthorized person from the Common Areas or to prohibit the use of the Common
Areas by unauthorized persons, including, without limitation, the right to
prohibit mobile food and beverage vendors. In exercising any such right
regarding the Common Areas, Landlord shall make a reasonable effort to minimize
any disruption to Tenant's business.

        4.11 RULES AND REGULATIONS: Landlord shall have the right from time to
time to establish reasonable rules and regulations and/or amendments or
additions thereto respecting the use of space within the Project and the use of
the Common Areas for the care and orderly management of the Project and the
safety of its tenants, occupants and invitees. Upon delivery to Tenant of a copy
of such rules and regulations or any amendments or additions thereto, Tenant
shall comply with such rules and regulations. A violation by Tenant of any of
such rules and regulations shall constitute a default by Tenant under this
Lease. If there is a conflict between the rules and regulations and any of the
provisions of this Lease, the provisions of this Lease shall prevail. Landlord
shall not be responsible or liable to Tenant for the violation of such rules and
regulations by any other tenant of the Project.

        4.12 ENVIRONMENTAL PROTECTION: Landlord may voluntarily cooperate in a
reasonable manner with the efforts of all governmental agencies in reducing
actual or potential environmental damage. Tenant shall not be entitled to
terminate this Lease or to any reduction in or abatement of rent by reason of
such compliance or cooperation. Tenant agrees at all times to cooperate fully
with Landlord and to abide by all rules and regulations and requirements which
Landlord may reasonably prescribe in order to comply with the requirements and
recommendations of governmental agencies regulating, or otherwise involved in,
the protection of the environment.

        4.13 OUTSIDE AREAS: No materials, pallets, supplies, tanks or containers
whether above or below ground level, equipment, finished products or
semi-finished products, raw materials, inoperable vehicles or articles of any
nature shall be stored upon or permitted to remain outside of the Leased
Premises except in fully fenced and screened areas outside the Building which
have been designed for such purpose and have been approved in writing by
Landlord for such use by Tenant.

        4.14 HAZARDOUS MATERIALS: Landlord and Tenant agree as follows with
respect to the existence or use of Hazardous Materials on the Property:

                                       14
<PAGE>   15

                A. Any handling, transportation, storage, treatment, disposal or
use of Hazardous Materials by Tenant, Tenant's Agents, or any other party after
the Effective Date of this Lease in or about the Property shall strictly comply
with all applicable Hazardous Materials Laws. Tenant shall indemnify, defend
upon demand with counsel reasonably acceptable to Landlord, and hold harmless
Landlord from and against any and all liabilities, losses, claims, damages, lost
profits, consequential damages, interest, penalties, fines, court costs,
remediation costs, investigation costs and other expenses which result from or
arise in any manner whatsoever out of the use, storage, treatment,
transportation, release, or disposal of Hazardous Materials on or about the
Property by Tenant , Tenant's Agents, Permitees, or Invitees after the Effective
Date.

                B. If the presence of Hazardous Materials on the Property caused
or permitted by Tenant, Tenant's Agents, Permitees, or Invitees after the
Effective Date of this Lease results in contamination or deterioration of water
or soil or any other part of the Property, then Tenant shall promptly take any
and all action necessary to investigate and remediate such contamination. Tenant
shall further be solely responsible for, and shall defend, indemnify and hold
Landlord and its agents harmless from and against all claims, costs and
liabilities, including attorneys' fees and costs, arising out of or in
connection with any investigation and remediation (including investigative
analysis, removal, cleanup, and/or restoration work) required hereunder to
return the Leased Premises, Building, Common Areas, Outside Areas, and/or
Property and any other property of whatever nature to their condition existing
prior to the appearance of such Hazardous Materials.

                C. Landlord and Tenant shall each give written notice to the
other as soon as reasonably practicable of (i) any communication received from
any governmental authority concerning Hazardous Materials which relates to the
Property, and (ii) any contamination of the Property by Hazardous Materials
which constitutes a violation of any Hazardous Materials Law. Tenant
acknowledges that Landlord, as the owner of the Property, at Landlord's
election, shall have the sole right at Tenants expense to negotiate, defend,
approve, and/or appeal any action taken or order issued with regard to Hazardous
Materials by any applicable governmental authority. Tenant may use small
quantities of household chemicals such as adhesive, lubricants, and cleaning
fluids in order to conduct its business at the Premises and such other Hazardous
Materials as are necessary to the operation of Tenant's business of which
Landlord receives notice prior to such Hazardous Materials being brought onto
the Property (or any portion thereof) and which Landlord consents in writing may
be brought onto the Property. In granting Landlord's consent, Landlord may
specify the location and manner or use, storage, or handling of any Hazardous
Material, Landlord's consent shall in no way relieve Tenant from any of its
obligations as contained herein. Tenant shall notify Landlord in writing at
least ten (10) days prior to the first appearance of any Hazardous Material on
the Leased Premises, Building, Common Areas, Outside Areas, and/or Property.
Tenant shall provide Landlord with a list of all Hazardous Materials and the
quantities of each Hazardous Material to be

                                       15
<PAGE>   16

stored, or used, on any portion of the Property, and upon Landlord's request
Tenant shall provide Landlord with copies of any and all Hazardous Materials
Management Plans, Material Safety Data Sheets, Hazardous Waste Manifests, and
other documentation maintained or received by Tenant pertaining to the Hazardous
Materials used, stored, or transported or to be used, stored, or transported on
any portion of the Property. At any time during the Lease Term, Tenant shall,
within five days after written request therefor received from Landlord, disclose
in writing all Hazardous Materials that are being used by Tenant on the Property
(or have been used on the Property), the nature of such use, and the manner of
storage and disposal.

                D. Landlord may cause testing wells to be installed on the
Property and may cause the ground water to be tested to detect the presence of
Hazardous Material by the use of such tests as are then customarily used for
such purposes. If Tenant so requests, Landlord shall supply Tenant with copies
of such test results, the cost of such tests and of the installation,
maintenance, repair and replacement of such wells shall be paid by Tenant if
such tests disclose the existence of facts which give rise to liability of
Tenant pursuant to its indemnity given in A and/or B above. Landlord may retain
consultants to inspect the Property, conduct periodic environmental audits, and
review any information provided by Tenant. Tenant shall pay the reasonable cost
of fees charged by Landlord and/or Landlord's consultants as a Project
Maintenance Cost.

                E. Upon the expiration or earlier termination of the Lease,
Tenant, at its sole cost, shall remove all Hazardous Materials from the Property
and shall provide a certificate to Landlord from a registered consultant
satisfactory to Landlord, certifying that Tenant has caused no contamination of
building(s), soil or groundwater in or about the Leased Premises, Building,
Common Areas, Outside Areas, or Property. If Tenant fails to so surrender the
Property, Tenant shall indemnify and hold Landlord harmless from all damages
resulting from Tenant's failure to surrender the Property as required by this
Subsection, including, without limitation, any claims or damages in connection
with the condition of the Property including, without limitation, damages
occasioned by the inability to Lease the Property (or any portion thereof) or a
reduction in the fair market and/or rental value of the Property, Building,
Common Areas, Outside Areas, and/or Property by reason of the existence of any
Hazardous Materials in or around the Leased Premises, Building, Common Areas,
Outside Areas, and/or Property. If any action is required to be taken by a
governmental authority to test, monitor, and/or clean up Hazardous Materials
from the Leased Premises, Building, Common Areas, Outside Areas, and/or Property
and such action is not completed prior to the expiration or earlier termination
of the Lease, Tenant shall be deemed to have impermissibly held over until such
time as such required action is completed, and Tenant shall pay Base Monthly
Rent and Additional Rent in accordance with the terms of Section 13.2 (Holding
Over). In addition, Landlord shall be entitled to all damages directly or
indirectly incurred in connection with such holding over, including without
limitation, damages occasioned by

                                       16
<PAGE>   17

the inability to Lease the Property or a reduction of the fair market and/or
rental value of the Leased Premises, Building, Common Areas, Outside Areas,
and/or Property.

                F. As used herein, the term "Hazardous Materials(s)" means any
hazardous or toxic substance, material or waste, which is or becomes regulated
by any federal, state, regional or local governmental authority because it is in
any way hazardous, toxic, carcinogenic, mutagenic or otherwise adversely affects
any part of the environment or creates risks of any such hazards or effects,
including, but not limited to, petroleum; asbestos, and polychlorinated bipheyls
and any material, substance, or waste (a) defined as a "hazardous waste,"
"extremely hazardous waste" or "restricted hazardous waste" under Sections
25115, 25117 or 25122,7, or listed pursuant to Section 25140 of the California
Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law);
(b) defined as a "hazardous substance" under Section 25316 of the California
Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley Tanner
Hazardous Substance Account Act); (c) defined as a "hazardous material,"
"hazardous substance" or "hazardous waste" under Section 25501 of the California
Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release
Response Plans and Inventory); (d) defined as a "hazardous substance" under
Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7
(Underground Storage of Hazardous Substances); (e) defined as a "hazardous
substance" pursuant to Section 311 of the Clean Water Act, 33 United States Code
Sections 1251 et seq. (33 U.S.C. 1321) or listed pursuant to Section 307 of the
Clean Water Act (33 U.S.C. 1317); (f) defined as a "hazardous waste" pursuant to
Section 1004 of the Resource Conservation and Recovery Act, 42 United States
Code Sections 6901 et seq. (42 U.S.C. 6903); or (g) defined as a "hazardous
substance" pursuant to Section 101 of the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 United States Code Section 9601 et seq. (42
U.S.C. 9601) or (h) defined as a "hazardous substance" pursuant to Section 311
of the Federal Water Pollution Control Act, 33 U.S.C. 1251 et seq. or (i) listed
pursuant to Section 307 of the Federal Water Pollution Control Act (33 U.S.C.
1317 ) or (j ) regulated under the Toxic Substances Control Act (15 U.S.C. 2601
et seq.) or (k) defined ass "hazardous material "under Section 66680 or 66084 of
Title 22 of the California Code of Regulations (Administrative Code) (l) listed
in the United States Department of Transportation Hazardous Materials Table (49
C. F.R. 172.101) or (m) listed by the Environmental Protection Agency as
"hazardous substances" (4 0 C.F.R. Part 302 ) and amendments thereto . The term
"Hazardous Material Laws" shall mean (i) all of the foregoing laws as amended
from time to time and (ii) any other federal, state, or local law, ordinance,
regulation, or order regulating Hazardous Materials,

                G. Tenant's failure to comply with any of the requirements of
this Section regarding the storage, use, disposal, or transportation of
Hazardous Materials, or the appearance of any Hazardous Materials on the Leased
Premises, Building, Common Area, Outside Area, and/or the Property without
Landlord's consent shall be an Event of Default as defined in this Lease. The
obligations of Landlord and Tenant under this

                                       17
<PAGE>   18

Section shall survive the expiration or earlier termination of the Lease Term.
The rights and obligations of Landlord and Tenant within respect to issues
relating to Hazardous Materials are exclusively established by this section. In
the event of any inconsistency between any other part of this Lease and this
Section, the terms of this Section shall control.

                                    ARTICLE 5
                  REPAIRS, MAINTENANCE, SERVICES AND UTILITIES

        5.1 REPAIR AND MAINTENANCE: Except in the case of damage to or
destruction of the Leased Premises, the Building or the Project caused by an Act
of God or other peril, in which case the provisions of Article 10 shall control,
the parties shall have the following obligations and responsibilities with
respect to the repair and maintenance of the Leased Premises, the Building and
the Common Areas.

                A. Tenants Obligation: Tenant shall, at all times during the
Lease Term and at its sole cost and expense, regularly clean and continuously
keep and maintain in good order, condition and repair the Leased Premises and
every part thereof and all appurtenances thereto, including, without limiting
the generality of the foregoing, (i) all interior walls, floors and ceilings,
(ii) all windows, doors and skylights, (iii) all electrical wiring, conduits,
connectors and fixtures, (iv) all plumbing, pipes, sinks, toilets, faucets and
drains, (v) all lighting fixtures, bulbs and lamps, (vi) all heating,
ventilating and air conditioning equipment located within the Leased Premises or
located outside the Leased Premises (e.g. rooftop compressors) and serving the
Leased Premises (other than Common HVAC as defined in Subarticle B below), and
(vii) all entranceways to the Leased Premises. Tenant, if requested to do so by
Landlord, shall hire, at Tenant's sole cost and expense, a licensed heating,
ventilating and air conditioning contractor to regularly, and periodically
inspect (not less frequently than every three months) and perform required
maintenance on the heating, ventilating and air conditioning equipment and
systems serving the Leased Premises, or alternatively, Landlord may, at its
election, contract in its own name for such regular and periodic inspections of
and maintenance on such heating, ventilating and air conditioning equipment and
systems and charge to Tenant, as Additional Rent, the cost thereof. Tenant
shall, at its sole cost and expense, repair all damage to the Building, the
Common Areas or the Project caused by the activities of Tenant, its employees,
invitees or contractors promptly following written notice from Landlord to so
repair such damage. If Tenant shall fail to perform the required maintenance or
fail to make repairs required of it pursuant to this Article within a reasonable
period of time following notice from Landlord to do so, then Landlord may, at
its election and without waiving any other remedy it may otherwise have under
this Lease or as Law, perform such maintenance or make such repairs and charge
to Tenant, as Additional Rent, the costs so incurred by Landlord for same. All
glass within or a part of the Leased Premises, both interior and exterior, is at
the sole risk of Tenant and any

                                       18
<PAGE>   19

broken glass shall promptly be replaced by Tenant at Tenant's expense with glass
of the same kind, size and quality.

                B. Landlord's Obligation: Landlord shall, at all times during
the Lease Term, maintain in good condition and repair: (i) the exterior and
structural parts of the Building (including the foundation, subflooring,
load-bearing and exterior walls, and roof); (ii) the Common Areas; and (iii) the
electrical and plumbing systems located outside the Leased Premises which
service the Building. Additionally, to the extent that the Building contains
central heating, ventilating and/or air conditioning systems located outside the
Leased Premises which are designed to service, and are then servicing, more than
a single tenant within the Building ("Common HVAC"), Landlord shall maintain in
good operating condition and repair such Common HVAC equipment and systems. The
provisions of this Subarticle B shall in no way limit the right of Landlord to
charge to tenants of the Project, as Additional Rent pursuant to Article 3, the
costs incurred by Landlord in making such repairs and/or performing such
maintenance.

        5.2 SERVICES AND UTILITIES: The parties shall have the following
responsibilities and obligations with respect to obtaining and paying the cost
of providing the following utilities and other services to the Leased Premises.

                A. Gas and Electricity: Tenant shall arrange, at its sole cost
and expense and in its own name, for the supply of gas and electricity to the
Leased Premises. In the event that such services are not separately metered,
Tenant shall, at its sole expense, cause such meters to be installed. Tenant
shall be responsible for determining if the local supplier of gas and/or
electricity can supply the needs of Tenant and whether or not the existing gas
and/or electrical distribution systems within the Building and the Leased
Premises are adequate for Tenant's needs. Tenant shall pay all charges for gas
and electricity as so supplied to the Leased Premises.

                B. Water: Landlord shall provide the Leased Premises with water
for lavatory and drinking purposes only. Tenant shall pay, as Additional Rent,
the cost to Landlord of providing water to the Leased Premises. In the event
Landlord believes that Tenant is using more water than what normally would be
required for lavatory and drinking purposes, Landlord at its election may (i)
periodically charge Tenant, as Additional Rent, a sum equal to Landlord's
estimate of the cost of Tenant's excess water usage or (ii) install (or require
Tenant to install at Tenant's sole cost) a separate meter for purposes of
measuring Tenant's water usage and, based upon such meter readings, periodically
charge Tenant, as Additional Rent, a sum equal to Landlord's estimate of the
cost of Tenant's excess water usage. In the event that Landlord shall so install
such a separate meter, Tenant shall pay to Landlord, upon demand, the costs
incurred by Landlord in purchasing and installing such meter and thereafter all
costs incurred by Landlord in maintaining said meter. The cost of Tenant's water
usage shall include any costs to Landlord in keeping account of such usage and
all governmental fees, public

                                       19
<PAGE>   20

charges or the like attributable to or based upon (such as sewer usage fees) the
use of water to the extent of such usage.

                C. Security Service: Tenant acknowledges that Landlord is not
responsible for the security of the Leased Premises or the protection of
Tenant's property or Tenant's employees, invitees or contractors, and that to
the extent Tenant determines that such security or protection services are
advisable or necessary, Tenant shall arrange for and pay the costs of providing
same.

                D. Trash Disposal: Tenant acknowledges that Landlord is not
responsible for the disposal of Tenant's waste, garbage or trash and that Tenant
shall arrange, in its own name and at its sole cost, for the regular and
periodic removal of such waste, garbage or trash from the Leased Premises. In no
event shall Landlord be required to provide trash bins for the disposal of
Tenant's waste, garbage or trash.

        5.3 ENERGY AND RESOURCE CONSUMPTION: Landlord may voluntarily cooperate
in a reasonable manner with the efforts of governmental agencies and/or utility
suppliers in reducing energy or other resource consumption within the Project.
Tenant shall not be entitled to terminate this Lease or to any reduction in or
abatement of rent by reason of such compliance or cooperation. Tenant agrees at
all times to cooperate fully with Landlord and to abide by all reasonable rules
established by Landlord (i) in order to maximize the efficient operation of the
electrical, heating, ventilating and air conditioning systems and all other
energy or other resource consumption systems within the Project and/or (ii) in
order to comply with the requirements and recommendations of utility suppliers
and governmental agencies regulating the consumption of energy and/or other
resources.

        5.4 LIMITATION OF LANDLORD'S LIABILITY: Landlord shall not be liable to
Tenant for injury to Tenant, its employees, agents, invitees or contractors,
damage to Tenant's property or loss of Tenant's business or profits, nor shall
Tenant be entitled to terminate this Lease or to any reduction in or abatement
of rent by reason of (i) Landlord's failure to perform any maintenance or
repairs to the Project until Tenant shall have first notified Landlord, in
writing, of the need for such maintenance or repairs, and then only after
Landlord shall have had a reasonable period of time following its receipt of
such notice within which to perform such maintenance or repairs, or (ii) any
failure, interruption, rationing or other curtailment in the supply of water,
electric current, gas or other utility service to the Leased Premises, the
Building or the Project from whatever cause (other than Landlord's active
negligence or willful misconduct), or (iii) the unauthorized intrusion or entry
into the Leased Premises by third parties (other than Landlord).

                                       20
<PAGE>   21

                                    ARTICLE 6
                          ALTERATIONS AND IMPROVEMENTS

        6.1 BY TENANT: Tenant shall not make any alterations to or modifications
of the Leased Premises or construct any improvements to or within the Leased
Premises without Landlord's prior written approval, and then not until Landlord
shall have first approved, in writing, the plans and specifications therefore,
which approval shall not be unreasonably withheld. All such modifications,
alterations or improvements, once so approved, shall be made, constructed or
installed by Tenant at Tenant's expense, using a licensed contractor first
approved by Landlord, in substantial compliance with the Landlord-approved plans
and specifications therefore. All work undertaken by Tenant shall be done in
accordance with all Laws and in a good and workmanlike manner using new
materials of good quality that match or complement the original improvements
existing as of the Lease Commencement Date. Tenant shall not commence the making
of any such modifications or alterations or the construction of any such
improvements until (i) all required governmental approvals and permits shall
have been obtained, (ii) all requirements regarding insurance imposed by this
Lease have been satisfied, (iii) Tenant shall have given Landlord at least five
business days prior written notice of its intention to commence such work so
that Landlord may post and file notices of non-responsibility, and (iv) if
requested by Landlord, Tenant shall have obtained contingent liability and broad
form builder's risk insurance in an amount satisfactory to Landlord to cover any
perils relating to the proposed work not covered by insurance carried by Tenant
pursuant to Article 9. In no event shall Tenant make any modifications,
alterations or improvements to the Common Areas or any areas outside of the
Leased Premises. As used in this Article, the term "modifications, alterations
and/or improvements" shall include, without limitation, the installation of
additional electrical outlets, overhead lighting fixtures, drains, sinks,
partitions, doorways, or the like. As a part of granting Landlord's approval for
Tenant to make alterations or modifications Landlord may require Tenant to
increase the amount of it's Security Deposit to cover the cost of removing
Tenant's alterations or modifications and to restore the condition of the
Premises to it's prior condition. Tenant shall pay Landlord's reasonable costs
to inspect the construction of Tenant's alterations or modifications and to have
Landlord's architect revise Landlord's drawings to show the work performed by
Tenant.

        6.2 OWNERSHIP OF IMPROVEMENTS: All modifications, alterations or
improvements made or added to the Leased Premises by Tenant (other than Tenant's
inventory, equipment, movable furniture, wall decorations and trade fixtures)
shall be deemed real property and a part of the Leased Premises, but shall
remain the property of Tenant during the Lease Term. Any such modifications,
alterations or improvements, once completed, shall not be altered or removed
from the Leased Premises during the Lease Term without Landlord's written
approval first obtained in accordance with the provisions of Article 6.1 above.
At the expiration or sooner termination of the Lease, all such modifications,
alterations and improvements (other than Tenant's inventory,

                                       21
<PAGE>   22

equipment, movable furniture, wall decorations and trade fixtures) shall
automatically become the property of Landlord and shall be surrendered to
Landlord as a part of the Leased Premise as required pursuant to Article 2,
unless Landlord shall require Tenant to remove any of such modifications,
alterations or improvements in accordance with the provisions of Article 2, in
which case Tenant shall so remove same. Landlord shall have no obligation to
reimburse to Tenant all or any portion of the cost or value of any such
modifications, alterations or improvements so surrendered to Landlord. All
modifications, alterations or improvements which are installed or constructed on
or attached to the Leased Premises by Landlord at Landlord's expense shall be
deemed real property, and a part of the Leased Premises and shall be the
property of Landlord. All lighting, plumbing, electrical, heating, ventilating
and air conditioning fixtures, partitioning, window coverings, wall coverings
and floor coverings installed by Tenant shall be deemed improvements to the
Leased Premises and not trade fixtures of Tenant.

        6.3 ALTERATIONS: At its sole cost, Tenant shall make all modifications,
alterations and improvements to the Leased Premises that are required by any Law
because of (i) Tenant's use or occupancy of the Leased Premises, the Building,
the Outside Areas, or the Property, (ii) Tenant's application for any permit or
governmental approval, or (iii) Tenant's making of any modifications,
alterations or improvements to or within the Leased Premises. If Landlord shall,
as any time during the Lease Term, (i) be required by any governmental authority
to make any modifications, alterations or improvements to the Building or the
Project, (ii) modify the existing (or construct additional) capital improvements
or provide building service equipment for the purpose of reducing the
consumption of utility services or project maintenance costs for the property,
the cost incurred by Landlord in making such modifications, alterations or
improvements, including an eighteen percent per annum cost of money factor,
shall be amortized by Landlord over the useful life of such modifications,
alterations or improvements, as determined in accordance with generally accepted
accounting standards, and the monthly amortized cost of such modifications,
alterations and improvements as so amortized shall be considered a Project
Maintenance Cost.

        6.4 LIENS: Tenant shall keep the Leased Premises, the Building and the
Property free from any liens and shall pay when due all bills arising out of any
work performed, materials furnished, or obligations incurred by Tenant, its
agents, employees or contractors relating to the Leased Premises. If any such
claim of lien is recorded against Tenant's interest in this Lease, the Leased
Premises, the Building or the Project, Tenant shall bond against, discharge or
otherwise cause such lien to be entirely released within ten days after the same
has been so recorded.

                                       22
<PAGE>   23

                                    ARTICLE 7
                       ASSIGNMENT AND SUBLETTING BY TENANT

        7.1 BY TENANT: Tenant shall not sublet the Leased Premises (or any
portion thereof) or assign or encumber its interest in this Lease, whether
voluntarily or by operation of Law, without Landlord's prior written consent
first obtained in accordance with the provisions of this Article 7. Any
attempted subletting, assignment or encumbrance without Landlord's prior written
consent, at Landlord's election, shall constitute a default by Tenant under the
terms of this Lease. The acceptance of rent by Landlord from any person or
entity other than Tenant, or the acceptance of rent by Landlord from Tenant with
knowledge of a violation of the provisions of this Article, shall not be deemed
to be a waiver by Landlord of any provision of this Article or this Lease or to
be a consent to any subletting by Tenant or any assignment or encumbrance of
Tenant's interest in this Lease.

        7.2 MERGER OR REORGANIZATION: If Tenant is a corporation, any
dissolution, merger, consolidation or other reorganization of Tenant, or the
sale or other transfer in the aggregate over the Lease Term of a controlling
percentage of the capital stock of Tenant, shall be deemed a voluntary
assignment of Tenant's interest in this Lease. The phrase "controlling
percentage" means the ownership of and the right to vote stock possessing more
than fifty percent of the total combined voting power of all classes of Tenant's
capital stock issued, outstanding and entitled to vote for the election of
directors. If Tenant is a partnership, a withdrawal or change, whether
voluntary, involuntary or by operation of Law, of any general partner, or the
dissolution of the partnership, shall be deemed a voluntary assignment of
Tenant's interest in this Lease.

        7.3 LANDLORD'S ELECTION: If Tenant or Tenant's successors shall desire
to assign its interest under this Lease or to sublet the Leased Premises, Tenant
and Tenant's successors must first notify Landlord, in writing, of its intent to
so assign or sublet, as least thirty days in advance of the date it intends to
so assign its interest in this Lease or sublet the Leased Premises but not
sooner than sixty days in advance of such date, specifying in detail the terms
of such proposed assignment or subletting, including the name of the proposed
assignee or sublessee, the proposed assignee's or Sublessee's intended use of
the Leased Premises, a current financial statement of such proposed assignee or
sublessee and the form of documents to be used in effectuating such assignment
or subletting. Landlord shall have a period of fifteen days following receipt of
such notice and receipt of all information requested by Landlord regarding the
proposed assignee or sublessee within which to do one of the following: (a)
terminate this Lease or, in the case of a sublease of less than all of the
Leased Premises, terminate this Lease as to that part of the Leased Premises
proposed to be so sublet, either (i) on the condition that the proposed
Transferee immediately enter into a direct lease of the Leased Premises with
Landlord (or, in the case of a partial sublease, a lease for the portion
proposed to be so sublet) on the same terms and conditions contained in Tenant's
(or Tenant's successors')

                                       23
<PAGE>   24

notice, or (ii) so that Landlord is thereafter free to lease the Leased Premises
(or, in the case of a partial sublease, the portion proposed to be so sublet) to
whomever it pleases on whatever terms are acceptable to Landlord. In the event
Landlord elects to so terminate this Lease, then (i) if such termination is
conditioned upon the execution of a lease between Landlord and the proposed
Transferee, Tenant's and Tenant's successors' obligations under this Lease shall
not be terminated until such Transferee executes a new lease with Landlord,
enters into possession, and commences the payment of rent, and (ii) if Landlord
elects simply to terminate this Lease (or, in the case of a partial sublease
terminate this Lease as to the portion to be so sublet), the Lease shall so
terminate in its entirety (or as to the space to be so sublet) fifteen (15) days
after Landlord has notified Tenant and Tenant's successors in writing of such
election. In the case of a partial termination of the Lease, the Base Monthly
Rent and Tenant's or Tenant's successors' proportionate share shall be reduced
to an amount which bears the same relationship to the original amount thereof as
the area of that part of the Leased Premises which remains subject to the Lease
bears to the original area of the Leased Premises. Landlord and Tenant or
Tenant's successors shall execute a cancellation agreement with respect to the
Lease to effect such termination or partial termination, or (b) if Landlord
shall not have elected to cancel and terminate this Lease, to either (i) consent
to such requested assignment or subletting subject to Tenant's and Tenant's
successors' compliance with the conditions set forth in Article 7.4 below or
(ii) refuse to so consent to such requested assignment or subletting, provided
that such consent shall not be unreasonably refused. It shall not be
unreasonable for Landlord to withhold its consent to any proposed assignment or
subletting if (i) the proposed assignee's or subtenant's anticipated use of the
Premises involves the storage, use or disposal of a Hazardous Material; (ii) if
the proposed assignee or subtenant has been required by any prior landlord,
lender or governmental authority to clean up Hazardous Materials unlawfully
discharged by the proposed assignee or subtenant; or (iii) if the proposed
assignee or subtenant is subject to investigation or enforcement order or
proceeding by any governmental authority in connection with the use, disposal or
storage of a Hazardous Material. Tenant and Tenant's successors covenant and
agree to supply to Landlord, upon request, with all necessary or relevant
information which Landlord may reasonably request respecting such proposed
assignment or subletting and/or the proposed assignee or sublessee. Landlord's
review period shall not commence until Landlord has received all information
requested by Landlord.

        7.4 CONDITIONS TO LANDLORD'S CONSENT: If Landlord elects to consent, or
shall have been ordered to so consent by a court of competent jurisdiction, to
such requested assignment, subletting or encumbrance, such consent shall be
expressly conditioned upon the occurrence of each of the conditions below set
forth, and any purported assignment, subletting or encumbrance made or ordered
prior to the full and complete satisfaction of each of the following conditions
shall be void and, at the election of Landlord, which election may be exercised
at any time following such a purported assignment, subletting or encumbrance
shall constitute a material default by Tenant under

                                       24
<PAGE>   25

this Lease giving Landlord the absolute right to terminate this Lease. The
conditions are as follows:

                A. Landlord having approved in form and substance the assignment
of sublease agreement (or the encumbrance agreement), which approval shall not
be unreasonably withheld by Landlord if the requirements of this Article 7 are
otherwise complied with.

                B. Each such sublessee or assignee having agreed, in writing
satisfactory to Landlord and its counsel and for the benefit of Landlord, to
assume, to be bound by, and to perform the obligations of this Lease to be
performed by Tenant (or, in the case of an encumbrance, each such encumbrancer
having similarly agreed to assume, be bound by and perform Tenant's obligations
upon a foreclosure or transfer in lieu thereof).

                C. Tenant having fully and completely performed all of its
obligations under the terms of this Lease through and including the date of the
requested consent, as well as through and including the date such assignment or
subletting is to become effective.

                D. Tenant having reimbursed to Landlord all reasonable costs and
attorneys' fees incurred by Landlord in conjunction with the processing and
documentation of any such requested subletting, assignment or encumbrance.

                E. Tenant having delivered to Landlord a complete and fully
executed duplicate original of such sublease agreement, assignment agreement or
encumbrance (as applicable) and all related agreements.

                F. Tenant having paid, or having agreed in writing to pay as to
future payments, to Landlord one hundred percent of all assignment consideration
or excess rentals to be paid to Tenant or to any other on Tenant's behalf or for
Tenant's benefit for such assignment or subletting as follows:

                        (1) If Tenant assigns its interest under the Lease and
if all or a portion of the consideration for such assignment is to be paid by
the assignee at the time of the assignment, that Tenant shall have paid to
Landlord and Landlord shall have received an amount equal to one hundred percent
of the assignment consideration so paid or to be paid whichever is the greater)
at the time of the assignment by the assignee; or

                        (2) If Tenant assigns its interest under this Lease and
if Tenant is to receive all or a portion of the consideration for such
assignment in future installments, that Tenant and Tenant's assignee shall have
entered into a written agreement with and for the benefit of Landlord
satisfactory to Landlord and its counsel whereby Tenant and Tenant's assignee
jointly agree to pay to Landlord an amount equal to one hundred

                                       25
<PAGE>   26

percent of all such future assignment consideration installments to be paid by
such assignee as and when such assignment consideration is so paid.

                        (3) If Tenant subleases the Leased Premises, that Tenant
and Tenant's sublessee shall have entered into a written agreement with and for
the benefit of Landlord satisfactory to Landlord and its counsel whereby Tenant
and Tenant's sublessee jointly agree to pay to Landlord one hundred percent of
all excess rentals to be paid by such sublessee as and when such excess rentals
are so paid.

        7.5 ASSIGNMENT CONSIDERATION AND EXCESS RENTALS DEFINED: For purposes of
this article, the term "Assignment Consideration" shall mean all consideration
to be paid by the Assignee as consideration for such assignment, and the term
"Excess Rentals" shall mean all consideration to be paid by the Sublessee in
excess of the rent to be paid by said Sublessee/Sublessor for the premises
subleased for the same period. It is specifically intended and agreed that this
provision is intended to be a one hundred percent profit sharing clause, such
that neither Tenant nor any successor to Tenant shall make any profit whatsoever
as a result of any transfer of an interest in the Lease or the Leased Premises
or any other property, as more particularly described herein. Assignment
Considerations and/or "Excess Rentals" shall include all payments made or to be
made by any Assignee or Sublessee relating in any way to any transfer of an
interest in the Lease or the Leased Premises including, but not limited to, any
payment made with respect to property which would or shall become Landlord's
property upon the expiration or earlier termination of the lease, whether such
property was installed or paid for by Landlord or by Tenant or Tenant's
successors. In the event Tenant or Tenant's successors sublease a portion of the
Leased Premises, "Excess Rentals" shall be calculated by subtracting the rent
payable by the Subleasor for the portion of the Leased Premises so sublet from
all consideration to be paid by such Sublessee. Rent payable by the Sublessor
for the portion of the Leased Premises so sublet shall be calculated by
multiplying the Base Monthly Rent payable by the Sublessor for the Leased
Premises leased by such Sublessor by a fraction, the numerator of which is the
area in square feet subleased and the denominator of which is the total floor
area of the Leased Premises leased by such Sublessor also in square feet. Tenant
and Tenant's Successors agree that any Assignment Consideration and/or Excess
Rentals hereunder shall be the property of Landlord and not the property of
Tenant.

        7.6 PAYMENTS: All payments required by this Article to be made to
Landlord shall be made in cash in full as and when they become due. As the time
Tenant, Tenant's assignee or sublessee makes each such payment to Landlord,
Tenant or Tenant's assignee or sublessee, as the case may be, shall deliver to
Landlord an itemized statement in reasonable detail showing the method by which
the amount due Landlord was calculated and certified by the party making such
payment as true and correct. Landlord may require that all payments of Excess
Rentals and/or Assignment Consideration to be made hereunder be made directly to
Landlord by such Transferee.

                                       26
<PAGE>   27

        7.7 GOOD FAITH: The rights granted to Tenant by this Article are granted
in consideration of Tenant's express covenant that all pertinent allocations
which are made by Tenant between the rental value of the Leased Premises and the
value of any of Tenant's personal property which may be conveyed or leased
concurrently with and which may reasonably be considered a part of the same
transaction as the permitted assignment or subletting shall be made fairly,
honestly and in good faith. If Tenant shall breach this Covenant of Good Faith,
Landlord may immediately declare Tenant to be in default under the terms of this
Lease and terminate this Lease and/or exercise any other rights and remedies
Landlord would have under the terms of this Lease in the case of a material
default by Tenant under this Lease.

        7.8 EFFECT OF LANDLORD'S CONSENT: No subletting, assignment or
encumbrance, even with the consent of Landlord, shall relieve Tenant of its
personal and primary obligation to pay rent and to perform all of the
obligations to be performed by Tenant hereunder. Consent by Landlord to one or
more assignments or encumbrances of Tenant's interest in this Lease or to one or
more sublettings of the Leased Premises shall not be deemed to be a consent to
any subsequent assignment, encumbrance or subletting. If Landlord shall have
been ordered by a court of competent jurisdiction to consent to a requested
assignment or subletting, or such an assignment or subletting shall have been
ordered over the objection of Landlord, such assignment or subletting shall not
be binding between the assignee (or sublessee) and Landlord until such time as
all conditions set forth in Article 7.4 above have been fully satisfied (to the
extent not then satisfied) by the assignee or sublessee, including, without
limitation, the payment to Landlord of all agreed assignment considerations
and/or excess rentals then due Landlord.

        7.9 PROHIBITED FINANCIAL TRANSACTIONS: Tenant shall not, without
Landlord's consent, enter into or do any of the following acts if to do so would
result in Tenant having a net worth or net income after such action or evens
that is less than Tenant's net worth and/or net income as of the date of this
Lease: (i) make any distribution or declare or pay any cash dividends on, or
purchase, acquire, redeem or retire any of its capital stock, of any class,
whether now or hereafter outstanding, (ii) acquire, merge, or consolidate with
or into any other business organization, (iii) make any changes in Tenant's
financial structure or (iv) borrow funds, pledge assets, or lease or sell
equipment or other property. Landlord and Tenant understand and agree that the
value of the Leased Premises is influenced by Tenant's financial standing, and
the provisions of this section are intended to prohibit those voluntary actions
of Tenant that are not conducted in the normal course of its business which
would reduce Tenant's net worth and/or net income and thereby would adversely
effect the value of the Leased Premises.

                                       27
<PAGE>   28

                                    ARTICLE 8
                LIMITATION ON LANDLORD'S LIABILITY AND INDEMNITY

        8.1 LIMITATION ON LANDLORD'S LIABILITY AND RELEASE: Landlord shall not
be liable to Tenant for, and Tenant hereby releases Landlord and its partners
and officers from, any and all liability, whether in contract, tort or on any
other basis, for any injury to or any damage sustained by Tenant, its agents,
employees, contractors or invitees; any damage to Tenant's property; or any loss
to Tenant's business, loss of Tenant's profits or other financial loss of Tenant
resulting from or attributable to the condition of, the management of, the
maintenance of, or the protection of the Leased Premises, the Building, the
Project or the Common Areas, including, without limitation, any such injury,
damage or loss resulting from (i) the failure, interruption, rationing or other
curtailment or cessation in the supply of electricity, water, gas or other
utility service to the Project, the Building or the Leased Premises; (ii) the
vandalism or forcible entry into the Building or the Leased Premises; (iii) the
penetration of water into or onto any portion of the Leased Premises through
roof leaks or otherwise; (iv) the failure to provide security and/or adequate
lighting in or about the Project, the Building or the Leased Premises; (v) the
existence of any design or construction defects within the Project, the Building
or the Leased Premises; (vi) the failure of any mechanical systems to function
properly (such as the HVAC systems); or (vii) the blockage of access to any
portion of the Project, the Building or the Leased Premises, except to the
extent such damage was proximately caused by Landlord's active negligence or
willful misconduct, or Landlord's failure to perform an obligation expressly
undertaken pursuant to this Lease but only if Tenant shall have given Landlord
prior written notice to perform such obligation and Landlord shall have failed
to perform such obligation within a reasonable period of time following receipt
of written notice from Tenant to so perform such obligation. In this regard,
Tenant acknowledges that it is fully apprised of the provisions of Law relating
to releases, and particularly to those provisions contained in Section 1542 of
the California Civil Code which read as follows: A general release does not
extend to claims which the creditor does not know or suspect to exist in his
favor at the time of executing the release, which if known by him must have
materially affected his settlement with the debtor. Notwithstanding such
statutory provision, and for the purpose of implementing a full and complete
release and discharge, Tenant hereby (i) waives the benefit of such statutory
provision and (ii) acknowledges that, subject to the exceptions specifically set
forth herein, the release and discharge set forth in this Article is a full and
complete settlement and release and discharge of all claims and is intended to
include in its effect, without limitation, all claims which Tenant, as of the
date hereof, does not know of or suspect to exist in its favor.

        8.2 TENANT'S INDEMNIFICATION OF LANDLORD: Tenant shall defend, with
competent counsel satisfactory to Landlord, any claims made or legal actions
filed or threatened by third parties against landlord which result in the death,
bodily injury, personal injury, damage to property or interference with
contractual or

                                       28
<PAGE>   29

other rights suffered by any third party, (including other Tenants within the
Project) which (i) occurred within the Leased Premises or (ii) resulted from
Tenant's use or occupancy of the Leased Premises or the Common Areas or (iii)
resulted from Tenant's activities in or about the Leased Premises, the Building
or the Project, and Tenant shall indemnify and hold Landlord, Landlord's
principals, employees and agents harmless from any loss (including loss of rents
by reason of vacant space which otherwise would have been leased but for such
activities), liabilities , penalties, or expense whatsoever (including all legal
fees incurred by Landlord with respect to defending such claims) resulting
therefrom, except to the extent proximately caused by the active negligence or
willful misconduct of Landlord. This indemnity agreement shall survive the
expiration or sooner termination of this Lease, provided that Tenant shall not
be required to indemnify Landlord under this section 8.2 with respect to events
that first occur after the later of (a) the date of the expiration, or sooner
termination, of this Lease, or (b) the date Tenant actually vacates the
Premises, provided that Landlord has actual notice of such vacation.

                                    ARTICLE 9
                                    INSURANCE

        9.1 TENANT'S INSURANCE: Tenant shall maintain insurance complying with
all of the following:

                A. Tenant shall procure, pay for and keep in full force and
effect, at all times during the Lease Term, the following:

                        (1) Commercial General Liability insurance insuring
Tenant against liability for bodily injury, death, property damage and personal
injury occurring at the Leased Premises, or resulting from Tenant's use or
occupancy of the Leased Premises or the Building, Outside Areas, Property, or
Common Areas or resulting from Tenant's activities in or about the Leased
Premises. Such insurance shall be on an occurrence basis with a combined single
limit of liability of not less than the amount of Tenant's Required Liability
Coverage (as set forth in Article 1). The policy or policies shall be endorsed
to name Landlord and such others as are designated by Landlord as additional
insureds in the form equivalent to CG20111185 or successor and shall contain the
following additional endorsement: "The insurance afforded to the additional
insureds is primary insurance. If the additional insureds have other insurance
which is applicable to the loss on a contributing, excess or contingent basis,
the amount of this insurance company's liability under this policy shall not be
reduced by the existence of such other insurance. Any insurance carried by the
additional insureds shall be excess and non-contributing with the insurance
provided by the Tenant." The policy shall not be canceled or reduced without at
least 30 days' written notice to additional insureds. If the policy insures more
than one location, it shall be endorsed to show that the limits and aggregate
apply per location using endorsement CG25041185 or successor. Tenant's policy
shall also contain the severability of interest and cross-liability endorsement
or clauses.

                                       29
<PAGE>   30

                        (2) Fire and property damage insurance in so-called
Special Form plus earthquake and flood insuring Tenant against loss from
physical damage to Tenant's personal property, inventory, stock, trade fixtures
and improvements within the Leased Premises with coverage for the full actual
replacement cost thereof;

                        (3) Plate-glass insurance, at actual replacement cost;

                        (4) Boiler and Machinery insurance, if applicable;

                        (5) Product Liability insurance (including without
limitation Liquor Liability insurance for liability arising out of the
distribution, sale, or consumption of food and/or beverages including alcoholic
beverages at the Leased Premises for not less than the Tenant's Required
Liability Coverage as set forth in Article I;

                        (6) Workers' compensation insurance and any other
employee benefit insurance sufficient to comply with all Laws which policy shall
be endorsed to provide thirty (30) days written notice of cancellation to
Landlord;

                        (7) With respect to making of alterations or the
construction of improvements or the like undertaken by Tenant, contingent
liability and builder's risk insurance, in an amount and with coverage
satisfactory to Landlord;

                        (8) Business Income Insurance at a minimum of 50%
co-insurance including coverage for loss of business income due to damage to
equipment from perils covered under the so-called Special Form plus perils of
earthquake and flood; and

                        (9) Comprehensive Auto Liability insurance with a
combined single limit coverage of not less than the amount of Tenant's Required
Liability Coverage (as set forth in Article I) for bodily injury and/or property
damage liability for: a) Owned autos b) Hired or borrowed autos c) Non-owned
autos d) Auto blanket contractual form CA0029. The policy shall be endorsed to
provide 30 days written notice of cancellation to Landlord.

                B. Each policy of liability insurance required to be carried by
Tenant pursuant to this Article or actually carried by Tenant with respect to
the Leased Premises or the Property (i) shall be in a form satisfactory to
Landlord, (ii) Shall be provided by carriers admitted to do business in the
state of California, with a Best rating of "A/VI" or better and/or acceptable to
Landlord. Property insurance shall contain a waiver and/or a permission to waive
by the insurer any right of subrogation against Landlord, its principals,
employees, agents and contractors which might arise by reason of any payment
under such policy or by reason of any act or omission of Landlord, its
principals, employees, agents or contractors.

                                       30
<PAGE>   31

                C. Prior to the time Tenant or any of its contractors enters the
Leased Premises, Tenant shall deliver to the Landlord with respect to each
policy of insurance required to be carried by Tenant pursuant to this Article, a
certificate of the insurer certifying, in a form satisfactory to the Landlord,
that the policy has been issued and premium paid providing the coverage required
by this Article and containing the provisions herein. Attached to such a
certificate shall be endorsements naming Landlord as additional insured, and
including the wording under primary insurance above. With respect to each
renewal or replacement of any such insurance, the requirements of this Article
must be complied with not less than 30 days prior to the expiration or
cancellation of the policy being renewed or replaced. Landlord may as any time
and from time-to-time inspect and/or copy any and all insurance policies
required to be carried by Tenant pursuant to this article. If Landlord's lender,
insurance broker or advisor or counsel reasonably determines as any time that
the form or amount of coverage set forth in Article 9.1 (A) for any policy of
insurance Tenant is required to carry pursuant to this Article is not adequate,
then Tenant shall increase the amount of coverage for such insurance to such
greater amount or change the form as Landlord's lender, insurance broker or
advisor or counsel reasonably deems adequate (provided however such increase
level of coverage may not exceed the level of coverage for such insurance
commonly carried by comparable businesses similarly situated and operating under
similar circumstances).

                D. The Commercial General Liability insurance carried by Tenant
shall specifically insure the performance b Tenant of the Indemnification
provisions set forth in Article 8.2 of this lease provided, however, nothing
contained in this Article 9 shall be construed to limit the liability of Tenant
under site Indemnification provisions set forth in said Article 8.2.

        9.2 LANDLORD'S INSURANCE: With respect to insurance maintained by
Landlord:

                A. Landlord shall maintain, as the minimum coverage required of
is by this Lease, property insurance in so-called "Special" form insuring
Landlord (and such others as Landlord may designate) against loss from physical
damage to the Building with coverage of not less than one hundred percent of the
full actual replacement cost thereof and against loss of rents for a period of
not less than twelve months. Such property damage insurance, at Landlord's
election but without any requirement on Landlord's behalf to do so, (i) may be
written in so-called Special Form, excluding only those perils commonly excluded
from such coverage by Landlord's then property damage insurer; (ii) may provide
coverage for physical damage to the improvements so insured for up to the entire
full actual replacement cost thereof; (iii) may be endorsed to include (or
separate policies which may be carried to cover) loss or damage caused by any
additional perils against which Landlord may elect to insure, including
earthquake and/or flood; (iv) may provide coverage for loss of rents for a
period of up to twelve months;

                                       31
<PAGE>   32

and/or (v) may contain "deductibles" per occurrence in an amount reasonably
acceptable to Landlord. Landlord shall not be required to cause such insurance
to cover any of Tenant's personal property, inventory and trade fixtures, or any
modifications, alterations or improvements made or constructed by Tenant to or
within the Leased Premises.

                B. Landlord shall maintain Commercial General Liability
insurance insuring Landlord (and such others as are designated by Landlord)
against liability for personal injury, bodily injury, death, and damage to
property occurring in, on or about, or resulting from the use or occupancy of
the Project, or any portion thereof, with combined single limit coverage of as
least Two Million Dollars. Landlord may carry such greater coverage as Landlord
or Landlord's Lender, insurance broker or advisor or counsel may from time to
time determine is reasonably necessary for the adequate protection of Landlord
and the Project.

                C. Landlord may maintain any other insurance which in the
opinion of its lender, insurance broker or advisor, or legal counsel is prudent
to carry under the given circumstances.

        9.3 MUTUAL WAIVER OF SUBROGATION: Landlord hereby releases Tenant, and
Tenant hereby releases Landlord and its respective partners and officers,
agents, employees and servants, from any and all liability for loss, damage or
injury to the property of the other in or about the Leased Premises which is
caused by or results from a peril or event or happening which would be covered
by insurance required to be carried under the terms of this Lease, or is covered
by insurance actually carried and in force as the time of the loss, by the party
sustaining such loss; provided, however, that such waiver shall be effective
only to the extent permitted by the insurance covering such loss and to the
extent such insurance is not prejudiced thereby.

                                   ARTICLE 10
                            DAMAGE TO LEASED PREMISES

        10.1 LANDLORD'S DUTY TO RESTORE: If the Leased Premises are damaged by
any peril after the Effective Date of this Lease, Landlord shall restore the
Leased Premises, as and when required by this Article, unless this Lease is
terminated by Landlord pursuant to Article 10.2 or by Tenant pursuant to Article
10.3. All insurance proceeds available from the fire and property damage
insurance carried by Landlord shall be paid to and become the property of
Landlord. If this Lease is terminated pursuant to either Article 10.2 or 10.3,
all insurance proceeds available from insurance carried by Tenant which cover
loss to property that is Landlord's property or would become Landlord's property
on termination of this Lease shall be paid to and become the property of
Landlord, and the remainder of such proceeds shall be paid to and become the
property of Tenant. If this Lease is not terminated pursuant to either Article
10.2 or 10.3, all insurance proceeds available from insurance carried by Tenant
which cover loss to

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<PAGE>   33

property that is Landlord's property shall be paid to and become the property of
Landlord, and all proceeds available which cover loss to property which would
become the property of Landlord upon the termination of this Lease shall be paid
to and remain the property of Tenant. If this Lease is not so terminated, then
upon receipt of the insurance proceeds (if the loss is covered by insurance) and
the issuance of all necessary governmental permits, Landlord shall commence and
diligently prosecute to completion the restoration of the Leased Premises, to
the extent then allowed by Law, to substantially the same condition in which the
Leased Premises existed as of the Lease Commencement Date. Landlord's obligation
to restore shall be limited to the Leased Premises and interior improvements
constructed by Landlord. Landlord shall have no obligation to restore any other
improvements to the Leased Premises or any of Tenant's personal property,
inventory or trade fixtures. Upon completion of the restoration by Landlord,
Tenant shall forthwith replace or fully repair all of Tenant's personal
property, inventory, trade fixtures and other improvements constructed by Tenant
to like or similar condition as existed as the time of such damage or
destruction.

        10.2 LANDLORD'S RIGHT TO TERMINATE: Landlord shall have the option to
terminate this Lease in the event any of the following occurs, which option may
be exercised only by delivery to Tenant of a written notice of election to
terminate within thirty days after the date of such damage or destruction:

                A. The Building is damaged by any peril covered by valid and
collectible insurance actually carried by Landlord and in force at the time of
such damage or destruction (an "insured peril") to such an extent that the
estimated cost to restore the Building exceeds the lesser of (i) the insurance
proceeds available from insurance actually carried by Landlord, or (ii)
seventy-five percent of the then actual replacement cost thereof;

                B. The Building is damaged by an uninsured peril, which peril
Landlord was required to insure against pursuant to the provisions of Article 9
of this Lease, to such an extent that the estimated cost to restore the Building
exceeds the lesser of (i) the insurance proceeds which would have been available
had Landlord carried such required insurance, or (ii) seventy-five percent of
the then actual replacement cost thereof;

                C. The Building is damaged by an uninsured peril, which peril
Landlord was not required to insure against pursuant to the provisions of
Article 9 of this Lease, to any extent.

                D. The Building is damaged by any peril and, because of the Laws
then in force, the Building (i) can not be restored as reasonable cost or (ii)
if restored, can not be used for the same use being made thereof before such
damage.

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<PAGE>   34

        10.3 TENANT'S RIGHT TO TERMINATE: If the Leased Premises are damaged by
any peril and Landlord does not elect to terminate this Lease or is not entitled
to terminate this Lease pursuant to this Article, then as soon as reasonably
practicable, Landlord shall furnish Tenant with the written opinion of
Landlord's architect or construction consultant as to when the restoration work
required of Landlord may be complete. Tenant shall have the option to terminate
this Lease in the event any of the following occurs, which option may be
exercised in the case of A or B below only by delivery to Landlord of a written
notice of election to terminate within seven days after Tenant receives from
Landlord the estimate of the time needed to complete such restoration:

                A. The Leased Premises are damaged by any peril and, in the
reasonable opinion of Landlord's architect or construction consultant, the
restoration of the Leased Premises cannot be substantially completed within
twelve months after the date of such notice from Landlord; or

                B. The Leased Premises are damaged by any peril within nine
months of the last day of the Lease Term and, in the reasonable opinion of
Landlord's architect or construction consultant, the restoration of the Leased
Premises cannot be substantially completed within ninety days after the date
such restoration is commenced.

        10.4 TENANT'S WAIVER: Landlord and Tenant agree that the provisions of
Article 10.3 above, captioned "Tenant's Right to Terminate," are intended to
supersede and replace the provisions contained in California Civil Code, Section
1932, Subdivision 2, and California Civil Code, Section 1934, and accordingly,
Tenant hereby waives the provisions of said Civil Code Sections and the
provisions of any successor Code Sections or similar Laws hereinafter enacted.

        10.5 ABATEMENT OF RENT: In the evens of damage to the Leased Premises
which does not result in the termination of this Lease, the Base Monthly Rent
(and any Additional Rent) shall be temporarily abated during the period of
restoration in proportion to the degree to which Tenant's use of the Leased
Premises is impaired by such damage.

                                   ARTICLE 11
                                  CONDEMNATION

        11.1 LANDLORDS RIGHT TO TERMINATE: Subject to Article 11.3, Landlord
shall have the option to terminate this Lease if, as a result of a taking by
means of the exercise of the power of eminent domain (including inverse
condemnation and/or a voluntary sale or transfer by Landlord under threat of
condemnation to an entity having the power of eminent domain), (i) all or any
part of the Leased Premises is so taken, (ii) more than thirty-three and
one-third percent of the Buildings leasable area is so taken,

                                       34
<PAGE>   35

(iii) more than thirty-three and one-third percent of the Common Area is so
taken, or (iv) because of the Laws then in force, the Leased Premises may not be
used for the same use being made thereof before such taking, whether or not
restored as required by Article 11..4 below. Any such option to terminate by
Landlord muss be exercisable within a reasonable period of time, to be effective
as of the date possession is taken by the condemnor.

        11.2 TENANT'S RIGHT TO TERMINATE: Subject to Article 11.3, Tenant shall
have the option to terminate this Lease if, as a result of any taking by means
of the exercise of the power of eminent domain (including inverse condemnation
and/or a voluntary sale or transfer by Landlord to an entity having the power of
eminent domain under threat of condemnation), (i) all of the Leased Premises is
so taken, (ii) thirty-three and one-third percent or more of the Leased Premises
is so taken and the part of the Leased Premises that remains cannot, within a
reasonable period of time, be made reasonably suitable for the continued
operation of the Tenant's business, or (iii) there is a taking of a portion of
the Common Area and, as a result of such taking, Landlord cannot provide parking
spaces within the Project (or within a reasonable distance therefrom) equal in
number to at least sixty-six and two-thirds percent of Tenant's Number of
Parking Spaces (as set forth in Article 1), whether by rearrangement of the
remaining parking areas in the Common Area (including, if Landlord elects,
construction of multi-dock parking structures or restriping for compact cars
where permitted by Law), or by providing alternative parking facilities on other
land within reasonable walking distance of the Leased Premises. Tenant must
exercise such option within a reasonable period of time, to be effective on the
later to occur of (i) the date that possession of that portion of the Common
Area or the Leased Premises that is condemned is taken by the condemnor or (ii)
the date Tenant vacates the Leased Premises.

        11.3 TEMPORARY TAKING: If any portion of the Leased Premises is
temporarily taken for one year or less, this Lease shall remain in effect. If
any portion of the Leased Premises is temporarily taken for a period which
either exceeds one year or which extends beyond the natural expiration of the
Lease Term, then Landlord and Tenant shall each independently have the option to
terminate this Lease, effective on the date possession is taken by the condemnor

        11.4 RESTORATION AND ABATEMENT OF RENT: If any part of the Leased
Premises is taken by condemnation and this Lease is not terminated, then
Landlord shall repair any damage occasioned thereby to the remainder of the
Leased Premises to a condition reasonably suitable for Tenant's continued
operations and otherwise, to the extent practicable, in the manner and to the
extent provided in Article 10. I. As of the date possession is taken by the
condemning authority, (i) the Base Monthly Rent shall be reduced in the same
proportion that the area of that part of the Leased Premises so taken (less any
addition to the area of the Leased Premises by reason

                                       35
<PAGE>   36

of any reconstruction) bears to the area of the Leased Premises immediately
prior to such taking, and (ii) Tenant's Proportionate Share shall be
appropriately adjusted.

        11.5 DIVISION OF CONDEMNATION AWARD: Any award made for any condemnation
of the Project, the Building, the Common Areas or the Leased Premises, or any
portion thereof, shall belong to and be paid to Landlord, and Tenant hereby
assigns to Landlord all of its right, title and interest in any such award;
provided, however, that Tenant shall be entitled to receive any condemnation
award that is made directly to Tenant (i) for the taking of personal property,
inventory or trade fixtures belonging to Tenant, (ii) for the interruption of
Tenant's business or its moving costs, (iii) for loss of Tenant's goodwill, or
(iv) for any temporary taking where this Lease is not terminated as a result of
such taking. The rights of Landlord and Tenant regarding any condemnation shall
be determined as provided in this Article, and each party hereby waives the
provisions of Section 1265.130 of the California Code of Civil Procedure, and
the provisions of any similar law hereinafter enacted, allowing either party to
petition the Superior Court to terminate this Lease and/or allocating
condemnation awards between Landlord and Tenant in the evens of a taking of the
Leased Premises,

                                   ARTICLE 12
                              DEFAULT AND REMEDIES

        12.1 EVENTS OF TENANT'S DEFAULT: Tenant shall be in default of its
obligations under this Lease if any of the following events occur:

                A. Tenant shall have failed to pay Base Monthly Rent or any
Additional Rent when due; or

                B. Tenant shall have done or permitted to have been done any
act, use or thing in its use, occupancy or possession of the Leased Premises or
in its use of the Common Areas which is prohibited by the terms of this Lease;
or

                C. Tenant shall have failed to perform any term, covenant or
condition of this Lease, except those requiring the payment of Base Monthly Rent
or Additional Rent, within ten days after written notice from Landlord to Tenant
specifying the nature of such failure and requesting Tenant to perform same.

                D. Tenant shall have sublet the Leased Premises or assigned or
encumbered its interest in this Lease in violation of the provisions contained
in Article 7, whether voluntarily or by operation of Law; or

                E. Tenant shall have failed too continuously occupy the Leased
Premises for a period of 10 consecutive days; or

                                       36
<PAGE>   37

                F. Tenant or any Guarantor of this Lease shall have permitted or
suffered the sequestration or attachment of, or execution on, or the appointment
of a custodian or receiver with respect to, all or any substantial part of the
property or assets of Tenant (or such Guarantor) or any property or asset
essential to the conduct of Tenant's (or such Guarantor's) business, and Tenant
(or such Guarantor) shall have failed to obtain a return or release of the same
within thirty days thereafter, or prior to sale pursuant to such sequestration,
attachment or levy, whichever is earlier; or

                G. Tenant or any Guarantor of this Lease shall have made a
general assignment of all or a substantial part of its assets for the benefit of
its creditors; or

                H. Tenant or any Guarantor of this Lease shall have allowed (or
sought) to have entered against it a decree or order which: (i) grants or
constitutes an order for relief, appointment of a trustee, or confirmation of a
reorganization plan under the bankruptcy laws of the United States; (ii)
approves as properly filed a petition seeking liquidation or reorganization
under said bankruptcy laws or any other debtor's relief law or similar statute
of the United States or any state thereof; or (iii) otherwise directs the
winding up or liquidation of Tenant; provided, however, if any decree or order
was entered without Tenant's consent or over Tenant's objection, Landlord may
not terminate this Lease pursuant to this Subarticle if such decree or order is
rescinded or reversed within thirty days after its original entry.

                I. Tenant or any Guarantor of this Lease shall have availed
itself of the protection of any debtor's relief law, moratorium law or other
similar Law which does not require the prior entry of a decree of order.

        12.2 LANDLORD'S REMEDIES: In the event of any default by Tenant, and
without limiting Landlord's right to indemnification as provided in Article 8.2,
Landlord shall have the following remedies, in addition to all other rights and
remedies provided by Law or otherwise provided in this Lease, to which Landlord
may resort cumulatively, or in the alternative:

                A. Landlord may, as Landlord's election, keep this Lease in
effect and enforce, by an action at law or in equity all of its rights and
remedies under this Lease including, without limitation, (i) the right to
recover the rent and other sums as they become due by appropriate legal action,
(ii) the right to make payments required of Tenant, or perform Tenant's
obligations and be reimbursed by Tenant for the cost thereof with interest as
the then maximum rate of interest not prohibited by Law from the date the sum is
paid by Landlord until Landlord is reimbursed by Tenant, and (iii) the remedies
of injunctive relief and specific performance to prevent Tenant from violating
the terms of this Lease and/or to compel Tenant to perform its obligations under
this Lease, as the case may be,

                                       37
<PAGE>   38

                B. Landlord may, as Landlord's election, terminate this Lease by
giving Tenant written notice of termination, in which event this Lease shall
terminate on the date set forth for termination in such notice. Any termination
under this Subarticle shall not relieve Tenant from its obligation to pay to
Landlord all Base Monthly Rent and Additional Rent then or thereafter due, or
any other sums due or thereafter accruing to Landlord, or from any claim against
Tenant for damages previously accrued or then or thereafter accruing. In no
event shall any one or more of the following actions by Landlord, in the absence
of a written election by Landlord to terminate this Lease, constitute a
termination of this Lease:

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

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

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

                C. In the event Tenant breaches this Lease and abandons the
Leased Premises, Landlord may terminate this Lease, but this Lease shall not
terminate unless Landlord gives Tenant written notice of termination. No act by
or on behalf of Landlord intended to mitigate the adverse effect of such breach,
including those described by Subarticles B(l), (2) and (3) immediately
preceding, shall constitute a termination of Tenant's right to possession unless
Landlord gives Tenant written notice of termination. If Landlord does not
terminate this Lease by giving written notice of termination, Landlord may
enforce all its rights and remedies under this Lease, including the right to
recover rent as is becomes due under this Lease as provided in California Civil
Code Section 1951.4, as in effect on the Effective Date of this Lease.

                D. In the event Landlord terminates this Lease, Landlord shall
be entitled, as Landlord's election, to damages in an amount as set forth in
California Civil Code Section 1951.2, as in effect on the Effective Date of this
Lease. For purposes of computing damages pursuant to said Section 1951.2, an
interest rate equal to the maximum rate of interest then not prohibited by Law
shall be used where permitted. Such damages shall include, without limitation:

                        (1) The worth as the time of award of the amount by
which the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that Tenant proves could be reasonably
avoided, computed by

                                       38
<PAGE>   39

discounting suds amount as the discount rate of the Federal Reserve Bank of San
Francisco as the time of award plus one percent; and

                        (2) Any other amount necessary to compensate Landlord
for all detriment proximately caused by Tenant's failure to perform Tenant's
obligations under this Lease, or which in the ordinary course of things would be
likely to result therefrom, including, without limitation, the following: (i)
expenses for cleaning, repairing or restoring the Leased Premises; (ii) expenses
for altering, remodeling or otherwise improving the Leased Premises for the
purpose of reletting, including removal of existing leasehold improvements
and/or installation of additional leasehold improvements (regardless of how the
same is funded, including reduction of rent, a direct payment or allowance to a
new tenant, or otherwise); (iii) broker's fees, advertising costs and other
expenses of reletting the Leased Premises; (iv) costs of carrying the Leased
Premises, which costs would have been billed to Tenant as Additional Rent had
Tenant not defaulted and which include, but are not limited to; taxes, insurance
premiums, landscape maintenance, HVAC maintenance, utility charges and security
precautions; (v) expenses incurred in removing, disposing of and/or storing any
of Tenant's personal property, inventory or trade fixtures remaining therein;
(vi) attorneys' fees, expert witness fees, court costs and other reasonable
expenses incurred by Landlord (bus not limited to taxable costs) in retaking
possession of the Leased Premises, establishing damages hereunder, and releasing
the Leased Premises; and (vii) any other expenses, costs or damages otherwise
incurred or suffered ass result of Tenant's default.

        12.3 LANDLORD'S DEFAULT AND TENANT'S REMEDIES: In the event Landlord
fails to perform any of its obligations under this Lease, Landlord shall
nevertheless not be in default under the terms of this Lease until such time as
Tenant shall have first given Landlord written notice specifying the nature of
such failure to perform its obligations, and then only after Landlord shall have
had a reasonable period of time following its receipt of such notice within
which to perform such obligations. In the event of Landlord's default as above
set forth, then, and only then, Tenant shall have the following remedies only:

                A. Tenant may then proceed in equity or at law to compel
Landlord to perform its obligations and/or to recover damages proximately caused
by such failure to perform (except as and to the extent Tenant has waived its
right to damages as provided in this Lease).

                B. Tenant, as its option, may then cure any default of Landlord
at Landlord's cost. If, pursuant to this Subarticle, Tenant reasonably pays any
sum to any third party or does any act that requires the payment of any sum to
any third party at any time by reason of Landlord's default, the sum paid by
Tenant shall be immediately due from Landlord to Tenant as the time Tenant
supplies Landlord with an invoice therefore (provided such invoice sets forth
and is accompanied by a written statement of Tenant setting forth in reasonable
detail the amount paid, the party to whom it was paid, the date

                                       39
<PAGE>   40

is was paid, and the reasons giving rise to such payment), together with
interest at twelve percent per annum from the date of such invoice until Tenant
is reimbursed by Landlord. Tenant may not offset such sums against any
installment of rent due Landlord under the terms of this Lease.

        12.4 LIMITATION ON TENANT'S RECOURSE: If Landlord is a corporation,
trust, partnership, joint venture, unincorporated association, or other form of
business entity, Tenant agrees that (i) the obligations of Landlord under this
Lease shall not constitute personal obligations of the officers, directors,
trustees, partners, joint venturers, members, owners, stockholders, or other
principals of such business entity and (ii) Tenant shall have recourse only to
Landlord's then equity interest, if any, in the Property for the satisfaction of
such obligations and not against the assets of such officers, directors,
trustees, partners, joint venturers, members, owners, stockholders or principals
(other than to the extent of their interest in the Property). Tenant shall look
exclusively to such equity interest of Landlord, if any, in the Property for
payment and discharge of any obligations imposed upon Landlord hereunder, and
Landlord is hereby released and relieved of any other obligations hereunder.
Additionally, if Landlord is a partnership, then Tenant covenants and agrees:

                A. No partner of Landlord shall be sued or named as a party in
any suit or action brought by Tenant with respect to any alleged breach of this
Lease (except to the extent necessary to secure jurisdiction over the
partnership and then only for that sole purpose);

                B. No service of process shall be made against any partner of
Landlord except for the sole purpose of securing jurisdiction over the
partnership; and

                C. No writ of execution shall be levied against the assess of
any partner of Landlord other than to the extent of his interest in Property.

Tenant further agrees that each of the foregoing covenants and agreements shall
be enforceable by Landlord and by any partner of Landlord and shall be
applicable to any actual or alleged misrepresentation or non-disclosure made
respecting this Lease or the Leased Premises or any actual or alleged failure,
default or breach of any covenant or agreement either expressly or implicitly
contained in this Lease or imposed by statute or as common law.

        12.5 TENANT'S WAIVER: Landlord and Tenant agree that the provisions of
Article 12.3 above are intended to supersede and replace the provisions of
California Civil Code 1932(l), 1941 and 1942, and accordingly, Tenant hereby
waives the provisions of Section 1932(1), 1941 and 1942 of the California Civil
Code and/or any similar or successor Law regarding Tenant's right to terminate
this Lease or to make repairs and deduct the expenses of such repairs from the
rent due under this Lease. Tenant hereby waives any right of redemption or
relief from forfeiture under the Laws of

                                       40
<PAGE>   41

the State of California, or under any other present or future Law, in the event
Tenant is evicted or Landlord takes possession of the Leased Premises by reason
of any default by Tenant.

                                   ARTICLE 13
                               GENERAL PROVISIONS

        13.1 TAXES ON TENANT'S PROPERTY: Tenant shall pay before delinquency any
and all taxes, assessments, license fees, use fees, permit fees and public
charges of whatever nature or description levied, assessed or imposed against
Tenant or Landlord by a governmental agency arising out of, caused by reason of
or based upon Tenant's estate in this Lease, Tenant's ownership of property,
improvements made by Tenant to the Leased Premises, improvements made by
Landlord for Tenant's use within the Leased Premises, Tenant's use (or estimated
use) of public facilities or services or Tenant's consumption (or estimated
consumption) of public utilities, energy, water or other resources. On demand by
Landlord, Tenant shall furnish Landlord with satisfactory evidence of these
payments. If any such taxes, assessments, fees or public charges are levied
against Landlord, Landlord's property, the Building or the Project, or if the
assessed value of the Building or the Project is increased by the inclusion
therein of a value placed upon same, then Landlord, after giving written notice
to Tenant, shall have the right, regardless of the validity thereof, to pay such
taxes, assessment, fee or public charge and bill Tenant, as Additional Rent, the
amount of such taxes, assessment, fee or public charge so paid on Tenant's
behalf. Tenant shall, within ten days from the date is receives an invoice from
Landlord setting forth the amount of such taxes, assessment, fee or public
charge so levied, pay to Landlord, as Additional Rent, the amount set forth in
said invoice. Failure by Tenant to pay the amount so invoiced within said ten
day period shall be conclusively deemed a default by Tenant under this Lease.
Tenant shall have the right, and with Landlord's full cooperation if Tenant is
not then in default under the terms of this Lease, to bring suit in any court of
competent jurisdiction to recover from the taxing authority the amount of any
such taxes, assessment, fee or public charge so paid.

        13.2 HOLDING OVER: This Lease shall terminate without further notice on
the Lease Expiration Date (as set forth in Article I). Any holding over by
Tenant after expiration of the Lease Term shall neither constitute a renewal nor
extension of this Lease nor give Tenant any rights in or to the Leased Premises
except as expressly provided in this Article. Any such holding over shall be
deemed an unlawful detainer of the Leased Premises unless Landlord has consented
to same. Any such holding over to which Landlord has consented shall be
construed to be a tenancy from month to month, on the same terms and conditions
herein specified insofar as applicable, except that the Base Monthly Rent shall
be increased to an amount equal to one hundred fifty percent of the Base Monthly
Rent payable during the last full month immediately preceding such holding over.

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<PAGE>   42

        13.3 SUBORDINATION TO MORTGAGES: This Lease is subject and subordinate
to all underlying ground leases and to all mortgages and deeds of truss which
affect the Building and are of public record as of the Effective Date of this
Lease, and to all renewals, modifications, consolidations, replacements and
extensions thereof. However, if the lessor under any such ground lease or any
Lender holding any such mortgage or deed of truss shall advise Landlord that is
desires or requires this Lease to be made prior and superior thereto, then, upon
written request of Landlord to Tenant, Tenant shall promptly execute,
acknowledge and deliver any and all documents or instruments which Landlord and
such lessor or Lender deem necessary or desirable to make this Lease prior
thereto. Tenant hereby consents to Landlord's ground leasing the land underlying
the Building and/or encumbering the Building as security for future loans on
such terms as Landlord shall desire, all of which future ground leases,
mortgages or deeds of truss shall be subject and subordinate to this Lease.
However, if any lessor under any such future ground lease or any Lender holding
such future mortgage or deed of truss shall desire or require that this Lease be
made subject and subordinate to such future ground lease, mortgage or deed of
trust, then Tenant agrees, within ten days after Landlord's written request
therefore, to execute, acknowledge and deliver to Landlord any and all documents
or instruments requested by Landlord or such lessor or Lender as may be
necessary or proper to assure the subordination of this Lease to such future
ground lease, mortgage or deed of trust; bus only if such lessor or Lender
agrees to recognize Tenant's rights under this Lease and not to disturb Tenant's
quiet possession of the Leased Premises so long as Tenant is not in default
under this Lease.

        13.4 TENANT'S ATTORNMENT UPON FORECLOSURE: Tenant shall, upon request,
attorn (i) to any purchaser of the Building as any foreclosure sale or private
sale conducted pursuant to any security instrument encumbering the Building,
(ii) to any grantee or transferee designated in any deed given in lieu of
foreclosure of any security interest encumbering the Building, or (iii) to the
lessor under any underlying ground lease of the land underlying the Building,
should such ground lease be terminated; provided that such purchaser, grantee or
lessor recognizes Tenant's rights under this Lease.

        13.5 MORTGAGEE PROTECTION: In the event of any default on the part of
Landlord, Tenant will give notice by registered mail to any Lender or lessor
under any underlying ground lease who shall have requested, in writing, to
Tenant that it be provided with such notice, and Tenant shall offer such Lender
or lessors reasonable opportunity to cure the default, including time to obtain
possession of the Leased Premises by power of sale or judicial foreclosure or
other appropriate legal proceedings if reasonably necessary to effects cure.

        13.6 ESTOPPEL CERTIFICATES: Tenant will, following any request by
Landlord, promptly execute and deliver to Landlord an estoppel certificate (i)
certifying that this Lease is unmodified and in full force and effect, or, if
modified, stating the nature of such modification and certifying that this
Lease, as so modified, is in full force

                                       42
<PAGE>   43

and effect, (ii) stating the date to which the rent and other charges are paid
in advance, if any, (iii) acknowledging that there are not, to Tenant's
knowledge, any uncured defaults on the part of Landlord hereunder, or specifying
such defaults if any are claimed, and (iv) certifying such other information
about this Lease as may be reasonably requested by Landlord. Tenant's failure to
execute and deliver such estoppel certificate within ten days after Landlord's
request therefore shall be a material default by Tenant under this Lease, and
Landlord shall have all of the rights and remedies available to Landlord as
Landlord would otherwise have in the case of any other material default by
Tenant, including the right to terminate this Lease and sue for damages
proximately caused thereby : being agreed and understood by Tenant that Tenant's
failure to so deliver such estoppel certificate in a timely manner could result
in Landlord being unable to perform committed obligations to other third parties
which were made by Landlord in reliance upon this covenant of Tenant. Landlord
and Tenant intend that any statement delivered pursuant to this Article may be
relied upon by any Lender or purchaser or prospective Lender or purchaser of the
Building, the Project, or party interest therein.

        13.7 TENANT'S FINANCIAL INFORMATION: Tenant shall, within ten business
days after Landlord's request therefore, deliver to Landlord a copy of a current
financial statement, including an income statement and balance sheet, and any
such other information reasonably requested by Landlord regarding Tenant's
financial condition. Tenant acknowledges that Landlord has and will rely on the
truth and accuracy of the information provided by Tenant to Landlord both prior
to and during the term of the Lease. Landlord shall be entitled to disclose such
financial statements or other information to its Lender, to any present or
prospective principal of or investor in Landlord, or to any prospective Lender
or purchaser of the Building, the Project or any portion thereof or interest
therein. Any such financial statement or other information which is marked
"confidential" or "company secrets" (or is otherwise similarly marked by Tenant)
shall be confidential and shall not be disclosed by Landlord to any third party
except as specifically provided in this Article, unless the same becomes a part
of the public domain without the fault of Landlord.

        13.8 TRANSFER BY LANDLORD: Landlord and its successors in interest shall
have the right to transfer their interest in the Building, the Project, or any
portion thereof as any time and to any person or entity. In the event of any
such transfer, the Landlord originally named herein (and in the case of any
subsequent transfer, the transferor), from the date of such transfer, (i) shall
be automatically relieved, without any further act by any person or entity, of
all liability for the performance of the obligations of the Landlord hereunder
which may accrue after the date of such transfer and (ii) shall be relieved of
all liability for the performance of the obligations of the Landlord hereunder
which have accrued before the date of transfer if its transferee agrees to
assume and perform all such prior obligations of the Landlord hereunder. Tenant
shall attorn to any such transferee. After the date of any such transfer, the
term "Landlord" as used herein shall mean the transferee of such interest in the
Building or the Project.

                                       43
<PAGE>   44

        13.9 FORCE MAJEURE: The obligations of each of the parties under this
Lease (other than the obligation to pay money) shall be temporarily excused if
such party is prevented or delayed in performing such obligation by reason of
any strikes, lockouts or labor disputes; inability to obtain labor, materials,
fuels or reasonable substitutes therefore' governmental restrictions,
regulations, controls, action or inaction; civil commotion; inclement weather,
fire or other acts of God; or other causes (except financial inability) beyond
the reasonable control of the party obligated to perform (including acts or
omissions of the other party for a period equal to the period of any such
prevention, delay or stoppage.

        13.10 NOTICES: Any notice required or desired to be given by a party
regarding this Lease shall be in writing and shall be personally served, or in
lieu of personal service may be given by: (i) delivery by Federal Express,
United Parcel Service or similar commercial service, (ii) electronic facsimile
transmission, or (iii) by depositing such notice in the United States mail,
postage prepaid, addressed to the other party as follows:

                A. If addressed to Landlord, to Landlord as its Address for
Notices (as set forth in Article I).

                B. If addressed to Tenant, to Tenant at its Address for Notices
(as set forth in Article I).

Any notice given by registered mail shall be deemed to have been given on the
third business day after its deposit in the United States mail. Any notice given
by certified mail shall be deemed given on the date receipt was acknowledged to
the postal authorities. Any notice given by mail other than registered or
certified mail shall be deemed given only if received by the other party, and
then on the date of receipt. In the event of notice by electronic facsimile
transmission or commercial carrier, notice shall be deemed received on the date
of confirmation documented by the transmission or carrier. Each party may, by
written notice to the other in the manner aforesaid, change the address to which
notices addressed to is shall thereafter be mailed.

        13.11 ATTORNEYS' FEES: In the event any party shall bring any action,
arbitration proceeding or legal proceeding alleging a breach of any provision of
this Lease to recover rent, to terminate this Lease, or to enforce, protect,
determine or establish any term or covenant of this Lease or rights or duties
hereunder of either party, the prevailing party shall be entitled to recover
from the non-prevailing party as a part of such action or proceeding, or in a
separate action for that purpose brought within one year from the determination
of such proceeding, reasonable attorneys' fees, expert witness fees, court costs
and other reasonable expenses incurred by the prevailing party. In the event
that Landlord shall be required to retain counsel to enforce any provision of
this Lease, and if Tenant shall thereafter cure (or desire to cure) such
default, Landlord shall be conclusively deemed the prevailing party, and Tenant
shall pay to Landlord all attorneys' fees, expert witness fees, court costs and
other reasonable expenses so incurred

                                       44
<PAGE>   45

by Landlord promptly upon demand. Landlord may enforce this provision by either
(i) requiring Tenant to pay such fees and costs as a condition to curing its
default or (ii) bringing a separate action to enforce such payment, is being
agreed by and between Landlord and Tenant that Tenant's failure to pay such fees
and costs upon demand shall constitute a breach of this Lease in the same manner
as a failure by Tenant to pay the Base Monthly Rent, giving Landlord the same
rights and remedies as if Tenant failed to pay the Base Monthly Rent.

        13.12 DEFINITIONS: Any term that is given a special meaning by any
provision in this Lease shall, unless otherwise specifically stated, have such
meaning whenever used in this Lease or in any Addenda or amendment hereto. In
addition to the terms defined in Article I, the following terms shall have the
following meanings:

                A. REAL PROPERTY TAXES: The term "Real Property Tax" or "Real
Property Taxes" shall each mean (i) all taxes, assessments, levies and other
charges of any kind or nature whatsoever, general and special, foreseen and
unforeseen (including all installments of principal and interest required to pay
any general or special assessments for public improvements and any increases
resulting from reassessments caused by any change in ownership or new
construction), now or hereafter imposed by any governmental or
quasi-governmental authority or special district having the direct or indirect
power to tax or levy assessments, which are levied or assessed for whatever
reason against the Project or any portion thereof, or Landlord's interest
therein, or the fixtures, equipment and other property of Landlord that is an
integral part of the Project and located thereon, or Landlord's business of
owning, leasing or managing the Project or the gross receipts, income or rentals
from the Project; (ii) all charges, levies or fees imposed by any governmental
authority against Landlord by reason of or based upon the use of or number of
parking spaces within the Project, the amount of public services or public
utilities used or consumed (e.g. water, gas, electricity, sewage or surface
water disposal) at the Project, the number of persons employed by tenants of the
Project, the size (whether measured in area, volume, number of tenants or
whatever) or the value of the Project, or the type of use or uses conducted
within the Project; and (iii) all costs and fees (including attorneys' fees)
incurred by Landlord in contesting any Real Property Tax and in negotiating with
public authorities as to any Real Property Tax. If, as any time during the Lease
Term, the taxation or assessment of the Project prevailing as of the Effective
Date of this Lease shall be altered so that in lieu of or in addition to any
Real Property Tax described above there shall be levied, assessed or imposed
(whether by reason of a change in the method of taxation or assessment, creation
of a new sax or charge, or any other cause) an alternate, substitute, or
additional sax or charge (i) on the value, size, use or occupancy of the Project
or Landlord's interest therein or (ii) on or measured by the gross receipts,
income or rentals from the Project, or on Landlord's business of owning, leasing
or managing the Project or (iii) computed in any manner with respect to the
operation of the Project, then any such sax or charge, however designated, shall
be included within the meaning of the terms "Real Property Tax" or "Real
Property

                                       45
<PAGE>   46

Taxes" for purposes of this Lease. If any Real Property Tax is partly based upon
property or rents unrelated to the Project, then only that part of such Real
Property Tax that is fairly allocable to the Project shall be included within
the meaning of the terms "Real Property Tax" or "Real Property Taxes".
Notwithstanding the foregoing, the terms "Real Property Tax" or "Real Property
Taxes" shall not include estate, inheritance, transfer, gift or franchise taxes
of Landlord or the federal or state income sax imposed on Landlord's income from
all sources.

                B. LANDLORD'S INSURANCE COSTS: The term "Landlord's Insurance
Costs" shall mean the costs to Landlord to carry and maintain the policies of
fire and property damage insurance, including quake and flood, for the Project
and general liability insurance required, or permitted, to be carried by
Landlord pursuant to Article 9, together with any deductible amounts paid by
Landlord upon the occurrence of any insured casualty or loss.

                C. PROJECT MAINTENANCE COSTS: The term "Project Maintenance
Costs" shall mean all costs and expenses (except Landlord's Insurance Costs and
Real Property Taxes) paid or incurred by Landlord in protecting, operating,
maintaining, repairing and preserving the Project and all parts thereof,
including without limitation, (i) professional management fees (equal to five
percent of the annualized Base Monthly Rent), (ii) the amortizing portion of any
costs incurred by Landlord in the making of any modifications, alterations or
improvements as set forth in Article 6, which are so amortized during the Lease
Term, (iii) costs of complying with governmental regulations governing Tenant's
use of Hazardous Materials, and Landlord's costs of monitoring Tenant's use of
Hazardous Materials including fees charged by Landlord's consultants to
periodically inspect the Premises and the Property, and (iv) such other costs as
may be paid or incurred with respect to operating, maintaining and preserving
the Project, such as repairing replacing and resurfacing the exterior surfaces
of the buildings (including roofs), repairing, replacing, and resurfacing paved
areas, repairing structural parts of the buildings, cleaning, maintaining,
repairing, or replacing the interior of the Leased Premises both during the
Lease Term and upon the termination of the Lease, and maintaining, repairing or
replacing, when necessary electrical, plumbing, sewer, drainage, heating,
ventilating and air conditioning systems serving the buildings, providing
utilities to the common areas, maintenance, repair, replacement or installation
of lighting fixtures, directional or other signs and signals, irrigation or
drainage systems, trees, shrubs, materials, maintenance of all landscaped areas,
and depreciation and financing costs on maintenance and operating machinery and
equipment (if owned) and rental paid for such machinery and equipment (if
leased).

                D. READY FOR OCCUPANCY: The term "Ready for Occupancy" shall
mean the date upon which (i) the Leased Premises are available for Tenant's
occupancy in a broom clean condition and (ii) the improvements, if any, to be
made to the Leased Premises by Landlord as a condition to Tenant's obligation to
accept

                                       46
<PAGE>   47

possession of the Leased Premises have been substantially completed and the
appropriate governmental building department (i.e. the City building department,
if the Project is located within a City, or otherwise the County building
department) shall have approved the construction of the improvements as
substantially complete or is willing to so approve the construction of such
improvements as substantially complete subject only to compliance with specified
conditions which are the responsibility of Tenant to satisfy or is willing to
allow Tenant to occupy subject to its receiving assurances that specified work
will be completed.

                E. TENANT'S PROPORTIONATE SHARE: The term "Tenant's
Proportionate Share" or "Tenant's Share," as used with respect to an item
pertaining to the Building, shall each mean that percentage obtained by dividing
the leasable square footage contained within the Leased Premises (as set forth
in Article I) by the total leasable square footage contained within the Building
as the same from time to time exists or, as used with respect to an item
pertaining to the Project, shall each mean that percentage obtained by dividing
the leasable square footage contained within the Leased Premises (as set forth
in Article I) by the total leasable square footage contained within the Project
as the same from time to time exists, unless, as to any given item, such a
percentage allocation unfairly burdens or benefits a given tenant(s), in which
case Landlord shall have the exclusive right to equitably allocate such item so
as to not unfairly burden or benefit any given tenant(s). Landlord's
determination of any such special allocation shall be final and binding upon
Tenant unless made in bad faith.

                F. BUILDING'S PROPORTIONATE SHARE: The term "Building's
Proportionate Share" or "Building's Share" shall each mean that percentage which
is obtained by dividing the leasable square footage contained within the
Building by the leasable square footage contained within all buildings located
within the Project, unless, as to any given item, such a percentage allocation
unfairly burdens or benefits a given building(s), in which case Landlord shall
have the exclusive right to equitably allocate such item so as to not unfairly
burden or benefit any given building(s). Landlord's determination of any such
special allocation shall be final and binding upon Tenant unless made in bad
faith.

                G. BUILDING OPERATING EXPENSES: The term "Building Operating
Expenses" shall mean and include the Building's Share of all Real Property
Taxes, plus the Building's Share of all Landlord's Insurance Costs, plus the
Building's Share of all Project Maintenance Costs, plus an accounting fee equal
to five percent of all such costs.

                H. LAW: The term "Law" shall mean any judicial decision and any
statute, constitution, ordinance, resolution, regulation, rule, administrative
order, or usher requirement of any municipal, county , state, federal, or other
governmental agency or authority having jurisdiction over the parties to this
Lease, the Leased Premises, the Building or the Project, or any of them in
effect either at the Effective Date of this Lease

                                       47
<PAGE>   48

or as any time during the Lease Term, including, without limitation, any
regulation, order, or policy of any quasi-official entity or body (e.g. a board
of fire examiners or a public utility or special district).

                I. LENDER: The term "Lender" shall mean the holder of any Note
or other evidence of indebtedness secured by the Project or any portion thereof

                J. PRIVATE RESTRICTIONS: The term "Private Restrictions" shall
mean all recorded covenants, conditions and restrictions, private agreements,
easements, and any other recorded instruments affecting the use of the Project,
as they may exist from time to time.

                K. RENT: The term "rent" shall mean collectively Base Monthly
Rent and all Additional Rent.

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

        13.14 MISCELLANEOUS: Should any provision of this Lease prove to be
invalid or illegal, such invalidity or illegality shall in no way affect, impair
or invalidate any other provision hereof, and such remaining provisions shall
remain in full force and effect. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor. Any copy of this Lease which is executed by the parties shall be deemed
an original for all purposes. This Lease shall, subject to the provisions
regarding assignment, apply to and bind the respective heirs, successors,
executors, administrators and assigns of Landlord and Tenant. The term "party"
shall mean Landlord or Tenant as the context implies. If Tenant consists of more
than one person or entity, then all members of Tenant shall be jointly and
severally liable hereunder. This Lease shall be construed and enforced in
accordance with the Laws of the State in which the Leased Premises are located.
The language in all parts of this Lease shall in all cases be construed as a
whole according to its fair meaning, and not strictly for or against either
Landlord or Tenant. The captions used in this Lease are for convenience

                                       48
<PAGE>   49

only and shall not be considered in the construction or interpretation of any
provision hereof. When the context of this Lease requires, the neuter gender
includes the masculine, the feminine, a partnership or corporation or joint
venture, and the singular includes the plural. The terms "must," "shall," "will"
and "agree" are mandatory. The term "may" is permissive. When a party is
required to do something by this Lease, it shall do so at its sole cost and
expense without right of reimbursement from the other party unless specific
provision is made therefore. Where Tenant is obligated not to perform any act or
is not permitted to perform any act, Tenant is also obligated to restrain any
others reasonably within its control, including agents, invitees, contractors,
subcontractors and employees, from performing said act. Landlord shall not
become orbs deemed a partner or a joins venturer with Tenant by reason of any of
the provisions of this Lease.

                                   ARTICLE 14
                               CORPORATE AUTHORITY
                          BROKERS AND ENTIRE AGREEMENT

        14.1 CORPORATE AUTHORITY: If Tenant is a corporation, each individual
executing this Lease on behalf of said corporation represents and warrants that
Tenant is validly formed and duly authorized and existing, that Tenant is
qualified to do business in the State in which the Leased Premises are located,
that Tenant has the full right and legal authority to enter into this Lease,
that he or the is duly authorized to execute and deliver this Lease on behalf of
Tenant in accordance with the bylaws and/or a board of directors' resolution of
Tenant, and that this Lease is binding upon Tenant in accordance with its terms.
Tenant shall, within thirty days after execution of this Lease, deliver to
Landlord a certified copy of the resolution of its board of directors
authorizing or ratifying the execution of this Lease, and if Tenant fails to do
so, Landlord as its sole election may elect to (i) extend the Intended
Commencement Date by such number of days that Tenant shall have delayed in so
delivering such corporate resolution to Landlord or (ii) terminate this Lease.

        14.2 BROKERAGE COMMISSIONS: Tenant warrants that is has not had any
dealings with any real estate broker(s), leasing agent(s), finder(s) or
salesmen, other than those persons or entities named in Article I as the
"Brokers" with respect to the lease by it of the Leased Premises pursuant to
this Lease, and that it will indemnify, defend with competent counsel, and hold
Landlord harmless from any liabilities for the payment of any real estate
brokerage commissions, leasing commissions or finder's fees claimed by any other
real estate broker(s), leasing agent(s), finder(s) or salesmen to be earned or
due and payable by reason of Tenant's agreement or promise (implied or
otherwise) to pay (or have Landlord pay) such a commission or finder's fee by
reason of its leasing the Leased Premises pursuant to this Lease.

        14.3 ENTIRE AGREEMENT: This Lease, the Exhibits (as described in Article
I) and the Addenda (as described in Article I), which Exhibits and Addenda are
by this

                                       49
<PAGE>   50

reference incorporated herein, constitute the entire agreement between the
parties, and there are no other agreements, understandings or representations
between the parties relating to the lease by Landlord of the Leased Premises to
Tenant, except as expressed herein, No subsequent changes, modifications or
additions to this Lease shall be binding upon the parties unless in writing and
signed by both Landlord and Tenant.

        14.4 LANDLORD'S REPRESENTATIONS: Tenant acknowledges that neither
Landlord nor any of its agents made any representations or warranties respecting
the Project, the Building or the Leased Premises, upon which Tenant relied in
entering into this Lease, which are not expressly set forth in this Lease.
Tenant further acknowledges that neither Landlord nor any of its agents made any
representations as to (i) whether the Leased Premises may be used for Tenant's
intended use under existing Law or (ii) the suitability of the Leased Premises
for the conduct of Tenant's business or (iii) the exact square footage of the
Leased Premises, and that Tenant relied solely upon its own investigations
respecting said matters. Tenant expressly waives any and all claims for damage
by reason of any statement, representation, warranty, promise or other agreement
of Landlord or Landlord's agent(s), if any, not contained in this Lease or in
any Addenda hereto.

                                   ARTICLE 15
                               TENANT IMPROVEMENTS

                Landlord shall pay for and construct the improvements depicted
on Exhibit "D," attached hereto, new building standard carpet, base and painting
of the walls of the Premises ("Tenant Improvements"). Except for the Tenant
Improvements, Tenant agrees to lease the Premises in their "as-is" condition,
and any alteration or modification to the Premises shall be made as Tenant's
sole cost and expense and shall not delay the Lease Commencement Date nor the
payment of Rent.

                                   ARTICLE 16
                                 EARLY OCCUPANCY

                At such time as Landlord has completed construction of' the
Tenant Improvements, Tenant shall have the right to take occupancy of the
Premises and to use the Premises as set forth under the terms of the Lease.
Notwithstanding Tenant's early occupancy of the Premises, Tenant shall not be
required to pay Base Monthly Rent, nor Additional Rent for the use of the
Premises for any period of time prior to July 1, 1999. From and after July I,
999, Tenant shall pay Rent for the Premises as set forth in this Lease.

                                       50
<PAGE>   51

                IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease
as of the date set forth above, wish the intent to be legally bound thereby as
of the Effective Date of this Lease.

AS LANDLORD:                                AS TENANT:

RENCO BAYSIDE INVESTORS                     VIRAGE LOGIC, CORP.
A California Limited Partnership            A California Corporation

By: Renco Properties IX                     By: /s/ Adam Kablanian
    A California Limited Partnership           ---------------------------------
    General Partner                         Title: President & CEO
                                                  ------------------------------
By: Renco Properties, Inc.
    General Partner

By: /s/ Donald Vermeil
   ---------------------------------

Title: Secretary/Treasurer Renco Properties, Inc.
      -------------------------------------------

By: /s/
   ---------------------------------

Title: Exec. VP & Asst. Secy. Renco Properties, Inc.
      ----------------------------------------------

By: /s/
   ---------------------------------

Title: Richard T. Peery Trustee, UTA Dated 7/20/77
      ----------------------------------------------
       (Richard T. Peery Separate Property Trust)
      ----------------------------------------------

If Tenant is a CORPORATION, the authorized officers must sign on behalf of the
corporation and indicate the capacity in which they are signing. This Lease must
be executed by the chairman of the board, president or vice president, and the
secretary, assistant secretary, the chief financial officer or assistant
treasurer, unless the bylaws or a resolution of the board of directors shall
otherwise provide, in which event a certified copy of the bylaws or a certified
copy of the resolution, as the case may be, muss be attached to this Lease.

                                       51
<PAGE>   52

                                   EXHIBIT "C"
                              ACCEPTANCE AGREEMENT

        This Acceptance Agreement is made as of ___________________, by and
between the parties hereto with regard to the Lease dated ___________________,
by and between ______________________________, a California general partnership,
as Landlord ("Landlord"), and _________________________________, a California
Corporation, as Tenant ("Tenant"), affecting those premises commonly known as
________________ located at __________________________________ in the City of
____________, State of California (the "Premises"). The parties agree as
follows:

        1. All improvements required to be constructed by Landlord by the Lease
have been completed in accordance with the terms of the Lease and are hereby
accepted by Tenant, subject to the completion of punchlist items identified on
Exhibit "A" attached hereto.

        2. Possession of the Premises has been delivered to Tenant and Tenant
has accepted and taken possession of the Premises.

        3. The Lease Commencement Date is _____________________.

        4. The Lease Term shall expire on _________________ unless sooner
terminated according to the terms of the Lease or by mutual agreement.

        5. The Base Monthly Rent due pursuant to the Lease is as follows:

        _____________ through _____________        $______________________

        _____________ through _____________        $______________________

        _____________ through _____________        $______________________

        6. Landlord has received a Security Deposit in the amount of ___________
($__________).

        7. Landlord has received Prepaid Rent in the amount of _________________
($__________), which shall be applied to the first installment of Base Monthly
Rent.

        8. The Lease is in full force and effect, neither party is in default of
its obligations under the Lease, and Tenant has no setoffs, claims, or defenses
to the enforcement of the Lease.

<PAGE>   53

AS LANDLORD:                                AS TENANT:

                                            VIRAGE LOGIC, CORP.
--------------------------------            A California Corporation
A California Limited Partnership

By:                                         By:
   ---------------------------------           ---------------------------------
Title:  General Partner                     Title:
      ------------------------------              ------------------------------
By:
   ---------------------------------
Title:  General Partner

<PAGE>   54

                                   EXHIBIT "A"

                                      None<PAGE>   1
                                                                  EXHIBIT 10.20

                                       HQ

                            OFFICE SERVICE AGREEMENT

This Agreement is dated August 3, 1999 entered into in Lebanon, NJ (City & State
of Center) for the HQ Clinton (Center) located at 3 Werner Way, Lebanon, NJ
08833 (Center Address) by and between HQ Global Workplaces, Inc. (hereinafter
"HQ") and Virage Logic (hereinafter "Client).

HQ and Client agree that HQ shall grant to Client for an in consideration of the
agreements and fee(s) set forth herein and in the Master Office Service
Agreement dated August 3, 1999, a license to use the Office(s) as from time to
time designated by HQ and, in common with HQ's other clients. Client's license
to use HQ's Business Center facilities and services shall be in accordance with
the terms hereof and the Master Office Service Agreement. All of the terms and
conditions of the Master Office Service Agreement shall be included in and shall
control this Agreement. This Agreement shall be attached to and become part of
the Master Office Service Agreement.

1. BASIC TERMS. Stated below are the basic terms of this Agreement and all
provisions of the Master Office Service Agreement are to be read in accord
therewith.

        A. Base Services. HQ's Complete Executive Office Program, including the
use of executive offices complete with professional administrative staff and
such other inclusive services are as defined in Schedule "A" (attached to the
Master Office Service Agreement.)

        B. Additional Services. Access to additional business services for
purchase as needed by Client, including secretarial, administrative,
telecommunications support and such other services are as defined in Schedule
"B" (attached to the Master Office Service Agreement.)

        C. HQ Business Center Name: HQ Clinton.

        D. Business Center Address: 3 Warner Way.

        E. Office number(s): #331($865.00), #332 ($860.00), #333 ($1,046.00)
having a maximum occupancy capacity of 6 person(s).

<TABLE>
<CAPTION>
------------------------- --------------------- --------------------
                          # OF PERSONS          MONTHLY BASE
OFFICE #(S)               PER OFFICE            OFFICE FEE
------------------------- --------------------- --------------------
<S>                       <C>                   <C>
    334                   2                       $  890.50
------------------------- --------------------- --------------------
    335                   2                       $1,176.00
------------------------- --------------------- --------------------
    336                   2                       $  890.50
------------------------- --------------------- --------------------
TOTAL: 3 OFFICES          6 PEOPLE                $2,967.00
------------------------- --------------------- --------------------
</TABLE>

                                     1 of 1
<PAGE>   2

        F.     Commencement Date:                  August 9, 1999

        G.     Initial Term:                       Six (6) months

        H.     End of Initial Term:                January 31, 2000

        I.     Total Fixed Monthly Charges:        $4,007.00

        J.     Refundable Services Retainer:       $6,010.50

        K. Client represents and warrants to HQ that there are no agents,
brokers, finders or other parties except Kurt Burdock - CO, Richard Ellis with
whom Client has dealt who are or may be entitled to any commission or fee with
respect to this Agreement unless noted in this section.

        L. Based upon a twelve, six or three month term, and upon the Ending of
the Initial Term (as noted above), or any extension thereof, the term of this
Agreement and the license herein granted shall be automatically extended for the
same period of time as the Initial Term, upon the same terms and conditions as
contained herein, unless either party give notice to the other in writing to the
contrary at least sixty (60) days prior to the End of Initial Term if Client has
licensed the use of two (2) or less offices or(90) days if Client has licensed
the use of three (3) or more offices.

All notices hereunder shall be in writing. Notices to Client shall be deemed to
be duly given if mailed by registered or certified mail, postage prepaid,
overnight mail service or hand delivered with proof of delivery addressed to
Client at:

        Contact:                    James Pekarsky, Chief Financial Officer
        Client/Company Name:        Virage Logic
        Client Address:             9 Trade Winds Dr.
        Client City, State, Zip:    Randolph, NJ 07849
        Phone:

Notice to HQ shall be deemed to be duly given if mailed by registered or
certified mail, postage prepaid, overnight mail service or hand delivered with
proof of delivery addressed to HQ at the Building and as follows:

        Center Name:                HQ Clinton
        Address:                    3 Warner Way
        Client City, State, Zip:    Lebanon NJ 08833
        Attn:                       Center Manager
        Center Phone:               908-236-3800

                                     2 of 2
<PAGE>   3

This Agreement may be executed in two or more counterparts, each of which shall
be deemed to be an original but all of which together shall constitute one and
the same instrument.

HQ GLOBAL WORKPLACES, INC.                   CLIENT: VIRAGE LOGIC

By:          /s/                          By:             /s/
     --------------------------                  ----------------------------
     Authorized Signature                        Authorized Signature

                                                       James Pekarsky
     --------------------------                  ----------------------------
     Print Name                                  Print Name

Its:                                      Its:     8/5/99
     --------------------------                  ----------------------------

                                          IF A PARTNERSHIP:

                                          By:
                                                 ----------------------------
                                                 Authorized Signature

                                                 ----------------------------
                                                 Print Name

                                          Its:
                                                 ----------------------------

                                     3 of 3
<PAGE>   4

                                   ADDENDUM 1

                                       TO

                            OFFICE SERVICE AGREEMENT

The following modifications are hereby made to the Office Service Agreement
dated August 3, 1999 by and between HQ Global Workplaces, Inc. d/b/a HQ Clinton
and Virage Logic.

       Section 1.E.         Add the following:

<TABLE>
<CAPTION>
                    ------------------- ---------------- ------------------
                    OFFICE #(S)         # OF PERSONS     MONTHLY BASE
                                        PER OFFICE       OFFICE FEE
                    ------------------- ---------------- ------------------
                   <S>                  <C>              <C>
                        331             2                  $  865.00
                    ------------------- ---------------- ------------------
                        332             2                  $  860.00
                    ------------------- ---------------- ------------------
                        333             2                  $1,046.00
                    ------------------- ---------------- ------------------
</TABLE>

                          Change Monthly Base Office Fee to $5,728.00 and Total
                          number of people to twelve (12)

       Section 1.F.       Commencement Date: August 23, 1999

       Section 1.I.       Change Total Fixed Monthly Charges to $8,038.00

       Section 1.J.       Change Total Refundable Service Retainer: $12,092.00
                          Additional Service Retainer will be required
                          in the amount of $6,046.50.

All other terms and conditions will remain in full force and effect.

HQ GLOBAL WORKPLACES, INC. D/B/A HQ CLINTON
         /s/
----------------------------                ---------------
Barbara Cafferty                            Date
Center Manager

VIRAGE LOGIC

  /s/ VP Finance, CFO                        8/5/99
----------------------------                ----------------
Signature/Title                             Date

<PAGE>   5

                                   ADDENDUM 2

                                       TO

                            OFFICE SERVICE AGREEMENT

The following modifications are hereby made to the Office Service Agreement
dated August 3, 1999 by and between HQ Global Workplaces, Inc. d/b/a HQ Clinton
and Virage Logic.

       Section 1.E.         Add the following:

<TABLE>
<CAPTION>
                    ------------------- ---------------- ------------------
                    OFFICE #(S)         # OF PERSONS     MONTHLY BASE
                                        PER OFFICE       OFFICE FEE
                    ------------------- ---------------- ------------------
                   <S>                  <C>              <C>
                        345             2                $  570.00
                    ------------------- ---------------- ------------------
                        346             2                $  640.00
                    ------------------- ---------------- ------------------
</TABLE>

                          Change Monthly Base Office Fee to $6,938.00 and Total
                          number of people to sixteen (16)

       Section 1.F.       Commencement Date: September 6, 1999

       Section 1.I.       Change Total Fixed Monthly Charges to $9,873.00

       Section 1.J.       Change Total Refundable Service Retainer: $14,809.50
                          Additional Service Retainer will be required
                          in the amount of $2,752.50.

All other terms and conditions will remain in full force and effect.

HQ GLOBAL WORKPLACES, INC. D/B/A HQ CLINTON
             /s/
----------------------------                ---------------
Barbara Cafferty                            Date
Center Manager

VIRAGE LOGIC

  /s/ VP Finance, CFO                        8/5/99
----------------------------                ----------------
Signature/Title                             Date

<PAGE>   6

                                    ADDENDUM

                                       TO

                         MASTER OFFICE SERVICE AGREEMENT

The following modifications are hereby made to the Master Office Service
Agreement dated August 3, 1999 by and between HQ Global Workplaces, Inc. d/b/a
HQ Clinton and Virage Logic.

               Section 5 DAMAGES AND INSURANCE

                             ...Client agrees to pay for repainting and cleaning
                             fees for each office occupied less than twelve (12)
                             months by Client at a cost not to exceed one
                             hundred dollars ($100.00) per Office.

                             ...HQ shall have the right to show the Office to
                             prospective Clients after written notification,
                             provided HQ will use reasonable efforts not to
                             disrupt Client's business.

                             ...effective upon such casualty, or may elect to
                             repair, restore, or rehabilitate, or cause to be
                             repaired, restored or rehabilitated, the HQ
                             Business Center, without expense to the client,
                             within thirty (30) days or within such longer
                             period of time as may be required because of events
                             beyond HQ's control.

               Section 7 RESTRICTION ON HIRING

                             Both parties agree that during the term of this
                             Master Agreement...

                             The hiring party shall be liable to the other party
                             for and shall pay to such other party, on demand,
                             liquidated damages in the sum of $25,000...

               Section 8B MISCELLANEOUS

                             Either Party's failure to enforce any provision of
                             this Agreement or its acceptance of fees shall not
                             be a waiver and shall not prevent such party from
                             enforcing...

      All other terms and conditions will remain in full force and effect.

                                     1 of 1
<PAGE>   7

HQ GLOBAL WORKPLACES, INC. D/B/A HQ CLINTON
          /s/
----------------------------                ---------------
Barbara Cafferty                            Date
Center Manager

VIRAGE LOGIC

  /s/ VP Finance, CFO                        8/5/99
----------------------------                ---------------
Signature/Title                             Date

                                     2 of 2
<PAGE>   8

                                       HQ

                         MASTER OFFICE SERVICE AGREEMENT

This Master Office Service Agreement ("Master Agreement") is dated August 3,1999
and is entered into in Lebanon, NJ by and between HQ GLOBAL WORKPLACES, INC.
(hereinafter "HQ") and VIRAGE LOGIC (hereinafter "Client).

        1. OFFICE. Client shall execute an Office Service Agreement ("Office
Agreement") for each HQ Business Center location where Client licenses an Office
and is provided services by HQ. Furthermore, each Office Agreement shall be
attached as a schedule to this Master Agreement. Furthermore, all of the terms
and conditions of each Office Agreement shall be incorporated into and become
part of this Master Agreement.

        Client shall, as part of the Base Services, be granted a license to use
the Office and shall have access to the Office twenty-four (24) hours a day,
seven (7) days a week. HQ agrees to provide office cleaning, maintenance
services, heating and air conditioning to the Office for normal office use in
such reasonable quantities and during such reasonable hours as shall be
determined by HQ or the Building. In addition, Client will have reasonable use
of HQ common area facilities during normal business hours. Client shall use the
Office and common areas of the HQ Business Center solely for general office use
in the conduct of the Client's business. HQ agrees, at its own cost and expense,
to furnish and to install furniture, fixtures and equipment that are in HQ's
sole opinion necessary to provide suitable office facilities for the Client upon
such terms and conditions routinely applicable to the facility; provided that
such furniture, fixtures and equipment shall remain HQ's property.

        If, for any reason whatsoever, HQ is unable to provide use of the Office
or a mutually agreed upon alternative Office at the time herein agreed, Client
may either extend the Commencement Date until the Office becomes available or,
as its sole remedy for such failure, cancel and terminate this Agreement if the
use of the Office is not available to Client within five (5) business days after
written notice to HQ by Client, in which case any prior payments shall be fully
refunded. No such failure to provide use of the Office shall subject HQ to any
liability for loss or damage, nor affect the validity of this Agreement or the
obligations of the Client hereunder.

        HQ will have the right to relocate Client to another office in the HQ
Business Center, and to substitute such other office for the Office licensed
hereby, provided such other office is substantially similar in area and
configuration to Client's contracted office and provided Client shall incur no
increase in the Monthly Base Office Fee or any relocation cost or expense.

        2. SERVICES. HQ agrees, in consideration of the Monthly Base Office Fee,
to provide Base Services to Client as described in Schedule "A." From time to
time during the Term, HQ may, at its option,

                                    1 of 11
<PAGE>   9

make other services available to Client of the nature described in Schedule "B"
at fees that are from time to time established by HQ. Fees are subject to change
at HQ's discretion, with thirty (30) days written notice to the Client from the
HQ Business Center. HQ shall be under no obligation to provide Schedule "B"
services if the monthly cost thereof exceeds the Refundable Services Retainer.
In the event Client is in default of this Agreement, HQ may, at its option,
cease furnishing any and all services including telephone services.

        Client will not offer to any party in the HQ Business Center or the
Building, any of the services that HQ provides to its clients including, but not
limited to, the services described in Schedule "A" or "B."

        Client acknowledges that due to the imperfect nature of verbal, written
and electronic communications, neither HQ nor HQ's Landlord or any of its
officers, directions, employees, shareholders, partners, agents or
representatives shall be responsible for damages, direct or consequential, that
may result from the failure of HQ to furnish any service, including but not
limited to the service of conveying messages, communications and other utility
or services required under this Master Agreement, Office Service Agreement or
agreed to by HQ. Client's sole remedy and HQ's sole obligation for any failure
to render any service, any error or omission, or any delay or interruption with
respect thereto, is limited to an adjustment to Client's billing in an amount
equal to the charge for such service for the period during which the failure,
delay or interruption continues.

        WITH THE SOLE EXCEPTION OF THE REMEDY SET FORTH IN THIS PARAGRAPH,
CLIENT EXPRESSLY AND SPECIFICALLY AGREES TO WAIVE, AND AGREES NOT TO MAKE ANY
CLAIM FOR DAMAGES, DIRECT OR CONSEQUENTIAL, INCLUDING WITH RESPECT TO LOST
BUSINESS OR PROFITS, ARISING OUT OF ANY FAILURE TO FURNISH ANY SERVICE, ANY
ERROR OR OMISSION WITH RESPECT THERETO OR ANY DELAY OR INTERRUPTION OF THE SAME.

        3. DURATION OF AGREEMENT. This Master Agreement can be terminated by
either party upon thirty (30) days written notice provided such notice is in
accordance with section 8(G), if and only if all of the licenses for office
space granted in accordance with the attached schedules have expired or been
terminated.

        Upon any termination of this Master Agreement or any Office Agreement,
whether by lapse of time or otherwise, or upon any revocation of Client's
license herein granted, the Client shall cease all use of the Office, the HQ
Business Center and all services immediately. For each and every month or
portion thereof that Client continues use of the Office after the termination
time or otherwise, without the express written consent of HQ, Client shall pay
HQ an amount equal to two (2) times the Monthly Base Office Fee computed on a
per-month basis for each month or portion thereof that Client continues the use
of the Office.

        4. PAYMENTS AND ESCALATIONS. Client agrees to pay to HQ the Monthly
Base Office Fee plus applicable

                                    2 of 11
<PAGE>   10

sales or use taxes, in advance, on the first day of each calendar month during
the Initial Term and all extensions thereof, without any deduction, offset,
notice or demand. If the Commencement Date shall be other than the first day of
a month, fees for any such month shall be prorated. Charges for any Schedule "B"
service purchased by Client from HQ shall be due and payable on the 10th of the
month following the order for any such service.

        All Monthly Base Office Fees and other sums payable hereunder shall be
payable at the office of HQ or at such other location or to any agent designated
in writing by HQ. In addition to any other sums due, Client shall pay monthly
late charges equal to five percent (5%) of all amounts that have not been paid
to HQ within five (5) days of their respective due dates. The parties agree that
such late charges are fair and reasonable compensation for costs incurred by HQ
where there is default in any payment due under this Master Agreement or an
Office Agreement.

        Upon the execution of an Office Agreement, Client shall pay HQ or its
agent the Refundable Services Retainer. The Refundable Services Retainer need
not be kept separate and apart from other funds of HQ, no interest shall be paid
thereon, and may be used by HQ to provide "Schedule "A" and "B" services under
this Master Agreement, pay to HQ the Total Fixed Monthly Charges for the first
full month of the Initial Term.

        Client agrees that the Refundable Services Retainer shall not be used by
Client as payment for the Monthly Base Office Fee for the last month of the
Initial Term, or any extension thereof. In the event Client defaults in the
performance of any of the terms hereof, HQ may terminate this Master Agreement
and the license herein granted and may also use, apply or retain the whole, or
any part, of the Refundable Services Retainer for the payment of any service fee
or any other payment due hereunder, or for payment of any other sum that HQ may
spend by reason of Client's default. If Client shall, at the end of the term of
this Master Agreement, have fully and faithfully complied with all of the terms
and provisions of this Master Agreement, and surrendered all keys, access cards
and building passes, the Refundable Services Retainer, or any balance thereof,
shall be returned to Client within forty-five (45) days thereafter.

        5. DAMAGES AND INSURANCE. Client will not damage or deface the
furnishings, walls, floors or ceilings, nor make holes for the hanging of
pictures or make or suffer to be made any waste, obstruction or unlawful,
improper or offensive use of the Office or the common area facilities. Client
will not cause damage to any part of the Building or the property of HQ or
disturb the quiet enjoyment of any other licensee or occupant of the Building.
At the termination of this Master Agreement, the Office shall be in as good
condition as when Client commenced the use thereof, normal wear and tear
excepted. Client agrees to pay for repainting and cleaning fees for each Office
occupied less than twelve (12) months by Client, at a cost not to exceed Two
Hundred Fifty Dollars ($250.00) per Office. Client is responsible for costs of
repairing any damage to office or furniture and to return each office to HQ

                                    3 of 11
<PAGE>   11

in good condition. HQ will have the right, at any time and from time to time, to
enter the Office to inspect the same, to make such repairs and alterations as HQ
reasonably deems necessary, and the cost of any such repair resulting from the
act or omission of Client shall be reimbursed to HQ by Client upon demand. HQ
shall have the right to show the Office to prospective Clients, provided HQ will
use reasonable efforts not to disrupt Client's business.

        HQ or Client and its respective directors, licensors, officers, agents,
servants and employees shall not, to the extent permitted by law, except upon
the affirmative showing of HQ's or Client's gross negligence or willful
misconduct, be liable for, and Client or HQ waives all right of recovery against
such entities and individuals for any damage or claim with respect to any injury
to person or damage to, or loss or destruction of any property of Client or HQ,
its employees, authorized persons and invitees due to any act, omission or
occurrence in or about the HQ Business Center or the Building. Without
limitation of any other provision hereof, each party hereto hereby agrees to
indemnify, defend and hold harmless the other party hereto, and such other
party's officers, directors, employees, shareholders, partners, agents and
representatives from and against any liability to third parties arising out of,
in the case of Client as an indemnifying party. Client's use and occupancy of
the Office or any act or omission constituting gross negligence or willful
misconduct of Client or Client's officers, directors, employees, shareholders,
partners, agents, representatives, contractors, customers or invitees and, in
the case of HQ as an indemnifying party, any act or omission constituting gross
negligence or willful misconduct of HQ or HQ's officers, directors, employees,
shareholders, partners, agents or representatives. Subject to the foregoing,
Client assumes all risk of loss with respect to all personal property of Client,
its agents, employees, contractors, and invitees, within or about the HQ
Business Center or the Building. Client acknowledges that it is the Client's
responsibility to maintain insurance to cover the risks set forth in this
paragraph.

        HQ and Client each hereby waive any and all rights of recovery against
the other, or against the directors, licensors, officers, agents, servants and
employees of the other, for loss of or damage to the property or the property of
others under its control, to the extent such loss or damage is covered by any
insurance policy.

        If the HQ Business Center is made unusable, in whole or in part, by fire
or other casualty not due to negligence of Client, HQ may, at its option,
terminate the Master Agreement upon notice to Client, effective upon such
casualty, or may elect to repair, restore or rehabilitate, or cause to be
repaired, restored or rehabilitated, the HQ Business Center, without expense to
Client, within ninety (90) days or within such longer period of time as may be
required because of events beyond HQ's control. The Monthly Base Office Fee
shall be abated on a per diem basis for the portions of the Office that are
unusable.

        6. DEFAULT. Client shall be deemed to be in default under this Master
Agreement, and all executed Office Agreements: (a) if Client defaults in the
payment of the Monthly Base Office Fee or

                                    4 of 11
<PAGE>   12

other sums due or (b) if Client defaults in the prompt and full performance of
any other provision of this Master Agreement or any executed Office Agreements
and any such default continues in excess of ten (10) business days after written
notice by HQ.

        Should Client be in default hereunder, HQ shall have the option to
pursue any one or more of the following remedies without any additional notice
or demand whatsoever and without limitation to HQ in the exercise of any remedy:

        (1) HQ may, if HQ so elects, without any additional notice of such
election or demand to Client, either forthwith terminate this Agreement and the
license to use any portion of the HQ Business Center, in whole or in part, from
the Client's obligations hereunder. In the event of such termination, HQ may, at
its option, declare the entire amount of the Monthly Base Office Fee which would
become due and payable during the remainder of the term, to be due and payable
immediately, in which event, Client agrees to pay the same at once.

        (2) Pursue any other remedy now or hereafter available to HQ. HQ's
exercise of any right or remedy shall not prevent it from exercising any other
right or remedy.

        7. RESTRICTION ON HIRING. Client agrees that during the term of this
Master Agreement and within one (1) year of the termination of this Master
Agreement, neither Client nor any of its principals, employees or affiliates
will hire directly or as an independent contractor, any person who is at that
time, or was during the term of this Agreement, an employee of HQ. In the vent
of a breach of any obligation of Client contained in this paragraph, Client
shall be liable to HQ for, and shall pay to HQ, on demand, liquidated damages in
the sum of $25,000.00 for each employee with respect to whom such breach shall
occur, it being mutually agreed that the actual damage that would be sustained
by HQ as the result of any such breach would be, from the nature of the case,
extremely difficult to fix and that the aforesaid liquidated damage amount is
fair and reasonable.

        8. MISCELLANEOUS.

        A. All Amendments to this Agreement shall be in writing and signed by
all parties. Any other attempted amendment shall be void. The invalidity or
unenforceability of any provision hereof shall not affect the remainder hereof.

        B. All waivers must be in writing and signed by the waiving party. HQ's
failure to enforce any provision of this Agreement or its acceptance of fees
shall not be a waiver and shall not prevent HQ from enforcing any provision of
this Agreement in the future. No receipt of money by HQ shall be deemed to waive
any default of Client or to extend, reinstate or continue the term hereof.

        C. All Schedules and Addenda attached hereto are hereby incorporated by
this reference. The laws of the State in which the HQ Business Center is located
shall govern this Agreement.

        D. All parties signing this Agreement as a partnership or co-signing
individuals shall be jointly and severally liable for all obligations of Client.

                                    5 of 11
<PAGE>   13

        E. Neither Client nor anyone claiming by, through or under Client shall
assign this Master Agreement and Office Agreements or permit the use of any
portion of the HQ Business Center by any person other than Client; provided,
however, Client may assign this Master Agreement and Office Agreements to an
affiliated corporation of Client. In the event of any such permitted assignment,
Client shall not thereby be relieved of any of its obligations under this Master
Agreement or any Office Agreement.

        F. The Rules and Regulations of the Building and of HQ as defined on
Schedule "C" hereto and any additional schedules that may be attached hereto are
expressly made a part of this Agreement and Client expressly covenants and
agrees to abide by all of such Rules and Regulations and such additional terms,
as well as such reasonable modifications to such Rules and Regulations as may be
hereafter adopted by HQ.

        G. All notices hereunder shall be in writing. Notices to Client shall be
deemed to be duly given if mailed by registered or certified mail, postage
prepaid, overnight mail service or hand delivered with proof of delivery
addressed to client at:

Contact:            Mr. James Pekarsky, CFO
Client Name:        Virage Logic
Client Address:     9 Trade Winds Dr.
City, State, Zip:   Randolph, NJ 07849
Phone:

        Notice to HQ shall be deemed to be duly given if mailed by registered or
certified mail, postage prepaid, overnight mail service or hand delivered with
proof of delivery addressed to HQ at the Building and as follows:

Center Name:        HQ Clinton
Address:            3 Warner Way
City, State, Zip:   Lebanon NJ 08833
Attn:               Center Manager
Center Phone:       908-236-3800

        H. THIS MASTER AGREEMENT AND THE OFFICE AGREEMENTS ARE NOT INTENDED TO
CREATE A LEASE OR ANY OTHER INTEREST IN REAL PROPERTY IN FAVOR OF THE CLIENT,
BUT MERELY CREATES A REVOCABLE LICENSE IN ACCORDANCE WITH THE TERMS HEREOF. This
Master Agreement and an Office Agreement grant Client the license to use the HQ
Business Center and the Office for the license to use the HQ Business Center and
the Office for the specific purposes herein set forth without diminution of the
legal possession or control thereof by HQ and shall be revocable at the option
of HQ upon the destruction of the HQ Business Center or the breach by Client of
any term or condition herein set forth. This Master Agreement and Office
Agreement are subject and subordinate to any underlying lease or contract of the
Building or of the premises comprising the Office or the HQ Business Center as
such lease or contract may be amended from time to time (such underlying lease
or contract together with any amendments, is hereinafter referred to

                                    6 of 11
<PAGE>   14

as the "Master Lease"). An Office Agreement shall terminate simultaneously with
the termination of the corresponding HQ Business Center operation for any
reason. Client is not a party to nor shall Client have any rights under the
Master Lease.

        I. Client acknowledges that each HQ Business Center will comply with
U.S. Postal Service regulations regarding Client mail and, upon termination of
this Agreement, it will be Client's responsibility to notify all parties of
termination of the use of the above described address, assigned telephone number
and facsimile numbers. For a period of thirty (30) days after the termination of
this Agreement, HQ will, at Client's written request and cost, provide Client's
new telephone number and address to all incoming callers and will hold or
forward to Client once a week all mail, packages, and facsimiles.

        J. HQ may assign this Agreement and/or any fees hereunder and Client
agrees to attorn to any such assignee.

        K. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.

HQ GLOBAL WORKPLACES, INC.

By:             /s/
        --------------------------
        Authorized Signature

        --------------------------
        Print Name

Its:
        --------------------------

CLIENT: VIRAGE LOGIC

By:              /s/
        --------------------------
        Authorized Signature

           James Pekarsky
        --------------------------
        Print Name

Its:        8/5/99
        --------------------------

                                    7 of 11
<PAGE>   15

SCHEDULE "A"

BASE SERVICES

-   Furnished Executive Office

-   Furnished and Decorated Reception Area

-   Professional Receptionist, Message Center, and Office Manager

-   Use of Furnished and Audio-Visual Equipped Conference Rooms, 8 hours per
    month at no charge

-   Prestigious Business Address

-   Building Lobby Directory Listing*

-   Facsimile Number for Client's Use

-   Mail and Package Receipt

-   Utilities and Janitorial Service

-   Building Operating Expenses

*Where available

SCHEDULE "B"

ADDITIONAL SERVICES

-   Word Processing Services

-   Secretarial Services

-   Facsimile Services

-   Copy and Binding Services

-   Outgoing Mail & Express Delivery Services

-   Additional Office Furniture

-   Specialized Equipment

-   Printing & Office Supplies

-   Miscellaneous Purchasing Services

-   Catering & Beverage Services

-   Paging Services

-   Telephone Equipment

-   Specialized Telephone Services

-   Local & Long Distance Telephone Service

-   Excess Conference Room Usage

-   Other Client Requested Services*

*Where available

                                    8 of 11
<PAGE>   16

                                  SCHEDULE "C"
                              RULES AND REGULATIONS

        1. Client's employees and guests shall conduct themselves in a
businesslike manner; proper business attire shall be worn at all times; the
noise level will be kept to a level so as not to interfere with or annoy other
clients and Client will abide by HQ's directives regarding security, keys,
parking and other such matters common to all occupants.

        2. Client agrees to use chair mats and desk pads in the Office(s) and
any damage from failure to use the same shall be the responsibility of Client.
Client shall not affix anything to the windows, walls or any other part of the
Office(s) or the HQ Business Center or make alterations or additions to the
Office(s) or the HQ Business Center without the prior written consent of HQ.

        3. Client shall not prop open any corridor doors, exit doors or door
connecting corridors during or after business hours.

        4. Client can only use public areas with the consent of HQ and those
areas must be kept neat and attractive at all times.

        5. All corridors, halls, elevators and stairways shall not be obstructed
by Client or used for any purpose other than egress and ingress.

        6. No advertisement or identifying signs, other than provided by HQ, or
other notices shall be inscribed, painted, or affixed on any part of the
corridors, doors or public areas.

        7. Client shall not, without HQ's prior written consent, store or
operate in the Office(s) or the HQ Business Center any computer (excepting a
personal computer) or any other large business machine, reproduction equipment,
heating equipment, stove, radio, stereo equipment or other mechanical
amplification equipment, vending or coin operated machine, refrigerator or
coffee equipment, or conduct a mechanical business therein, do any cooking
therein, or use or allow to be used in the Building, oil burning fluids,
gasoline, kerosene for heating, warming or lighting. No article deemed hazardous
on account of fire or any explosives shall be brought into the HQ Business
Center. No offensive gases, odors or liquids shall be permitted. No fire arms
shall be permitted.

        8. The electrical current shall be used for ordinary lighting purposes
only unless written permission to do otherwise shall first have been obtained
from HQ at an agreed cost to Client.

        9. If Client requires any special installation or wiring for electrical
use, telephone equipment or otherwise, such wiring shall be done at Client's
expense by the personnel designated by HQ.

        10. Client may not conduct business in the hallways, reception areas or
any other area except in its designated Office(s) without the prior written
consent of HQ.

                                    9 of 11
<PAGE>   17

        11. Client shall bring no animals other than seeing-eye dogs in the
company of blind persons into the building.

        12. Client shall not remove furniture, fixtures or decorative material
from the Office(s) without the written consent of HQ and such removal shall be
under the supervision and regulations of the HQ Business Center.

        13. Client shall not use the HQ Business Center for manufacturing or
storage of merchandise except as such storage may be incidental to general
office purposes.

        14. Client shall not occupy or permit any portion of the HQ Business
Center to be occupied or used for the manufacture, sale, gift or use of liquor,
narcotics or tobacco in any form.

        15. Client shall not use the Office(s) for lodging or sleeping or for
any immoral or illegal purposes.

        16. No additional locks or bolts of any kind shall be placed upon any of
the doors or windows of the HQ Business Center by Client nor shall any changes
be made on existing locks or the mechanisms thereof.

        17. Client shall, before leaving the Office(s) unattended for an
extended period of time, close and securely lock all doors and shut off all
lights and other electrical apparatus. Any damage resulting from failure to do
so shall be paid by Client.

        18. Canvassing, soliciting and peddling in the Building are prohibited
and Client shall not solicit other clients for any business or other purpose
without the prior written approval of HQ.

        19. All property belonging to Client or any employee, agent or invitee
of Client shall be at the risk of such person only and HQ shall not be liable
for damages thereto or for theft or misappropriation thereof.

        20. If Client does not remove any property belonging to Client from the
HQ Business Center by the end of the term, at the option of HQ, Client shall be
conclusively presumed to have conveyed such property to HQ under this Agreement
as a bill of sale without further payment or credit by HQ to Client and HQ may
remove the same and Client shall pay HQ all costs of such removal upon demand.

        21. Smoking shall be prohibited in all public areas, including
conference and training rooms. No smoking shall be permitted at any time in any
area of the HQ Business Center (including open offices and workstations),
provided, however, with the prior written consent of HQ, smoking shall be
permitted in Client's Office(s), but only with the door closed, and then only
cigarette smoking will be permitted so long as client provides an air filter
device acceptable to HQ, unless the entire Building has been designated
non-smoking, in which case smoking is not permitted in the Office(s). Cigar and
pipe smoking are prohibited in all areas of the HQ Business Center.

        22. Client shall use only telecommunications systems and services as
provided by HQ. Client shall pay HQ a monthly equipment rental fee for the use
of each telephone instrument and voice lines.

                                    10 of 11
<PAGE>   18

In the event HQ discontinues the offering of long distance service, Client shall
provide its own long distance service through a locally accessed long distance
carrier.

        23. Client or Client's officers, directors, employees, shareholders,
partners, agents, representatives, contractors, customers, or invitees shall be
prohibited from participating in any type of harassment, verbal or physical, in
the HQ Business Center for any reason.

HQ reserves the right to make such other rules and regulations as in its
judgment may from time to time be needed for the safety, care and cleanliness of
the offices. HQ shall have no responsibility to Client for the violation or
non-performance by any other HQ clients of any of the Rules and Regulations but
shall use reasonable efforts to uniformly enforce all Rules and Regulations.

                                    11 of 11

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