Document:

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                                                                   EXHIBIT 10.7

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                             NOVATEL WIRELESS, INC.

                           LOAN AND SECURITY AGREEMENT

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        This LOAN AND SECURITY AGREEMENT is entered into as of October 12, 1999,
by and between VENTURE BANKING GROUP, a division of Cupertino National Bank
("Bank") and NOVATEL WIRELESS, INC. ("Borrower").

                                    RECITALS

        Borrower wishes to obtain credit from time to time from Bank, and Bank
desires to extend credit to Borrower. This Agreement sets forth the terms on
which Bank will advance credit to Borrower, and Borrower will repay the amounts
owing to Bank.

                                    AGREEMENT

        The parties agree as follows:

        1. DEFINITIONS AND CONSTRUCTION.

           1.1 Definitions. As used in this Agreement, the following terms shall
have the following definitions:

               "Accounts" means all presently existing and hereafter arising
accounts, contract rights, and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods (including, without limitation, the
licensing of software and other technology) or the rendering of services by
Borrower, whether or not earned by performance, and any and all credit
insurance, guaranties, and other security therefor, as well as all merchandise
returned to or reclaimed by Borrower and Borrower's Books relating to any of the
foregoing.

               "Adjusted Net Worth" means Net Worth plus the book value of the
Minority Interest.

               "Advance" or "Advances" means a cash advance or cash advances
under the Revolving Facility.

               "Affiliate" means, with respect to any Person, any Person that
owns or controls directly or indirectly such Person, any Person that controls or
is controlled by or is under common control with such Person, and each of such
Person's senior executive officers, directors, and partners.

               "Bank Expenses" means all: reasonable costs or expenses
(including reasonable attorneys' fees and expenses) incurred in connection with
the preparation, negotiation, administration, and enforcement of the Loan
Documents; reasonable Collateral audit fees; and Bank's reasonable attorneys'
fees and expenses incurred in amending, enforcing or defending the Loan
Documents (including fees and expenses of appeal), incurred before, during and
after an Insolvency Proceeding, whether or not suit is brought.

               "Borrower's Books" means all of Borrower's books and records
including: ledgers; records concerning Borrower's assets or liabilities, the
Collateral, business operations or financial condition; and all computer
programs, or tape files, and the equipment, containing such information.

               "Borrowing Base" means an amount equal to (i) seventy percent
(70%) of Eligible Accounts of Borrower and each Guarantor before the Equity
Event and eighty percent (80%) thereafter plus (ii) forty percent (40%) of
Eligible Inventory of Borrower and each Guarantor (not to exceed One Million
Dollars ($1,000,000)), as determined by Bank in its good faith business judgment
with reference to the most recent Borrowing Base Certificate delivered by
Borrower, provided that Accounts owing to Novatel Canada and Eligible Inventory
owned by any Person may not be included in the Borrowing Base after January 31,
2000.

               "Business Day" means any day that is not a Saturday, Sunday, or
other day on which banks in the State of California are authorized or required
to close.

               "Closing Date" means the date of this Agreement.

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               "Code" means the California Uniform Commercial Code.

               "Collateral" means the property described on Exhibit A attached
hereto.

               "Committed Revolving Line" means a credit extension of up to Two
Million Five Hundred Thousand Dollars ($2,500,000).

               "Contingent Obligation" means, as applied to any Person, any
direct or indirect liability, contingent or otherwise, of that Person with
respect to (i) any indebtedness, lease, dividend, letter of credit or other
obligation of another, including, without limitation, any such obligation
directly or indirectly guaranteed, endorsed, co-made or discounted or sold with
recourse by that Person, or in respect of which that Person is otherwise
directly or indirectly liable; (ii) any obligations with respect to undrawn
letters of credit issued for the account of that Person; and (iii) all
obligations arising under any interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; provided, however,
that the term "Contingent Obligation" shall not include endorsements for
collection or deposit in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determined amount of the primary obligation in respect of which such Contingent
Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith; provided, however, that such amount shall not in any event exceed the
maximum amount of the obligations under the guarantee or other support
arrangement.

               "Copyrights" means any and all copyright rights, copyright
applications, copyright registrations and like protections in each work or
authorship and derivative work thereof, whether published or unpublished and
whether or not the same also constitutes a trade secret, now or hereafter
existing, created, acquired or held.

               "Credit Extension" means each Advance, Letter of Credit, or any
other extension of credit by Bank for the benefit of Borrower hereunder.

               "Current Assets" means, as of any applicable date, all amounts
that should, in accordance with GAAP, be included as current assets on the
consolidated balance sheet of Borrower and its Subsidiaries as at such date.

               "Current Liabilities" means, as of any applicable date, all
amounts that should, in accordance with GAAP, be included as current liabilities
on the consolidated balance sheet of Borrower and its Subsidiaries, as at such
date, plus, to the extent not already included therein, all outstanding Credit
Extensions made under this Agreement, including all Indebtedness that is payable
upon demand or within one year from the date of determination thereof unless
such Indebtedness is renewable or extendible at the option of Borrower or any
Subsidiary to a date more than one year from the date of determination.

               "Daily Balance" means the amount of the Obligations owed at the
end of a given day.

               "Eligible Accounts" means those Accounts that arise in the
ordinary course of Borrower's or a Guarantor's business that comply in all
material respects with all of Borrower's representations and warranties to Bank
set forth in Section 5.4; provided, that standards of eligibility may be fixed
and revised from time to time by Bank in Bank's reasonable judgment and upon
notification thereof to Borrower in accordance with the provisions hereof.
Unless otherwise agreed to by Bank, Eligible Accounts shall not include the
following:

               (a) Accounts that the account debtor has failed to pay within
ninety (90) days of invoice date;

               (b) Accounts with respect to an account debtor, twenty-five
percent (25%) of whose Accounts the account debtor has failed to pay within
ninety (90) days of invoice date;

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               (c) Accounts with respect to which the account debtor is an
officer, employee, or agent of Borrower;

               (d) Accounts with respect to which goods are placed on
consignment, guaranteed sale, sale or return, sale on approval, bill and hold,
or other terms by reason of which the payment by the account debtor may be
conditional;

               (e) Accounts with respect to which the account debtor is an
Affiliate of Borrower;

               (f) Accounts with respect to which the account debtor does not
have its principal place of business in the United States, except for Eligible
Foreign Accounts;

               (g) Accounts with respect to which the account debtor is the
United States or any department, agency, or instrumentality of the United
States, unless there is compliance with the Assignment of Claims Act;

               (h) Accounts with respect to which Borrower is liable to the
account debtor for goods sold or services rendered by the account debtor to
Borrower, but only to the extent of any amounts owing to the account debtor
against amounts owed to Borrower;

               (i) Accounts with respect to an account debtor, including
Subsidiaries and Affiliates, whose total obligations to Borrower exceed
twenty-five percent (25%) of all Accounts, to the extent such obligations exceed
the aforementioned percentage, except that the concentration limit for Accounts
owing by OpenSky, Inc. and Metricom shall be forty percent (40%);

               (j) Accounts with respect to which the account debtor disputes
liability or makes any claim with respect thereto as to which Bank believes, in
its reasonable discretion, that there may be a basis for dispute (but only to
the extent of the amount subject to such dispute or claim), or is subject to any
Insolvency Proceeding, or becomes insolvent, or goes out of business; and

               (k) Accounts the collection of which Bank reasonably determines
to be doubtful.

               "Eligible Foreign Accounts" means Accounts with respect to which
the account debtor does not have its principal place of business in the United
States and that (i) are supported by one or more letters of credit or insurance
in an amount and of a tenor, and issued by a financial institution, insurance
company or governmental entity acceptable to Bank, or (ii) that Bank approves on
a case-by-case basis.

               "Eligible Inventory" means raw materials and finished goods
Inventory approved from time to time by Bank in its good faith business
judgment, valued at Bank's reasonable determination of the lower of cost or fair
market value.

               "Equipment" means all present and future machinery, equipment,
tenant improvements, furniture, fixtures, vehicles, tools, parts and attachments
in which Borrower has any interest.

               "Equity Event" means the receipt by Borrower after the Closing
Date of not less than Fifteen Million Dollars ($15,000,000) from the sale or
issuance of its equity securities.

               "ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the regulations thereunder.

               "Event of Default" has the meaning assigned in Article 8.

               "GAAP" means generally accepted accounting principles as in
effect from time to time.

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               "Guarantor" or "Guarantors" means Novatel Wireless Technology,
Ltd. and Novatel Wireless Solutions, Inc.

               "Indebtedness" means (a) all indebtedness for borrowed money or
the deferred purchase price of property or services, including without
limitation reimbursement and other obligations with respect to surety bonds and
letters of credit, (b) all obligations evidenced by notes, bonds, debentures or
similar instruments, (c) all capital lease obligations and (d) all Contingent
Obligations.

               "Insolvency Proceeding" means any proceeding commenced by or
against any person or entity under any provision of the United States Bankruptcy
Code, as amended, or under any other bankruptcy or insolvency law, including
assignments for the benefit of creditors, formal or informal moratoria,
compositions, extension generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.

               "Intellectual Property Collateral" means all of Borrower's right,
title, and interest in and to the following:

               (a) Copyrights, Trademarks and Patents;

               (b) Any and all trade secrets, and any and all intellectual
property rights in computer software and computer software products now or
hereafter existing, created, acquired or held;

               (c) Any and all design rights which may be available to Borrower
now or hereafter existing, created, acquired or held;

               (d) Any and all claims for damages by way of past, present and
future infringement of any of the rights included above, with the right, but not
the obligation, to sue for and collect such damages for said use or infringement
of the intellectual property rights identified above;

               (e) All licenses or other rights to use any of the Copyrights,
Patents or Trademarks, and all license fees and royalties arising from such use
to the extent permitted by such license or rights;

               (f) All amendments, renewals and extensions of any of the
Copyrights, Trademarks or Patents; and

               (g) All proceeds and products of the foregoing, including without
limitation all payments under insurance or any indemnity or warranty payable in
respect of any of the foregoing.

               "Inventory" means all present and future inventory in which
Borrower has any interest, including merchandise, raw materials, parts,
supplies, packing and shipping materials, work in process and finished products
intended for sale or lease or to be furnished under a contract of service, of
every kind and description now or at any time hereafter owned by or in the
custody or possession, actual or constructive, of Borrower, including such
inventory as is temporarily out of its custody or possession or in transit and
including any returns upon any accounts or other proceeds, including insurance
proceeds, resulting from the sale or disposition of any of the foregoing and any
documents of title representing any of the above, and Borrower's Books relating
to any of the foregoing.

               "Investment" means any beneficial ownership of (including stock,
partnership interest or other securities) any Person, or any loan, advance or
capital contribution to any Person.

               "IRC" means the Internal Revenue Code of 1986, as amended, and
the regulations thereunder.

               "Lien" means any mortgage, lien, deed of trust, charge, pledge,
security interest or other encumbrance.

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               "Loan Documents" means, collectively, this Agreement, any note or
notes executed by Borrower, and any other agreement entered into between
Borrower and Bank in connection with this Agreement, all as amended or extended
from time to time.

               "Material Adverse Effect" means a material adverse effect on (i)
the business operations or condition (financial or otherwise) of Borrower and
its Subsidiaries taken as a whole or (ii) the ability of Borrower to repay the
Obligations or otherwise perform its obligations under the Loan Documents.

               "Minority Interest" means the equity interest of Borrower in
Novatel Canada.

               "Negotiable Collateral" means all of Borrower's present and
future letters of credit of which it is a beneficiary, notes, drafts,
instruments, securities, documents of title, and chattel paper, and Borrower's
Books relating to any of the foregoing.

               "Net Worth" means net worth, as determined in accordance with
GAAP.

               "Novatel Canada" means Novatel Wireless Technologies, Ltd., a
corporation organized under the laws of Alberta.

               "Obligations" means all debt, principal, interest, Bank Expenses
and other amounts owed to Bank by Borrower pursuant to this Agreement or any
other agreement, whether absolute or contingent, due or to become due, now
existing or hereafter arising, including any interest that accrues after the
commencement of an Insolvency Proceeding and including any debt, liability, or
obligation owing from Borrower to others that Bank may have obtained by
assignment or otherwise.

               "Patents" means all patents, patent applications and like
protections including without limitation improvements, divisions, continuations,
renewals, reissues, extensions and continuations-in-part of the same.

               "Periodic Payments" means all installments or similar recurring
payments that Borrower may now or hereafter become obligated to pay to Bank
pursuant to the terms and provisions of any instrument, or agreement now or
hereafter in existence between Borrower and Bank.

               "Permitted Indebtedness" means:

               (a) Indebtedness of Borrower in favor of Bank arising under this
Agreement or any other Loan Document;

               (b) Indebtedness existing on the Closing Date and disclosed in
the Schedule;

               (c) Indebtedness secured by a lien described in clause (c) of the
defined term "Permitted Liens," provided such Indebtedness does not exceed the
lesser of the cost or fair market value of the equipment financed with such
Indebtedness;

               (d) Subordinated Debt;

               (e) accounts payable to trade creditors and accrued expenses
(other than for money borrowed) that are not aged more than 30 days from due
date, in each case incurred in the ordinary course of business and paid within
such time period, unless the same are being actively contested in good faith and
by appropriate and lawful proceedings, and Borrower shall have set aside such
reserves, if any, with respect thereto as are required by GAAP and deemed
adequate by Borrower and its independent accountants;

               (f) rental obligations under existing leases of Borrower;

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               (g) contingent liabilities arising out of endorsements of checks
and other negotiable instruments for deposit or collection in the ordinary
course of Borrower's business;

               (h) intercompany indebtedness among Borrower and Guarantors;

               (i) taxes, assessments and governmental charges or levies which
are not delinquent or which are being contested in good faith and for which, in
accordance with GAAP, adequate reserves have been set aside on the books of
Borrower; and

               (j) indebtedness not included in paragraphs (a) through (i) above
which does not exceed at any time, in the aggregate, the sum of $50,000.

               "Permitted Investment" means:

               (a) Investments existing on the Closing Date disclosed in the
Schedule; and

               (b) (i) marketable direct obligations issued or unconditionally
guaranteed by the United States of America or any agency or any State thereof
maturing within one (1) year from the date of acquisition thereof, (ii)
commercial paper maturing no more than one (1) year from the date of creation
thereof and currently having rating of at least A-2 or P-2 from either Standard
& Poor's Corporation or Moody's Investors Service, (iii) certificates of deposit
maturing no more than one (1) year from the date of investment therein issued by
Bank and (iv) Bank's money market accounts.

               "Permitted Liens" means the following:

               (a) Any Liens existing on the Closing Date and disclosed in the
Schedule or arising under this Agreement or the other Loan Documents;

               (b) Liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or being contested in good faith by
appropriate proceedings, provided the same have no priority over any of Bank's
security interests;

               (c) Liens (i) upon or in any equipment acquired or held by
Borrower or any of its Subsidiaries to secure the purchase price of such
equipment or indebtedness incurred solely for the purpose of financing the
acquisition of such equipment, or (ii) existing on such equipment at the time of
its acquisition, provided that the Lien is confined solely to the property so
acquired and improvements thereon, and the proceeds of such equipment;

               (d) Liens incurred in connection with the extension, renewal or
refinancing of the indebtedness secured by Liens of the type described in
clauses (a) through (c) above, provided that any extension, renewal or
replacement Lien shall be limited to the property encumbered by the existing
Lien and the principal amount of the indebtedness being extended, renewed or
refinanced does not increase.

               "Person" means any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or governmental agency.

               "Prime Rate" means the variable rate of interest, per annum,
quoted from time to time in the Western Edition of The Wall Street Journal, as
the "prime rate," whether or not such rate is the lowest rate available from
Bank.

               "Quick Assets" means, at any date as of which the amount thereof
shall be determined, the unrestricted cash and cash-equivalents and billed trade
accounts receivable of Borrower determined in accordance with GAAP.

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               "Responsible Officer" means each of the Chief Executive Officer,
the Chief Operating Officer, the Chief Financial Officer and the Controller of
Borrower.

               "Revolving Facility" means the facility under which Borrower may
request Bank to issue Advances, as specified in Section 2.1(a) hereof.

               "Revolving Maturity Date" means the day before the first
anniversary of the Closing Date.

               "Schedule" means the schedule of exceptions attached hereto, if
any.

               "Subordinated Debt" means any debt incurred by Borrower that is
subordinated to the debt owing by Borrower to Bank on terms reasonably
acceptable to Bank (and identified as being such by Borrower and Bank).

               "Subsidiary" means any corporation or partnership in which (i)
any general partnership interest or (ii) more than 50% of the stock of which by
the terms thereof ordinary voting power to elect the Board of Directors,
managers or trustees of the entity, at the time as of which any determination is
being made, is owned by Borrower, either directly or through an Affiliate.

               "Tangible Net Worth" means the excess of total assets over Total
Liabilities, excluding from the determination of total assets all assets that
would be classified as intangible assets under GAAP.

               "Total Liabilities" means at any date as of which the amount
thereof shall be determined, all obligations that should, in accordance with
GAAP be classified as liabilities on the consolidated balance sheet of Borrower,
including in any event all Indebtedness.

               "Trademarks" means any trademark and servicemark rights, whether
registered or not, applications to register and registrations of the same and
like protections, and the entire goodwill of the business of Borrower connected
with and symbolized by such trademarks.

           1.2 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP and all calculations made
hereunder shall be made in accordance with GAAP. When used herein, the terms
"financial statements" shall include the notes and schedules thereto.

        2. LOAN AND TERMS OF PAYMENT.

           2.1 Credit Extensions.

               Borrower promises to pay to the order of Bank, in lawful money of
the United States of America, the aggregate unpaid principal amount of all
Credit Extensions made by Bank to Borrower hereunder. Borrower shall also pay
interest on the unpaid principal amount of such Credit Extensions at rates in
accordance with the terms hereof.

               (a) Revolving Advances.

                   (i) Subject to and upon the terms and conditions of this
Agreement, Borrower may request Advances in an aggregate outstanding amount not
to exceed the lesser of (i) the Committed Revolving Line or (ii) the Borrowing
Base, minus, in each case, the aggregate undrawn face amount of the outstanding
Letters of Credit, and any drawn but unreimbursed Letters of Credit. Subject to
the terms and conditions of this Agreement, amounts borrowed pursuant to this
Section 2.1(a) may be repaid and reborrowed at any time prior to the Revolving
Maturity Date, at which time all Advances under this Section 2.1(a) shall be
immediately due and payable. Borrower may prepay any Advances without penalty or
premium. Borrower's obligation to repay the Advances is evidenced by this
Agreement and a Promissory Note in substantially the form of Exhibit B attached
hereto.

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                   (ii) Whenever Borrower desires an Advance, Borrower will
notify Bank by facsimile transmission or telephone no later than 3:00 p.m.
Pacific time, on the Business Day that the Advance is to be made. Each such
notification shall be promptly confirmed by a Payment/Advance Form in
substantially the form of Exhibit C hereto. Bank is authorized to make Advances
under this Agreement, based upon instructions received from a Responsible
Officer or a designee of a Responsible Officer, or without instructions if in
Bank's discretion such Advances are necessary to meet Obligations which have
become due and remain unpaid. Bank shall be entitled to rely on any telephonic
notice given by a person who Bank reasonably believes to be a Responsible
Officer or a designee thereof, and Borrower shall indemnify and hold Bank
harmless for any damages or loss suffered by Bank as a result of such reliance.
Bank will credit the amount of Advances made under this Section 2.1(a) to
Borrower's deposit account.

               (b) Letters of Credit.

                   (i) Subject to the terms and conditions of this Agreement,
Bank agrees to issue or cause to be issued letters of credit for the account of
Borrower (each, a "Letter of Credit" and collectively, the "Letters of Credit")
in an aggregate outstanding face amount not to exceed the lesser of the
availability under the Committed Revolving Line and the Borrowing Base; provided
the undrawn face amount of such Letters of Credit and any drawn but unreimbursed
Letters of Credit shall not in any case exceed Five Hundred Thousand Dollars
($500,000) in the aggregate. All Letters of Credit shall be, in form and
substance, acceptable to Bank in its sole discretion and shall be subject to the
terms of Bank's form of standard application and letter of credit agreement,
including Bank's fee equal to two percent (2%) of the face amount of each Letter
of Credit. On any drawn but unreimbursed Letter of Credit, the unreimbursed
amount shall be deemed an Advance under Section 2.1(a). No Letter of Credit may
have an expiration date later than the Revolving Maturity Date.

                   (ii) Subject to the penultimate sentence of Section
2.1(b)(i), the obligation of Borrower to immediately reimburse Bank for drawings
made under Letters of Credit shall be absolute, unconditional and irrevocable,
and shall be performed strictly in accordance with the terms of this Agreement
and such Letters of Credit, under all circumstances whatsoever. Borrower shall
indemnify, defend, protect, and hold Bank harmless from any loss, cost, expense
or liability, including, without limitation, reasonable attorneys' fees, arising
out of or in connection with any Letters of Credit, except for expenses caused
by Bank's gross negligence or willful misconduct.

           2.2 Overadvances. If at any time the aggregate amount of the
outstanding Advances plus the undrawn face amount of any outstanding Letters of
Credit, and any drawn but unreimbursed Letters of Credit, exceeds the lesser of
the Borrowing Base or the Committed Revolving Line, Borrower shall immediately
pay to Bank, in cash, the amount of such excess.

           2.3 Interest Rates, Payments, and Calculations.

               (a) Interest Rate. Except as set forth in Section 2.3(b), the
Advances shall bear interest, on the outstanding daily balance thereof, at a
rate equal to one and three quarters percent (1.75%) above the Prime Rate,
provided the interest rate shall be equal to one half percent (0.5%) above the
Prime Rate from and after Bank's receipt of written certification from a
Responsible Officer that the Equity Event has occurred.

               (b) Default Rate. All Obligations shall bear interest, from and
after the occurrence and during the continuance of an Event of Default, at a
rate equal to five (5) percentage points above the interest rate applicable
immediately prior to the occurrence of the Event of Default.

               (c) Payments. Interest hereunder shall be due and payable in
arrears on the twenty-seventh calendar day of each month during the term hereof.
Bank shall, at its option, charge such interest, all Bank Expenses, and all
Periodic Payments against any of Borrower's deposit accounts or against the
Committed Revolving Line, in which case those amounts shall thereafter accrue
interest at the rate then applicable hereunder. Any interest not paid when due
shall be compounded by becoming a part of the Obligations, and such interest
shall thereafter accrue interest at the rate then applicable hereunder.

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               (d) Computation. In the event the Prime Rate is changed from time
to time hereafter, the applicable rate of interest hereunder shall be increased
or decreased, effective as of the day the Prime Rate is changed, by an amount
equal to such change in the Prime Rate. All interest chargeable under the Loan
Documents shall be computed on the basis of a three hundred sixty (360) day year
for the actual number of days elapsed.

           2.4 Crediting Payments. Prior to the occurrence of an Event of
Default, Bank shall credit a wire transfer of funds, check or other item of
payment to such deposit account or Obligation as Borrower specifies. After the
occurrence of an Event of Default, the receipt by Bank of any wire transfer of
funds, check, or other item of payment shall be immediately applied to
conditionally reduce Obligations, but shall not be considered a payment on
account unless such payment is of immediately available federal funds or unless
and until such check or other item of payment is honored when presented for
payment. Notwithstanding anything to the contrary contained herein, any wire
transfer or payment received by Bank after 12:00 noon Eastern time shall be
deemed to have been received by Bank as of the opening of business on the
immediately following Business Day. Whenever any payment to Bank under the Loan
Documents would otherwise be due (except by reason of acceleration) on a date
that is not a Business Day, such payment shall instead be due on the next
Business Day, and additional fees or interest, as the case may be, shall accrue
and be payable for the period of such extension.

           2.5 Fees. Borrower shall pay to Bank the following:

               (a) Facility Fee. On the Closing Date, a Facility Fee equal to
Eighteen Thousand Seven Hundred Fifty Dollars ($18,750), which shall be
nonrefundable;

               (b) Bank Expenses. On the Closing Date, all Bank Expenses
incurred through the Closing Date, including reasonable attorneys' fees and
expenses and, after the Closing Date, all Bank Expenses, including reasonable
attorneys' fees and expenses, as and when they become due. Bank shall provide to
Borrower monthly accountings of all Bank Expenses.

           2.6 Additional Costs. In case after the date hereof any law,
regulation, treaty or official directive or the interpretation or application
thereof by any court or any governmental authority charged with the
administration thereof or the compliance with any guideline or request of any
central bank or other governmental authority (whether or not having the force of
law):

               (a) subjects Bank to any tax with respect to payments of
principal or interest or any other amounts payable hereunder by Borrower or
otherwise with respect to the transactions contemplated hereby (except for taxes
on the overall net income of Bank imposed by the United States of America or any
political subdivision thereof);

               (b) imposes, modifies or deems applicable any deposit insurance,
reserve, special deposit or similar requirement against assets held by, or
deposits in or for the account of, or loans by, Bank; or

               (c) imposes upon Bank any other condition with respect to its
performance under this Agreement,

and the result of any of the foregoing is to increase the cost to Bank, reduce
the income receivable by Bank or impose any expense upon Bank with respect to
the Obligations, Bank shall notify Borrower thereof. Borrower agrees to pay to
Bank the amount of such increase in cost, reduction in income or additional
expense as and when such cost, reduction or expense is incurred or determined,
upon presentation by Bank of a statement of the amount and setting forth Bank's
calculation thereof, all in reasonable detail, which statement shall be deemed
true and correct absent manifest error.

           2.7 Term. This Agreement shall become effective on the Closing Date
and, subject to Section 12.7, shall continue in full force and effect for a term
ending on the Revolving Maturity Date. Notwithstanding the foregoing, Bank shall
have the right to terminate its obligation to make Credit Extensions under this
Agreement immediately and without notice upon the occurrence and during the
continuance of an Event of

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Default. Notwithstanding termination, Bank's Lien on the Collateral shall remain
in effect for so long as any Obligations are outstanding.

        3. CONDITIONS OF CREDIT EXTENSIONS.

           3.1 Conditions Precedent to Initial Credit Extension. The obligation
of Bank to make the initial Credit Extension is subject to the condition
precedent that Bank shall have received, in form and substance reasonably
satisfactory to Bank, the following:

               (a) this Agreement;

               (b) a certificate of the Secretary of Borrower with respect to
incumbency and resolutions authorizing the execution and delivery of this
Agreement;

               (c) a financing statement (Form UCC-1);

               (d) an intellectual property security agreement in the form of
Exhibit F hereto;

               (e) an unconditional guaranty and security agreement of each
Guarantor;

               (f) a warrant to purchase stock in the form of Exhibit G hereto;

               (g) an agreement to provide insurance;

               (h) a subordination agreement in the form of Exhibit H hereto;

               (i) payment of the fees and Bank Expenses then due specified in
Section 2.5 hereof;

               (j) an audit of the Collateral, the results of which shall be
satisfactory to Bank; and

               (k) such other documents, and completion of such other matters,
as Bank may reasonably deem necessary or appropriate.

           3.2 Conditions Precedent to all Credit Extensions. The obligation of
Bank to make each Credit Extension, including the initial Credit Extension, is
further subject to the following conditions:

               (a) timely receipt by Bank of the Payment/Advance Form as
provided in Section 2.1; and

               (b) the representations and warranties contained in Section 5
shall be true and correct in all material respects on and as of the date of such
Payment/Advance Form and on the effective date of each Credit Extension as
though made at and as of each such date, and no Event of Default shall have
occurred and be continuing, or would exist after giving effect to such Credit
Extension (provided, however, that those representations and warranties
expressly referring to another date shall be true, correct and complete in all
material respects as of such date). The making of each Credit Extension shall be
deemed to be a representation and warranty by Borrower on the date of such
Credit Extension as to the accuracy of the facts referred to in this Section
3.2(b).

        4. CREATION OF SECURITY INTEREST.

           4.1 Grant of Security Interest. Borrower grants and pledges to Bank a
continuing security interest in all presently existing and hereafter acquired or
arising Collateral in order to secure prompt repayment of any and all
Obligations and in order to secure prompt performance by Borrower of each of its
covenants and duties under the Loan Documents. Except for Permitted Liens, such
security interest constitutes a valid, first priority security interest in the
presently existing Collateral, and will constitute a valid, first priority
security interest in Collateral acquired after the date hereof.

                                       10
<PAGE>   12

           4.2 Delivery of Additional Documentation Required. Borrower shall
from time to time execute and deliver to Bank, at the request of Bank, all
Negotiable Collateral, the certificates evidencing all of the outstanding
capital stock of each Guarantor (together with stock powers executed in blank),
all financing statements and other documents that Bank may reasonably request,
in form satisfactory to Bank, to perfect and continue perfected Bank's security
interests in the Collateral and in order to fully consummate all of the
transactions contemplated under the Loan Documents.

           4.3 Right to Inspect. Bank (through any of its officers, employees,
or agents) shall have the right, upon reasonable prior notice, from time to time
during Borrower's usual business hours but no more than once a year (unless an
Event of Default has occurred and is continuing), to inspect Borrower's Books
and to make copies thereof and to check, test, and appraise the Collateral in
order to verify Borrower's financial condition or the amount, condition of, or
any other matter relating to, the Collateral.

        5. REPRESENTATIONS AND WARRANTIES.

           Borrower represents and warrants as follows:

           5.1 Due Organization and Qualification. Borrower and each Subsidiary
is a corporation duly existing under the laws of its state or province of
incorporation and qualified and licensed to do business in any jurisdiction in
which failure to be so qualified or licensed could reasonably be expected to
have a Material Adverse Effect.

           5.2 Due Authorization; No Conflict. The execution, delivery, and
performance of the Loan Documents are within Borrower's powers, have been duly
authorized, and are not in conflict with nor constitute a breach of any
provision contained in Borrower's Articles of Incorporation or Bylaws, nor will
they constitute an event of default under any material agreement to which
Borrower is a party or by which Borrower is bound. Borrower is not in default
under any agreement to which it is a party or by which it is bound, which
default could have a Material Adverse Effect.

           5.3 No Prior Encumbrances. Borrower has good and indefeasible title
to the Collateral, free and clear of Liens, except for Permitted Liens.

           5.4 Bona Fide Eligible Accounts. The Eligible Accounts are bona fide
existing obligations. The property giving rise to such Eligible Accounts has
been delivered to the account debtor or to the account debtor's agent for
immediate shipment to and acceptance by the account debtor, subject only to
usual and customary return rights, or the services giving rise to such Eligible
Accounts have been fully performed. Borrower has not received notice of actual
or imminent Insolvency Proceeding of any account debtor that is included in any
Borrowing Base Certificate as an Eligible Account.

           5.5 Merchantable Inventory. All Eligible Inventory is in all material
respects of good and marketable quality, free from all material defects.

           5.6 Intellectual Property Collateral. Borrower is the sole owner of
the Intellectual Property Collateral, except for non-exclusive licenses granted
by Borrower to its customers in the ordinary course of business. Each of the
Patents is valid and enforceable, and no part of the Intellectual Property
Collateral has been judged invalid or unenforceable, in whole or in part, and no
claim has been made that any part of the Intellectual Property Collateral
violates the rights of any third party. The Intellectual Property Security
Agreement sets forth all of the Intellectual Property Collateral that is
material to Borrower's business. Except as set forth in the Schedule, Borrower's
rights as a licensee of intellectual property do not give rise to more than five
percent (5%) of its gross revenue in any given month, including without
limitation revenue derived from the sale, licensing, rendering or disposition of
any product or service.

           5.7 Name; Location of Chief Executive Office. Except as disclosed in
the Schedule, Borrower has not done business under any name other than that
specified on the signature page hereof. The chief executive office of Borrower
is located at the address indicated in Section 10 hereof.

                                       11
<PAGE>   13

           5.8 Litigation. Except as set forth in the Schedule, there are no
actions or proceedings pending by or against Borrower or any Subsidiary before
any court or administrative agency in which an adverse decision could reasonably
be expected to have a Material Adverse Effect, or a material adverse effect on
Borrower's interest or Bank's security interest in the Collateral.

           5.9 No Material Adverse Change in Financial Statements. All
consolidated financial statements of Borrower and any Subsidiary that are
delivered by Borrower to Bank fairly present in all material respects Borrower's
consolidated financial condition as of the date thereof and Borrower's
consolidated results of operations for the period then ended. There has not been
a material adverse change in the consolidated financial condition of Borrower
since the date of the most recent of such financial statements submitted to
Bank.

           5.10 Solvency, Payment of Debts. Borrower is solvent and able to pay
its debts (including trade debts) as they mature.

           5.11 Regulatory Compliance. Borrower and each Subsidiary have met the
minimum funding requirements of ERISA with respect to any employee benefit plans
subject to ERISA. No event has occurred resulting from Borrower's failure to
comply with ERISA that is reasonably likely to result in Borrower's incurring
any liability that could have a Material Adverse Effect. Borrower is not an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940. Borrower is not engaged
principally, or as one of the important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulations T and U of the Board of Governors of the Federal Reserve
System). Borrower has complied in all material respects with all the provisions
of the Federal Fair Labor Standards Act. Borrower has not violated any statutes,
laws, ordinances or rules applicable to it, violation of which could reasonably
be expected to have a Material Adverse Effect.

           5.12 Environmental Condition. Except as disclosed in the Schedule,
none of Borrower's or any Subsidiary's properties or assets has ever been used
by Borrower or any Subsidiary or, to the best of Borrower's knowledge, by
previous owners or operators, in the disposal of, or to produce, store, handle,
treat, release, or transport, any hazardous waste or hazardous substance other
than in accordance with applicable law; to the best of Borrower's knowledge,
none of Borrower's properties or assets has ever been designated or identified
in any manner pursuant to any environmental protection statute as a hazardous
waste or hazardous substance disposal site, or a candidate for closure pursuant
to any environmental protection statute; no lien arising under any environmental
protection statute has attached to any revenues or to any real or personal
property owned by Borrower or any Subsidiary; and neither Borrower nor any
Subsidiary has received a summons, citation, notice, or directive from the
Environmental Protection Agency or any other federal, state or other
governmental agency concerning any action or omission by Borrower or any
Subsidiary resulting in the releasing, or otherwise disposing of hazardous waste
or hazardous substances into the environment.

           5.13 Taxes. Borrower and each Subsidiary have filed or caused to be
filed all tax returns required to be filed, and have paid (unless the same are
being contested in good faith by appropriate proceedings), or have made adequate
provision for the payment of, all taxes reflected therein.

           5.14 Subsidiaries. Borrower does not own any stock, partnership
interest or other equity securities of any Person, except for Permitted
Investments.

           5.15 Government Consents. Borrower and each Subsidiary have obtained
all consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all governmental authorities that are necessary
for the continued operation of Borrower's business as currently conducted, the
failure to obtain which could reasonably be expected to have a Material Adverse
Effect.

           5.16 Year 2000. Borrower and its Subsidiaries have reviewed the areas
within their operations and business which could be adversely affected by, and
have developed or are developing a program to address on a timely basis, the
Year 2000 Problem and have made related appropriate inquiry of material
suppliers and vendors, and based on such review and program, the Year 2000
Problem will not have a Material Adverse Effect upon its financial condition,
operations or business as now conducted. "Year 2000 Problem" means the
possibility that any

                                       12
<PAGE>   14

computer applications or equipment used by Borrower may be unable to recognize
and properly perform date sensitive functions involving certain dates prior to
and any dates on or after December 31, 1999.

           5.17 Full Disclosure. No representation, warranty or other statement
made by Borrower in any certificate or written statement furnished to Bank
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained in such certificates or
statements not misleading.

        6. AFFIRMATIVE COVENANTS.

           Borrower covenants and agrees that, until payment in full of all
outstanding Obligations, and for so long as Bank may have any commitment to make
a Credit Extension hereunder, Borrower shall do all of the following:

           6.1 Good Standing. Borrower shall maintain its and each of its
Subsidiaries' corporate existence in its jurisdiction of incorporation and
maintain qualification in each jurisdiction in which the failure to so qualify
could reasonably be expected to have a Material Adverse Effect. Borrower shall
maintain, and shall cause each of its Subsidiaries to maintain, in force all
licenses, approvals and agreements, the loss of which could reasonably be
expected to have a Material Adverse Effect.

           6.2 Government Compliance. Borrower shall meet, and shall cause each
Subsidiary to meet, the minimum funding requirements of ERISA with respect to
any employee benefit plans subject to ERISA. Borrower shall comply, and shall
cause each Subsidiary to comply, with all statutes, laws, ordinances and
government rules and regulations to which it is subject, noncompliance with
which could reasonably be expected to have a Material Adverse Effect, or a
material adverse effect on the Collateral or the priority of Bank's Lien on the
Collateral.

           6.3 Financial Statements, Reports, Certificates. Borrower shall
deliver to Bank: (a) as soon as available, but in any event within twenty (20)
days after the end of each calendar month, a company prepared consolidated
balance sheet and income statement covering Borrower's consolidated operations
during such period, in a form acceptable to Bank and certified by a Responsible
Officer; (b) as soon as available, but in any event within ninety (90) days
after the end of Borrower's fiscal year, audited consolidated financial
statements of Borrower prepared in accordance with GAAP, consistently applied,
together with an unqualified opinion on such financial statements of an
independent certified public accounting firm reasonably acceptable to Bank; (c)
as soon as available, but in any event within twenty (20) days after the end of
Borrower's fiscal quarter, a company prepared consolidating balance sheet and
income statement for Borrower and each Guarantor; (d) copies of all statements,
reports and notices sent or made available generally by Borrower to its security
holders or to any holders of Subordinated Debt and, to the extent applicable,
all reports on Forms 10-K and 10-Q filed with the Securities and Exchange
Commission; (e) promptly upon receipt of notice thereof, a report of any legal
actions pending or threatened against Borrower or any Subsidiary that could
reasonably be expected to result in damages or costs to Borrower or any
Subsidiary of Fifty Thousand Dollars ($50,000) or more; (f) such budgets, sales
projections, operating plans or other financial information as Bank may
reasonably request from time to time generally prepared by Borrower in the
ordinary course of business; and (g) within thirty (30) days of the last day of
each fiscal quarter, a report signed by Borrower, in form reasonably acceptable
to Bank, listing any applications or registrations that Borrower has made or
filed in respect of any Patents, Copyrights or Trademarks and the status of any
outstanding applications or registrations, as well as any material change in
Borrower's intellectual property, including but not limited to any subsequent
ownership right of Borrower in or to any Trademark, Patent or Copyright not
specified in Exhibits A, B, and C of the Intellectual Property Security
Agreement delivered to Bank by Borrower in connection with this Agreement.

        Within twenty (20) days after the last day of each month in which any
Credit Extension is outstanding, Borrower shall deliver to Bank a Borrowing Base
Certificate signed by a Responsible Officer in substantially the form of Exhibit
D hereto, together with aged listings of accounts receivable and accounts
payable.

        Borrower shall deliver to Bank with the monthly financial statements a
Compliance Certificate signed by a Responsible Officer in substantially the form
of Exhibit E hereto.

                                       13
<PAGE>   15

        Bank shall have a right from time to time hereafter to audit Borrower's
Accounts and appraise Collateral at Borrower's expense, provided that such
audits will be conducted no more often than annually unless an Event of Default
has occurred and is continuing.

           6.4 Inventory; Returns. Borrower shall keep all Inventory in good and
marketable condition, free from all material defects except for Inventory for
which adequate reserves have been made. Returns and allowances, if any, as
between Borrower and its account debtors shall be on the same basis and in
accordance with the usual customary practices of Borrower, as they exist at the
time of the execution and delivery of this Agreement. Borrower shall promptly
notify Bank of all returns and recoveries and of all disputes and claims, where
the return, recovery, dispute or claim involves more than Fifty Thousand Dollars
($50,000).

           6.5 Taxes. Borrower shall make, and shall cause each Subsidiary to
make, due and timely payment or deposit of all material federal, state, and
local taxes, assessments, or contributions required of it by law, and will
execute and deliver to Bank, on demand, appropriate certificates attesting to
the payment or deposit thereof; and Borrower will make, and will cause each
Subsidiary to make, timely payment or deposit of all material tax payments and
withholding taxes required of it by applicable laws, including, but not limited
to, those laws concerning F.I.C.A., F.U.T.A., state disability, and local,
state, and federal income taxes, and will, upon request, furnish Bank with proof
satisfactory to Bank indicating that Borrower or a Subsidiary has made such
payments or deposits; provided that Borrower or a Subsidiary need not make any
payment if the amount or validity of such payment is contested in good faith by
appropriate proceedings and is reserved against (to the extent required by GAAP)
by Borrower.

           6.6 Insurance.

               (a) Borrower, at its expense, shall keep the Collateral insured
against loss or damage by fire, theft, explosion, sprinklers, and all other
hazards and risks, and in such amounts, as ordinarily insured against by other
owners in similar businesses conducted in the locations where Borrower's
business is conducted on the date hereof. Borrower shall also maintain insurance
relating to Borrower's ownership and use of the Collateral in amounts and of a
type that are customary to businesses similar to Borrower's.

               (b) All such policies of insurance shall be in such form, with
such companies, and in such amounts as reasonably satisfactory to Bank. All such
policies of property insurance shall contain a lender's loss payable
endorsement, in a form satisfactory to Bank, showing Bank as an additional loss
payee thereof, and all liability insurance policies shall show the Bank as an
additional insured and shall specify that the insurer must give at least twenty
(20) days notice to Bank before canceling its policy for any reason. Upon Bank's
request, Borrower shall deliver to Bank certified copies of such policies of
insurance and evidence of the payments of all premiums therefor. All proceeds
payable under any such policy shall, at the option of Bank, be payable to Bank
to be applied on account of the Obligations.

           6.7 Year 2000 Compliance. Borrower shall perform all acts reasonably
necessary to ensure that Borrower and any business in which Borrower holds a
substantial interest become Year 2000 Compliant in a timely manner. Such acts
shall include, without limitation, performing a comprehensive review and
assessment of all Borrower's systems and adopting a detailed plan, with itemized
budget, for the remediation, monitoring and testing of such systems. As used in
this paragraph, "Year 2000 Compliant" shall mean, in regard to any entity, that
all software, hardware, firmware, equipment, goods or systems utilized by or
material to the business operations or financial condition of such entity, will
properly perform date sensitive functions before, during and after the year
2000. Borrower shall, promptly upon request, provide to Bank such certifications
or other evidence of Borrower's compliance with the terms of this paragraph as
Bank may from time to time reasonably require.

           6.8 Principal Depository. Borrower shall maintain its principal
depository and operating accounts with Bank.

           6.9 Quick Ratio. Borrower shall maintain, as of the last day of each
fiscal quarter, beginning on March 31, 2000, a ratio of Quick Assets to Current
Liabilities of at least 1.25 to 1.00.

                                       14
<PAGE>   16

           6.10 Profitability. Borrower shall not suffer cumulative monthly
losses from the Closing Date through the last day of each month in excess of
125% of the losses set forth in the projection delivered to Bank as of the
Closing Date (excluding any loss attributable to the tax expense recognized
under GAAP in connection with issuance of warrants to the holders of the
Subordinated Debt).

           6.11 Net Worth. Borrower shall maintain at all times through January
31, 2000 a balance of Adjusted Net Worth plus Subordinated Debt of at least One
Million Dollars ($1,000,000). Beginning March 31, 2000, Borrower shall maintain
as of the last day of each fiscal quarter a Net Worth of at least Ten Million
Dollars ($10,000,000).

           6.12 Total Liabilities-Tangible Net Worth. Beginning March 31, 2000,
Borrower shall maintain, as of the last day of each fiscal quarter, a ratio of
Total Liabilities to Tangible Net Worth of not more than 1.00 to 1.00.

           6.13 Registration of Intellectual Property Rights.

                (a) Borrower shall register or cause to be registered on an
expedited basis (to the extent not already registered) with the United States
Patent and Trademark Office or the United States Copyright Office, as
applicable: (i) those intellectual property rights listed on Exhibits A, B and C
to the Intellectual Property Security Agreement delivered to Bank by Borrower in
connection with this Agreement, within thirty (30) days of the date of this
Agreement, (ii) all registerable intellectual property rights Borrower has
developed as of the date of this Agreement but heretofore failed to register,
within thirty (30) days of the date of this Agreement, and (iii) those
additional intellectual property rights developed or acquired by Borrower from
time to time in connection with any product, prior to the sale or licensing of
such product to any third party, and prior to Borrower's use of such product
(including without limitation major revisions or additions to the intellectual
property rights listed on such Exhibits A, B and C). Borrower shall give Bank
notice of all such applications or registrations.

                (b) Borrower shall execute and deliver such additional
instruments and documents from time to time as Bank shall reasonably request to
perfect Bank's security interest in the Intellectual Property Collateral.

                (c) Borrower shall (i) protect, defend and maintain the validity
and enforceability of the Trademarks, Patents and Copyrights, (ii) use its best
efforts to detect infringements of the Trademarks, Patents and Copyrights and
promptly advise Bank in writing of material infringements detected and (iii) not
allow any material Trademarks, Patents or Copyrights to be abandoned, forfeited
or dedicated to the public without the written consent of Bank, which shall not
be unreasonably withheld.

                (d) Bank may audit Borrower's Intellectual Property Collateral
to confirm compliance with this Section 6.13, provided such audit may not occur
more often than once per year, unless an Event of Default has occurred and is
continuing. Bank shall have the right, but not the obligation, to take, at
Borrower's sole expense, any actions that Borrower is required under this
Section 6.13 to take but which Borrower fails to take, after fifteen (15) days'
notice to Borrower. Borrower shall reimburse and indemnify Bank for all
reasonable costs and reasonable expenses incurred in the reasonable exercise of
its rights under this Section 6.13.

           6.14 Further Assurances. At any time and from time to time Borrower
shall execute and deliver such further instruments and take such further action
as may reasonably be requested by Bank to effect the purposes of this Agreement.

        7. NEGATIVE COVENANTS.

           Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until payment in full of the outstanding Obligations or
for so long as Bank may have any commitment to make any Credit Extensions,
Borrower will not do any of the following without the prior written consent of
Bank:

                                       15
<PAGE>   17

           7.1 Dispositions. Convey, sell, lease, transfer or otherwise dispose
of (collectively, a "Transfer"), or permit any of its Subsidiaries to Transfer,
all or any part of its business or property, other than: (i) Transfers of
Inventory in the ordinary course of business; (ii) Transfers of non-exclusive
licenses and similar arrangements for the use of the property of Borrower or its
Subsidiaries; or (iii) Transfers of surplus, worn-out or obsolete Equipment; or
(iv) Transfers of property with an aggregate value of $50,000 or less per fiscal
year of Borrower.

           7.2 Change in Business. Engage in any business, or permit any of its
Subsidiaries to engage in any business, other than the businesses currently
engaged in by Borrower and its Subsidiaries and any business substantially
similar or related thereto (or incidental thereto). Borrower will not, without
thirty (30) days prior written notification to Bank, relocate its chief
executive office.

           7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of
its Subsidiaries to merge or consolidate, with or into any other business
organization, or acquire, or permit any of its Subsidiaries to acquire, all or
substantially all of the capital stock or property of another Person; provided
that a Subsidiary of Borrower may merge with and into Borrower, so long as
Borrower is the surviving entity.

           7.4 Indebtedness. Create, incur, assume or be or remain liable with
respect to any Indebtedness, or permit any Subsidiary so to do, other than
Permitted Indebtedness.

           7.5 Encumbrances. Create, incur, assume or suffer to exist any Lien
with respect to any of its property, or assign or otherwise convey any right to
receive income, including the sale of any Accounts, or permit any of its
Subsidiaries so to do, except for Permitted Liens.

           7.6 Distributions. Pay any dividends or make any other distribution
or payment on account of or in redemption, retirement or purchase of any capital
stock, except that Borrower may (i) repurchase the stock of former employees
pursuant to stock repurchase agreements, but only so long as an Event of Default
does not exist or would not exist after giving effect to such repurchase and
(ii) make distributions in capital stock of Borrower.

           7.7 Investments. Directly or indirectly acquire or own, or make any
Investment in or to any Person, or permit any of its Subsidiaries so to do,
other than Permitted Investments.

           7.8 Transactions with Affiliates. Directly or indirectly enter into
or permit to exist any material transaction with any Affiliate of Borrower
except for transactions that are in the ordinary course of Borrower's business,
upon fair and reasonable terms that are no less favorable to Borrower than would
be obtained in an arm's length transaction with a non-affiliated Person.

           7.9 Subordinated Debt. Make any payment in respect of any
Subordinated Debt, or permit any of its Subsidiaries to make any such payment,
except in compliance with the terms of such Subordinated Debt, or amend any
provision contained in any documentation relating to the Subordinated Debt
without Bank's prior written consent.

           7.10 Inventory and Equipment. Store the Inventory or the Equipment
with a bailee, warehouseman, or similar party unless Bank has received a pledge
of the warehouse receipt covering such Inventory; provided, however, that
Borrower may deposit software code in escrow for customers in the ordinary
course of business. Except for Inventory sold in the ordinary course of business
and except for such other locations as Bank may approve in writing, Borrower
shall keep the Inventory and Equipment only at the location set forth in Section
10 hereof and such other locations of which Borrower gives Bank prior written
notice and as to which Borrower signs and files at Bank's request a financing
statement where needed to perfect Bank's security interest.

           7.11 Compliance. Become an "investment company" or be controlled by
an "investment company," within the meaning of the Investment Company Act of
1940, or become principally engaged in, or undertake as one of its important
activities, the business of extending credit for the purpose of purchasing or
carrying margin stock, or use the proceeds of any Credit Extension for such
purpose. Fail to meet the minimum funding requirements of ERISA, permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to

                                       16
<PAGE>   18

occur, fail to comply in all material respects with the Federal Fair Labor
Standards Act or violate any law or regulation, which violation could reasonably
be expected to have a Material Adverse Effect, or a material adverse effect on
the Collateral or the priority of Bank's Lien on the Collateral, or permit any
of its Subsidiaries to do any of the foregoing.

           7.12 Negative Pledge Agreements. Borrower shall not permit the
inclusion in any contract to which it becomes a party of any provisions that
could or might in any way prevent the creation of a security interest in
Borrower's rights and interests in any Collateral, unless an exception is made
therein for the security interest of Bank.

        8. EVENTS OF DEFAULT.

           Any one or more of the following events shall constitute an Event of
Default by Borrower under this Agreement:

           8.1 Payment Default. If Borrower fails to pay, when due, any of the
Obligations;

           8.2 Covenant Default. If Borrower fails to perform any obligation
under Article 6 or violates any of the covenants contained in Article 7 of this
Agreement, or fails or neglects to perform, keep, or observe any other material
term, provision, condition, covenant, or agreement contained in this Agreement,
in any of the Loan Documents, or in any other present or future agreement
between Borrower and Bank and as to any default under such other term,
provision, condition, covenant or agreement that can be cured, has failed to
cure such default within ten (10) days after Borrower receives notice thereof or
any officer of Borrower becomes aware thereof; provided, however, that if the
default cannot by its nature be cured within the ten (10) day period or cannot
after diligent attempts by Borrower be cured within such ten (10) day period,
and such default is likely to be cured within a reasonable time, then Borrower
shall have an additional reasonable period (which shall not in any case exceed
thirty (30) days) to attempt to cure such default, and within such reasonable
time period the failure to have cured such default shall not be deemed an Event
of Default (provided that no Credit Extensions will be required to be made
during such cure period);

           8.3 Material Adverse Change. If there occurs a material adverse
change in Borrower's business or financial condition, or if there is a material
impairment of the prospect of repayment of any portion of the Obligations or a
material impairment of the value or priority of Bank's security interests in the
Collateral;

           8.4 Attachment. If any material portion of Borrower's assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon, or
comes into the possession of any trustee, receiver or person acting in a similar
capacity and such attachment, seizure, writ or distress warrant or levy has not
been removed, discharged or rescinded within thirty (30) days, or if Borrower is
enjoined, restrained, or in any way prevented by court order from continuing to
conduct all or any material part of its business affairs, or if a judgment or
other claim becomes a lien or encumbrance upon any material portion of
Borrower's assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of Borrower's assets by the United States Government,
or any department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, and the same is not paid within thirty (30)
days after Borrower receives notice thereof, provided that none of the foregoing
shall constitute an Event of Default where such action or event is stayed or an
adequate bond has been posted pending a good faith contest by Borrower (provided
that no Credit Extensions will be required to be made during such cure period);

           8.5 Insolvency. If Borrower becomes insolvent, or if an Insolvency
Proceeding is commenced by Borrower, or if an Insolvency Proceeding is commenced
against Borrower and is not dismissed or stayed within thirty (30) days
(provided that no Credit Extensions will be made prior to the dismissal of such
Insolvency Proceeding);

           8.6 Other Agreements. If there is a default in any agreement to which
Borrower is a party with a third party or parties resulting in a right by such
third party or parties, whether or not exercised, to accelerate the maturity of
any Indebtedness in an amount in excess of $250,000 or that could reasonably be
expected to have a Material Adverse Effect;

                                       17
<PAGE>   19

           8.7 Subordinated Debt. If Borrower makes any payment on account of
Subordinated Debt, except to the extent such payment is allowed herein or under
any subordination agreement entered into with Bank;

           8.8 Judgments. If a judgment or judgments for the payment of money in
an amount, individually or in the aggregate, of at least $250,000 shall be
rendered against Borrower and shall remain unsatisfied and unstayed for a period
of ten (10) days (provided that no Credit Extensions will be made prior to the
satisfaction or stay of such judgment); or

           8.9 Misrepresentations. If any material misrepresentation or material
misstatement exists now or hereafter in any warranty or representation set forth
herein or in any certificate delivered to Bank by any Responsible Officer
pursuant to this Agreement or to induce Bank to enter into this Agreement or any
other Loan Document.

           8.10 Guaranty. If any guaranty of all or a portion of the Obligations
ceases for any reason to be in full force and effect, or any of the
circumstances described in any of Sections 8.3, 8.4 or 8.5 occurs with respect
to any Guarantor, or any Guarantor fails to perform any obligation under any
guaranty of all or a portion of the Obligations, or any Guarantor revokes or
purports to revoke any guaranty of the Obligations, or any material
misrepresentation or material misstatement exists now or hereafter in any
warranty or representation set forth in any guaranty of all or a portion of the
Obligations or in any certificate delivered to Bank in connection with such
guaranty.

        9. BANK'S RIGHTS AND REMEDIES.

           9.1 Rights and Remedies. Upon the occurrence and during the
continuance of an Event of Default, Bank may, at its election, without notice of
its election and without demand, do any one or more of the following, all of
which are authorized by Borrower:

               (a) Declare all Obligations, whether evidenced by this Agreement,
by any of the other Loan Documents, or otherwise, immediately due and payable
(provided that upon the occurrence of an Event of Default described in Section
8.5, all Obligations shall become immediately due and payable without any action
by Bank);

               (b) Cease advancing money or extending credit to or for the
benefit of Borrower under this Agreement or under any other agreement between
Borrower and Bank;

               (c) Demand that Borrower (i) deposit cash with Bank in an amount
equal to the amount of any Letters of Credit remaining undrawn, as collateral
security for the repayment of any future drawings under such Letters of Credit,
and Borrower shall forthwith deposit and pay such amounts, and (ii) pay in
advance all Letters of Credit fees scheduled to be paid or payable over the
remaining term of the Letters of Credit; and

               (d) Settle or adjust disputes and claims directly with account
debtors for amounts, upon terms and in whatever order that Bank reasonably
considers advisable;

               (e) Make such payments and do such acts as Bank considers
necessary or reasonable to protect its security interest in the Collateral.
Borrower agrees to assemble the Collateral if Bank so requires, and to make the
Collateral available to Bank as Bank may designate. Borrower authorizes Bank to
enter the premises where the Collateral is located, to take and maintain
possession of the Collateral, or any part of it, and to pay, purchase, contest,
or compromise any encumbrance, charge, or lien which in Bank's determination
appears to be prior or superior to its security interest and to pay all expenses
incurred in connection therewith. With respect to any of Borrower's owned
premises, Borrower hereby grants Bank a license to enter into possession of such
premises and to occupy the same, without charge, in order to exercise any of
Bank's rights or remedies provided herein, at law, in equity, or otherwise, but
only for so long as is reasonably required for the exercise of such right;

                                       18
<PAGE>   20

               (f) Set off and apply to the Obligations any and all (i) balances
and deposits of Borrower held by Bank, or (ii) indebtedness at any time owing to
or for the credit or the account of Borrower held by Bank;

               (g) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Collateral. Bank is hereby granted a license or other right, solely
pursuant to the provisions of this Section 9.1, to use, without charge,
Borrower's labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks, service marks, and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Bank's exercise of its rights under this Section 9.1, Borrower's
rights under all licenses and all franchise agreements shall inure to Bank's
benefit;

               (h) Dispose of the Collateral in accordance with the Code,
including a public or private sale, or both, by way of one or more contracts or
transactions, for cash or on terms, in such manner and at such places (including
Borrower's premises) as is commercially reasonable, and apply any proceeds to
the Obligations in whatever manner or order Bank deems appropriate;

               (i) Bank may credit bid and purchase at any public sale;

               (j) Any deficiency that exists after disposition of the
Collateral as provided above will be paid immediately by Borrower.

           9.2 Power of Attorney. Effective only upon the occurrence and during
the continuance of an Event of Default, Borrower hereby irrevocably appoints
Bank (and any of Bank's designated officers, or employees) as Borrower's true
and lawful attorney to: (a) send requests for verification of Accounts or notify
account debtors of Bank's security interest in the Accounts; (b) endorse
Borrower's name on any checks or other forms of payment or security that may
come into Bank's possession; (c) sign Borrower's name on any invoice or bill of
lading relating to any Account, drafts against account debtors, schedules and
assignments of Accounts, verifications of Accounts, and notices to account
debtors; (d) dispose of any Collateral; (e) make, settle, and adjust all claims
under and decisions with respect to Borrower's policies of insurance; (f) settle
and adjust disputes and claims respecting the accounts directly with account
debtors, for amounts and upon terms which Bank determines to be reasonable; (g)
to modify, in its sole discretion, any intellectual property security agreement
entered into between Borrower and Bank without first obtaining Borrower's
approval of or signature to such modification by amending Exhibits A, B, and C,
thereof, as appropriate, to include reference to any right, title or interest in
any Copyrights, Patents or Trademarks acquired by Borrower after the execution
hereof or to delete any reference to any right, title or interest in any
Copyrights, Patents or Trademarks in which Borrower no longer has or claims to
have any right, title or interest; (h) to file, in its sole discretion, one or
more financing or continuation statements and amendments thereto, relative to
any of the Collateral without the signature of Borrower where permitted by law;
and (i) to transfer the Intellectual Property Collateral into the name of Bank
or a third party to the extent permitted under the California Uniform Commercial
Code; provided Bank may exercise such power of attorney to sign the name of
Borrower on any of the documents described in Section 4.2 regardless of whether
an Event of Default has occurred if Borrower has not done so within 10 days of
Bank's request. The appointment of Bank as Borrower's attorney in fact, and each
and every one of Bank's rights and powers, being coupled with an interest, is
irrevocable until all of the Obligations have been fully repaid and performed
and Bank's obligation to provide advances hereunder is terminated.

           9.3 Accounts Collection. At any time during the term of this
Agreement, Bank may notify any Person owing funds to Borrower of Bank's security
interest in such funds and verify the amount of such Account. Borrower shall
collect all amounts owing to Borrower for Bank, receive in trust all payments as
Bank's trustee, and immediately deliver such payments to Bank in their original
form as received from the account debtor, with proper endorsements for deposit.

           9.4 Bank Expenses. If Borrower fails to pay any amounts or furnish
any required proof of payment due to third persons or entities, as required
under the terms of this Agreement, then Bank may do any or all of the following
after reasonable notice to Borrower: (a) make payment of the same or any part
thereof; (b) set up such reserves under the Revolving Facility as Bank deems
necessary to protect Bank from the exposure created by such failure; or (c)
obtain and maintain insurance policies of the type discussed in Section 6.6 of
this Agreement,

                                       19
<PAGE>   21

and take any action with respect to such policies as Bank deems prudent. Any
amounts so paid or deposited by Bank shall constitute Bank Expenses, shall be
immediately due and payable, and shall bear interest at the then applicable rate
hereinabove provided, and shall be secured by the Collateral. Any payments made
by Bank shall not constitute an agreement by Bank to make similar payments in
the future or a waiver by Bank of any Event of Default under this Agreement.

           9.5 Bank's Liability for Collateral. So long as Bank complies with
reasonable banking practices, Bank shall not in any way or manner be liable or
responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage
thereto occurring or arising in any manner or fashion from any cause; (c) any
diminution in the value thereof; or (d) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other person whomsoever. All risk of
loss, damage or destruction of the Collateral shall be borne by Borrower.

           9.6 Remedies Cumulative. Bank's rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative.
Bank shall have all other rights and remedies not inconsistent herewith as
provided under the Code, by law, or in equity. No exercise by Bank of one right
or remedy shall be deemed an election, and no waiver by Bank of any Event of
Default on Borrower's part shall be deemed a continuing waiver. No delay by Bank
shall constitute a waiver, election, or acquiescence by it. No waiver by Bank
shall be effective unless made in a written document signed on behalf of Bank
and then shall be effective only in the specific instance and for the specific
purpose for which it was given.

           9.7 Demand; Protest. Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment, notice
of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and
guarantees at any time held by Bank on which Borrower may in any way be liable.

       10. NOTICES.

           Unless otherwise provided in this Agreement, all notices or demands
by any party relating to this Agreement or any other agreement entered into in
connection herewith shall be in writing and (except for financial statements and
other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by a recognized overnight
delivery service, certified mail, postage prepaid, return receipt requested, or
by telefacsimile to Borrower or to Bank, as the case may be, at its addresses
set forth below:

       If to Borrower:    Novatel Wireless, Inc.
                          9360 Towne Centre Drive, Suite 110
                          San Diego, CA  92121
                          Attn:  Mr. Roger Hartman, Chief Financial Officer
                          FAX:  (858) 784-0626

                          with a copy to:

                          Orrick, Herrington & Sutcliffe LLP
                          777 South Figueroa Street, Suite 3200
                          Los Angeles, CA 90017
                          Attn: Peter Leparulo

       If to Bank:        Venture Banking Group
                          Three Palo Alto Square
                          Palo Alto, CA 94306
                          Attn:  Mr. Brad L. Smith
                          FAX: (650) 843-6969

        The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other. Failure to deliver a notice to Borrower's counsel shall not render
ineffective any notice delivered to Borrower.

                                       20
<PAGE>   22

       11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

           This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of California, without regard to principles
of conflicts of law. Each of Borrower and Bank hereby submits to the exclusive
jurisdiction of the state and Federal courts located in the County of Santa
Clara, State of California. BORROWER AND BANK EACH HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE
FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS
AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

       12. GENERAL PROVISIONS.

           12.1 Successors and Assigns. This Agreement shall bind and inure to
the benefit of the respective successors and permitted assigns of each of the
parties; provided, however, that neither this Agreement nor any rights hereunder
may be assigned by Borrower without Bank's prior written consent, which consent
may be granted or withheld in Bank's sole discretion. Bank shall have the right
without the consent of or notice to Borrower to sell, transfer, negotiate, or
grant participation in all or any part of, or any interest in, Bank's
obligations, rights and benefits hereunder.

           12.2 Indemnification. Borrower shall defend, indemnify and hold
harmless Bank and its officers, employees, and agents against: (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
party in connection with the transactions contemplated by this Agreement; and
(b) all losses or Bank Expenses in any way suffered, incurred, or paid by Bank
as a result of or in any way arising out of transactions between Bank and
Borrower under this Agreement or the other Loan Documents (including without
limitation reasonable attorneys fees and expenses), except for losses caused by
Bank's gross negligence or willful misconduct.

           12.3 Time of Essence. Time is of the essence for the performance of
all obligations set forth in this Agreement.

           12.4 Severability of Provisions. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.

           12.5 Amendments in Writing, Integration. This Agreement cannot be
amended or terminated orally. All prior agreements, understandings,
representations, warranties, and negotiations between the parties hereto with
respect to the subject matter of this Agreement, if any, are merged into this
Agreement and the Loan Documents.

           12.6 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same Agreement.

           12.7 Survival. All covenants, representations and warranties made in
this Agreement shall continue in full force and effect so long as any
Obligations remain outstanding. The obligations of Borrower to indemnify Bank
with respect to the expenses, damages, losses, costs and liabilities described
in Section 12.2 shall survive until all applicable statute of limitations
periods with respect to actions that may be brought against Bank have run.

                                       21
<PAGE>   23

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.

                                        NOVATEL WIRELESS, INC.

                                        By: /s/ R. HARTMAN
                                           -------------------------------------

                                        Title: 10/12/99
                                              ----------------------------------

                                        VENTURE BANKING GROUP, a division of
                                        Cupertino National Bank

                                        By: /s/ BRAD SMITH
                                           -------------------------------------

                                        Title: Vice President
                                              ----------------------------------

                                       22
<PAGE>   24

                                    EXHIBIT A

        The Collateral shall consist of all right, title and interest of
Borrower in and to the following:

        (a) All goods and equipment now owned or hereafter acquired, including,
without limitation, all machinery, fixtures, vehicles (including motor vehicles
and trailers), and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located;

        (b) All inventory, now owned or hereafter acquired, including, without
limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above, and
Borrower's Books relating to any of the foregoing;

        (c) All contract rights and general intangibles now owned or hereafter
acquired, including, without limitation, goodwill, trademarks, servicemarks,
trade styles, trade names, patents, patent applications, leases, license
agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kind;

        (d) All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Borrower, whether or not earned by performance, and any
and all credit insurance, guaranties, and other security therefor, as well as
all merchandise returned to or reclaimed by Borrower and Borrower's Books
relating to any of the foregoing;

        (e) All documents, cash, deposit accounts, securities, investment
property, financial assets, securities entitlements, securities accounts,
letters of credit, certificates of deposit, instruments and chattel paper now
owned or hereafter acquired and Borrower's Books relating to the foregoing;

        (f) All copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work thereof, whether published or unpublished, now owned or hereafter acquired;
all trade secret rights, including all rights to unpatented inventions,
know-how, operating manuals, license rights and agreements and confidential
information, now owned or hereafter acquired; all mask work or similar rights
available for the protection of semiconductor chips, now owned or hereafter
acquired; all claims for damages by way of any past, present and future
infringement of any of the foregoing; and

        Any and all claims, rights and interests in any of the above and all
substitutions for, additions and accessions to and proceeds thereof; provided
that, notwithstanding anything in the foregoing description to the contrary, the
Collateral shall not include (i) Borrower's equipment and related computer
programs and other related general intangibles to the extent the same are
subject to a lease or financing arrangement which includes a valid and
enforceable prohibition on further encumbrances ("Excluded Equipment"), (ii)
additions, attachments, accessories and accessions to, substitutions,
replacements and exchanges for, and products and proceeds (including insurance
proceeds) of the Excluded Equipment, and (iii) Borrower's rights as licensee
under license agreements, the encumbering of which constitutes an event of
termination which may be asserted against Borrower; provided that such exclusion
shall not apply to proceeds generated from or inventory sold pursuant to any
such license agreement; provided, however, that "Collateral" shall include, (A)
any general intangible or contract right which is an Account or a proceed of, or
otherwise related to the enforcement or collection of, any Account or goods
which are the subject of any Account, and (B) any and all proceeds of any
general intangibles or contract rights which are otherwise excluded to the
extent that the assignment or encumbrance of such proceeds is not so restricted,
and (C) upon obtaining the consent of any such licensor, lessor, or other
applicable party with respect to any such otherwise excluded general
intangibles, contract rights and Equipment, such general intangibles, contract
rights and Equipment as well as any and all proceeds thereof that might
theretofore have been excluded from the term "Collateral."

                                       23
<PAGE>   25

                                    EXHIBIT B

                            REVOLVING PROMISSORY NOTE

$2,500,000                                                 Palo Alto, California
                                                                October 12, 1999

        FOR VALUE RECEIVED, NOVATEL WIRELESS, INC. (the "Borrower"), promises to
pay to the order of Venture Banking Group (the "Bank") the principal amount of
Two Million Five Hundred Thousand Dollars ($2,500,000) or, if less, the
aggregate amount of Advances (as defined in the Loan Agreement referred to
below) made by Bank to Borrower pursuant to the Loan Agreement referred to below
outstanding on the Revolving Maturity Date (as defined in the Loan Agreement
referred to below). All unpaid amounts of principal and interest shall be due
and payable in full on the Revolving Maturity Date.

        Borrower also promises to pay interest on the unpaid principal amount
hereof from the date hereof until paid at the rates and at the times which shall
be determined in accordance with the provisions of the Loan Agreement.
Notwithstanding any other limitations contained in this Note, Bank does not
intend to charge and Borrower shall not be required to pay any interest or other
fees or charges in excess of the maximum permitted by applicable law. Any
payments in excess of such maximum shall be refunded to the Borrower or credited
against principal.

        All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in same day funds at the
office of Bank described in the Loan Agreement. Until notified of the transfer
of this Note, Borrower shall be entitled to deem Bank or such person who has
been so identified by the transferor in writing to the Borrower as the holder of
this Note, as the owner and holder of this Note.

        This Note is referred to in, and is entitled to the benefits of, the
Loan and Security Agreement dated as of October 12, 1999 (the "Loan Agreement")
between Borrower and Bank. The Loan Agreement, among other things, (i) provides
for the making of Advances by Bank to Borrower from time to time in an aggregate
amount not to exceed at any time outstanding the U.S. dollar amounts stated
therein, and (ii) contains provisions for acceleration of the maturity hereof
upon the happening of certain stated events and also for prepayments on account
of principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.

        The terms of this Note are subject to amendment only in the manner
provided in the Loan Agreement.

        No reference herein to the Loan Agreement and no provision of this Note
or the Loan Agreement shall alter or impair the obligation of Borrower, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the place, at the respective times, and in the currency herein prescribed.

        Borrower promises to pay all costs and expenses, including reasonable
attorneys' fees, incurred in the collection and enforcement of this Note.
Borrower hereby consents to renewals and extensions of time at or after the
maturity hereof, without notice, and hereby waives diligence, presentment,
protest, demand and notice of every kind and, to the full extent permitted by
law, the right to plead any statute of limitations as a defense to any demand
hereunder.

        This Note shall be governed by, and construed in accordance with, the
laws of the State of California without giving effect to its choice of law
doctrine.

        IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered by its duly authorized officer, as of the date and the place first
above written.

                                        NOVATEL WIRELESS, INC.

                                        By: ____________________________________

                                        Title: _________________________________

                                       24
<PAGE>   26

                                    EXHIBIT C

                   LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM

           DEADLINE FOR SAME DAY PROCESSING IS 3:00 P.M., Pacific Time

TO:  Venture Banking Group                                 DATE: _______________

FAX #:  650-843-6969                                       TIME: _______________

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

FROM: __________________________________________________________________________
                             CLIENT NAME (BORROWER)

REQUESTED BY:  NOVATEL WIRELESS, INC. __________________________________________
                                              AUTHORIZED SIGNER'S NAME

AUTHORIZED SIGNATURE: __________________________________________________________

PHONE NUMBER: __________________________________________________________________

FROM ACCOUNT # _________________________  TO ACCOUNT # _________________________

REQUESTED TRANSACTION TYPE            REQUEST DOLLAR AMOUNT
--------------------------            ---------------------
                                      $_________________________________________
PRINCIPAL INCREASE (ADVANCE)          $_________________________________________
PRINCIPAL PAYMENT (ONLY)              $_________________________________________
INTEREST PAYMENT (ONLY)               $_________________________________________
PRINCIPAL AND INTEREST (PAYMENT)      $_________________________________________

OTHER INSTRUCTIONS:_____________________________________________________________

________________________________________________________________________________

        All representations and warranties of Borrower stated in the Loan and
Security Agreement are true, correct and complete in all material respects as of
the date of the telephone request for an Advance confirmed by this Advance
Request Form; provided, however, that those representations and warranties
expressly referring to another date shall be true, correct and complete in all
material respects as of such date.

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

--------------------------------------------------------------------------------
                                  BANK USE ONLY

TELEPHONE REQUEST:
-----------------

The following person is authorized to request the loan payment transfer/loan
advance on the advance designated account and is known to me.

____________________________________________        ____________________________
              Authorized Requester                            Phone #

____________________________________________        ____________________________
               Received By (Bank)                             Phone #

                       __________________________________
                           Authorized Signature (Bank)

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

                                       25
<PAGE>   27

                                    EXHIBIT D

                           BORROWING BASE CERTIFICATE

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

Borrower: Novatel Wireless, Inc., Novatel Wireless Solutions, Inc., Novatel
          Wireless Technologies, Ltd.

Commitment Amount:  $2,500,000
--------------------------------------------------------------------------------

<TABLE>
<S>                                                                            <C>             <C>
ACCOUNTS RECEIVABLE
        1.     Accounts Receivable Book Value as of ___                                        $___________
        2.     Additions (please explain on reverse)                                           $___________
        3.     TOTAL ACCOUNTS RECEIVABLE                                                       $___________

ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
        4.     Amounts over 90 days due                                        $___________
        5.     Balance of 25% over 90 day accounts                             $___________
        6.     Concentration Limits                                            $___________
        7.     Foreign Accounts                                                $___________
        8.     Governmental Accounts                                           $___________
        9.     Contra Accounts                                                 $___________
        10.    Demo Accounts                                                   $___________
        11.    Intercompany/Employee Accounts                                  $___________
        12.    Other (please explain on reverse)                               $___________
        13.    TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS                            $___________
        14.    Eligible Accounts (#3 minus #13)                                                $___________
        15.    LOAN VALUE OF ACCOUNTS (70% of #14)                                             $___________

ELIGIBLE INVENTORY (Until January 31, 2000)
        16.    Inventory Book Value as of _______                                              $___________
               a.     Raw materials                                                            $___________
               b.     Finished goods                                                           $___________
        17.    Loan Value of Inventory (40%) of #16, up to $1,000,000)                         $___________

BALANCES
        18.    Maximum Loan Amount                                                             $2,500,000
        19.    Total Funds Available [Lesser of (#15 + #17) or #18]                            $___________
        20.    Present balance owing on Line of Credit                                         $___________
        21.    Outstanding under Sublimits (Letters of Credit)                                 $___________
        22.    RESERVE POSITION (#18 minus #19 and #20)                                        $___________
</TABLE>

The undersigned represents and warrants that the foregoing is true, complete and
correct, and that the information reflected in this Borrowing Base Certificate
complies with the representations and warranties set forth in the Loan and
Security Agreement between the undersigned and Venture Banking Group.

NOVATEL WIRELESS, INC.

By: _____________________________
          Authorized Signer

                                       26
<PAGE>   28

                                    EXHIBIT E
                             COMPLIANCE CERTIFICATE

TO:     VENTURE BANKING GROUP

FROM:   NOVATEL WIRELESS, INC.

        The undersigned authorized officer of Novatel Wireless, Inc. hereby
certifies in his capacity as an officer of the Borrower that in accordance with
the terms and conditions of the Loan and Security Agreement between Borrower and
Bank (the "Agreement"), (i) Borrower is in complete compliance for the period
ending _______________ with all required covenants except as noted below and
(ii) all representations and warranties of Borrower stated in the Agreement are
true and correct in all material respects as of the date hereof. Attached
herewith are the required documents supporting the above certification. The
Officer further certifies that these are prepared in accordance with Generally
Accepted Accounting Principles (GAAP) and are consistently applied from one
period to the next except as explained in an accompanying letter or footnotes.

        PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES"
COLUMN.

<TABLE>
<CAPTION>
       REPORTING COVENANT                              REQUIRED                               COMPLIES
       ------------------                              --------                               --------
<S>                                                    <C>                                    <C>
       Monthly consolidated financial statements       Monthly within 20 days                 Yes    No
       Annual (CPA Audited)                            FYE within 90 days                     Yes    No
       10K and 10Q                                     (as applicable)                        Yes    No
       A/R & A/P Agings, Borrowing Base Cert.          Monthly within 20 days (when           Yes    No
                                                       borrowing)
       A/R Audit                                       Initial and Annual                     Yes    No
       Quarterly consolidating financial statements    Quarterly within 20 days               Yes    No

       FINANCIAL COVENANT                              REQUIRED            ACTUAL               COMPLIES

       Maintain through January 31, 2000:
           Minimum Adjusted Net Worth (monthly)        $1,000,000          $_____             Yes    No
           Profitability/Losses (monthly)              <125% of            $_____             Yes    No
                                                       projected
                                                       cumulative
                                                       monthly losses

       Maintain beginning March 31, 2000
           Minimum Net Worth (quarterly)               $10,000,000         $_____             Yes    No
           Maximum Total Liabilities to TNW            1.00:1.00           _____:1.00         Yes    No
           (quarterly)
           Minimum Quick Ratio (quarterly)             1.25:1.00           _____:1.00         Yes    No
</TABLE>

<TABLE>
<S>                                                   <C>
                                                      --------------------------------------------------------
COMMENTS REGARDING EXCEPTIONS:  See Attached.
                                                      BANK USE ONLY

                                                      Received by: _________________________________________
Sincerely,                                                                    AUTHORIZED SIGNER

                                                      Date: ________________________________________________

                                                      Verified: ____________________________________________
_________________________________________________                            AUTHORIZED SIGNER
SIGNATURE

                                                      Date: ________________________________________________
_________________________________________________
TITLE
                                                      Compliance Status                     Yes      No
__________________________________________________
DATE
                                                      --------------------------------------------------------
</TABLE>

                                       27
<PAGE>   29

                             SCHEDULE OF EXCEPTIONS

Permitted Indebtedness  (Section 1.1)

See attached UCC search.

Permitted Investments  (Section 1.1)

None.

Permitted Liens  (Section 1.1)

See attached search.

Prior Names  (Section 5.7)

None.

Litigation  (Section 5.8)

None.

Environmental  (Section 5.12)

None.

                                       28
<PAGE>   30

                                    EXHIBIT F

                    INTELLECTUAL PROPERTY SECURITY AGREEMENT

                                       1
<PAGE>   31

                    INTELLECTUAL PROPERTY SECURITY AGREEMENT

       This Intellectual Property Security Agreement is entered into as of
October 12, 1999 by and between VENTURE BANKING GROUP, a division of Cupertino
National Bank ("Bank") and NOVATEL WIRELESS, INC. ("Grantor").

                                    RECITALS

       A. Bank has agreed to make certain advances of money and to extend
certain financial accommodation to Grantor (the "Loans") in the amounts and
manner set forth in that certain Loan and Security Agreement by and between Bank
and Grantor dated of even date herewith (as the same may be amended, modified or
supplemented from time to time, the "Loan Agreement"; capitalized terms used
herein are used as defined in the Loan Agreement). Bank is willing to make the
Loans to Grantor, but only upon the condition, among others, that Grantor shall
grant to Bank a security interest in certain Copyrights, Trademarks and Patents
to secure the obligations of Grantor under the Loan Agreement.

       B. Pursuant to the terms of the Loan Agreement, Grantor has granted to
Bank a security interest in all of Grantor's right, title and interest, whether
presently existing or hereafter acquired, in, to and under all of the
Collateral.

       NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, and intending to be legally bound, as collateral security
for the prompt and complete payment when due of its obligations under the Loan
Agreement, Grantor hereby represents, warrants, covenants and agrees as follows:

                                    AGREEMENT

       To secure its obligations under the Loan Agreement and any other amounts
owing to Bank from time to time, Grantor grants and pledges to Bank a security
interest in all of Grantor's right, title and interest in, to and under its
Intellectual Property Collateral (including without limitation those Copyrights,
Patents and Trademarks listed on Schedules A, B and C hereto), and including
without limitation all proceeds thereof (such as, by way of example but not by
way of limitation, license royalties and proceeds of infringement suits), the
right to sue for past, present and future infringements, all rights
corresponding thereto throughout the world and all re-issues, divisions
continuations, renewals, extensions and continuations-in-part thereof.

       This security interest is granted in conjunction with the security
interest granted to Bank under the Loan Agreement. The rights and remedies of
Bank with respect to the security interest granted hereby are in addition to
those set forth in the Loan Agreement and the other Loan Documents, and those
which are now or hereafter available to Bank as a matter of law or equity. Each
right, power and remedy of Bank provided for herein or in the Loan Agreement or
any of the Loan Documents, or now or hereafter existing at law or in equity
shall be cumulative and concurrent and shall be in addition to every right,
power or remedy provided for herein and the exercise by Bank of any one or more
of the rights, powers or remedies provided for in this Intellectual Property
Security Agreement, the Loan Agreement or any of the other Loan Documents, or
now or hereafter existing at law or in equity, shall not preclude the
simultaneous or later exercise by any person, including Bank, of any or all
other rights, powers or remedies.

                                       1
<PAGE>   32

       IN WITNESS WHEREOF, the parties have cause this Intellectual Property
Security Agreement to be duly executed by its officers thereunto duly authorized
as of the first date written above.

                                        GRANTOR:

Address of Grantor:                     NOVATEL WIRELESS INC.

9360 Towne Centre Drive
San Diego, CA  92121                    By:
                                           -------------------------------------

Attn:  Mr. Roger Hartman                Title:
                                              ----------------------------------

                                        BANK:

                                        VENTURE BANKING GROUP, a division of
Address of Bank:                        Cupertino National Bank

Three Palo Alto Square
Palo Alto, CA 94306                     By:
                                           -------------------------------------

Attn:  Mr. Brad Smith                   Title:
                                              ----------------------------------

                                       2
<PAGE>   33

                                    EXHIBIT A

                                   Copyrights

<TABLE>
<CAPTION>
                                  Registration/        Registration/
                                   Application         Application
Description                          Number                Date
-----------                          ------                ----
<S>                               <C>                  <C>
None
</TABLE>

<PAGE>   34

                                    EXHIBIT B

                                     Patents

<TABLE>
<CAPTION>
                                                              Registration/      Registration/
                                                               Application        Application
Description                                                       Number              Date
-----------                                                       ------              ----
<S>                                                           <C>                <C>
Bus for Cellular Telephone                                      5,109,402

Duplexing Antenna for Portable Radio                            5,231,407

Handheld Power Saving Technique                                 5,129,098

ESN Secure Cellular Data Transmitter                            5,337,345

Controlled Output Amplifier & Power Detector Therefor           4,760,347

R.F. Power Control Circuit                                      4,952,886

R.F. Power Control Circuit (cont.-in-part)                      5,003,270

Power Detector Utilizing Bias Voltage Divider                   5,043,672

Factor 2 Wireline Interface                                     5,526,403

Automatic Power Control for Burst Transmission                  5,438,683
</TABLE>

<PAGE>   35

                                    EXHIBIT C

                                   Trademarks

<TABLE>
<CAPTION>
                                    Registration/      Registration/
                                     Application        Application
Description                            Number              Date
-----------                            ------              ----
<S>                                 <C>                <C>
MERLIN                                75/742,650          07/01/99
</TABLE>

<PAGE>   36

                                    EXHIBIT G

                            WARRANT TO PURCHASE STOCK

                                       2
<PAGE>   37
THE WARRANT EVIDENCED HEREBY, THE SHARES OF PREFERRED STOCK ISSUABLE HEREUNDER,
AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE CONVERSION OF SUCH SHARES OF
PREFERRED STOCK HAVE BEEN AND WILL BE ISSUED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE APPLICABLE SECURITIES LAWS OF ANY
STATE. SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO
DISTRIBUTION OR RESALE, AND SHALL NOT BE SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS THE PROPOSED DISPOSITION IS THE SUBJECT OF A CURRENTLY
EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND UNDER APPLICABLE STATE
SECURITIES LAWS OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, IN
FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER SAID ACT AND SUCH STATE SECURITIES LAWS
IN CONNECTION WITH SUCH DISPOSITION.

                             NOVATEL WIRELESS, INC.

                        PREFERRED STOCK PURCHASE WARRANT

                           VOID AFTER OCTOBER 12, 2004

                    THIS STOCK PURCHASE WARRANT IS ISSUED TO

          VENTURE BANKING GROUP, A DIVISION OF CUPERTINO NATIONAL BANK
                               3 PALO ALTO SQUARE
                               PALO ALTO, CA 94301

(hereinafter called the "initial registered holder" or the "registered holder,"
which term shall include its successors and assigns) by Novatel Wireless, Inc.,
a Delaware corporation (hereinafter referred to as the "Company"). Holder is
entitled to purchase the number of fully paid and nonassessable shares of the
Series C Preferred Stock (the "Shares") of the Company at the initial exercise
price per Share (the "Warrant Price") all as set forth herein and as adjusted
pursuant to this Warrant, subject to the provisions and upon the terms and
conditions set forth of this Warrant. The Warrant shall be exercisable for the
number of Shares equal to $150,000 divided by the Warrant Price. If the Company
on or prior to January 31, 2000 shall close the sale of its Series C Preferred
Stock pursuant to an offering in which the Company receives not less than
Fifteen Million Dollars ($15,000,000) (such round being the "Series C Round"),
the Warrant Price shall be equal to the weighted average of the price per share
at which the Series C Preferred Stock is sold in the Series C Round and the
price per share at which the Series B Preferred Stock was last sold in a bona
fide venture capital round. If the Company does not close the Series C Round on
or prior to January 31, 2000, the Shares shall be Series B Preferred Stock and
the Warrant Price shall be the price per share at which the Series B Preferred
Stock was last sold in a bona fide venture capital round. The holder of this
Warrant is entitled to certain of the benefits conferred by that certain
Registration Rights Agreement, as amended, dated as of August 21, 1996, as
amended (the "Registration Rights Agreement"), a copy of which is on file at the
office of the Company at the address specified below. This Warrant may

<PAGE>   38

be transferred by the registered holder only in accordance with the provisions
of Sections 1.4 and 5 hereof. A copy of the Registration Rights Agreement will
be furnished to any subsequent registered holder hereof upon written request.
The Registration Rights Agreement contains an undertaking by the Company under
certain circumstances to effect registration and qualification under federal and
state securities laws of, or to take other action with respect to, the shares of
Common Stock, par value $.001, of the Company ("Common Stock") issuable on
conversion of the Shares issued upon exercise of this Warrant.

        Section 1: The Warrant.

               1.1 This Warrant may be exercised in full or in part from time to
time. As promptly as practicable after surrender of this Warrant and receipt of
payment of the Warrant Price, the Company shall issue and deliver to the
registered holder a certificate or certificates for the Shares, as applicable,
in certificates of such denominations and in such names as the registered holder
may specify, together with any other stock, securities or property to which such
holder may be entitled to receive pursuant to Sections 1.5(A), 1.5(B) or 1.5(C)
hereof. In the case of the purchase of less than all the shares purchasable
under this Warrant, the Company shall cancel this Warrant upon the surrender
hereof and shall execute and deliver a substitute Warrant of like tenor for the
balance of the shares purchasable hereunder. This Warrant shall expire at 8:00
P.M. (Eastern Standard Time) on October 12, 2004 and shall be void thereafter.
In lieu of exercising this Warrant by cash payment, Holder may from time to time
convert this Warrant, in whole or in part, into a number of Shares determined by
dividing (a) the aggregate fair market value of the Shares or other securities
otherwise issuable upon exercise of this Warrant minus the aggregate Warrant
Price of such Shares by (b) the fair market value of one Share. If the Shares
are traded in a public market, the fair market value of the Shares shall be the
closing price of the Shares (or the closing price of the Company's stock into
which the Shares are convertible) reported for the business day immediately
before Holder delivers its Notice of Exercise to the Company. If the Shares are
not traded in a public market, the Board of Directors of the Company shall
determine fair market value in its reasonable good faith judgment.

               1.2 During the period within which the rights represented by this
Warrant may be exercised, the Company shall at all times have authorized and
reserved for the purpose of issue upon exercise of the rights evidenced hereby,
a sufficient number of shares of its Shares and Common Stock issuable upon the
conversion of such Shares to provide for the exercise of such rights. Upon
surrender for exercise, this Warrant shall be canceled and shall not be
reissued; provided, however, that upon the partial exercise hereof a substitute
Warrant representing the rights to subscribe for and purchase any such
unexercised portion hereof shall be issued.

               1.3 Subject to compliance with applicable securities laws, this
Warrant may be subdivided into one or more Stock Purchase Warrants entitling the
registered holder to purchase Shares in multiples of one or more whole shares,
upon surrender of this Warrant by the registered holder for such purpose at the
office of the Company.

               1.4 The Company shall maintain at its office (or at such other
office or agency of the Company as it may from time to time designate in writing
to the registered holder hereof), a register containing the names and addresses
of the holders of all Stock Purchase Warrants. The

<PAGE>   39

registered holder of such a Warrant shall be the person in whose name such
Warrant is originally issued and registered, unless a subsequent holder shall
have presented to the Company such Warrant, duly assigned to him, for inspection
and a written notice of his acquisition of such Warrant and designating in
writing the address of such holder, in which case such subsequent holder of the
Warrant shall become a subsequent registered holder. Any registered holder of
this Warrant may change his address as shown on such register by written notice
to the Company requesting such change. Any written notice required or permitted
to be given to the registered holder of this Warrant shall be mailed, by
registered or certified mail, to such registered holder at his address as shown
on such register.

               1.5 The rights of the registered holder shall be subject to the
following terms and conditions:

                      (A) Adjustments for Certain Dividends and Distributions.
In the event that at any time or from time to time after the date hereof the
Company shall make or issue, or fix a record date for the determination of
holders of Shares entitled to receive, a dividend or other distribution payable
in securities of the Company other than shares of Common Stock, then and in each
such event provision shall be made so that the holders of Stock Purchase
Warrants shall receive upon exercise thereof in addition to the number of Shares
receivable thereupon, the amount of securities of the Company that they would
have received had their Stock Purchase Warrants been exercised for Shares on the
date of such event and had they thereafter, during the period from the date of
such event to and including the exercise date, retained such securities
receivable by them as aforesaid during such period, giving application during
such period to all adjustments called for herein.

                      (B) Adjustment for Reclassification, Exchange, or
Substitution. In the event that at any time or from time to time after the date
hereof, the Shares issuable upon the exercise of this Warrant shall be changed
into the same or a different number of shares of any class or classes of stock,
whether by capital reorganization, reclassification, or otherwise (other than a
subdivision or combination of shares or stock dividend provided for above, or a
merger, consolidation, or sale of assets provided for below), then and in each
such event the registered holder of this Warrant shall have the right thereafter
to exercise this Warrant for the kind and amount of shares of stock and other
securities and property receivable upon such reorganization, reclassification,
or other change, by holders of the number of Shares which such Warrant might
have been exercisable for immediately prior to such reorganization,
reclassification, or change, all subject to further adjustment as provided
herein.

                      (C) Adjustment for Merger, Consolidation or Sale of
Assets. In the event that at any time or from time to time after the date
hereof, the Company shall sell all or substantially all of its assets or merge
or consolidate with or into another entity, this Warrant shall thereafter be
exercisable for the kind and amount of shares of stock or other securities or
property to which a holder of the number of Shares deliverable upon exercise of
this Warrant would have been entitled to receive upon such consolidation, merger
or sale; and, in such case, appropriate adjustment (as determined in good faith
by the Board of Directors) shall be made in the application of the provisions in
this Section with respect to the rights and interest thereafter of the
registered holders of the Stock Purchase Warrants, to the end that the
provisions set forth in this Section (including provisions with respect to
changes in and other adjustments of the

<PAGE>   40

Warrant Price) shall thereafter be applicable, as nearly as reasonably may be,
in relation to any shares of stock or other property thereafter deliverable upon
the exercise of this Warrant.

                      (D) No Impairment. The Company shall not, by amendment of
its Certificate of Incorporation or By-Laws or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, including, without limitation,
voluntary bankruptcy proceedings, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder by the
Company but shall at all times in good faith assist in the carrying out of all
the provisions of this Section and in the taking of all such action as may be
necessary or appropriate on order to protect the rights of the registered holder
of this Warrant against impairment.

                      (E) Notice of Adjustment of the Warrant Price or Number of
Shares. Upon the occurrence of each adjustment, readjustment or other change
relating to the Warrant Price or in the number of Shares into which this Warrant
is exercisable, then, and in each such case, the Company at its expense shall
give written notice thereof, by first class mail, postage prepaid, addressed to
the registered holder at the address of such registered holder as shown on the
books of the Company, which notice shall state the Warrant Price resulting from
such adjustment and the increase or decrease in the number of Shares (or other
denominations of securities) purchasable at the Warrant Price upon the exercise
of this Warrant setting forth in reasonable detail the method of calculation and
the facts upon which such calculation is based.

                      (F) Notice. In case at any time: (1) the Company shall pay
any dividend or make any distribution (other than regular cash dividends from
earnings or earned surplus paid at an established rate) to the holders of its
Shares; (2) the Company shall offer for subscription pro rata to the holders of
its Shares any additional shares of stock of any class or other rights; (3)
there shall be any capital reorganization or reclassification of the capital
stock of the Company, or consolidation or merger of the Company with or sale of
all or substantially all of its assets to another corporation; or (4) there
shall be a voluntary or involuntary dissolution, liquidation or winding up of
the Company; then, in any one or more of such cases, the Company shall give
written notice, by first class mail, postage prepaid, addressed to the
registered holder at the address of such registered holder as shown on the books
of the Company of the date on which (a) the books of the Company shall close or
a record date shall be fixed for determining the shareholders entitled to such
dividend, distribution or subscription rights, or (b) such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up shall take place, as the case may be. Such notice shall also provide
reasonable details of the proposed transaction and specify the date as of which
the holders of Shares of record shall participate in such dividend, distribution
or subscription rights, or shall be entitled to exchange their Shares for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, as the case may be. Such written notice shall be given at least 20
days prior to the action in question and not less than 20 days prior to the
record date or the date on which the Company's transfer books are closed in
respect thereto.

                      (G) Voting Rights. This Warrant shall not entitle the
registered holder to any voting rights or any other rights as a stockholder of
the Company but upon presentation of this Warrant with the subscription form
annexed duly executed and the tender of payment of the

<PAGE>   41

Warrant Price at the office of the Company pursuant to the provisions of this
Warrant the registered holder shall forthwith be deemed a stockholder of the
Company in respect of the Shares so subscribed and paid for.

                      (H) No Change Necessary. The form of this Warrant need not
be changed because of any adjustment in the Warrant Price or in the number of
Shares issuable upon its exercise. A Warrant issued after any adjustment on any
partial exercise or upon replacement may continue to express the same Warrant
Price and the same number of Shares (appropriately reduced in the case of
partial exercise) as are stated on this Warrant as initially issued, and that
Warrant Price and that number of shares shall be considered to have been so
changed as of the close of business on the date of adjustment.

        Section 2: Covenant of the Company. All Shares and shares of Common
Stock issuable upon conversion of the Shares which may be issued upon the
exercise of the rights represented by this Warrant, shall, upon issuance, be
duly authorized, validly issued, fully paid and non-assessable and free from all
taxes, liens and charges with respect to the issue thereof.

        Section 3: Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon exercise of this Warrant. If, upon
exercise of this Warrant as an entirety, the registered holder would, except for
the provisions of this Section 3, be entitled to receive a fractional Share,
then the Company shall pay in cash to such registered holder an amount equal to
such fractional share multiplied by the fair market value of one such Share (as
reasonably determined by the Board of Directors of the Company) on the date of
such exercise.

        Section 4: Substitution. In case this Warrant shall be mutilated, lost,
stolen or destroyed, the Company will issue a new Warrant of like tenor and
denomination and deliver the same (a) in exchange and substitution for and upon
surrender and cancellation of any mutilated Warrant, or (b) in lieu of any
Warrant lost, stolen or destroyed, upon receipt of evidence satisfactory to the
Company of the loss, theft, or destruction of such Warrant (including a
reasonably detailed affidavit with respect to the circumstances of any loss,
theft or destruction), and of indemnity (or, in the case of the initial holder
or any other institutional holder, an indemnity agreement) satisfactory to the
Company.

        Section 5: Transfer Restrictions. This Warrant, the Shares or the shares
of Common Stock issuable upon conversion of the Shares shall not be sold,
transferred, pledged or hypothecated unless the proposed disposition is the
subject of a currently effective registration statement under the Securities Act
of 1933, as amended (the "Securities Act"), or unless the Company has received
an opinion of counsel reasonably satisfactory in form and scope to the Company
that such registration is not required except that such restrictions shall not
apply to any transfer of this Warrant, the Shares or the shares of Common Stock
issuable upon conversion of the Shares: (i) to a partner or other affiliate of
the registered holder, including any entity of which the registered holder or a
related entity is a General Partner; (ii) by gift or bequest or through
inheritance to, or for the benefit of, any member or members of the registered
holder's immediate family; (iii) by a registered holder to a trust (a) in
respect of which the registered holder serves as trustee, provided that the
trust instrument governing such trust shall provide that the registered holder,
as trustee, shall retain sole and exclusive control over the voting and
disposition of such Warrant until the termination of this Warrant or (b) for the
benefit solely of

<PAGE>   42

any member or members of the registered holder's immediate family; and (iv)
pursuant to any underwritten public offering of Common Stock pursuant to an
effective registration statement under the Securities Act.

        Section 6: Remedies. The Company stipulates that the remedies at law of
the registered holder of this Warrant in the event of any default or threatened
default by the Company in the performance of or compliance with any of the terms
of this Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.

        Section 7: Taxes. The Company shall pay any taxes or other charges that
may be imposed in respect of the issuance and delivery of the Warrant or any of
the Shares or other property upon exercise hereof.

        Section 8: Governing Law. This Warrant shall be deemed a contract made
under the laws of the State of Delaware and its provisions and the rights and
obligations of the parties hereunder shall be governed by, and construed and
enforced in accordance with, the substantive laws of the State of Delaware,
without regard to its principles of conflicts of laws.

        Section 9: Miscellaneous. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought.

                                      ****

<PAGE>   43

IN WITNESS WHEREOF, the Company has caused this Preferred Stock Purchase Warrant
to be signed by its Chief Executive Officer thereunto duly authorized and its
corporate seal to be hereunto affixed and attested by its Secretary this ___ day
of _______, 1999.

ATTEST:                                      NOVATEL WIRELESS, INC.

By:                                          By:
    -------------------------------              -------------------------------
Name:  Roger Hartman                         Name:  Robert Corey
Its:   Secretary                             Its: Chief Executive Officer

<PAGE>   44

                                SUBSCRIPTION FORM

        The undersigned, the registered holder of the within Preferred Stock
Purchase Warrant, hereby irrevocably elects to exercise the purchase right
represented by such Warrant for, and to purchase thereunder, ________ shares of
Preferred Stock of Novatel Wireless, Inc., and herewith makes payment of
$___________ therefor and requests that the certificates representing such
shares be issued in the name of and delivered to:

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

and if such shares shall not include all of the shares issuable under this
Warrant, that a new Warrant of like tenor and date be delivered to the
undersigned for the shares not issued.

Dated:
      ------------------------               -----------------------------------
                                             Signature

<PAGE>   45

                               FORM OF ASSIGNMENT

For value received the undersigned hereby sells, assigns and transfers unto
_________________________________ whose address is______________________________
________________________________________________________________________________
________________________________________________________________, the within
Preferred Stock Purchase Warrant with respect to ____________ shares purchasable
thereby, and does hereby irrevocably constitute and appoint
_____________________________________ attorney to transfer such Warrant on the
books of the within named corporation with full power of substitution in the
premises.

Dated:
      -----------------------------

In the presence of:

-----------------------------------          -----------------------------------
                                             Signature
<PAGE>   46

                                    EXHIBIT H

                             SUBORDINATION AGREEMENT

                                       3
<PAGE>   47

                            SUBORDINATION AGREEMENT

       This Subordination Agreement is made as of October 12, 1999, by and
between ARGO GLOBAL CAPITAL, INC., for itself and on behalf of the Investors, as
defined below ("Creditor") and VENTURE BANKING GROUP, a division of Cupertino
National Bank ("Bank").

                                    Recitals

       A. Novatel Wireless, Inc. ("Borrower") has requested and/or obtained
certain loans or other credit accommodations from Bank to Borrower which are or
may be from time to time secured by assets and property of Borrower.

       B. Creditor is the Agent for certain Investors pursuant to a Security
Agreement and Stock Pledge dated as of June 15, 1999 between Creditor and
Borrower pursuant to which Borrower granted Agent, as agent for the Investors, a
security interest in substantially all of Borrower's property. Such security
interest secures payment and other obligations owed by Borrower to Agent and
Investors under certain Convertible Subordinated Debentures (the "Debentures")
issued pursuant to a certain Unit Purchase Agreement (the "NWI Purchase
Agreement") and under a certain Guaranty (the "Guaranty") by Borrower for the
benefit of Working Ventures Canadian Fund Inc.("Working Ventures").

       C. Bank and Borrower are parties to a Loan and Security Agreement of even
date, as amended from time to time (the "Loan Agreement"). Borrower's
obligations under the Loan Agreement are guaranteed pursuant to Unconditional
Guarantees by each of Borrower's wholly-owned subsidiaries.

       D. In order to induce Bank to extend credit to Borrower and, at any time
or from time to time, at Bank's option, to make such further loans, extensions
of credit, or other accommodations to or for the account of Borrower, or to
purchase or extend credit upon any instrument or writing in respect of which
Borrower may be liable in any capacity, or to grant such renewals or extension
of any such loan, extension of credit, purchase, or other accommodation as Bank
may deem advisable, Creditor, for itself and on behalf of Investors, is willing
to subordinate: (i) all of Borrower's indebtedness and obligations to Investors
and Creditor, whether presently existing or arising in the future (the
"Subordinated Debt"), up to a principal amount of $5,000,000 of Borrower's
indebtedness and obligations to Bank; and (ii) all of the security interests of
Creditor and Investors, if any, to all of Bank's security interests in the
Borrower's property.

       NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:

       1. Creditor subordinates to Bank any security interest or lien that
Creditor may have in any property of Borrower, Novatel Wireless Solutions, Inc.,
or Novatel Wireless Technology Ltd. (such entities are sometimes referred to
herein as a "Loan Party" or collectively, the "Loan Parties"). Notwithstanding
the respective dates of attachment or perfection of the security interest of
Creditor and the security interest of Bank, the security interest of Bank in the
Collateral, as defined in the Loan Agreement and each other security agreement
between Bank and each Loan Party, shall at all times be prior to the security
interest of Creditor.

       2. All Subordinated Debt is subordinated in right of payment to all
obligations of the Loan Parties to Bank now existing or hereafter arising in a
principal amount not to exceed $5,000,000, together with all costs of collecting
such obligations (including attorneys' fees), including, without limitation, all
interest accruing after the commencement by or against any Loan Party of any
bankruptcy, reorganization or similar proceeding, and all obligations under the
Loan Agreement (the "Senior Debt").

       3. Except as otherwise permitted in this Section 3, Creditor will not
demand or receive from a Loan Party (and no Loan Party will pay to Creditor) all
or any part of the Subordinated Debt, by way of payment, prepayment, setoff,
lawsuit or otherwise, nor will Creditor exercise any remedy with respect to the
Collateral, nor will Creditor commence, or cause to commence, prosecute or
participate in any administrative, legal or equitable action against a Loan
Party, for so long as any portion of the Senior Debt remains outstanding.
Subject to the next sentence, Creditor shall not demand or receive from a Loan
Party any principal payment under the Subordinated Debt until the Revolving
Maturity Date, as defined in the Loan Agreement. Upon (i) the occurrence and
continuation of an Event of Default relating to the Senior Debt and (ii) written
notice thereof to Creditor from Bank

<PAGE>   48
(a "Payment Blockage Notice"), Creditor may not exercise any remedy nor receive
any payment with respect to the Subordinated Debt for any period (a "Payment
Blockage Period") commencing on the date of the Payment Blockage Notice and
ending on the earliest to occur of the following events: (i) such Event of
Default has been cured or has been waived by Bank in writing; (ii) 180 days have
passed from the date of such Payment Blockage Notice, unless at the expiration
of such period the Senior Debt shall have been accelerated or any judicial
proceeding shall be pending that stays or prevents the acceleration of the
Senior Debt or the exercise of Bank's remedies in connection therewith, or (iii)
such Senior Debt has been discharged or paid in full and Bank's commitment, if
any, with respect thereto has been terminated, immediately after which Creditor
may exercise such remedies and Borrower may make all required payments in
respect of the Subordinated Debt. Notwithstanding the foregoing, Creditor shall
be entitled to receive each regularly scheduled payment of interest that
constitutes Subordinated Debt, provided that an Event of Default (as defined in
the Loan Agreement) has not occurred or would not exist after giving effect to
such payment. Notwithstanding any other provisions hereof, Creditor and
Investors may at any time (i) convert the Debentures into Borrower's equity
securities in accordance with the terms of the Debentures and the NWI Purchase
Agreement, and (ii) receive dividends and other distributions made to Borrower's
shareholders in accordance with Borrower's Certificate of Incorporation, as
amended from time to time, to the extent such dividends and distributions are
permitted under the Loan Agreement.

       4. Creditor shall promptly deliver to Bank in the form received (except
for endorsement or assignment by Creditor where required by Bank) for
application to the Senior Debt any payment, distribution, security or proceeds
received by Creditor with respect to the Subordinated Debt other than in
accordance with this Agreement.

       5. In the event of a Loan Party's insolvency, reorganization or any case
or proceeding under any bankruptcy or insolvency law or laws relating to the
relief of debtors, these provisions shall remain in full force and effect, and
Bank's claims against such Loan Party and the estate of such Loan Party shall be
paid in full before any payment is made to Creditor.

       6. No amendment of the documents evidencing or relating to the
Subordinated Debt shall directly or indirectly modify the provisions of this
Agreement in any manner which might terminate or impair the subordination of the
Subordinated Debt or the subordination of the security interest or lien that
Creditor may have in any property of any Loan Party. By way of example, such
instruments shall not be amended to (i) increase the rate of interest with
respect to the Subordinated Debt, or (ii) accelerate the payment of the
principal or interest or any other portion of the Subordinated Debt.

       7. This Agreement shall remain effective for so long as any Loan Party
owes any amounts to Bank under the Loan Agreement or otherwise. Subject to
Section 5, upon satisfaction of all Obligations, as defined in the Loan
Agreement, or the conversion of all the Subordinated Debt into equity securities
of Borrower, this Agreement shall terminate. Notwithstanding the foregoing, if
at any time after payment in full of the Senior Debt any payments of the Senior
Debt must be disgorged by Bank for any reason (including, without limitation,
the bankruptcy of Borrower), this Agreement and the relative rights and
priorities set forth herein shall be reinstated as to all such disgorged
payments as though such payments had not been made and Creditor shall
immediately pay over to Bank all payments received with respect to the
Subordinated Debt to the extent that such payments would have been prohibited
hereunder. At any time and from time to time, without notice to Creditor, Bank
may take such actions with respect to the Senior Debt as Bank, in its sole
discretion, may deem appropriate, including, without limitation, terminating
advances to Borrower, increasing the principal amount, extending the time of
payment, increasing applicable interest rates, renewing, compromising or
otherwise amending the terms of any documents affecting the Senior Debt and any
collateral securing the Senior Debt, and enforcing or failing to enforce any
rights against any Loan Party or any other person. No such action or inaction
shall impair or otherwise affect Bank's rights hereunder. Creditor waives the
benefits, if any, of Civil Code Sections 2809, 2810, 2819, 2845, 2847, 2848,
2849, 2850, 2899 and 3433.

       8. This Agreement shall bind any successors or assignees of Creditor and
shall benefit any successors or assigns of Bank. This Agreement is solely for
the benefit of Creditor and Bank and not for the benefit of any Loan Party or
any other party. Creditor further agrees that if Borrower is in the process of
refinancing a portion of the Senior Debt with a new lender, and if Bank makes a
request of Creditor, Creditor shall agree to enter into a new subordination
agreement with the new lender on substantially the terms and conditions of this
Agreement.

                                       2
<PAGE>   49

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

       10. This Agreement shall be governed by and construed in accordance with
the laws of the State of California, without giving effect to conflicts of laws
principles. Creditor and Bank submit to the exclusive jurisdiction of the state
and federal courts located in Santa Clara County, California. CREDITOR AND BANK
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREIN.

       11. This Agreement represents the entire agreement with respect to the
subject matter hereof, and supersedes all prior negotiations, agreements and
commitments. Creditor is not relying on any representations by Bank or any Loan
Party in entering into this Agreement, and Creditor has kept and will continue
to keep itself fully apprised of the financial and other condition of Borrower.
This Agreement may be amended only by written instrument signed by Creditor and
Bank.

       12. In the event of any legal action to enforce the rights of a party
under this Agreement, the party prevailing in such action shall be entitled, in
addition to such other relief as may be granted, all reasonable costs and
expenses, including reasonable attorneys' fees, incurred in such action.

       IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.

                                       3
<PAGE>   50

"Creditor"                              "Bank"
ARGO GLOBAL CAPITAL INC.                VENTURE BANKING GROUP, A DIVISION OF
                                        CUPERTINO NATIONAL BANK

By:
   ----------------------------------

Title:
      -------------------------------
                                        By:
                                           -------------------------------------
                                        Title:
                                              ----------------------------------
The undersigned approves of the terms
of this Agreement.
                                        "Borrower"

                                        NOVATEL WIRELESS, INC.

                                        By:
                                           -------------------------------------
                                        Title:
                                              ----------------------------------

                                        NOVATEL WIRELESS TECHNOLOGY, LTD.

                                        By:
                                           -------------------------------------
                                        Title:
                                              ----------------------------------

                                        NOVATEL WIRELESS SOLUTIONS, INC.

                                        By:
                                           -------------------------------------
                                        Title:
                                           -------------------------------------

                                       4

<PAGE>   51

                         CORPORATE RESOLUTIONS TO BORROW

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

BORROWER:      Novatel Wireless, Inc.
--------------------------------------------------------------------------------

        I, the undersigned Secretary or Assistant Secretary of Novatel Wireless,
Inc. (the "Corporation"), HEREBY CERTIFY that the Corporation is organized and
existing under and by virtue of the laws of the State of Delaware.

        I FURTHER CERTIFY that attached hereto as Attachments 1 and 2 are true
and complete copies of the Certificate of Incorporation, as amended, and the
Bylaws of the Corporation, each of which is in full force and effect on the date
hereof.

        I FURTHER CERTIFY that at a meeting of the Directors of the Corporation,
duly called and held, at which a quorum was present and voting (or by other duly
authorized corporate action in lieu of a meeting), the following resolutions
were adopted.

        BE IT RESOLVED, that any one (1) of the following named officers,
employees, or agents of this Corporation, whose actual signatures are shown
below:

<TABLE>
<CAPTION>
          NAMES                    POSITION                ACTUAL SIGNATURES
          -----                    --------                -----------------
<S>                         <C>                         <C>

________________________    ________________________    ________________________

________________________    ________________________    ________________________

________________________    ________________________    ________________________

________________________    ________________________    ________________________
</TABLE>

acting for an on behalf of this Corporation and as its act and deed be, and they
hereby are, authorized and empowered:

        BORROW MONEY. To borrow from time to time from Venture Banking Group, a
division of Cupertino National Bank ("Bank"), on such terms as may be agreed
upon between the officers, employees, or agents and Bank, such sum or sums of
money as in their judgment should be borrowed, without limitation, including
such sums as are specified in that certain Loan and Security Agreement dated as
of October 12, 1999 (the "Loan Agreement").

        EXECUTE LOAN DOCUMENTS. To execute and deliver to Bank the Loan
Agreement and any other agreement entered into between Borrower and Bank in
connection with the Loan Agreement, all as amended or extended from time to time
(collectively, with the Loan Agreement, the "Loan Documents"), and also to
execute and deliver to Bank one or more renewals, extensions, modifications,
refinancings, consolidations, or substitutions for the Loan Documents, or any
portion thereof.

        GRANT SECURITY; ISSUE WARRANTS. To grant a security interest to Bank in
the Collateral described in the Loan Documents, which security interest shall
secure all of the Corporation's Obligations, as described in the Loan Documents,
and to issue to Bank a warrant to purchase the Corporation's capital stock.

        NEGOTIATE ITEMS. To draw, endorse, and discount with Bank all drafts,
trade acceptances, promissory notes, or other evidences of indebtedness payable
to or belonging to the Corporation or in which the Corporation may have an
interest, and either to receive cash for the same or to cause such proceeds to
be credited to the account of the Corporation with Bank, or to cause such other
disposition of the proceeds derived therefrom as they may deem advisable.

        LETTERS OF CREDIT. To execute letters of credit applications and other
related documents pertaining to Bank's issuance of letters of credit.

        FURTHER ACTS. In the case of lines of credit, to designate additional or
alternate individuals as being authorized to request advances thereunder, and in
all cases, to do and perform such other acts and things, to pay any and all fees
and costs, and to execute and deliver such other documents and agreements as
they may in their discretion deem reasonably necessary or proper in order to
carry into effect the provisions of these Resolutions.

        BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to
these resolutions and performed prior to the passage of these resolutions are
hereby ratified and approved, that these Resolutions shall remain in full force
and effect and Bank

                                       4
<PAGE>   52

may rely on these Resolutions until written notice of their revocation shall
have been delivered to and received by Bank. Any such notice shall not affect
any of the Corporation's agreements or commitments in effect at the time notice
is given.

        I FURTHER CERTIFY that the officers, employees, and agents named above
are duly elected, appointed, or employed by or for the Corporation, as the case
may be, and occupy the positions set forth opposite their respective names; that
the foregoing Resolutions now stand of record on the books of the Corporation;
and that the Resolutions are in full force and effect and have not been modified
or revoked in any manner whatsoever.

        IN WITNESS WHEREOF, I have hereunto set my hand on _______________, 1999
and attest that the signatures set opposite the names listed above are their
genuine signatures.

                                        CERTIFIED AND ATTESTED BY:

                                        X_______________________________________

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

                                       5
<PAGE>   53

                         AGREEMENT TO PROVIDE INSURANCE

TO:     VENTURE BANKING GROUP                  Date:  October 12, 1999
        Three Palo Alto Square
        Palo Alto, CA  94306                   Borrower:  Novatel Wireless, Inc.

        In consideration of a loan in the amount of $2,500,000, secured by all
tangible personal property including inventory and equipment.

        I/We agree to obtain adequate insurance coverage to remain in force
during the term of the loan.

        I/We also agree to advise the below named agent to add Venture Banking
Group, a division of Cupertino National Bank as lender's loss payable on the new
or existing insurance policy, and to furnish Bank at above address with a copy
of said policy/endorsements and any subsequent renewal policies.

        I/We understand that the policy must contain:

        1. Fire and extended coverage in an amount sufficient to cover:

           (a) The amount of the loan, OR

           (b) All existing encumbrances, whichever is greater,

        But not in excess of the replacement value of the improvements on the
real property.

        2. Lender's "Loss Payable" Endorsement Form 438 BFU in favor of Venture
Banking Group, a division of Cupertino National Bank, or any other form
acceptable to Bank.

                              INSURANCE INFORMATION

Insurance Co./Agent                                Telephone No.:

Agent's Address:

                  Signature of Obligor: _______________________

                  Signature of Obligor: _______________________

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

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

                       FOR BANK USE ONLY

INSURANCE VERIFICATION: Date: _________________________

Person Spoken to: _____________________________________

Policy Number: ________________________________________

Effective From: ______ To: ____________________________

Verified by: __________________________________________

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

<PAGE>   54
                               FIRST AMENDMENT TO
                          LOAN AND SECURITY AGREEMENT

     This First Amendment to Loan and Security Agreement, is entered into as of
November 9, 1999, (the "Amendment"), by and between Venture Banking Group, a
division of Cupertino National Bank ("Bank") and Novatel Wireless, Inc.
("Borrower"). Capitalized terms used herein without definition shall have the
same meanings as is given to them in the Agreement (defined below).

                                    RECITALS

     A.   The Borrower and the Bank have entered into that certain Loan and
Security Agreement dated as of October 12, 1999, (as amended or modified from
time to time, the "Agreement") pursuant to which the Bank has agreed to extend
and make available to the Borrower certain advances of money.

     B.   Borrower has disclosed to Bank a breach of Section 6.11, entitled Net
Worth as of fiscal month ending October 31, 1999, the Borrower desires that the
Bank amend the Loan Agreement upon the terms and conditions more fully set
forth herein.

     C.   Subject to the representations and warranties of the Borrower herein
and upon the terms and conditions set forth in this Amendment, the Bank is
willing to amend the Agreement.

                                   AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing Recitals and intending
to be legally bound, the parties hereto agree as follows:

     SECTION 1. THE BORROWER'S REPRESENTATIONS AND WARRANTIES. The Borrower
represents and warrants that:

          (a)  the execution, delivery, and performance of the Loan Documents
are within Borrower's powers, have been duly authorized, and are not in
conflict with nor constitute a breach of any provision contained in Borrower's
Amended and Restated Articles of Incorporation or Bylaws, nor will they
constitute an event of default under any material agreement to which Borrower
is a party or by which Borrower is bound. Borrower is not in default under any
agreement to which it is a party or by which it is bound, which default could
have a Material Adverse Effect; and

          (b)  immediately before and immediately after giving effect to this
Amendment, no event shall have occurred and be continuing which constitutes an
Event of Default that has not be disclosed to Bank.

     SECTION 2. AMENDMENTS TO THE LOAN AND SECURITY AGREEMENT.

          2.1  Bank hereby waives Borrower's breach of Section 6.11, entitled
Net Worth as of fiscal month ending October 31, 1999. Any further breach of
this covenant is not waived.

     Except as waived hereby, the Agreement, as the same may have previously
been waived, shall remain unaltered and in full force and effect. This
Amendment shall not be a waiver of any existing default or breach of a covenant
unless specified herein.

     SECTION 3. LIMITATION. The amendments and waivers set forth in this
Amendment shall be limited precisely as written and shall not be deemed (a) to
be a modification of any other term or condition of the Agreement or of any
other instrument or agreement referred to therein or to prejudice any right or
remedy which the Bank may now have or may have in the future under or in
connection with the Agreement or any instrument or agreement referred to
therein; or (b) to be a consent to any future amendment or waiver to any
instrument or agreement the execution and delivery of which is consented to

                                       1

<PAGE>   55

hereby, or to any waiver of any of the provisions thereof. Except as expressly
amended hereby, the Agreement shall continue in full force and effect.

      SECTION 4.  EFFECTIVENESS.    This Amendment shall become effective upon:

            (1)   The execution and delivery of a copy hereof by Borrower to
the Bank;

            (2)   The execution and delivery of a certificate of the Secretary
of Borrower with respect to incumbency and resolutions authorizing the
execution and delivery of this Amendment;

            (3)   The payment of the amendment fee in the amount of One
Thousand Dollars ($1,000) by Borrower to the Bank; and

            (4)   Bank shall have received, in form and substance satisfactory
to Bank, such other documents, and completion of such other matters, as Bank
may reasonably deem necessary or appropriate.

      SECTION 5.  RELEASE AND WAIVER. BORROWER HEREBY REPRESENTS AND WARRANTS
TO THE BANK THAT IT HAS NO KNOWLEDGE OF ANY FACTS THAT WOULD SUPPORT A CLAIM,
COUNTERCLAIM, DEFENSE OR RIGHT OF SET-OFF, AND HEREBY RELEASES BANK FROM ALL
LIABILITY ARISING UNDER OR WITH RESPECT TO AND WAIVES ANY AND ALL CLAIMS,
COUNTERCLAIMS, DEFENSES AND RIGHTS OF SET-OFF, AT LAW OR IN EQUITY, THAT
BORROWER MAY HAVE AGAINST BANK EXISTING AS OF THE DATE OF THIS AMENDMENT
ARISING UNDER OR RELATED TO THIS AMENDMENT, THE AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR TO THE LOANS CONTEMPLATED HEREBY OR THEREBY OR TO ANY ACT OR
OMISSION TO ACT BY THE BANK WITH RESPECT HERETO OR THERETO.

      SECTION 6.  COUNTERPARTS.     This Amendment may be signed in any number
of counterparts, and by different parties hereto in separate counterparts, with
the same effect as if the signatures to each such counterpart were upon a
single instrument. All counterparts shall be deemed an original of this
Amendment.

      IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date first written above.

BORROWER                            NOVATEL WIRELESS, INC.

                                    By: [SIGNATURE ILLEGIBLE]
                                       ------------------------------------

                                    Title: VP/CFO
                                          ---------------------------------

BANK                                VENTURE BANKING GROUP, a division of
                                    Cupertino National Bank

                                    By: [SIGNATURE ILLEGIBLE]
                                       ------------------------------------

                                    Title: Vice President
                                          ---------------------------------

                                       2
<PAGE>   56

                              SECOND AMENDMENT TO
                          LOAN AND SECURITY AGREEMENT

     This Second Amendment to Loan and Security Agreement is entered into as of
July 13, 2000, (the "Amendment"), by and between Venture Banking Group, a
division of Cupertino National Bank ("Bank") and Novatel Wireless, Inc.
("Borrower"). Capitalized terms used herein without definition shall have the
same meanings as is given to them in the Agreement (defined below).

                                    RECITALS

     A.   The Borrower and the Bank have entered into that certain Loan and
Security Agreement dated as of October 12, 1999, (as amended or modified from
time to time, the "Agreement") pursuant to which the Bank has agreed to extend
and make available to the Borrower certain advances of money.

     B.   Borrower has disclosed to Bank (i) a breach of Section 6.10, entitled
Profitability as of fiscal year ending December 31, 1999 and (ii) a breach of
Sections 6.9, 6.10, 6.11, and 6.12 entitled Quick Ratio, Profitability, Net
Worth, and Total Liabilities-Tangible Net Worth, respectively, as of fiscal
quarter ending March 31, 2000. The Borrower desires that the Bank amend the
Loan Agreement upon the terms and conditions more fully set forth herein.

     C.   Subject to the representations and warranties of the Borrower herein
and upon the terms and conditions set forth in this Amendment, the Bank is
willing to amend the Agreement.

                                   AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing Recitals and intending
to be legally bound, the parties hereto agree as follows:

     SECTION 1. THE BORROWER'S REPRESENTATIONS AND WARRANTIES. The Borrower
represents and warrants that:

          (a)  the execution, delivery, and performance of the Loan Documents
are within Borrower's powers, have been duly authorized, and are not in
conflict with nor constitute a breach of any provision contained in Borrower's
Amended and Restated Articles of Incorporation or Bylaws, nor will they
constitute an event of default under any material agreement to which Borrower
is a party or by which Borrower is bound. Borrower is not in default under any
agreement to which it is a party or by which it is bound, which default could
have a Material Adverse Effect; and

          (b)  Immediately before and immediately after giving effect to this
Amendment, no event shall have occurred and be continuing which constitutes an
Event of Default that has not be disclosed to Bank.

     SECTION 2.     AMENDMENTS TO THE LOAN AND SECURITY AGREEMENT.

          2.1  Bank hereby waives (i) Borrower's breach of Section 6.10,
entitled Profitability as of fiscal year ending December 31, 1999 and (ii)
Borrower's breach of Sections 6.9, 6.10, 6.11, and 6.12 entitled Quick Ratio,
Profitability, Net Worth, and Total Liabilities-Tangible Net Worth,
respectively, as of fiscal quarter ending March 31, 2000. Any further breach of
this covenant is not waived.

     Except as waived hereby, the Agreement, as the same may have previously
been waived, shall remain unaltered and in full force and effect. This
Amendment shall not be a waiver of any existing default or breach of a covenant
unless specified herein.

     SECTION 3. LIMITATION. The amendments and waivers set forth in this
Amendment shall be limited precisely as written and shall not be deemed (a) to
be a modification of any other term or condition

                                       1
<PAGE>   57
of the Agreement or of any other instrument or agreement referred to therein or
to prejudice any right or remedy which the Bank may now have or may have in the
future under or in connection with the Agreement or any instrument or agreement
referred to therein; or (b) to be a consent to any future amendment or waiver
to any instrument or agreement the execution and delivery of which is consented
to hereby, or to any waiver of any of the provisions thereof. Except as
expressly amended hereby, the Agreement shall continue in full force and effect.

       SECTION 4.   EFFECTIVENESS. This Amendment shall become effective upon:

             (1)    The execution and delivery of a copy hereof by Borrower to
the Bank; and

             (2)    Bank shall have received, in form and substance
satisfactory to Bank, such other documents, and completion of such other
matters, as Bank may reasonably deem necessary or appropriate.

       SECTION 5.   RELEASE AND WAIVER. BORROWER HEREBY REPRESENTS AND WARRANTS
TO THE BANK THAT IT HAS NO KNOWLEDGE OF ANY FACTS THAT WOULD SUPPORT A CLAIM,
COUNTERCLAIM, DEFENSE OR RIGHT OF SET-OFF, AND HEREBY RELEASES BANK FROM ALL
LIABILITY ARISING UNDER OR WITH RESPECT TO AND WAIVES ANY AND ALL CLAIMS,
COUNTERCLAIMS, DEFENSES AND RIGHTS OF SET-OFF, AT LAW OR IN EQUITY, THAT
BORROWER MAY HAVE AGAINST BANK EXISTING AS OF THE DATE OF THIS AMENDMENT
ARISING UNDER OR RELATED TO THIS AMENDMENT, THE AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR TO THE LOANS CONTEMPLATED HEREBY OR THEREBY OR TO ANY ACT OR
OMISSION TO ACT BY THE BANK WITH RESPECT HERETO OR THERETO.

       SECTION 6.   COUNTERPARTS. This Amendment may be signed in any number of
counterparts, and by different parties hereto in separate counterparts, with
the same effect as if the signatures to each such counterpart were upon a
single instrument. All counterparts shall be deemed an original of this
Amendment.

       IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date first written above.

BORROWER                                NOVATEL WIRELESS, INC.

                                        BY:   /s/ [Signature Illegible]
                                              -------------------------------

                                        Title:   VP & CFO
                                              -------------------------------

BANK                                    VENTURE BANKING GROUP, a division of
                                        Cupertino National Bank

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

                                        Title:  Vice President
                                              -------------------------------

                                       2<PAGE>   1

                                                                    EXHIBIT 10.8

                               SUBLEASE AGREEMENT

        This SUBLEASE AGREEMENT ("Sublease") is made and entered into as of July
7, 2000 ("Effective Date") by and between SICOR INC. (formerly known as GENSIA
SICOR INC.), a Delaware corporation ("Sublandlord") and NOVATEL WIRELESS, INC.,
a Delaware corporation ("Subtenant").

        WHEREAS, GENA PROPERTY COMPANY, a California general partnership, as
landlord ("Landlord"), and Sublandlord, as tenant, are parties to a certain
Lease Agreement dated as of December 21, 1993 ("Master Lease") whereby Landlord
leased to Sublandlord the building ("Building") located at 9360 Towne Centre
Drive, San Diego, CA 92121 ("Master Premises"), as more particularly described
in the Master Lease, upon the terms and conditions contained therein. All
capitalized terms used herein shall have the same meaning ascribed to them in
the Master Lease unless otherwise defined herein. A copy of those portions of
the Master Lease which are applicable to this Sublease is attached hereto as
Exhibit "A" and made a part hereof. Subtenant shall not be required to comply
with any provision of the Master Lease, as the same is in effect between
Landlord and Sublandlord, which is not included in the attached Exhibit "A."
Hereinafter, the term "Master Lease" shall refer to only those portions of the
Master Lease which are intended to be applicable to this Sublease, as attached
hereto as Exhibit "A," subject to any further exclusions or modifications
thereto as are expressly set forth in this Sublease. Sublandlord is vested with
the leasehold estate described in the Master Lease.

        WHEREAS, Sublandlord and Subtenant are desirous of entering into a
sublease of that portion of the Master Premises so indicated on the demising
plan annexed hereto as Exhibit "B" and made a part hereof on the terms and
conditions hereafter set forth. Subtenant currently occupies approximately 6,636
rentable square feet of premises in the Building ("Existing Space") pursuant to
that certain Sublease Agreement between Subtenant and Sublandlord dated as of
May 17, 1999 ("Original Sublease Agreement"). Subtenant desires to expand into
approximately 13,358 rentable square feet of adjacent space ("Expansion Space"),
as more particularly described in Exhibit "C" attached hereto. The Existing
Space and the Expansion Space shall collectively be referred to herein as the
"Sublease Premises" and are depicted on Exhibit "B" attached hereto. The parties
intend to terminate the Original Sublease Agreement and enter into this new
Sublease as to the entire Sublease Premises.

        NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto mutually
covenant and agree as follows:

        1.     Demise. Sublandlord hereby subleases and demises to Subtenant and
Subtenant hereby hires and subleases from Sublandlord the Sublease Premises
consisting of approximately 19,994 rentable square feet ("RSF") of office space
located on the first floor of 9360 Towne Centre Drive and commonly known as
Suites 110, 120 and 150, upon and subject to the terms, covenants and conditions
hereinafter set forth. The parties stipulate that the square footage of the
Sublease Premises shall be as specified above.

                                      -1-
<PAGE>   2

        2.     Sublease Term.

               (a)    Sublease Term. The term of this Sublease ("Term") shall
commence on February 7, 2000 ("Sublease Commencement Date") and end, unless
sooner terminated as provided herein, on February 6, 2005 ("Sublease Expiration
Date").

        3.     Use. The Sublease Premises shall be used and occupied by
Subtenant solely for office use and corporate headquarters for Subtenant's
business which shall be limited to communications products, devices and uses
ancillary thereto, in compliance with the Master Lease and for no other purpose.
In no event may Subtenant use the Sublease Premises for retail, manufacturing or
fabrication use.

        4.     Subrental.

               (a)    Base Rental. Beginning with the Sublease Commencement Date
and thereafter during the Term of this Sublease and ending on the Sublease
Expiration Date, Subtenant shall pay to Sublandlord monthly installments of base
rent ("Base Rental") with respect to the Sublease Premises as follows:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                         BASE RENTAL/SQ.
                          FT.(PER MONTH)                            BASE RENTAL
        PERIOD           (APPROXIMATELY)      RSF OF PREMISES       (PER MONTH)
================================================================================
<S>                      <C>                  <C>                   <C>
        Year 1                $2.15                19,994            $42,987.10
--------------------------------------------------------------------------------
        Year 2                $2.21                19,994            $44,186.74
--------------------------------------------------------------------------------
        Year 3                $2.28                19,994            $45,586.32
--------------------------------------------------------------------------------
        Year 4                $2.35                19,994            $46,985.90
--------------------------------------------------------------------------------
        Year 5                $2.42                19,994            $48,385.48
--------------------------------------------------------------------------------
</TABLE>

The first monthly installment of Base Rental shall be paid by Subtenant upon the
execution of this Sublease. Base Rental and additional rent shall hereinafter be
collectively referred to as "Rent."

               (b)    Prorations. If the Sublease Commencement Date is not the
first (1st) day of a month, or if the Sublease Expiration Date is not the last
day of a month, a prorated installment of monthly Base Rental based on a thirty
(30) day month shall be paid for the fractional month during which the Term
commenced or terminated.

               (c)    Additional Rent. Beginning with the Sublease Commencement
Date and continuing to the Sublease Expiration Date, Base Rental shall include
Normal Operating Expenses for the Sublease Premises. The term "Normal Operating
Expenses" shall mean the full cost of all operating expenses applicable to the
Sublease Premises (including Building maintenance, common area expenses,
insurance premiums for casualty insurance maintained by Sublandlord with respect
to the Building (but excluding any insurance coverages for Subtenant's

                                      -2-
<PAGE>   3

personal property), security and janitorial services provided by Sublandlord,
real estate taxes, and utilities (natural gas, water, and electricity) which are
allocable to Subtenant's normal and customary use of the Sublease Premises in
accordance with this Sublease. Notwithstanding the foregoing, Subtenant shall
pay to Sublandlord as additional rent for this subletting the cost of all
additional expenses, costs and charges which are not Normal Operating Expenses
(i.e., expenses which result from usage which is not normal and customary),
based on the amount of Subtenant's excess usage, each as determined by
Sublandlord in its reasonable discretion. Such amounts payable by Subtenant
shall be calculated based on costs and expenses attributed to the Building in
which the Sublease Premises are located and the proportion of Subtenant's
occupancy thereof under this Sublease or, in the case of excess usage, based on
the amount of Subtenant's excess usage.

               (d)    Payment of Rent. Except as otherwise specifically provided
in this Sublease, Rent shall be payable in lawful money without demand, and
without offset, counterclaim, or setoff in monthly installments, in advance, on
the first day of each and every month during the Term of this Sublease. All of
said Rent is to be paid to Sublandlord at its office at the address set forth in
Section 13 herein, or at such other place or to such agent and at such place as
Sublandlord may designate by notice to Subtenant. Any additional rent payable on
account of items which are not payable monthly by Subtenant to Sublandlord under
this Sublease is to be paid to Sublandlord as and when such items are payable by
Sublandlord to third parties or to Landlord under the Master Lease unless a
different time for payment is elsewhere stated herein. To the extent practicable
in each such instance, Sublandlord shall provide Subtenant with copies of any
statements or invoices received by Sublandlord from Landlord pursuant to the
terms of the Master Lease.

               (e)    Late Charge. Subtenant shall pay to Sublandlord an
administrative charge at an annual interest rate equal to the Prime Rate (as
stated under the column "Money Rates" in the Wall Street Journal) plus three
percent (3%) ("Interest Rate") on all amounts of Rent payable hereunder which
are not paid within three (3) business days of the date on which such payment is
due, such charge to accrue from the date upon which such amount was due until
paid.

               (f)    Rental Abatement. Provided there is no Event of Default by
Subtenant under this Sublease, Subtenant shall receive a credit ("T/I Credit")
against the payment of Base Rental for certain tenant improvements described in
the attached Exhibit "D" ("Tenant Improvements") in an amount not to exceed One
Hundred Thirty Nine Thousand Nine Hundred Fifty-Eight and 00/100 Dollars
($139,958.00). The T/I Credit shall be given in the form of an abatement of Base
Rental in months two (2) through four (4) and a portion of month five (5) of the
Term. Subtenant shall have no right to remove any such Tenant Improvements upon
the expiration of this Sublease and the grant of the T/I Credit does not
constitute Sublandlord's consent to the Tenant Improvements proposed to be
installed in the Sublease Premises by Subtenant, such approval to be governed by
Section 19 of this Sublease. If Subtenant fails to construct the Tenant
Improvements, in addition to all other remedies available to Sublandlord at law
or in equity, Sublandlord may recover from Subtenant the T/I Credit. Upon any
Event of Default by Subtenant hereunder, Sublandlord may recover from Subtenant
the unamortized portion of the T/I Credit, amortized over the Term of this
Sublease.

                                      -3-
<PAGE>   4

        5.     Security Deposit. Concurrently with the execution of this
Sublease, Subtenant shall deposit with Sublandlord the sum of Forty-Two Thousand
Nine Hundred Eighty-Seven and 10/100 Dollars ($42,987.10) ("Deposit"), which
shall be held by Sublandlord as security for the full and faithful performance
by Subtenant of its covenants and obligations under this Sublease.
Notwithstanding the foregoing, Sublandlord shall retain, and Subtenant shall
receive a credit against the Deposit in the amount of, Twenty-Seven Thousand
Eight Hundred Seventy-One and 00/100 Dollars ($27,871.00) which represents the
security deposit held by Sublandlord under the Original Sublease Agreement. The
Deposit is not an advance Rent deposit, an advance payment of any other kind, or
a measure of Sublandlord's damages in case of Subtenant's default. If Subtenant
defaults in the full and timely performance of any or all of Subtenant's
covenants and obligations set forth in this Sublease, then Sublandlord may, from
time to time, without waiving any other remedy available to Sublandlord, use the
Deposit, or any portion of it, to the extent necessary to cure or remedy the
default or to compensate Sublandlord for all or a part of the damages sustained
by Sublandlord resulting from Subtenant's default. Subtenant shall pay to
Sublandlord within five (5) business days following written demand, the amount
so applied in order to restore the Deposit to its original amount, and
Subtenant's failure to pay such amount within such five (5) business day period
shall constitute a default under this Sublease. Sublandlord shall endeavor to
provide notice of any application of the Deposit substantially contemporaneously
with such application. If Subtenant is not in default with respect to the
covenants and obligations set forth in this Sublease at the expiration or
earlier termination of the Sublease, Sublandlord shall return the Deposit to
Subtenant after the expiration or earlier termination of this Sublease in
accordance with the provisions of California Civil Code Section 1950.7.
Sublandlord's obligations with respect to the Deposit are those of a debtor and
not a trustee. Sublandlord shall not be required to maintain the Deposit
separate and apart from Sublandlord's general or other funds and Sublandlord may
commingle the Deposit with any of Sublandlord's general or other funds.
Subtenant shall not be entitled to interest on the Deposit.

        6.     Signage. Subtenant shall have no right to maintain Subtenant
identification signs in any location in, on, or about the Sublease Premises
other than:

               (a)    a listing consisting of two (2) lines in the lobby
directory for the Building;

               (b)    two (2) identification signs, one (1) located at each
entrance to the Sublease Premises;

               (c)    a pro rata portion (such pro rata allocation to be
determined by Sublandlord) of the Building monument sign located on the corner
of Executive Drive and Towne Centre Drive; and

               (d)    an identification sign located on the glass door at the
suite entrance located at the south end of the Building.

        The size, appearance and location of such signage shall be subject to
Sublandlord's prior approval and, where Sublandlord deems it appropriate, the
prior approval of Landlord. Except for the directory listing described in
Section 6(a) above (which shall be installed at Sublandlord's cost and expense),
the cost of such signs, including the installation, maintenance and removal
thereof, shall be at Subtenant's sole cost and expense. If Subtenant fails to
maintain its signage,

                                      -4-
<PAGE>   5

or if Subtenant fails to remove the same upon the expiration or earlier
termination of this Sublease and repair any damage caused by such removal,
Sublandlord may, upon five (5) days notice, do so at Subtenant's expense and
Subtenant shall reimburse Sublandlord for all actual costs incurred by
Sublandlord to effect such removal.

        7.     Parking. At no additional rent or charge, Subtenant shall have
the right, during the Term of this Sublease, to use on a non-reserved basis
parking spaces in the parking facilities of the Buildings in number equal to 3.2
spaces per 1,000 square feet of rentable area of the Sublease Premises, except
for five (5) of such spaces, which shall be located in the underground parking
garage and marked as reserved for Subtenant's use, the location of which shall
be designated by Sublandlord. All such parking privileges shall be subject to
the terms and conditions set forth in the Master Lease.

        8.     Incorporation of Terms of Master Lease.

               (a)    This Sublease is subject and subordinate to the Master
Lease. Subject to the modifications set forth in this Sublease, the terms of the
Master Lease are incorporated herein by reference, and shall, as between
Sublandlord and Subtenant (as if they were "Landlord" and "Tenant,"
respectively, under the Master Lease) constitute the terns of this Sublease
except to the extent that they are inapplicable to, inconsistent with, or
modified by, the terms of this Sublease. Notwithstanding the foregoing, to the
extent provisions of the Master Lease are unique and personal to Sublandlord's
interest in the Building pursuant to the Master Lease or are indicated on the
attached Exhibit "A" as intentionally omitted from the Master Lease, Subtenant
shall not be required to comply with such provisions. Provisions which are
personal and unique to Sublandlord under the Master Lease include, but are not
limited to, Paragraphs 17, 18 and 19 of the Master Lease. In the event of any
inconsistencies between the terms and provisions of the Master Lease and the
terms and provisions of this Sublease, the terms and provisions of this Sublease
shall govern. Subtenant acknowledges that it has reviewed the Master Lease and
is familiar with the terms and conditions thereof.

               (b)    For the purposes of incorporation herein, the terms of the
Master Lease are subject to the following additional modifications:

                      (i)    In all provisions of the Master Lease (under the
        terms thereof and without regard to modifications thereof for purposes
        of incorporation into this Sublease) requiring the approval or consent
        of Landlord, Subtenant shall be required to obtain the approval or
        consent of both Sublandlord and Landlord.

                      (ii)   In all provisions of the Master Lease requiring
        Tenant to submit, exhibit to, supply or provide Landlord with evidence,
        certificates, or any other matter or thing, including, without
        limitation, the provisions of Sections 10(c) and 10(f) thereof,
        Subtenant shall be required to submit, exhibit to, supply or provide, as
        the case may be, the same to both Landlord and Sublandlord. In any such
        instance, Sublandlord shall determine if such evidence, certificate or
        other matter or thing shall be satisfactory.

                      (iii)  In the event of any taking by eminent domain or
        casualty to the Sublease Premises such that Subtenant is deprived of the
        use and occupancy of greater

                                      -5-
<PAGE>   6

        than fifty percent (50%) of the Sublease Premises for a period in excess
        of sixty (60) days, Subtenant and Sublandlord shall each have the right
        to terminate this Sublease upon not less than thirty (30) days written
        notice to the other. In the event of any such taking by eminent domain
        or casualty such that Subtenant is deprived of fifty percent (50%) or
        less of the use and occupancy of the Sublease Premises, or in the event
        Subtenant elects to continue occupancy of the remaining portion of the
        Sublease Premises after the occurrence of a taking or casualty giving
        Subtenant a right to terminate this Sublease, the Rent shall be
        proportionally reduced for the portion of the Term during which
        Subtenant is prevented from using and occupying the damaged or taken
        portion of the Sublease Premises. Sublandlord shall have no obligation
        to restore or rebuild any portion of the Sublease Premises after any
        destruction or taking by eminent domain, and Subtenant shall have no
        rights to any portion of the award in any eminent domain proceeding
        affecting the Sublease Premises.

                      (iv)   Subtenant shall not be required to comply with the
        following provisions of the Master Lease:

                             (A)    Paragraph 3(c), without, however, limiting
               in any way the provisions of Section 15 of this Sublease.

                             (B)    Paragraph 3(e).

                             (C)    Paragraph 7, other than Subtenant's
               responsibility for costs of curing any Environmental Violations
               arising from the acts or omissions of Subtenant and costs of
               Subtenant complying with all Legal Requirements attributable to
               its use and occupancy of the Sublease Premises, including fines,
               penalties and interest arising from Subtenant's violation
               thereof.

                             (D)    Paragraph 8.

                             (E)    Paragraph 9(b) to the extent it applies to
               Escrow Payments imposed on Sublandlord as a result of a Monetary
               Event of Default by Sublandlord under the Master Lease which is
               not the result of a default by Subtenant under this Sublease,
               however Subtenant shall, in all events, be responsible for Escrow
               Charges comprising real estate taxes on the Sublease Premises
               imposed as a result of alterations to the Sublease Premises made
               by, or for, Subtenant during the Term.

                             (F)    Paragraph 10(b) to the extent any such
               Easement Agreements materially adversely interfere with
               Subtenant's permitted use of the Sublease Premises as described
               in Section 3 above or with Subtenant's right to occupy the
               Sublease Premises pursuant to the terms and provisions of this
               Sublease.

                             (G)    Paragraph 10(i).

                             (H)    Paragraph 12(a), to the extent it requires
               Subtenant to (i) repair or maintain Building Systems Equipment,
               it being expressly acknowledged

                                      -6-
<PAGE>   7

               by Subtenant hereunder that it has no right to repair or maintain
               any Building Systems Equipment, (ii) maintain the Adjoining
               Property, or (iii) make Alterations.

                             (I)    Paragraph 12(b).

                             (J)    Paragraph 13.

                             (K)    Paragraph 15(a), to the extent it requires
               indemnity from Subtenant for the acts or omissions of any Person
               other than Subtenant, its agents, employees, representatives,
               parents, affiliates or subsidiaries, or any Person acting on
               behalf of, or with the permission of, or at the sufferance of,
               Subtenant and only in connection with events on, about or arising
               from the Sublease Premises.

                             (L)    Paragraph 16(a)(i), (ii) and (iv), except to
               the extent referred to in Section 8(c) below.

                             (M)    Paragraph 22(a)(iv)-(vii), (x), (xi),
               (xiii), (xv), (xvi) and (xvii).

                             (N)    Paragraph 23 (g).

                             (O)    Paragraph 28.

                             (P)    Paragraph 29.

                             (Q)    Paragraph 30.

                             (R)    Paragraph 31.

                             (S)    Paragraph 33.

               (c)    During the Term, Subtenant shall not be required to
maintain casualty insurance policies and coverages with respect to the Sublease
Premises and Subtenant shall be named as an additional insured under such
policies maintained by Sublandlord (to the extent of Subtenant's interest in the
Sublease Premises), evidence of such coverage to be in the form of a certificate
of insurance provided by Sublandlord to Subtenant; provided, however, such
policies and coverages maintained by Sublandlord with respect to the Building
and the Sublease Premises shall not include coverage for Subtenant's personal
property and Subtenant, at its sole cost and expense, shall maintain such
policies and coverages with respect to its personal property as it may elect.
During the Term, Subtenant shall maintain a policy of comprehensive general
liability insurance with respect to its occupancy of, and activities on, the
Sublease Premises and related common areas, which coverage shall be subject to
any required waivers of subrogation as are described under Paragraph 16 of the
Master Lease and shall have a minimum policy limit of $4,000,000 and shall
otherwise meet the requirements of the Master Lease for such insurance coverage.
All such policies shall name Sublandlord, Landlord and any other party required
to be so named under the Master Lease as additional insureds thereunder and
shall be with carriers reasonably acceptable to Sublandlord and, in all events,
in accordance with the requirements of

                                      -7-
<PAGE>   8

the Master Lease except as otherwise provided hereinabove. In the event
Subtenant elects to carry its own policies of casualty insurance with respect to
the Sublease Premises, all such policies shall name Sublandlord as an additional
insured thereunder. Sublandlord and Subtenant each hereby waive all rights of
subrogation with respect to claims covered by the property insurance carried
respectively by Sublandlord and Subtenant pursuant to the terms of this
Sublease.

               (d)    Sublandlord and Subtenant acknowledge that this Sublease
is of short duration in relation to the term of the Master Lease and, as a
result, the parties do not intend that Subtenant shall be required to comply
with any obligations or requirements under the Master Lease (except those which
are specifically referenced as an obligation of Subtenant under this Sublease)
which are of a character or nature as is reasonably determined to be
inconsistent with the scope and Term of occupancy of the Sublease Premises by
Subtenant under this Sublease. In the event of a dispute regarding Subtenant's
obligation to comply with any such obligations or requirements of the Master
Lease, the determination of the applicability of such obligations or
requirements shall be made by Sublandlord and Subtenant in good faith with
reference to current statutory and case law in California interpreting the
relative obligations of a landlord and tenant in circumstances similar to the
Sublease with respect to the nature of the obligation for which compliance is
sought. In the event Sublandlord and Subtenant are unable to reasonably agree on
the scope of responsibility of such obligation for which compliance is sought
under the Master Lease, each party shall refer the matter to its most senior
executive who shall jointly attempt to resolve such issue not later than five
(5) business days after such reference. In the event such reference is
unsuccessful, each party may exercise its rights and remedies under law with
respect to a final determination of such dispute.

        9.     Subtenant's Obligations. Subtenant covenants and agrees that all
obligations of Sublandlord under the Master Lease shall be done or performed by
Subtenant with respect to the Sublease Premises, except as otherwise provided by
this Sublease, and Subtenant's obligations shall run to Sublandlord and Landlord
as Sublandlord may determine to be appropriate or be required by the respective
interests of Sublandlord and Landlord. Subtenant agrees to indemnify
Sublandlord, and hold it harmless, from and against any and all claims, damages,
losses, expenses and liabilities (including reasonable attorneys' fees) incurred
as a result of the non-performance, non-observance or non-payment of any of
Sublandlord's obligations under the Master Lease which, as a result of this
Sublease, became an obligation of Subtenant. If Subtenant makes any payment to
Sublandlord pursuant to this indemnity, Subtenant shall be subrogated to the
rights of Sublandlord concerning said payment. Subtenant shall not do, nor
permit to be done, any act or thing which is, or with notice or the passage of
time would be, a default under this Sublease or the Master Lease.

        10.    Sublandlord's Obligations. Sublandlord covenants and agrees that
all obligations of Sublandlord under the Master Lease, other than those which
are to be done or performed by Subtenant, with respect to the Sublease Premises
shall be done or performed by Sublandlord. Sublandlord agrees that Subtenant
shall be entitled to receive all services and repairs to be provided by Landlord
to Sublandlord under the Master Lease. Subtenant shall look solely to Landlord
for all such services and shall not, under any circumstances, seek or require
Sublandlord to perform any of such services, nor shall Subtenant make any claim
upon Sublandlord for any damages which may arise by reason of Landlord's default
under the Master

                                      -8-
<PAGE>   9

Lease; provided, however, Sublandlord shall provide all necessary assistance and
cooperation to Subtenant (at no material cost or liability to Sublandlord) to
enforce Sublandlord's rights under the Master Lease to compel performance by
Landlord with respect to such services or repairs to which Subtenant is
entitled. Any condition resulting from a default by Landlord shall not
constitute as between Sublandlord and Subtenant an eviction, actual or
constructive, of Subtenant and no such default shall excuse Subtenant from the
performance or observance of any of its obligations to be performed or observed
under this Sublease, or entitle Subtenant to receive any reduction in or
abatement of the Rent provided for in this Sublease unless, and to the extent,
Sublandlord is excused from performance, or entitled to a reduction or abatement
of its rental obligations to Landlord under the Master Lease also. In
furtherance of the foregoing, Subtenant does hereby waive any cause of action
and any right to bring any action against Sublandlord by reason of any act or
omission of Landlord under the Master Lease, other than an act or omission by
Sublandlord or Sublandlord's negligence. Sublandlord covenants and agrees with
Subtenant that Sublandlord will pay all fixed rent and additional rent payable
by Sublandlord pursuant to the Master Lease to the extent that failure to
perform the same would adversely affect Subtenant's use or occupancy of the
Sublease Premises. Sublandlord shall extend all reasonable cooperation to
Subtenant (at no material cost or liability to Sublandlord) to enable Subtenant
to receive the benefits under this Sublease, as the same are dependent upon
performance under the Master Lease.

        11.    Default by Subtenant. In the event Subtenant shall be in default
of any covenant of, or shall fail to honor any obligation under, this Sublease,
Sublandlord shall have available to it against Subtenant all of the remedies
available (a) to Landlord under the Master Lease in the event of a similar
default on the part of Sublandlord thereunder or (b) at law.

        12.    Quiet Enjoyment. So long as Subtenant pays all of the Rent due
hereunder and performs all of Subtenant's other obligations hereunder,
Sublandlord shall do nothing to affect Subtenant's right to peaceably and
quietly have, hold and enjoy the Sublease Premises.

        13.    Notices. Anything contained in any provision of this Sublease to
the contrary notwithstanding, Subtenant agrees, with respect to the Sublease
Premises, to comply with and remedy any default in this Sublease or the Master
Lease which is Subtenant's obligation to cure, within the period allowed to
Sublandlord under the Master Lease, even if such time period is shorter than the
period otherwise allowed therein due to the fact that notice of default from
Sublandlord to Subtenant is given after the corresponding notice of default from
Landlord to Sublandlord. Sublandlord agrees to forward to Subtenant, promptly
upon receipt thereof by Sublandlord, a copy of each notice of default received
by Sublandlord in its capacity as Tenant under the Master Lease. Subtenant
agrees to forward to Sublandlord, promptly upon receipt thereof, copies of any
notices received by Subtenant from Landlord or from any governmental
authorities. All notices, demands and requests shall be in writing and shall be
sent either by hand delivery or by a nationally recognized overnight courier
service (e.g., Federal Express), in either case return receipt requested, to the
address of the appropriate party. Notices, demands and requests so sent shall be
deemed given when the same are received. Notices to Sublandlord shall be sent to
the attention of:

                                      -9-
<PAGE>   10

               SICOR Inc.
               19 Hughes
               Irvine, CA 92618
               Attn: Chief Financial Officer

               with a copy to:

               Pillsbury Madison & Sutro LLP
               101 W. Broadway, Suite 1800
               San Diego, California 92101
               Attn: Eric A. Kremer, Esq.

               Notices to Subtenant shall be sent to the attention of:

               Novatel Wireless, Inc.
               9360 Towne Centre Drive, Suite 110
               San Diego, CA 92121
               Attn: Chief Financial Officer

               With a copy to:

               Orrick, Herrington & Sutcliffe LLP
               777 South Figueroa Street
               Los Angeles, CA 90017
               Attn: Peter Leparulo, Esq.

        14.    Broker. Sublandlord and Subtenant represent and warrant to each
other that no brokers other than Burnham Real Estate Services, on behalf of
Sublandlord, and IPC Commercial Real Estate, on behalf of Subtenant, were
involved in connection with the negotiation or consummation of this Sublease.
Each party agrees to indemnify the other, and hold it harmless, from and against
any and all claims, damages, losses, expenses and liabilities (including
reasonable attorneys' fees) incurred by said party as a result of a breach of
this representation and warranty by the other party. Subtenant acknowledges that
Sublandlord shall pay one commission to Burnham Real Estate Services pursuant to
its separate agreement with such broker, and such broker shall then provide the
portion thereof which has been agreed with the above-identified Subtenant
broker. Sublandlord shall have no liability for payment of any additional
amounts to Subtenant's broker.

        15.    Condition of Premises.

               (a)    Commencement. Subtenant acknowledges (i) that it is
subleasing the Sublease Premises "as-is" in an unfurnished condition, other than
existing office cubicles (as confirmed to Subtenant's satisfaction not later
than the Sublease Commencement Date), (ii) that Sublandlord is not making any
representation or warranty concerning the condition of the Sublease Premises,
and (iii) that Sublandlord is not obligated to perform any work to prepare the
Sublease Premises for Subtenant's occupancy other than to deliver the Expansion
Space in broom-clean condition upon the mutual execution of this Sublease.
Subtenant acknowledges that, other than as set forth in the plans and
specifications (true and correct copies of which

                                      -10-
<PAGE>   11

Subtenant hereby represents and warrants have been provided to Sublandlord)
which are hereby expressly approved, it is not authorized to make or do any
alterations or improvements in or to the Sublease Premises without Sublandlord's
prior written consent, which consent may not be unreasonably withheld and which
may impose additional requirements applicable to the construction and completion
of such alterations or improvements in addition to requiring Subtenant's
compliance with requirements of the Master Lease. Sublandlord shall not be
deemed to be unreasonable in withholding its consent to any alteration or
improvement which does not conform with the use requirements under this Sublease
or which is materially different from alterations or improvements customarily
seen in first-class office space.

               (b)    Vacation. Subtenant further acknowledges that it must
deliver the Sublease Premises to Sublandlord on the Sublease Expiration Date in
the condition substantially the same as that on the Sublease Commencement Date,
reasonable wear and tear excepted. Subtenant shall also remedy any hazardous
substance contamination which is the result of the act or omission of Subtenant,
its agents, employees, contractors, invitees or licensees, by promptly
remediating or removing such contamination in its entirety.

               (c)    Inspection Rights. In addition to all other rights under
the provisions of the Master Lease incorporated into this Sublease, Sublandlord
expressly reserves the right to conduct the inspections and testing in the
Sublease Premises during the Term as described in Paragraph 10 of the Master
Lease. During the Term of the Sublease, Subtenant shall deliver to Sublandlord,
upon Sublandlord's request therefor, copies of all notices, filings and permits
delivered to, or received from, regulatory and governmental entities having
jurisdiction over Subtenant's operations on the Sublease Premises with respect
to the use, storage or disposal of Hazardous Substances and a current inventory
of all Hazardous Substances used and/or stored on the Sublease Premises. Upon
reasonable prior notice in each instance, Sublandlord may enter the Sublease
Premises during ordinary business hours to show the space to actual or
prospective lenders or purchasers at any time during the Term and, as to actual
or prospective tenants or users, at any time during the last six (6) months of
the Term. Except in the case of an emergency, Subtenant may elect to have an
employee of Subtenant present during any such inspection for the purpose of
minimizing the disclosure by Subtenant of confidential or proprietary products
being developed or manufactured by Subtenant.

               (d)    Occupancy of Existing Space. Notwithstanding any provision
of this Sublease to the contrary, for purposes of this Sublease, Subtenant
confirms and acknowledges that Subtenant is in occupancy of, and has been in
occupancy of, the Existing Space as of the Sublease Commencement Date pursuant
to the Original Sublease Agreement. Accordingly, Sublandlord makes no
representation or warranty as to the condition of the Existing Space. For
purposes of Section 15(b), on the Sublease Expiration Date, Subtenant shall be
required to return the Existing Space to Sublandlord in the condition
substantially the same as that on the "Sublease Commencement Date" as defined in
the Original Sublease Agreement.

        16.    Notice to Landlord. Section 21(b) of the Master Lease requires
Sublandlord to provide written notice to Landlord and Lender regarding this
Sublease. Sublandlord shall provide such notice following the date of full
execution of this Sublease. If Sublandlord receives any objection from Landlord
to this Sublease within sixty (60) days of providing such notice, Sublandlord
shall notify Subtenant thereof and Sublandlord shall use reasonable best efforts
to

                                      -11-
<PAGE>   12

remove such objection. If such objection cannot be removed within said 60-day
period and the continuation of this Sublease would place Sublandlord in material
breach of the Master Lease, as determined by Sublandlord in its sole discretion,
this Sublease may be terminated by either party hereto upon notice to the other,
and upon such termination neither party hereto shall have any further rights
against or obligations to the other party hereto, other than Subtenant's
obligation to leave the Sublease Premises in the same condition as that existing
on the Sublease Commencement Date.

        17.    Termination of the Lease. If for any reason the term of the
Master Lease shall terminate prior to the Sublease Expiration Date, this
Sublease shall automatically be terminated and Sublandlord shall not be liable
to Subtenant by reason thereof unless said termination shall have been caused by
the default of Sublandlord under the Master Lease, and said Sublandlord default
was not as a result of a Subtenant default hereunder.

        18.    Assignment and Subletting.

               (a)    Independent of and in addition to any provisions of the
Master Lease, including without limitation the obligation to obtain Landlord's
consent to any assignment, it is understood and agreed that Subtenant shall have
no right to sublet the Sublease Premises or any portion thereof or any right or
privilege appurtenant thereto; provided, however, that Subtenant shall have the
right to assign this Sublease or any interest therein, and to suffer or permit
any other person (other than agents, servants or associates of the Subtenant) to
occupy or use the Sublease Premises, only upon the prior written consent of
Sublandlord and Landlord, which consent shall not be unreasonably withheld. Any
assignment by Subtenant without Sublandlord's prior written consent shall be
void and shall, at the option of Sublandlord, terminate this Sublease.

               (b)    Subtenant shall advise Sublandlord by notice of (i)
Subtenant's intent to assign this Sublease, (ii) the name of the proposed
assignee and evidence reasonably satisfactory to Sublandlord that such proposed
assignee is comparable in reputation, stature and financial condition to tenants
then leasing comparable space in comparable buildings, and (iii) the terms of
the proposed assignment. Sublandlord shall, within twenty (20) days of receipt
of such notice, and any additional information requested by Landlord concerning
the proposed assignee's financial responsibility, elect one of the following:

                      (i)    Consent to such proposed assignment;

                      (ii)   Refuse such consent, which refusal shall be on
        reasonable grounds; or

                      (iii)  Elect to terminate this Sublease.

               (c)    In the event that Sublandlord shall consent to an
assignment under the provisions of this Section 18, Subtenant shall pay
Sublandlord's reasonable processing costs and reasonable attorneys' fees
incurred in giving such consent (not to exceed $2,500 in any one instance).
Notwithstanding any permitted assignment, Subtenant shall at all times remain
directly, primarily and fully responsible and liable for all payments owed by
Subtenant under the Sublease and for compliance with all obligations under the
terms, provisions and covenants of

                                      -12-
<PAGE>   13

the Sublease. If for any proposed assignment or sublease, Subtenant receives
Rent or other consideration, either initially or over the term of the assignment
or sublease, in excess of the Rent required by this Sublease, after a deduction
for the following: (a) any brokerage commission paid by Subtenant in connection
therewith and (b) any reasonable attorneys' fees in connection with preparing
and negotiating an assignment or sublease document ("Profit"), Subtenant shall
pay to Sublandlord as additional Rent, fifty percent (50%) of such Profit or
other consideration received by Subtenant within five (5) days of its receipt by
Subtenant or, in the event the assignee makes payment directly to Sublandlord,
Sublandlord shall refund fifty percent (50%) of the Profit to Subtenant after
deducting (a) and (b) above.

               (d)    Occupancy of all or part of the Sublease Premises by
parent, subsidiary, or affiliated companies or a joint venture partnership of
Subtenant shall not be deemed an assignment or subletting provided that such
parent, subsidiary or affiliated companies or a joint venture partnership were
not formed as a subterfuge to avoid the obligation of this Section 18. If
Subtenant is a corporation, unincorporated association, trust or general or
limited partnership, then the sale, assignment, transfer or hypothecation of any
shares, partnership interest, or other ownership interest of such entity or the
dissolution, merger, consolidation, or other reorganization of such entity, or
the sale, assignment, transfer or hypothecation of the assets of such entity,
shall not be deemed an assignment or sublease subject to the provisions of this
Section 18.

        19.    Tenant Improvements. The Tenant Improvements shall be constructed
by Subtenant at its sole cost and expense in accordance with the following:

               (a)    Plans. Subtenant shall prepare and submit to Sublandlord
plans and working drawings for the construction of the Tenant Improvements, such
plans to contain all such information as may be required for the construction of
the Tenant Improvements. Sublandlord shall approve the plans within five (5)
business days after receipt of same or designate specific changes required to be
made to the plans. Subtenant shall make the required changes, and resubmit the
revised plans to Sublandlord. The revised plans shall be approved or disapproved
by Sublandlord within five (5) business days of receipt of the same. This
procedure shall be repeated until the plans are finally approved by Sublandlord
("Final Plans").

               (b)    Procedure for Construction of Tenant Improvements.
Subtenant shall begin the construction of the Tenant Improvements within fifteen
(15) days of Sublandlord's approval of the Final Plans and shall complete the
same in a good, workmanlike and lien-free manner in compliance with all
applicable laws, codes and private restrictions. Subtenant shall only use
contractors acceptable to Sublandlord, in its sole discretion, who shall
maintain customary policies of "All Risk" insurance with respect to such
construction with such carriers and in such amounts as are acceptable to
Sublandlord in its sole discretion; provided, however, Sublandlord hereby
approves Biostruct, Inc. as an acceptable contractor. All such policies shall
name Sublandlord and Landlord as "additional insureds," evidence of which shall
be provided to Sublandlord prior to commencement of construction. Subtenant
hereby indemnifies, defends and holds Sublandlord and Landlord harmless from and
against all claims or liabilities arising from such construction.

                                      -13-
<PAGE>   14

               (c)    Changes. If Subtenant requests any change, addition or
alteration to the Final Plans ("Changes"), Subtenant shall submit a written
request to Sublandlord set forth in reasonable detail the description of the
proposed change. If Sublandlord approves such Changes, which approval shall not
be unreasonably withheld on the same basis as described in Section 15(a),
Subtenant shall, at Subtenant's sole cost and expense, promptly make such
Changes.

        20.    Termination of Original Sublease Agreement. Effective as of the
Effective Date, the Original Sublease Agreement shall terminate and be of no
further force or effect except as to any rental obligation thereunder and any
existing default or any event which, with the giving of notice or the passage of
time shall constitute a default, unless such default or event is cured prior to
the Effective Date.

        21.    Limitation of Estate. Subtenant's estate shall in all respects be
limited to, and be construed in a fashion consistent with, the estate granted to
Sublandlord by Landlord. Subtenant shall stand in the place of Sublandlord and
shall defend, indemnify and hold Sublandlord harmless with respect to all
covenants, warranties, obligations, and payments made by Sublandlord under or
required of Sublandlord by the Master Lease with respect to the Sublease
Premises. In the event Sublandlord is prevented from performing any of its
obligations under this Sublease by a breach by Landlord of a term of the Master
Lease, then Sublandlord's sole obligation in regard to its obligation under this
Sublease shall be to use reasonable efforts in diligently pursuing the
correction or cure by Landlord of Landlord's breach.

        22.    Entire Agreement. It is understood and acknowledged that there
are no oral agreements between the parties hereto affecting this Sublease and
this Sublease supersedes and cancels any and all previous negotiations,
arrangements, brochures, agreements and understandings, if any, between the
parties hereto or displayed by Sublandlord to Subtenant with respect to the
subject matter thereof; and none thereof shall be used to interpret or construe
this Sublease. This Sublease, and the exhibits and schedules attached hereto,
contain all of the terms, covenants, conditions, warranties and agreements of
the parties relating in any manner to the rental, use and occupancy of the
Sublease Premises and shall be considered to be the only agreements between the
parties hereto and their representatives and agents. None of the terms,
covenants, conditions or provisions of this Sublease can be modified, deleted or
added to except in writing signed by the parties hereto. All negotiations and
oral agreements acceptable to both parties have been merged into and are
included herein. There are no other representations or warranties between the
parties, and all reliance with respect to representations is based totally upon
the representations and agreements contained in this Sublease.

        23.    Acceptance. The submission of this Sublease to Subtenant does not
constitute an offer to lease. This Sublease shall become effective only upon the
execution and delivery thereof by both Sublandlord and Subtenant. Sublandlord
shall have no liability or obligation to Subtenant by reason of Sublandlord's
rejection of this Sublease or a failure to execute, acknowledge and deliver the
same to Subtenant.

                                      -14-
<PAGE>   15

        IN WITNESS WHEREOF, the parties have entered into this Sublease as of
the date first written above.

                                    SUBLANDLORD:

                                    SICOR INC.,
                                    a Delaware corporation

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

                                    Its: Executive Vice President Finance & CFO
                                         --------------------------------------

                                    SUBTENANT:

                                    NOVATEL WIRELESS, INC.,
                                    a Delaware corporation

                                    By: /s/ MELVIN FLOWERS
                                        ---------------------------------------

                                    Its: Vice President & CFO 7/6/00
                                         ---------------------------------------

                                      -15-
<PAGE>   16

                                   EXHIBIT "A"

                              COPY OF MASTER LEASE

                                   [Attached]

                                      -1-
<PAGE>   17

                         LEASE AGREEMENT by and between

                             GENA PROPERTY COMPANY,

                            a California partnership

                                   as LANDLORD

                                       and

                                  GENSIA, INC.,

                             a Delaware corporation,

                                    as TENANT

                         Premises: San Diego, California

                         Dated as of: December 21, 1993

<PAGE>   18

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                          PAGE
<S>     <C>                                                                               <C>
1.      DEMISE OF PREMISES..................................................................1

2.      CERTAIN DEFINITIONS.................................................................1

3.      TITLE AND CONDITION................................................................10

4.      USE OF LEASED PREMISES; QUIET ENJOYMENT............................................12

5.      TERM...............................................................................12

6.      BASIC RENT.........................................................................13

7.      ADDITIONAL RENT....................................................................13

8.      NET LEASE; NON-TERMINABILITY.......................................................14

9.      PAYMENT OF IMPOSITIONS.............................................................15

10.     COMPLIANCE WITH LAWS AND EASEMENT AGREEMENTS; ENVIRONMENTAL MATTERS................16

12.     MAINTENANCE AND REPAIR.............................................................18

13.     ALTERATIONS AND IMPROVEMENTS.......................................................19

15.     INDEMNIFICATION....................................................................21

16.     INSURANCE..........................................................................22

17.     CASUALTY AND CONDEMNATION..........................................................25

18.     EARLY TERMINATION EVENTS...........................................................26

19.     RESTORATION; REDUCTION OF RENT.....................................................28

20.     PROCEDURES UPON PURCHASE BY TENANT.................................................29

21.     ASSIGNMENT AND SUBLETTING; PROHIBITION AGAINST
        LEASEHOLD FINANCING................................................................29

22.     EVENTS OF DEFAULT..................................................................32

23.     REMEDIES AND DAMAGES UPON DEFAULT..................................................35

24.     NOTICES............................................................................37

25.     ESTOPPEL CERTIFICATES..............................................................38

26.     SURRENDER..........................................................................38

27.     NO MERGER OF TITLE.................................................................39

28.     BOOKS AND RECORDS..................................................................39

29.     SECURITY DEPOSIT...................................................................40

30.     NON-RECOURSE AS TO LANDLORD........................................................40

31.     FINANCING..........................................................................41

32.     SUBORDINATION......................................................................42
</TABLE>

                                       -i-
<PAGE>   19

                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                          PAGE
<S>     <C>                                                                               <C>
33.     FINANCIAL COVENANTS................................................................42

34.     TAX TREATMENT; REPORTING...........................................................42

35.     RIGHT OF FIRST REFUSAL.............................................................42

36.     FINANCING MAJOR ALTERATIONS........................................................42

37.     INITIAL LENDER RIGHTS RE: LETTER OF CREDIT.........................................42

38.     MISCELLANEOUS......................................................................42
</TABLE>

                                      -ii-
<PAGE>   20

        LEASE AGREEMENT, made as of this 21st day of December, 1993, between
GENA PROPERTY COMPANY, a California partnership, ("Landlord") the partners of
which are GENA (CA) QRS 11-25, INC., a California corporation ("GENA:11") and
GENA (CA) QRS 12-1, INC., a California corporation ("GENA:12") with an address
c/o W. P. Carey & Co., Inc., 620 Fifth Avenue, New York, New York 10020, and
GENSIA, INC. ("Tenant"), a Delaware corporation with an address at 9360 Towne
Centre Drive, San Diego, California 92121.

        In consideration of the rents and provisions herein stipulated to be
paid and performed, Landlord and Tenant hereby covenant and agree as follows:

        1.     Demise of Premises. Landlord hereby demises and lets to Tenant,
and Tenant hereby takes and leases from Landlord, for the term and upon the
provisions hereinafter specified, the following described property
(collectively, the "Leased Premises"): (a) the real property described in
Exhibit "A" hereto, together with the Appurtenances (collectively, the "Land");
(b) the buildings, structures, driveways, walkways and other improvements now or
hereafter constructed on the Land (collectively, the "Structures"); and (c) the
Building Systems Equipment (as defined in Paragraph 2).

        2.     Certain Definitions.

        "Additional Rent" shall mean Additional Rent as defined in Paragraph 7.

        "Adjoining Property" shall mean all appurtenant sidewalks, driveways,
curbs, gores and vault spaces which are located on land adjoining the Land and
which Tenant is entitled to use and responsible to repair.

        "Affiliate" with respect to Tenant shall mean any other Person
controlling, controlled by or under common control with Tenant and "control"
shall mean the power to direct or cause the direction of the management and
policies of such Person, whether by contract or otherwise.

        "Alterations" shall mean all changes, additions, improvements or repairs
to, all alterations, reconstructions, renewals, replacements or removals of and
all substitutions or replacements for any of the Improvements, both interior and
exterior, structural and non-structural, and ordinary and extraordinary.

        "Appurtenances" shall mean all tenements, hereditaments, easements,
rights-of-way, rights, privileges in and to the Land, including (a) easements
over other lands granted by any Easement Agreement and (b) rights to use any
streets, ways, alleys, vaults, gores or strips of land adjoining the Land.

        "Assignment by Landlord" shall mean any assignment of rents and leases
from Landlord to a Lender which (a) encumbers any of the Leased Premises and (b)
secures Landlord's obligation to repay a Loan, as the same may be amended,
supplemented or modified from time to time.

        "Basic Rent" shall mean Basic Rent as defined in Paragraph 6 and
computed pursuant to Exhibit "D".

                                       1
<PAGE>   21

        "Basic Rent Commencement Date" shall mean January 1, 1994.

        "Basic Rent Payment Dates" shall mean the Basic Rent Payment Dates as
defined in Paragraph 6 below.

        "Building Systems Equipment" shall mean the Building Systems Equipment
described on Exhibit "B" which is installed or located in or on the Structures
on the date hereof and paid for by Landlord. Building Systems Equipment shall
include (i) that portion of the Tenant Improvements that is within the
definition of Building Systems Equipment and (ii) Alterations to the Building
Systems Equipment whether paid for by Landlord or, if required by the terms of
this Lease, Tenant.

        "Business Day" shall mean any day other than a Saturday, Sunday or a day
on which banking institutions are authorized or obligated to close in the State
of California.

        "Casualty" shall mean any loss of or damage to any, property except
Tenant's personal property and Tenant's, Equipment included within the Leased
Premises or to any property in which Landlord has an ownership interest.

        "Condemnation" shall mean a Taking and/or a Requisition, as defined
below in this Paragraph 2.

        "Condemnation Notice" shall mean notice or knowledge of the institution
of or intention to institute any proceeding for Condemnation.

        "Consolidated Tangible Net Worth" shall mean Consolidated Tangible Net
Worth as defined in Exhibit "E".

        "Construction Contracts" shall mean those certain Construction Contracts
described in the Construction Management Agreement and any other contracts
between Tenant, as construction manager for Landlord, and Contractors, pursuant
to which the Tenant Improvements will be constructed.

        "Construction Management Agreement" shall mean that certain Construction
Management Agreement of even date between Landlord, as owner, and Tenant, as
manager for Landlord, in connection with the installation and construction of
the Tenant Improvements.

        "Contractors" shall mean those contractors who are parties to the
Construction Contracts.

        "Costs" of a Person or associated with a specified transaction shall
mean all reasonable costs and expenses incurred by such Person or associated
with such transaction, including without limitation, attorneys' fees and
expenses, court costs, brokerage fees, escrow fees, title insurance premiums,
mortgage commitment fees, mortgage points, recording fees and transfer taxes, as
the circumstances require.

        "Covenant Breach" shall mean Covenant Breach as defined in Paragraph
29(e).

                                       2
<PAGE>   22

        "Covenant Event of Default" shall mean a Covenant Breach for which a
Letter of Credit is not issued in accordance with the provisions of Paragraph
29(e).

        "CPI" shall mean the CPI as defined in Exhibit "D".

        "Debt Rent" shall mean Debt Rent as defined in Paragraph 37(a)(ii).

        "Default Rate" shall mean the Default Rate as defined in Paragraph
7(a)(iv).

        "Direct Costs" shall mean Direct Costs as defined in Section 1.01 of the
Construction Management Agreement.

        "Early Termination Amount" shall mean [INTENTIONALLY OMITTED].

        "Early Termination Date" shall mean Early Termination Date as defined in
Paragraph 18.

        "Early Termination Event" shall mean an Early Termination Event as
defined in Paragraph 18.

        "Early Termination Notice" shall mean Early Termination Notice as
defined in Paragraph 18.

        "Easement Agreements" shall mean any recorded conditions, covenants,
restrictions, easements, declarations, licenses and other agreements affecting
the Leased Premises. The initial Easement Agreements are listed on the Schedule
of Permitted Encumbrances attached hereto as Exhibit "C". Tenant shall not
negotiate or execute any Easement Agreement without Landlord's prior written
consent, which shall not be unreasonably withheld or delayed. If Tenant or
Landlord subsequently negotiates and the other party approves Easement
Agreements in addition to those listed on Exhibit "C", such additional Easement
Agreements shall be deemed to be included as Easement Agreements to which this
Lease applies. Neither Tenant nor Landlord shall be bound by any Easement
Agreements which are not listed on Exhibit "C" unless Landlord and Tenant
expressly agree in writing to be bound thereby. If either Landlord or Tenant do
not so agree to be bound by any Easement Agreements not listed on Exhibit "C"
(the "Excluded Easement Agreements"), the Excluded Easement Agreements shall not
be' included as Easement Agreements or Permitted Encumbrances. Easement
Agreements other than Excluded Easement Agreements are Permitted Encumbrances.

        "Environmental Law" shall mean (i) whenever enacted or promulgated, any
applicable federal, state, foreign and local law, statute, ordinance, rule,
regulation, license, permit, authorization, approval, consent, court order,
judgment, decree, injunction, code, requirement or agreement with any
governmental entity, (x) relating to pollution (or the cleanup thereof), or the
protection of air, water vapor, surface water, groundwater, drinking water
supply, land (including land surface or subsurface), plant, aquatic and animal
life from injury caused by a Hazardous Substance or (y) concerning exposure to,
or the use, containment, storage, recycling, reclamation, reuse, treatment,
generation, discharge, transportation, processing, handling, labeling,
production, disposal or remediation of Hazardous Substances, Hazardous
Conditions or Hazardous Activities, in each case as amended and as now or
hereafter in effect, and (ii) any common law or equitable doctrine (including,
without limitation, injunctive relief and tort

                                       3
<PAGE>   23

doctrines such as negligence, nuisance, trespass and strict liability) that may
impose liability or obligations or injuries or damages due to or threatened as a
result of the presence of, exposure to, or ingestion of, any Hazardous
Substance. The term Environmental Law includes, without limitation, the federal
Comprehensive Environmental Response Compensation and Liability Act of 1980, the
Superfund Amendments and Reauthorization Act, the federal Water Pollution
Control Act, the federal Clean Air Act, the federal Clean Water Act, the federal
Resources Conservation and Recovery Act of 1976 (including the Hazardous and
Solid Waste Amendments to RCRA), the federal Solid Waste Disposal Act, the
federal Toxic Substance Control Act, the federal Insecticide, Fungicide and
Rodenticide Act, the federal Occupational Safety and Health Act of 1970, the
federal National Environmental Policy Act and the federal Hazardous Materials
Transportation Act, each as amended and as now or hereafter in effect and any
similar state or local Law.

        "Environmental Violation" shall mean (a) any direct or indirect
discharge, disposal, spillage, emission, escape, pumping, pouring, injection,
leaching, release, seepage, filtration or transporting of any Hazardous
Substance at, upon, under, onto or within the Leased Premises, or from the
Leased Premises to the environment, in violation of any Environmental Law or in
excess of any reportable quantity established under any Environmental Law or
which could result in any liability to Landlord, Tenant or Lender, any Federal,
state or local government or any other Person for the costs of any removal or
remedial action or natural resources damage or for bodily injury or property
damage, (b) any deposit, storage, dumping, placement or use of any Hazardous
Substance at, upon, under or within the Leased Premises or which extends to any
Adjoining Property in violation of any Environmental Law or in excess of any
reportable quantity established under any Environmental Law or which could
result in any liability to any Federal, state or local Government or to any
other Person for the costs of any removal or remedial action or natural
resources damage or for bodily injury or property damage, (c) the abandonment or
discarding of any barrels, containers or other receptacles containing any
Hazardous Substances in violation of any Environmental Laws, (d) any activity,
occurrence or condition which could result in any liability, cost or expense to
Landlord or Lender or any other owner or occupier of the Leased Premises, or
which could result in a creation of a lien on the Leased Premises, under any
Environmental Law, or (e) any violation of or noncompliance with any
Environmental Law.

        "Equipment" shall mean Building Systems Equipment and Tenant's
Equipment.

        "Equity Rent" shall mean Equity Rent as defined in Paragraph 37(b).

        "Event of Default" shall mean an Event of Default as defined in
Paragraph 22(a).

        "Existing Leases" is defined in Paragraph 21.

        "Fair Market Rent" shall mean Fair Market Rent as determined in
accordance with Section 3 of Exhibit "D".

        "Federal Funds" shall mean federal or other immediately available funds
which at the time of payment are legal tender for the payment of public and
private debts in the United States of America.

                                       4
<PAGE>   24

        "Final Release Conditions" shall mean Final Release Conditions as
defined in Paragraph 29.

        "Financial Covenants" shall mean the financial covenants of Tenant
described on Exhibit "E".

        "Funded Indebtedness" shall mean Funded Indebtedness as defined in
Exhibit "E".

        "Funding Deadline" shall mean [INTENTIONALLY OMITTED].

        "GAAP" shall mean generally accepted accounting principles as in effect
from time to time and followed consistently throughout the relevant period.

        "Hazardous Activity" means any activity, process, procedure or
undertaking which directly or indirectly (i) procures, generates or creates any
Hazardous Substance; (ii) causes or results in (or `threatens to cause or result
in) the release, seepage, spill, leak, flow, discharge or emission of any
Hazardous Substance into the environment (including the air, ground water,
watercourses or water systems), (iii) involves the containment or storage of any
Hazardous Substance; or (iv) would cause the Leased Premises or any portion
thereof to become a hazardous waste treatment, recycling, reclamation,
processing, storage or disposal facility within the meaning of any Environmental
Law; provided, however, that notwithstanding anything in this sentence or this
Lease to the contrary, Tenant shall not be deemed to be engaged in a Hazardous
Activity if the subject activity, process, procedure or undertaking is done or
performed in accordance with applicable Law and/or governmental permit.

        "Hazardous Condition" means any condition which would support any claim
or liability under any Environmental Law, including the presence of underground
storage tanks.

        "Hazardous Substance" means (i) any substance, material, product,
petroleum, petroleum product, derivative, compound or mixture, mineral
(including asbestos), chemical, gas, medical waste, or other pollutant, in each
case whether naturally occurring, man-made or the by-product of any process,
that is toxic, harmful or hazardous or acutely hazardous to the environment or
public health or safety or (ii) any substance supporting a claim under any
Environmental Law, whether or not defined as hazardous as such under any
Environmental Law. Hazardous Substances include, without limitation, any toxic
or hazardous waste, pollutant, contaminant, industrial waste, petroleum or
petroleum-derived substances or waste, radon, radioactive materials, asbestos,
asbestos containing materials, urea formaldehyde foam insulation, lead and
polychlorinated biphenyls.

        "Impositions" shall mean the Impositions as defined in Paragraph 9(a).

        "Improvements" shall mean the Structures as defined in Paragraph 1,
Building Systems Equipment (as defined above) and Tenant Improvements (as
defined below).

        "Indemnitee" shall mean an Indemnitee as defined in Paragraph 15.

        "Indirect Costs" shall mean Indirect Costs as defined in Section 1.01 of
the Construction Management Agreement.

                                       5
<PAGE>   25

        "Initial Lender" shall mean The Northwestern Mutual Life Insurance
Company and its successors and assigns with respect to the Initial Loan.

        "Initial Loan" shall mean the [INTENTIONALLY OMITTED]loan from Initial
Lender to Landlord.

        "Initial Term" shall mean the Initial Term as defined in Paragraph 5.

        "Initial Term Commencement Date" shall mean Initial Term Commencement
Date as defined in Paragraph 5(a).

        "Initial Term Expiration Date" shall mean Initial Term Commencement Date
as defined in Paragraph 5(a).

        "Insurance Requirements" shall mean the requirements of all insurance
policies required to be maintained in accordance with this Lease.

        "Land" shall mean the Land as defined in Paragraph 1 and described in
Exhibit "A-1".

        "Landlord's Cash Contribution" shall mean [INTENTIONALLY OMITTED].

        "Landlord's Maximum Contribution" shall mean [INTENTIONALLY OMITTED].

        "Landlord's Share of Project Costs" shall mean [INTENTIONALLY OMITTED].

        "Law" shall mean any constitution, statute, rule of law, code,
ordinance, order, judgment, decree, injunction, rule, regulation, policy,
requirement or administrative or judicial determination, even if unforeseen or
extraordinary, of every duly constituted Governmental authority, court or
agency, now or hereafter enacted or in effect.

        "Lease" shall mean this Lease Agreement.

        "Leased Premises" shall mean the Leased Premises as defined in Paragraph
1.

        "Legal Requirements" shall mean all present and future Laws (including
but not limited to Environmental Laws and Laws relating to accessibility to,
usability by, and discrimination against, disabled individuals) and all
covenants, restrictions and conditions now or hereafter of record which may be
applicable to Tenant or to any of the Leased Premises, or to the use, manner of
use, occupancy, possession, operation, maintenance, alteration, repair or
restoration of any of the Leased Premises, even if compliance therewith
necessitates structural changes or improvements or results in interference with
the use or enjoyment of any of the Leased Premises.

        "Lender" shall mean (a) Initial Lender, its successors and assigns, and
(b) any person or entity (and their respective successors and assigns) which
may, after the date hereof, make a Loan to Landlord or is the holder of any
Note.

        "Letter of Credit" shall mean an unconditional, irrevocable letter of
credit in the form attached hereto as Exhibit "G" in the amount then required by
Paragraph 29, with such

                                       6
<PAGE>   26

modifications as may be reasonably requested by the beneficiary thereof from
time to time and issued by a commercial bank with a B rating or better according
to the Sheshunoff Bank Quarterly or, if no longer available, a similar
publication satisfactory to the then beneficiary thereof. The Letter of Credit
shall name Landlord or, at Landlord's direction, Lender as beneficiary.

        "Loan" shall mean the Initial Loan and any other loan made by one or
more Lenders to Landlord, which Initial Loan or other loan, as the case may be,
is secured by a Mortgage and an Assignment by Landlord and evidenced by a Note.

        "Major Alterations" shall mean Major Alterations as defined in Paragraph
36(a).

        "Monetary Event of Default" shall mean a failure by Tenant to pay Rent
or any other Monetary Obligation within the cure period, if any, as provided in
this Lease.

        "Monetary Obligations" shall mean Rent and all other sums payable by
Tenant under this Lease.

        "Mortgage" shall mean any mortgage or deed of trust from Landlord to a
Lender which (a) encumbers any of the Leased Premises and (b) secures Landlord's
obligation to repay a Loan, as the same may be amended, supplemented or
modified.

        "Net Award" shall mean (a) the entire award payable to Landlord or
Lender by reason of a Condemnation whether pursuant to a judgment or by
agreement or otherwise, or (b) the entire proceeds of any insurance required
under clauses (i), (ii) (to the extent payable to Landlord or Lender), (iv), (v)
or (vi) of Paragraph 16(a) (to the extent payable to Landlord, Tenant or
Lender), as the case may be, less any expenses incurred by Landlord, Tenant and
Lender in collecting such award or proceeds.

        "Note" shall mean any promissory note evidencing Landlord's obligation
to repay a Loan, as the same may be amended, supplemented or modified.

        "Notice Receipt Date" shall mean Notice Receipt Date as defined in
Paragraph l8(b).

        "Occupancy Date" shall mean the date on which each of the following
events has occurred: (i) the Tenant Improvements have been completed
substantially in accordance with the Plans, as certified to Landlord by the
Architect (as defined in the Construction Management Agreement), and (ii) all
permanent permits and licenses required for the occupancy of the Leased Premises
have been obtained.

        "Partial Casualty" shall mean any Casualty which does not constitute an
Early Termination Event.

        "Partial Condemnation" shall mean any Condemnation which does not
constitute an Early Termination Event.

        "Partial Release Conditions" shall mean Partial Release Conditions as
defined in Paragraph 29(b).

                                       7
<PAGE>   27

        "Permitted Encroachments" shall mean the encroachments listed on that
certain ALTA/ACSM Land Title Survey of the Land dated December 2, 1992 and
revised November 21, 1993 which was prepared by Bock & Clark's National
Surveyors Network.

        "Permitted Encumbrances" shall mean the existing state of title to the
Leased Premises including those covenants, restrictions, reservations, liens,
conditions and easements and other encumbrances, other than any Mortgage or
Assignment by Landlord, listed on Exhibit "C" hereto. It is agreed that such
listing shall not be deemed to revive any such encumbrances that have expired or
terminated or are otherwise invalid or unenforceable.

        "Person" shall mean an individual, partnership, association, corporation
or other entity.

        "Plans" shall mean the plans and specifications prepared and to be
prepared by McGraw Baldwin Architects or another architect selected by Tenant
for the installation and construction of the Tenant Improvements. A list of the
existing Plans is attached to the Construction Management Agreement. Any
amendments, modifications or additions to the Plans shall be approved as
provided in the Construction Management Agreement.

        "Prepayment Premium" shall mean any payment (other than a payment of
principal and/or interest which Landlord is required to make under a Note or a
Mortgage) by reason of any prepayment by Landlord of any principal due under a
Note or Mortgage as the result of the occurrence of an Early Termination Events
or an Event of Default or the purchase of the Leased Premises by Tenant upon the
occurrence of an Environmental Violation pursuant to Paragraph 10(h), and which
may be (in lieu of such prepayment premium or prepayment penalty) a "make whole"
clause requiring a prepayment premium in an amount sufficient to compensate the
Lender for the loss of the benefit of the Loan due to a prepayment.

        "Present Value" of any amount shall mean [INTENTIONALLY OMITTED].

        "Primary Term Expiration Date" shall mean Primary Term Expiration Date
as defined in Paragraph 5(a).

        "Prime Rate" shall mean the annual interest rate as published, from time
to time, in the Wall Street Journal as the "Prime Rate" in its column entitled
"Money Rates". The Prime Rate may not be the lowest rate of interest charged by
any "large U.S. money center commercial banks" and Landlord makes no
representations or warranties to that effect. In the event the Wall Street
Journal ceases publication or ceases to publish the "Prime Rate" as described
above, the Prime Rate shall be the average per annum discount rate (the
"Discount Rate") on ninety-one (91) day bills ("Treasury Bills") issued from
time to time by the United States Treasury at its most recent auction, plus
three hundred (300) basis points. If no such 91-day Treasury Bills are then
being issued, the Discount Rate shall be the discount rate on Treasury Bills
then being issued for the period of time closest to ninety-one (91) days.

        "Project Costs" shall mean [INTENTIONALLY OMITTED].

        "Reciprocal Easement Agreement" means that certain Reciprocal Easement
Agreement executed between Landlord, as owner of the Land, and Tenant, as owner
of a parcel of land continuous to the Land. The Reciprocal Easement Agreement is
an Easement Agreement.

                                       8
<PAGE>   28

        "Remaining Obligations" shall mean Remaining Obligations as defined in
Paragraph 18(c).

        "Remaining Sum" shall mean Remaining Sum as defined in Paragraph 19(c).

        "Renewal Term" shall mean Renewal Term as defined in Paragraph 5.

        "Rent" shall mean, collectively, Basic Rent and Additional Rent.

        "Rent Determination Date" shall mean the date when the Fair Market Rent
is determined in accordance with Section 3 of Exhibit "D".

        "Requisition" shall mean any temporary requisition or confiscation of
the use or occupancy of any of the Leased Premises by any governmental
authority, civil or military, whether pursuant to an agreement with such
governmental authority in settlement of or under threat of any such requisition
or confiscation, or otherwise.

        "Retention Date" shall mean the later of the date on which the amount of
the Remaining Sum is finally determined or the date on which Landlord's right to
the Remaining Sum is finally determined.

        "Site Assessment" shall mean a Site Assessment as defined in Paragraph
10(c).

        "State" shall mean the State of California.

        "Structures" shall mean the Structures as defined in Paragraph 1.

        "Surviving Obligations" shall mean any obligations of Tenant under this
Lease, actual or contingent, which arise on or prior to the expiration or prior
termination of this Lease or which survive such expiration or termination by
their own terms.

        "Taking" shall mean (a) any taking or damaging of all or a portion of
any of the Leased Premises (i) in or by condemnation or other eminent domain
proceedings pursuant to any Law, general or special, or (ii) by reason of any
agreement with any condemnor in settlement of or under threat of any such
condemnation or other eminent domain proceeding, or (b) any inverse or other de
facto condemnation. The Taking shall be considered to have taken place as of the
later of the date actual physical possession is taken by the condemnor, or the
date on which the right to compensation and damages accrues under the Law
applicable to the Leased Premises.

        "Tenant Improvements" shall mean all interior improvements and equipment
to be purchased, paid for, constructed and/or installed in the Structures, all
in accordance with the Plans and the terms of the Construction Management
Agreement. The Tenant Improvements, including the Building Systems Equipment,
shall not include Tenant's Equipment.

        "Tenant's Equipment" shall mean all furniture, fixtures and equipment
which are owned and paid for by Tenant at any time before or during the Term and
transferred to and installed in the Structures and any replacements thereof,
except that Alterations to Building Systems

                                       9
<PAGE>   29

Equipment shall be Building Systems Equipment even if paid for by Tenant.
Tenant's Equipment shall not include the Tenant Improvements.

        "Term" shall mean the Primary Term and the Initial Term, plus any
exercised Renewal Terms.

        "Third Party Purchaser" shall mean Third Party Purchaser as defined in
Paragraph 21(j).

        "Total Capitalization" shall mean Total Capitalization as defined in
Exhibit "E".

        3.     Title and Condition.

               (a)    The Leased Premises are demised and let subject to (i) the
Mortgage and Assignment by Landlord presently in effect, (ii) the rights of any
Persons in possession of the Leased Premises, (iii) the existing state of title
of any of the Leased Premises, including any Permitted Encumbrances, (iv) any
state of facts which an accurate survey or physical inspection of the Leased
Premises might show, (v) all Legal Requirements, including any existing
violation of any thereof, and (vi) the condition of the Leased Premises as of
the commencement of the Term, without representation or warranty by Landlord.

               (b)    Tenant acknowledges that the Leased Premises are in good
condition and repair at the inception of this Lease. LANDLORD LEASES AND WILL
LEASE AND TENANT TAKES AND WILL TAKE THE LEASED PREMISES AS IS. TENANT
ACKNOWLEDGES THAT LANDLORD (WHETHER ACTING AS LANDLORD HEREUNDER OR IN ANY OTHER
CAPACITY) HAS NOT MADE AND WILL NOT MAKE, NOR SHALL LANDLORD BE DEEMED TO HAVE
MADE, ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF
THE LEASED PREMISES, INCLUDING ANY WARRANTY OR REPRESENTATION AS TO (i) ITS
FITNESS, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE, (ii) THE QUALITY
OF THE MATERIAL OR WORKMANSHIP THEREIN, (iii) THE EXISTENCE OF ANY DEFECT,
LATENT OR PATENT, (iv) LANDLORD'S TITLE THERETO, (v) VALUE, (vi) COMPLIANCE WITH
SPECIFICATIONS, (vii) LOCATION, (viii) USE, (ix) CONDITION, (x) MERCHANTABILITY,
(xi) QUALITY, (xii) DESCRIPTION, (xiii) DURABILITY, (xiv) OPERATION, (xv) THE
EXISTENCE OF ANY HAZARDOUS SUBSTANCE, HAZARDOUS CONDITION OR HAZARDOUS ACTIVITY
OR (xvi) COMPLIANCE OF THE LEASED PREMISES WITH ANY LAW OR LEGAL REQUIREMENT.
ALL RISKS INCIDENT TO THE FOREGOING ARE TO BE BORNE BY TENANT. TENANT
ACKNOWLEDGES THAT THE LEASED PREMISES ARE OF ITS SELECTION AND TO ITS
SPECIFICATIONS AND THAT AS OF THE OCCUPANCY DATE THE LEASED PREMISES WILL HAVE
BEEN INSPECTED BY TENANT AND SATISFACTORY TO IT. IN THE EVENT OF ANY DEFECT OR
DEFICIENCY IN ANY OF THE LEASED PREMISES OF ANY NATURE, WHETHER LATENT OR
PATENT, LANDLORD SHALL NOT HAVE ANY RESPONSIBILITY OR LIABILITY WITH RESPECT
THERETO OR FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING STRICT
LIABILITY IN TORT). THE PROVISIONS OF THIS PARAGRAPH 3 (b) HAVE BEEN NEGOTIATED,
AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY

                                       10
<PAGE>   30

WARRANTIES BY LANDLORD, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED
PREMISES, ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER LAW NOW
OR HEREAFTER IN EFFECT OR ARISING OTHERWISE.

               (c)    Tenant represents to Landlord that Tenant has examined the
title to the Leased Premises prior to the execution and delivery of this Lease
and has found the same to be satisfactory for the purposes contemplated hereby.
Tenant acknowledges that (i) fee simple title (both legal and equitable) is in
Landlord and that Tenant has only the leasehold right of possession and use of
the Leased Premises as provided herein, (ii) the Structures conform to all
material Legal Requirements and all Insurance Requirements, (iii) all easements
necessary or appropriate for the use or operation of the Leased Premises have
been obtained, (iv) except as shown on the schedule of even date delivered to
Landlord, all contractors and subcontractors who have performed work on or
supplied materials to the Leased Premises have been fully paid, and all
materials and supplies have been fully paid for, (v) the Structures (except for
the Tenant Improvements) have been fully completed in all material respects in a
workmanlike manner of first class quality, (vi) all Equipment (except for the
Tenant Improvements) necessary or appropriate for the use or operation of the
Leased Premises has been installed and is presently fully operative in all
material respects, and (vii) upon completion of the Tenant Improvements the
Tenant Improvements will be fully completed, installed and operative in all
respects and of a first class quality.

               (d)    Landlord hereby assigns to Tenant, without recourse or
warranty whatsoever, all warranties, guaranties, indemnities and similar rights
which Landlord may have against any manufacturer, seller, engineer, contractor
or builder in respect of any of the Leased Premises. Such assignment shall
remain in effect until an Event of Default occurs or until the expiration or
earlier termination of this Lease, whereupon such assignment shall cease and all
of said warranties, guaranties, indemnities and other rights shall automatically
revert to Landlord.

               (e)    Pursuant to the Construction Management Agreement, Tenant
will cause the Tenant Improvements to be constructed and installed with funds
more particularly described in the Construction Management Agreement. The Tenant
Improvements will be owned by Landlord and are included within the Leased
Premises. Tenant acknowledges that the Tenant Improvements have not yet been
completed and that, pursuant to the Construction Management Agreement, Tenant
has the responsibility for causing the Tenant Improvements to be completed in
accordance with the terms of the Construction Management Agreement. Landlord
will not make any representations or warranties with respect to the Tenant
Improvements. Tenant further acknowledges that, upon occurrence of an Event of
Default, Landlord may terminate the Construction Management Agreement, in
addition to all other remedies of Landlord under this Lease, Landlord shall have
the right but not the obligation to complete construction of the Tenant
Improvements in accordance with the Plans. If Landlord so completes construction
of the Tenant Improvements, Tenant will not be excused from paying all Rent due
pursuant to the terms of this Lease, and, whether Or not Landlord completes the
Tenant Improvements, Landlord shall have the right to exercise any or all of its
remedies hereunder following an Event of Default. All acknowledgments of Tenant
regarding the Leased Premises contained in Paragraph 3 (b) shall be deemed to
have been made again as of the Occupancy Date.

                                       11
<PAGE>   31

        4.     Use of Leased Premises; Quiet Enjoyment.

               (a)    Tenant may occupy and use the Leased Premises for office
use and for research, development, testing, manufacturing, sale and use of
pharmaceutical, medical, chemical and related products and devices and uses
ancillary thereto, including without limitation the performance of clinical
experiment programs and the operation of a delicatessen or restaurant, as long
as such uses are permitted under and conducted in accordance with applicable
Law, and for no other purpose without having first received the prior written
approval of Landlord, which approval shall not be unreasonably withheld or
delayed. Tenant shall not use or occupy or permit any of the Leased Premises to
be used or occupied, nor do or permit anything to be done in or on any of the
Leased Premises, in a manner which would or might (i) violate any Law or Legal
Requirement, (ii) make void or voidable or cause any insurer to cancel any
insurance required by this Lease, or make it difficult or impossible to obtain
any such insurance at commercially reasonable rates, (iii) cause structural
injury to any of the Structures or (iv) constitute a public or private nuisance
or waste.

               (b)    Subject to the provisions hereof, so long as no Event of
Default has occurred and is continuing, Tenant shall quietly hold, occupy and
enjoy the Leased Premises throughout the Term, without any hindrance, ejection
or molestation by Landlord with respect to matters that arise after the date
hereof, provided that Landlord and Lender may enter upon and examine any of the
Leased Premises at such reasonable times as Landlord or Lender may select for
the purpose of inspecting the Leased Premises, verifying compliance or
non-compliance by Tenant with its obligations hereunder and the existence or
non-existence of an Event of Default or event which with the passage of time
and/or notice would constitute an Event of Default, showing the Leased Premises
to prospective Lenders and purchasers and taking such other action with respect
to the Leased Premises as is permitted by any provision hereof. Tenant may
reasonably limit the extent of any such inspection so as to minimize disclosure
by Tenant of confidential or proprietary products being developed or
manufactured by Tenant.

        5.     Term.

               (a)    Subject to all of the provisions of this Lease, Tenant
shall have and hold the Leased Premises for a primary term ("Primary Term")
commencing on the date hereof and ending on the last day of the calendar month
in which the Funding Deadline occurs (the "Primary Term Expiration Date") and
for an initial term (the "Initial Term") commencing on the first day of the
first month following the Primary Term Expiration Date (the "Initial Term
Commencement Date") and ending on the last day (the "Initial Term Expiration
Date") of the one hundred eightieth (180th) calendar month next following the
date on which the Initial Term commences. If all Rent and all other sums due
hereunder shall not have been fully paid by the end of the Term, Landlord may,
at its option, extend the Term on a month-to-month basis until all said sums
shall have been fully paid.

               (b)    Provided that if, on or prior to the Initial Term
Expiration Date or any other Renewal Date (as hereinafter defined) this Lease
shall not have been terminated pursuant to any provision hereof, then on the
Initial Term Expiration Date and on the tenth (10th), twentieth (20th) and
thirtieth (30th) anniversaries of the Initial Term Expiration Date (the Initial
Term Expiration Date and each such anniversary being a "Renewal Date"), the Term
shall be deemed

                                       12
<PAGE>   32

to have been automatically extended for an additional period of ten (10) years
(each such ten (10) year period, a "Renewal Term"), unless Tenant shall-notify
Landlord in writing at least one (1) year prior to the next Renewal Date that
Tenant is terminating this Lease as of the next Renewal Date. If Tenant so
notifies Landlord of Tenant's election to terminate this Lease, Tenant shall
deliver to Landlord such additional documents in recordable form as are
necessary to delete from the public records any reference to the leasehold
estate and other rights of Tenant hereunder. Any such extension of the Term
shall be subject to all of the provisions of this Lease, as the same may be
amended, supplemented or modified.

               (c)    If Tenant exercises its option not to extend or further
extend the Term, or if an Event of Default occurs, then Landlord shall have the
right during the remainder of the Term then in effect and, in any event,
Landlord shall have the right during the last year of the Term, to (i) advertise
the availability of the Leased Premises for sale or reletting and to erect upon
the Leased Premises signs indicating such availability and (ii) show the Leased
Premises to prospective purchasers or tenants or their agents at such reasonable
times as Landlord may select. Tenant may reasonably limit the extent of any such
inspection so as to minimize disclosure by Tenant of confidential or proprietary
products being developed or manufactured by Tenant.

        6.     Basic Rent. Tenant shall pay to Landlord, as annual rent for the
Leased Premises during the Term, the amounts determined in accordance with
Exhibit "D" hereto ("Basic Rent"). [PORTION OF PARAGRAPH INTENTIONALLY OMITTED]
Basic Rent shall be payable monthly in advance (each such monthly day being a
"Basic Rent Payment Date"). Each such rental payment shall be made, at
Landlord's sole discretion, (a) to Landlord at its address set forth above
and/or to such one or more other Persons, at such addresses and in such
proportions as Landlord may direct by fifteen (15) days' prior written notice to
Tenant (in which event Tenant shall give Landlord notice of each such payment
concurrent with the making thereof), and (b) in Federal Funds.

        7.     Additional Rent.

               (a)    Subject to any specific provisions of this Lease to the
contrary, Tenant shall pay and discharge, as additional rent (collectively,
"Additional Rent"):

                      (i)    [INTENTIONALLY OMITTED]

                             (J)    any other items specifically required to be
paid by Tenant under this Lease, which costs and expenses shall include, without
limitation, all Costs, judgments, settlement amounts, Impositions, insurance
premiums, appraisal fees, the cost of performing and reporting Site Assessments
to the extent provided in Paragraph 10(c), the cost of curing any Environmental
Violation, and the cost of complying with all Legal Requirements, fines,
penalties and interest.

                      (ii)   after the date all or any portion of any
        installment of Basic Rent is due and not paid, an amount equal to three
        percent (3%) of the amount of such unpaid installment or portion thereof
        ("Late Charge"), provided, however, that with respect to the first two
        late payments of all or any portion of any installment of Basic Rent in
        any

                                       13
<PAGE>   33

        consecutive twelve (12) month period the Late Charge shall not be due
        and payable unless the Basic Rent has not been paid within three (3)
        Business Days following the due date thereof;

                      (iii)  a sum equal to any additional sums (including any
        late charge, default penalties, interest and fees of Lender's counsel)
        which are actually paid by Landlord to any Lender under any Note by
        reason of Tenant's late payment or non-payment of Basic Rent or by
        reason of an Event of Default or as a result of Tenant's failure to
        comply with Paragraph 28 hereof; and

                      (iv)   interest at the rate (the "Default Rate") equal to
        the lower of (A) the maximum rate permitted by Law, or (B) three percent
        (3%) over the Prime Rate per annum on the following sums until paid in
        full: (1) all overdue installments of Basic Rent from the respective due
        dates thereof, provided that the Default Rate shall not be due on any
        installment not paid as a result of Initial Lender's failure to draw on
        the Letter of Credit pursuant to Paragraph 37(b) hereof, (2) all overdue
        amounts of Additional Rent relating to obligations which Landlord or
        Lender shall have paid on behalf of Tenant, beginning five (5) Business
        Days after notice of payment thereof by Landlord or Lender, and (3) all
        other overdue amounts of Additional Rent, from the date when any such
        amount becomes overdue.

               (b)    Subject to any specific provisions of this Lease to the
contrary, Tenant shall pay and discharge (i) any Additional Rent referred to in
Paragraph 7 (a) (i) when the same shall become due, provided that amounts which
are billed to Landlord, Lender or any third party, but not to Tenant, shall be
paid within ten (10) days after Landlord's or Lender's written demand for
payment thereof, and (ii) any other Additional Rent, within fifteen (15) days
following Landlord's demand for payment thereof. At the time Landlord makes
demand for payment, Landlord shall furnish to Tenant reasonably detailed
invoices or statements for all items of Additional Rent paid by Landlord or
Lender.

               (c)    Notwithstanding anything in this Paragraph 7 to the
contrary, Tenant shall not be responsible for paying any costs of Landlord
and/or any Lender incurred with respect to any sale, transfer, or financing of
the Leased Premises by Landlord unless Tenant purchases the Leased Premises from
Landlord pursuant to any provision of this Lease which requires Tenant to pay
such costs.

        8.     Net Lease; Non-Terminability.

               (a)    This is a net lease and all Monetary Obligations shall be
paid without notice or demand and without set-off, counterclaim, recoupment,
abatement, suspension, deferment, diminution, deduction, reduction or defense
(collectively, a "Set-Off").

               (b)    Except as otherwise expressly provided herein, this Lease
and the rights of Landlord and the obligations of Tenant hereunder shall not be
affected by any event or for any reason, including the following: (i) any damage
to or theft, loss or destruction of any of the Leased Premises, (ii) any
Condemnation, (iii) the prohibition, limitation or restriction of Tenant's use
of any of the Leased Premises, (iv) any eviction by paramount title or
otherwise,

                                       14
<PAGE>   34

(v) Tenant's acquisition of ownership of any of the Leased Premises other than
pursuant to an express provision of this Lease, (vi) any default on the part of
Landlord hereunder or under any Note, Mortgage, Assignment by Landlord or any
other agreement, (vii) any latent or other defect in any of the Leased Premises,
(viii) the breach of any warranty of any seller or manufacturer of any of the
Equipment, (ix) any violation of Paragraph 4(b) or any other provision of this
Lease by Landlord, (x) the bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution or winding-up of, or other proceeding
affecting Landlord, (xi) the exercise of any remedy, including foreclosure,
under any Mortgage or Assignment by Landlord, (xii) any action with respect to
this Lease (including the disaffirmance hereof) which may be taken by Landlord,
any trustee, receiver or liquidator of Landlord or any court under the Federal
Bankruptcy Code or otherwise, (xiii) any interference with Tenant's use of the
Leased Premises, (xiv) market or economic changes, (xv) failure to complete the
Tenant Improvements, (xvi) failure of Landlord to pay Landlord's Share of
Project Costs, or (xvi) any other cause, whether similar or dissimilar to the
foregoing, any present or future Law to the contrary notwithstanding.

               (c)    Except as may be specifically provided herein to the
contrary, the obligations of Tenant hereunder shall be separate and independent
covenants and agreements, all Monetary Obligations shall continue to be payable
in all events, and the obligations of Tenant hereunder shall continue unaffected
by any breach of any provision hereof by Landlord unless the requirement to pay
or perform the same shall have been terminated pursuant to an express provision
of this Lease. Rent payable by Tenant hereunder shall constitute "rent" for all
purposes (including Section 502(b) (6) of the Bankruptcy Code) .

               (d)    Except as otherwise expressly provided in this Lease,
Tenant shall have no right and hereby waives all rights which it may have under
any Law (i) to quit, terminate or surrender this Lease or any of the Leased
Premises, or (ii) to any Set-Off of any Monetary Obligations.

        9.     Payment of Impositions.

               (a)    Tenant shall, before interest or penalties are due
thereon, pay and discharge all taxes (including real and personal property,
franchise, sales and rent taxes), all charges for any easement or agreement
maintained for the benefit of any of the Leased Premises, all assessments and
levies, all permit, inspection and license fees, all rents and charges for
water, sewer, utility and communication services relating to the any of Leased
Premises, all ground rents and all other public charges whether of a like or
different nature, even if unforeseen or extraordinary, imposed upon or assessed
against (i) Tenant, (ii) any of the Leased Premises, (iii) Landlord as a result
of or arising in respect of the acquisition, ownership, occupancy, leasing, use,
possession or sale of any of the Leased Premises, any activity conducted on any
of the Leased Premises, or the Rent, or (iv) any Lender by reason of any Note,
Mortgage, Assignment by Landlord or other document evidencing or securing a Loan
and which (as to this clause (iv)) Landlord has agreed to pay (collectively, the
"Impositions"); provided, however, that nothing herein shall obligate Tenant to
pay (A) income, excess profits or other taxes of Landlord (or Lender) which are
determined on the basis of Landlord's (or Lender's) net income or net worth
(unless and only to the extent that such taxes are in lieu of or a substitute
for any other tax, assessment or other charge upon or with respect to the Leased
Premises which, if it were in

                                       15
<PAGE>   35

effect, would be payable by Tenant under the provisions hereof or by the terms
of such tax, assessment or other charge), (B) any estate, inheritance,
succession, gift or similar tax imposed on Landlord, (C) any capital gains tax
imposed on Landlord in connection with the sale of the Leased Premises to any
Person, (D) installments of principal and/or interest payable by Landlord on any
Loan, (E) property management fees payable by Landlord or (F) increases in real
estate taxes which result from a transfer of the Leased Premises during the
first three (3) years of the Initial Term or from a transfer of the Leased
Premises at any time to any affiliate of Landlord or of Corporate Property
Associates 11 Incorporated or Corporate Property Associates 12 Incorporated. If
any Imposition may be paid in installments without interest or penalty, Tenant
shall have the option to pay such Imposition in installments; in such event,
Tenant shall be liable only for those installments which accrue or become due
and payable during the Term. Tenant shall prepare and file all tax reports
required by governmental authorities which relate to the Impositions. Tenant
shall deliver to Landlord (1) copies of all settlements and notices pertaining
to the Impositions which may be issued by any governmental authority within ten
(10) days after Tenant's receipt thereof, (2) receipts for payment of all taxes
required to be paid by Tenant hereunder within thirty (30) days after the due
date thereof and (3) receipts for payment of all other Impositions within ten
(10) days after Landlord's request therefor.

               (b)    At any time following the occurrence of a monetary Event
of Default or at any time following a draw on the Letter of Credit, Landlord
shall have the right to require Tenant to pay to Landlord an additional monthly
sum (each an "Escrow Payment") sufficient to pay the Escrow Charges (as
hereinafter defined) as they become due on an annual basis and in the amounts
actually payable. As used herein, "Escrow Charges" shall mean real estate taxes
on the Leased Premises or payments in lieu thereof and premiums on any property
and general liability insurance required by this Lease. Landlord shall determine
the amount of the Escrow Charges and of each Escrow Payment. If the Escrow
Payments are held by Lender, the Escrow Payments may be commingled with other
funds of Lender. If the Escrow Payments are held by Landlord, the Escrow
Payments shall not be commingled with other funds of Landlord, shall be invested
and interest thereon shall accrue to the benefit of Tenant. Landlord shall apply
the Escrow Payments to the payment of the Escrow Charges in such order or
priority as Landlord shall determine or as required by law. If at any time the
Escrow Payments theretofore paid to Landlord shall be insufficient for the
payment of the Escrow Charges, Tenant, within ten (10) days after Landlord's
demand therefor, shall pay the amount of the deficiency to Landlord.

        10.    Compliance with Laws and Easement Agreements; Environmental
Matters.

               (a)    Tenant shall, at its expense, comply with and conform to,
and cause any other Person occupying any part of the Leased Premises to comply
with and conform to, all Insurance Requirements and Legal Requirements
(including all applicable Environmental Laws). Tenant shall not at any time (i)
cause, permit or suffer to occur any Environmental Violation or (ii) permit any
sublessee, assignee or other Person occupying the Leased Premises under or
through Tenant to cause, permit or suffer to occur any Environmental Violation.

               (b)    Tenant, at its sole cost and expense, will at all times
promptly and faithfully abide by, discharge and perform all of the covenants,
conditions and agreements contained in any Easement Agreement on the part of
Landlord or the occupier to be kept and performed thereunder. Tenant will not
alter, modify, amend or terminate any Easement

                                       16
<PAGE>   36

Agreement, give any consent or approval thereunder, or enter into any new
Easement Agreement without, in each case, the prior written consent of Landlord.

               (c)    Upon prior written notice from Landlord, Tenant shall
permit such persons as Landlord may designate ("Site Reviewers") to visit the
Leased Premises during normal business hours and perform, as agents of Tenant,
environmental site investigations and assessments ("Site Assessments") on the
Leased Premises for the purpose of determining whether there exists on the
Leased Premises any Environmental Violation or any condition which could result
in any Environmental Violation. Such Site Assessments may include both above and
below the ground testing for Environmental Violations and such other tests as
may be necessary, in the opinion of the Site Reviewers, to conduct the Site
Assessments. Tenant shall supply to the Site Reviewers such historical and
operational information regarding the Leased Premises as may be reasonably
requested by the Site Reviewers to facilitate the Site Assessments, and shall
make available for meetings with the Site Reviewers appropriate personnel having
knowledge of such matters. The Cost of any Site Assessment conducted at the
request of Landlord, including any out-of-pocket costs incurred by Tenant, shall
be paid by Landlord unless the Site Reviewers confirm the existence of a
previously undisclosed Environmental Violation, in which case the Cost shall be
paid by Tenant. Landlord shall not have the right to conduct a Site Assessment
more than one time every three years during the Term except that such limitation
shall not apply to any Site Assessment conducted in connection with a financing,
refinancing or sale of the Leased Premises or if Landlord has reasonable cause
to believe that an Environmental Violation exists in violation of Law or if
Landlord is required to conduct a Site Assessment by any governmental agency or
in order to monitor an existing Environmental Violation. Provided that no
Monetary Event of Default shall have occurred and be continuing, Tenant shall
have the right to consent to the selection of the Site Reviewers, which consent
shall not be unreasonably withheld or delayed. If a Monetary Event of Default
exists, Tenant shall not have any right to consent to the selection of the Site
Reviewers so long as the Site Reviewers shall be a nationally recognized firm of
licensed engineers with an office in San Diego County, experienced in handling
environmental matters in such county and who specialize in (i) conducting
environmental site assessments to determine whether specific properties are in
compliance with Environmental Laws and (ii) formulating, implementing and
managing the remediation of the discharge or release of Hazardous Substances.

               (d)    If an Environmental Violation occurs or is found to exist
and, in Landlord's reasonable judgment, the cost of remediation of the same is
likely to exceed $500,000, Tenant shall provide to Landlord, within ten (10)
days after Landlord's request therefor, reasonable financial assurances that
Tenant will effect such remediation in accordance with applicable Environmental
Laws. Such financial assurances shall not exceed the financial assurances that
would be required by an applicable Governmental agency.

               (e)    Notwithstanding any other provision of this Lease, if an
Environmental Violation occurs or is found to exist and the Term would otherwise
terminate or expire, then, at the option of Landlord, the Term shall be
automatically extended beyond the date of termination or expiration and this
Lease shall remain in full force and effect beyond such date until the earlier
to occur of (i) the completion of all remedial action in accordance with
applicable Environmental Laws or (ii) the date specified in a written notice
from Landlord to Tenant terminating this Lease.

                                       17
<PAGE>   37

               (f)    Tenant shall notify Landlord immediately after becoming
aware of any Environmental Violation (or receipt of formal notice of any alleged
Environmental Violation) or noncompliance with any of the covenants contained in
this Paragraph 10 and shall forward to Landlord immediately upon receipt thereof
copies of all orders, reports, notices, permits, applications or other
communications relating to any such violation or noncompliance.

               (g)    All future leases, subleases or concession agreements
relating to the Leased Premises entered into by Tenant shall require the other
Person thereto to comply with all Environmental Laws with respect to its use and
occupancy of the Leased Premises.

               (h)    [INTENTIONALLY OMITTED]

               (i)    Tenant agrees that, no later than January 31, 1994, Tenant
(1) shall seal all cracks on the floor of the storage room (Room 82) of the
underground parking garage of the Structure known as 9360 Towne Centre Drive
with silicon caulking or similar material to prevent further seepage of radon
gas and (2) shall provide to Landlord and Initial Lender satisfactory
documentation of such remediation.

        11.    Liens; Recording.

               (a)    Tenant shall not, directly or indirectly, create or permit
to be created or to remain and shall promptly discharge or remove any lien, levy
or encumbrance on any of the Leased Premises or on any Rent or any other sums
payable by Tenant under this Lease, other than any Mortgage or Assignment by
Landlord, the Permitted Encumbrances and any mortgage, lien, encumbrance or
other charge created by or resulting solely from any act or omission of
Landlord. NOTICE IS HEREBY GIVEN THAT LANDLORD SHALL NOT BE LIABLE FOR ANY
LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO TENANT OR TO ANYONE
HOLDING OR OCCUPYING ANY OF THE LEASED PREMISES THROUGH OR UNDER TENANT, AND
THAT NO MECHANICS' OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS
SHALL ATTACH TO OR AFFECT THE INTEREST OF LANDLORD IN AND TO ANY OF THE LEASED
PREMISES. LANDLORD MAY AT ANY TIME, AND AT LANDLORD'S REQUEST TENANT SHALL.
PROMPTLY, POST ANY NOTICES ON THE LEASED PREMISES REGARDING SUCH NON-LIABILITY
OF LANDLORD.

               (b)    Landlord and Tenant shall execute, deliver and record,
file or register (collectively, "record") all such instruments as may be
required or permitted by any present or future Law in order to evidence the
respective interests of Landlord and Tenant in the Leased Premises, and Tenant
shall cause a memorandum of this Lease (or, if such a memorandum cannot be
recorded, this Lease), and any supplement hereto or thereto, to be recorded in
such manner and in such places as may be required or permitted by any present or
future Law in order to protect the validity and priority of this Lease.

        12.    Maintenance and Repair.

               (a)    Except for ordinary wear and tear, Tenant shall at all
times maintain the Leased Premises and the Adjoining Property in as good repair
and appearance as they are in on the Occupancy Date and fit to be used for their
intended use in accordance with the practices

                                       18
<PAGE>   38

generally recognized as then acceptable by other companies engaged in similar
industries in San Diego, California, and, in the case of the Building Systems
Equipment, in as good mechanical condition as it was on the later of the
Occupancy Date or the date of its installation, except for ordinary wear and
tear. Tenant shall take such actions as may be reasonably necessary or
appropriate for the preservation and safety of the Leased Premises. Tenant shall
promptly make all Alterations of every kind and nature, whether foreseen or
unforeseen, which may be required to comply with the foregoing requirements of
this Paragraph 12(a). Landlord shall not be required to make any Alteration,
whether foreseen or unforeseen, or to maintain any of the Leased Premises or
Adjoining Property in any way, and Tenant hereby expressly waives any right
which may be provided for in any Law now or hereafter in effect to make
Alterations at the expense of Landlord or to require Landlord to make
Alterations. Any Alteration made by Tenant pursuant to this Paragraph 12 shall
be made in conformity with the provisions of Paragraph 13.

               (b)    Except for Permitted Encroachments, if any Improvement,
now or hereafter constructed, shall (i) encroach upon any setback or any
property, street or right-of-way adjoining the Leased Premises, (ii) violate the
provisions of any restrictive covenant affecting the Leased Premises, (iii)
hinder or obstruct any easement or right-of-way to which any of the Leased
Premises is subject or (iv) impair the rights of others in, to or under any of
the foregoing, Tenant shall, promptly after receiving notice or otherwise
acquiring knowledge thereof, either (A) obtain from all necessary parties
waivers or settlements of all claims, liabilities and damages resulting from
each such encroachment, violation, hindrance, obstruction or impairment, whether
the same shall affect Landlord, Tenant or both, or (B) take such action as shall
be necessary to remove all such encroachments, hindrances or obstructions and to
end all such violations or impairments, including, if necessary, making
Alterations.

        13.    Alterations and Improvements.

               (a)    In addition to Alterations required by Paragraphs 12 and
17 Tenant shall have the right, without having to obtain the prior written
consent of Landlord and Lender, to (i) make any Alterations to the Structures
for a cost of not more than [INTENTIONALLY OMITTED] in any one instance, or (ii)
install Building Systems Equipment in the Structures or accessions to the
Building Systems Equipment the cost of which as to such Building Systems
Equipment or series of related Building Systems Equipment, does not exceed
[INTENTIONALLY OMITTED]. The consent of Landlord and Lender shall be required
(A) if a Monetary Event of Default exists, or (B) if the Alterations (or a
series of related Alterations) exceeds [INTENTIONALLY OMITTED], or (C) if Tenant
desires to remove and not upgrade or replace during the Term any Tenant
Improvements which had an initial cost in the aggregate in excess of
[INTENTIONALLY OMITTED], or (D) if Tenant desires to construct upon the Land any
additional Improvements, provided that, with respect to (C) and (D) above, such
consent shall not be unreasonably withheld or delayed. In any event, the consent
of Landlord and Lender will not be withheld on the basis of the type of
Alterations (i.e., laboratory or office space) to be constructed.

               (b)    If Tenant makes any Alterations pursuant to this Paragraph
13 or Paragraph 36 or as required by Paragraph 12 or 17 (such Alterations and
actions being hereinafter collectively referred to as "Work"), whether or not
Landlord's consent is required, then (i) all such Work shall be performed by
Tenant in a good and workmanlike manner; (ii) all

                                       19
<PAGE>   39

such Work shall be expeditiously completed in compliance with all Legal
Requirements; (iii) all such Work shall comply with the Insurance Requirements;
(iv) if any such Work involves the replacement of Building Systems Equipment
because of additions or changes to the Structures (as opposed to repairs or
replacements of Building Systems Equipment as part of an on-going maintenance
program), all replacements of Building Systems Equipment shall have a value and
useful life equal to the greater of (A) the value and useful life on the date
hereof of the Building Systems Equipment being replaced, or (B) the value and
useful life on the Occupancy Date of the Building Systems Equipment being
replaced, or (C) the value and useful life of the Building Systems Equipment
being replaced immediately prior to the occurrence of the event which required
its replacement; (v) if any such Work involves the replacement of Building
Systems Equipment or parts thereto in connection with an on-going maintenance
program, reconditioned equipment and parts may be used and upon completion the
Building Systems Equipment need not have a value and useful life greater than
the value and useful life of the Building Systems Equipment or parts being
replaced immediately prior to the occurrence of the event which requires its
replacement; (vi) Tenant shall promptly discharge or remove all liens filed
against any of the Leased Premises arising out of such Work; (vii) Tenant shall
procure and pay for all permits and licenses required in connection with any
such Work; (viii) all such Work shall be subject to this Lease; and (ix) Tenant
shall comply, to the extent requested by Landlord or required by this Lease,
with the provisions of Paragraph 19(a), whether or not such Work involves
restoration of the Leased Premises.

               (c)    If, after the Occupancy Date, Tenant makes any Alterations
to existing Tenant's Equipment or installs any additional Tenant's Equipment in
the Structures, Tenant shall retain title to such Alterations and additional
Tenant's Equipment ("Tenant Alterations") (except for replacements of, or
repairs to, or substitutions for, the Structures and Building Systems Equipment)
and shall have the right to remove the same upon the expiration or earlier
termination of this Lease, provided that (1) such removal will not cause
material damage to the Leased Premises, and (2) Tenant promptly repairs any
damage caused by such removal. Title to any Alterations which are not Tenant
Alterations shall vest in Landlord, and Tenant shall not be entitled to remove
the same upon the expiration or earlier termination of this Lease.

        14.    Permitted Contests.

               (a)    Notwithstanding any other provision of this Lease, Tenant
shall not be required to (a) pay any Imposition, (b) comply with any Legal
Requirement, (c) discharge or remove any lien referred to any Paragraph of this
Lease except Paragraph 21 or (d) take any action with respect to any
encroachment, violation, hindrance, obstruction or impairment referred to in
Paragraph 12(b) (such non-compliance with the terms hereof being hereinafter
referred to collectively as "Permitted Violations"), so long as at the time of
such contest no Monetary Event of Default or Covenant Event of Default exists
and so long as Tenant shall contest, in good faith, the existence, amount or
validity thereof, the amount of the damages caused thereby, or the extent of its
or Landlord's liability therefor by appropriate proceedings which shall operate
during the pendency thereof to prevent or stay (i) the collection of, or other
realization upon, the Permitted Violation so contested, (ii) the sale,
forfeiture or loss of any of the Leased Premises or any Rent to satisfy or to
pay any damages caused by any Permitted Violation, (iii) any interference with
the use or occupancy of any of the Leased Premises, (iv) any interference with
the payment of any Rent, (v) the cancellation or increase in the rate of any
insurance policy or a

                                       20
<PAGE>   40

statement by the carrier that coverage will be denied or (vi) the enforcement or
execution of any injunction, order or Legal Requirement with respect to the
Permitted Violation.

               (b)    Tenant shall provide Landlord security which is
satisfactory, in Landlord's reasonable judgment, to assure that such Permitted
Violation is corrected, including all Costs, interest and penalties that may be
incurred or become due in connection therewith. If such security is in the form
of a cash deposit, interest thereon shall accrue for the benefit of Tenant, and
Landlord shall not commingle any such cash security provided by Tenant with
other funds of Landlord. While any proceedings which comply with the
requirements of this Paragraph 14 are pending and the required security is held
by Landlord, Landlord shall not have the right to correct any Permitted
Violation thereby being contested unless Landlord is required by law to correct
such Permitted Violation and Tenant's contest does not prevent or stay such
requirement as to Landlord. Each such contest shall be promptly and diligently
prosecuted by Tenant to a final conclusion, except that Tenant, so long as the
conditions of this Paragraph 14 are at all times complied with, shall have the
right to attempt to settle or compromise such contest through negotiations.
Tenant shall pay any and all losses, judgments, decrees and Costs in connection
with any such contest and shall, promptly after the final determination of such
contest, fully pay and discharge the amounts which shall be levied, assessed,
charged or imposed or be determined to be payable therein or in connection
therewith, together with all penalties, fines, interest and Costs thereof or in
connection therewith, and perform all acts the performance of which shall be
ordered or decreed as a result thereof.

               (c)    Notwithstanding the foregoing, no provision of this Lease
shall allow the Tenant to continue any contest or other activity which shall
subject Landlord to any risk of criminal liability.

        15.    Indemnification.

               (a)    Tenant shall pay, protect, indemnify, save and hold
harmless Landlord, Lender and all other Persons described in Paragraph 30 (each
an "Indemnitee") from and against any and all liabilities, losses, damages
(including punitive damages), penalties, Costs, causes of action, suits, claims,
demands or judgments of any nature whatsoever, howsoever caused (unless and to
the extent caused by such Indemnitee's gross negligence or willful misconduct),
without regard to the form of action and whether based on strict liability,
gross negligence, negligence or any other theory of recovery at law or in
equity, arising from (i) any matter pertaining to the acquisition (or the
negotiations leading thereto), ownership, use, non-use, occupancy, operation,
condition, design, construction, maintenance, repair or restoration of the
Leased Premises or Adjoining Property, (ii) any casualty in any manner arising
from the Leased Premises or Adjoining Property, whether or not Landlord has or
should have knowledge or notice of any defect or condition causing or
contributing to said casualty, (iii) any violation by Tenant of any provision of
this Lease, any contract or agreement to which Tenant is a party, any Legal
Requirement or any Permitted Encumbrance, (iv) any alleged, threatened or actual
Environmental Violation, including (A) liability for response costs and for
costs of removal and remedial action incurred by the United States Government,
any state or local governmental unit or any other Person, or damages from injury
to or destruction or loss of natural resources, including the reasonable costs
of assessing such injury, destruction or loss, incurred pursuant to Section 107
of CERCLA, or any successor section or act or provision of any similar state or
local

                                       21
<PAGE>   41

Law, (B) liability for costs and expenses of abatement, correction or clean-up,
fines, damages, response costs or penalties which arise from the provisions of
any of the other Environmental Laws and (C) liability for personal injury or
property damage arising under any statutory or common-law tort theory, including
damages assessed for the maintenance of a public or private nuisance or for
carrying on of a dangerous activity or (v) any claim against an Indemnitee under
that certain Indemnity Agreement of even date executed by Landlord and other
Persons in favor of Initial Lender.

               (b)    In case any action or proceeding is brought against any
Indemnitee by reason of any such claim, such Indemnitee shall promptly notify
Tenant in writing of any such action or proceeding. If an Indemnitee fails to
give Tenant prompt notice of any such claim and Tenant is prejudiced as a result
of Indemnitee's delay, Tenant shall not be obligated to indemnify Indemnitee to
the extent Tenant is thereby prejudiced. Upon receipt of notice from any
Indemnitee, Tenant shall, subject to the preceding sentence, resist or defend
such action or proceeding by retaining counsel reasonably satisfactory to such
Indemnitee, and such Indemnitee will cooperate and assist in the defense of such
action or proceeding if reasonably requested so to do by Tenant. Any Indemnitee
may retain separate counsel to represent Indemnitee, but only at such
Indemnitee's sole cost and expense.

               (c)    The obligations of Tenant under this Paragraph 15 shall
survive any termination or expiration of this Lease.

        16.    Insurance.

               (a)    Tenant shall maintain the following insurance on or in
connection with the Leased Premises:

                      (i)    Insurance against physical loss or damage to the
        Improvements as provided under a standard "All Risk" property policy
        including but not limited to flood (if the Leased Premises are in a
        flood zone) and earthquake coverage. The amount of coverage shall not be
        less than the actual replacement cost of the Improvements, except for
        the Flood and Earthquake insurance which shall be provided with limits
        of $5,000,000 and $10,000,000 respectively. Such policies shall contain
        deductibles of not more than $100,000, except for Flood and Earthquake
        Insurance which shall have the customary deductibles reasonably
        available for such properties.

                      (ii)   Commercial General Liability Insurance against
        claims for personal and bodily injury, death or property damage
        occurring on, in or as a result of the use of the Leased Premises, in an
        amount not less than $10,000,000 per occurrence/annual aggregate,
        including but not limited to Garagekeepers Liability, Host Liquor
        Liability, and all other coverage extensions that are usual and
        customary for properties of this size and type.

                      (iii)  Worker's Compensation Insurance covering all of the
        Tenant's employees for claims for death, disease or bodily injury that
        may be asserted against Tenant. In lieu of such Worker's Compensation
        Insurance, a program of self-insurance

                                       22
<PAGE>   42

        complying with the rules, regulations and requirements of the
        appropriate agency of the State.

                      (iv)   Comprehensive Boiler and Machinery Insurance
        including but not limited to Service Interruption, Expediting Expenses,
        Ammonia Contamination in an amount not less than $5,000,000 for damage
        to property resulting from such covered perils as found in a standard
        Comprehensive Boiler and Machinery Policy. Such policies may contain a
        deductible not in excess of $100,000.

                      (v)    Business Income/Interruption Insurance to include
        Loss of Rents on an Actual Loss Sustained basis with a period of
        indemnity not less than one year from the time of loss. Such insurance
        shall name Landlord and Lender as "loss payee" solely with respect to
        Rent payable to or for the benefit of Landlord under this Lease.

                      (vi)   During construction of the Tenant Improvements and
        during any period in which substantial Alterations at the Leased
        Premises are being undertaken, (A) Builder's Risk Insurance covering the
        total completed value including any "soft costs" with respect to the
        Improvements being altered or repaired (on a completed value,
        non-reporting basis), replacement cost of work performed and equipment,
        supplies and materials furnished in connection with such construction or
        repair of Improvements and (B) General Liability, Worker's Compensation
        and Automobile Liability Insurance with respect to the Improvements
        being constructed, altered or repaired.

                      (vii)  Such other insurance (or other terms with respect
        to any insurance required pursuant to this Paragraph 16, including
        without limitation amounts of coverage, deductibles, form of mortgagee
        clause) on or in connection with any of the Leased Premises as Landlord
        or Lender may reasonably require, which at the time is usual and
        commonly obtained in connection with properties located in the Greater
        San Diego area and similar in type of building size and use to the
        Leased Premises.

               (b)    The insurance required by Paragraph 16(a) shall be written
by companies which have a Best's rating of A:X or above and are approved to
write insurance policies by the State Insurance Department of California. The
insurance policies (i) shall be in amounts sufficient at all times to satisfy
any coinsurance requirements thereof and (ii) shall (except for the worker's
compensation insurance referred to in Paragraph 16(a)(iii) hereof) name
Landlord, Tenant and Lender as insured parties, as their respective interests
may appear. If said insurance or any part thereof shall expire, be withdrawn,
become void for any reason whatsoever, Tenant shall immediately obtain new or
additional insurance to comply with the requirements of this Lease.

               (c)    All proceeds of any insurance required under clauses (i),
(ii) (except proceeds payable to a Person other than Tenant, Landlord or
Lender), (iv) and (v) of Paragraph 16(a) shall be payable to Landlord and Tenant
as their respective interests may appear or, if required by the Mortgage, to
Lender and with respect to proceeds of insurance described in Paragraph (a)(v)
paid to Landlord. Tenant shall receive a credit against installments of Equity
Rent to the extent such proceeds are received by Landlord and Debt Rent received
by Lender on behalf of Landlord. Each insurance policy referred to in clauses
(i), (iv), (v) and (vi) of

                                       23
<PAGE>   43

Paragraph 16(a) shall contain standard non-contributory mortgagee clauses in
favor of and acceptable to Lender. Each policy required by any provision of
Paragraph 16(a), except clause (iii) thereof, shall provide that it may not be
canceled except after thirty (30) days' prior notice to Landlord and Lender.
Each such policy shall also provide that any loss otherwise payable thereunder
shall be payable notwithstanding (i) any act or omission of the Landlord or
Tenant which might, absent such provision, result in a forfeiture of all or a
part of such insurance payment, (ii) the occupation or use of any of the Leased
Premises for purposes more hazardous than those permitted by the provisions of
such policy, (iii) any foreclosure or other action or proceeding taken by Lender
pursuant to any provision of the Mortgage, Note, Assignment by Landlord or other
document evidencing or securing the Loan upon the happening of an event of
default therein or (iv) any change in title to or ownership of any of the Leased
Premises.

               (d)    Tenant shall pay as they become due all premiums for the
insurance required by Paragraph 16(a), shall renew or replace each policy and
deliver to Landlord and Lender evidence of the payment of the full premium
therefor or installment then due at least thirty (30) days prior to the
expiration date of such policy, and Tenant shall deliver evidence of insurance
acceptable to Landlord and Lender or, if requested by Landlord or Lender,
certified copies of all policies required within thirty (30) days prior to the
expiration date of such policy.

               (e)    Anything in this Paragraph 16 to the contrary
notwithstanding, any insurance which Tenant is required to obtain pursuant to
Paragraph 16(a) may be carried under a "blanket" or umbrella policy or policies
covering other properties or liabilities of Tenant. The amount of the total
insurance allocated to the Leased Premises, which amount shall be not less than
the amounts required pursuant to this Paragraph 16, shall be specified either
(i) in each such "blanket" or umbrella policy or (ii) in a written statement,
which Tenant shall deliver to Landlord, from the insurer thereunder.

               (f)    Tenant shall promptly comply with and conform to (i) all
provisions of each insurance policy required by this Paragraph 16 and (ii) all
requirements of the insurers thereunder applicable to any of the Leased Premises
or to the use, manner of use, occupancy, possession, operation, maintenance,
alteration or repair of any of the Leased Premises, even if such compliance
necessitates Alterations or results in interference with the use or enjoyment of
any of the Leased Premises.

               (g)    Tenant shall not carry separate insurance concurrent in
form or contributing in the event of a Casualty with that required in this
Paragraph 16 unless (i) Landlord and Lender are included therein as named
insureds, with loss payable as provided herein, and (ii) such separate insurance
complies with the other provisions of this Paragraph 16. Tenant shall
immediately notify Landlord of such separate insurance. However, Tenant is
permitted to carry insurance limits in excess of the amounts required by
Paragraph 16 for Tenant's own protection and Tenant is not required to include
Landlord and Lender as named insureds as respects these excess insurances.

               (h)    All policies except for Worker's Compensation Insurance
shall contain effective waivers by the carrier against all claims for insurance
premiums against Landlord and shall contain full waivers of subrogation against
the Landlord. With regard to Worker's

                                       24
<PAGE>   44

Compensation Insurance, a waiver of subrogation will be provided to the extent
reasonably commercially available.

        17.    Casualty and Condemnation.

               (a)    Subject to Paragraph 17(b) and the immediately following
sentence, Landlord and/or Lender shall be entitled to adjust, collect and
compromise insurance claims which relate to any Casualty involving property
damage to the Leased Premises. Notwithstanding anything in this Lease to the
contrary, Tenant shall be entitled to adjust, collect and compromise all
insurance claims which relate to: (i) the Business Income/Interruption Insurance
provided for in Paragraph 16(a)(v), subject, however, to Landlord's rights to
Rent; (ii) Tenant's Equipment; and (iii) any other insurance claim not involving
property damage to the Leased Premises.

               (b)    If any Casualty in excess of Fifty Thousand Dollars
($50,000) occurs, Tenant shall give Landlord and Lender immediate notice
thereof. Except as specifically provided for in the following sentence, Landlord
and Lender are hereby authorized to adjust, collect and compromise, in their
discretion and upon notice to Tenant (except that no notice to Tenant shall be
required if a Monetary Event of Default has occurred and is continuing), all
claims relating to any Casualty and to execute and deliver on behalf of Tenant
all necessary proofs of loss, receipts, vouchers and releases required by the
insurers. Provided that no Monetary Event of Default has occurred and is
continuing, Tenant shall be entitled to adjust, collect and compromise any Net
Award that is less than Fifty Thousand Dollars ($50,000) without any notice to
or consent of Landlord or Lender and shall be entitled to participate with
Landlord and Lender in any adjustment, collection and compromise of the Net
Award payable in connection with a Casualty that is reasonably estimated by
Landlord and Lender to be more than Fifty Thousand Dollars ($50,000). Tenant
agrees to sign, upon the request of Landlord or Lender, all such proofs of loss,
receipts, vouchers and releases. If Landlord or Lender so requests, Tenant shall
adjust, collect and compromise any and all such claims equal to or in excess of
Fifty Thousand Dollars ($50,000), and Landlord and Lender shall have the right
to join with Tenant therein. Any adjustment, settlement or compromise of any
such claim equal to or in excess of Fifty Thousand Dollars ($50,000) shall be
subject to the prior written approval of Landlord and Lender, and Landlord and
Lender shall have the right to prosecute or contest, or to require Tenant to
prosecute or contest, any such claim, adjustment, settlement or compromise. Each
insurer is hereby authorized and directed to make payment under said policies in
excess of Fifty Thousand Dollars ($50,000), directly to Landlord or, if required
by the Mortgage, to Lender instead of to Landlord and Tenant jointly. Tenant
hereby appoints each of Landlord and Lender as Tenant's attorneys-in-fact to
endorse any draft for payments to be made to Landlord and/or Lender. Any payment
of a Net Award of Fifty Thousand Dollars ($50,000) or less shall be paid
directly to Tenant by the insurance company.

               (c)    Tenant, immediately upon receiving a Condemnation Notice,
shall notify Landlord and Lender thereof. If Landlord receives a Condemnation
Notice, Landlord shall give Tenant and Lender prompt notice thereof. Except as
specifically provided in the following sentence, Landlord and Lender are
authorized to collect, settle and compromise, in their discretion (and, if no
Monetary Event of Default exists, upon notice to Tenant), the amount of any Net
Award. Provided that no Monetary Event of Default has occurred and is
continuing,

                                       25
<PAGE>   45

Tenant shall be entitled to participate with Landlord and Lender in any
Condemnation proceeding or negotiations under threat thereof and to contest the
Condemnation or the amount of the Net Award therefor. No agreement with any
condemnor in settlement or under threat of any Condemnation shall be made by
Tenant without the written consent of Landlord and Lender. Subject to the
provisions of this Paragraph 17(c), Tenant hereby irrevocably assigns to
Landlord any award or payment to which Tenant is or may be entitled by reason of
any Condemnation, whether the same shall be paid or payable for Tenant's
leasehold interest hereunder or otherwise. Nothing in this Lease shall, however,
impair Tenant's right to any award or payment on account of Tenant's Equipment,
moving expenses or loss of business, if available, to the extent that and so
long as (i) Tenant shall have the right to make, and does make, a separate claim
therefor against the condemnor and (ii) such claim does not in any way reduce
either the amount of the award otherwise payable to Landlord for the
Condemnation of Landlord's fee interest in the Leased Premises or the amount of
the award (if any) otherwise payable for the Condemnation of Tenant's leasehold
interest hereunder.

               (d)    If any Partial Casualty (whether or not insured against)
or Partial Condemnation shall occur, this Lease shall continue, notwithstanding
such event, and there shall be no abatement or reduction of any Monetary
Obligations, except as provided in Paragraph 17(e) and 19(c). Promptly after
such Partial Casualty or Partial Condemnation, Tenant, as required in Paragraph
12(a), shall commence and diligently continue to restore the Leased Premises as
nearly as possible to their value, condition and character immediately prior to
such event. Any Net Award of such Partial Casualty or Partial Condemnation
payable to Landlord or Lender shall be made available to Tenant for restoration
as promptly as practicable in accordance with and subject to the provisions of
Paragraph 19(a). If any Casualty or Condemnation which constitutes an Early
Termination Event shall occur, Tenant shall comply with the terms and conditions
of Paragraph 18.

               (e)    In the event of a Requisition of any of the Leased
Premises the Net Award payable by reason of such Requisition shall, at the
election of Landlord, either be (i) retained by Landlord and credited against
installments of Basic Rent for the period of such Requisition as the same shall
become due and payable or (ii) paid to Tenant on a monthly basis in an amount
equal to the installment of Basic Rent then due and payable until such Net Award
has been applied in full or until the Term has expired, whichever first occurs.
Any portion of such Net Award which is allocable to any period after the
expiration of the Term shall be retained by Landlord.

        18.    Early Termination Events.

               (a)    If (i) the Leased Premises shall be taken in its entirety
by a Taking or (ii) all or a substantial portion of the Leased Premises shall be
damaged or destroyed by a Casualty or any substantial portion of the Leased
Premises shall be taken by a Taking and, in the case of (i) above, Tenant
certifies and covenants to Landlord that it will abandon its operations at the
Leased Premises for three (3) years following the date of the Taking or Casualty
(except that no such certification and covenant shall be required if Tenant
notifies Landlord that it is electing to make an offer to terminate this Lease
for an Early Termination Amount equal to [INTENTIONALLY OMITTED]), as the case
may be (each of the events described in the above clauses (i) and (ii) shall
hereinafter be referred to as an "Early Termination Event"), then (x) in the
case of (i) above, Tenant shall be obligated, within thirty (30) days after
Tenant receives a

                                       26
<PAGE>   46

Condemnation Notice and (y) in the case of (ii) above, Tenant shall have the
option, within thirty (30) days after Tenant receives a Condemnation Notice or
thirty (30) days after the Casualty, as the case may be, to give to Landlord
written notice of the Tenant's offer to terminate this Lease (an "Early
Termination Notice") in the form described in Paragraph 18(b). Notwithstanding
anything in this Lease to the contrary, the provisions of this Paragraph 18(a)
shall not be applicable if the Net Award received by Landlord is equal to or
greater than [INTENTIONALLY OMITTED], it being agreed that Tenant shall have the
right to provide funds in such amount as may be necessary to make the actual
amount of the Net Award received by Landlord as a result of the Casualty or
Taking equal to [INTENTIONALLY OMITTED].

               (b)    An Early Termination Notice shall contain (i) notice of
Tenant's intention to terminate this Lease on the first Basic Rent Payment Date
(the "Early Termination Date") which occurs at least sixty (60) days after the
date of receipt ("Notice Receipt Date") by Landlord of the Early Termination
Notice, (ii) a binding and irrevocable offer of Tenant to pay the Early
Termination Amount and (iii) if the Early Termination Event is an event
described, in Paragraph 18(a)(ii), the certification and covenants described in
the foregoing Paragraph 18(a) and a certified resolution of the Board of
Directors of Tenant authorizing the same (unless Tenant elects to pay an Early
Termination Amount equal to [INTENTIONALLY OMITTED].

               (c)    If Landlord shall reject such offer to terminate this
Lease by written notice to Tenant (a "Rejection"), which Rejection shall contain
the written consent of Lender, not later than forty-five (45) days following the
Notice Receipt Date, then this Lease shall terminate as of the Early Termination
Date; provided, however, that, if Tenant has not satisfied all Monetary
Obligations and all other obligations and liabilities under this Lease which
have arisen on or prior to the Early Termination Date (collectively, "Remaining
Obligations") on the Early Termination Date, then Landlord may, at its option,
extend the date on which this Lease may terminate to a date which is no later
than the first Basic Rent Payment Date after the Early Termination Date on which
Tenant has satisfied all Remaining Obligations. Upon such termination (i) all
obligations of Tenant hereunder shall terminate except for any Surviving
Obligations, (ii) Tenant shall immediately vacate and shall have no further
right, title or interest in or to any of the Leased Premises and (iii) the Net
Award shall be retained by Landlord. Notwithstanding anything to the contrary
hereinabove contained, if Tenant shall have received a Rejection and, on the
date when this Lease would otherwise terminate as provided above, Landlord shall
not have received the full amount of the Net Award payable by reason of the
applicable Early Termination Event due to any action by Tenant, then the date on
which this Lease is to terminate automatically shall be extended to the first
Basic Rent Payment Date after the receipt by Landlord of the full amount of the
Net Award; provided, however, that, if Tenant has not satisfied all Remaining
Obligations on such date, then Landlord may, at its option, extend the date on
which this Lease may terminate to a date which is no later than the first Basic
Rent Payment Date after such date on which Tenant has satisfied all such
Remaining Obligations.

               (d)    Unless Tenant shall have received a Rejection not later
than the forty-fifth (45th) day following the Notice Receipt Date, Landlord
shall be conclusively presumed to have accepted such offer. If such offer is
accepted by Landlord then, on the Early Termination Date, Tenant shall pay to
Landlord the Early Termination Amount and all Remaining Obligations and, if
requested by Tenant, Landlord and Lender shall (i) convey to Tenant the Leased
Premises or

                                       27
<PAGE>   47

the remaining portion thereof, if any, and (ii) pay to or assign to Tenant their
entire interest in and to the Net Award, all in accordance with Paragraph 20.

        19.    Restoration; Reduction of Rent.

               (a)    The Net Award shall be made available by Landlord for the
restoration of the Leased Premises, and, if the Net Award is less than
[INTENTIONALLY OMITTED] and at the date of payment no Monetary Event of Default
exists, the Net Award shall be paid directly to Tenant in which event Tenant
shall comply with the provisions of Paragraph 13(b) and Paragraph 19(a)(iii) in
connection with such restoration. If the Net Award is [INTENTIONALLY OMITTED] or
more, Landlord (or Lender if required by any Mortgage) shall hold such Net Award
in a fund (the "Restoration Fund") and disburse amounts from the Restoration
Fund only in accordance with the following conditions:

                      (i)    prior to commencement of restoration, the
        architects, contracts, contractors, plans and specifications for the
        restoration shall have been reasonably approved by Landlord and Lender
        if the cost of restoration exceeds [INTENTIONALLY OMITTED] as soon as
        reasonably practical;

                      (ii)   at the time of any disbursement, no Event of
        Default shall exist and no mechanics' or materialmen's liens shall have
        been filed against any of the Leased Premises and remain undischarged;

                      (iii)  disbursements shall be made from time to time in an
        amount not exceeding the cost of the work completed since the last
        disbursement, upon receipt of (A) satisfactory evidence, including
        architects' certificates, of the stage of completion, the estimated
        total cost of completion and performance of the work to date in a good
        and workmanlike manner in accordance with the contracts, plans and
        specifications, (B) waivers of mechanics liens, (C) contractors' and
        subcontractors' sworn statements as to completed work and the cost
        thereof for which payment is requested, (D) other evidence of cost and
        payment so that Landlord can verify that the amounts disbursed from time
        to time are represented by work that is completed, in place and free and
        clear of mechanics' and materialmen's lien claims and (E) an endorsement
        to Landlord's and Lender's title insurance policies insuring against any
        liens arising from the restoration; (iv) each request for disbursement
        shall be accompanied by a certificate of Tenant, signed by the president
        or a vice president of Tenant, describing the work for which payment is
        requested, stating the cost incurred in connection therewith, stating
        that Tenant has not previously received payment for such work and, upon
        completion of the work, also stating that the work has been fully
        completed and complies with the applicable requirements of this Lease;
        (v) the Restoration Fund shall be held in a separate account and
        invested in any of the following investments and for such maturities as
        Landlord and Tenant shall agree-obligations of the United States, its
        agencies, or United States Government sponsored enterprises or
        obligations, the principal of and interest on which are Guaranteed by
        the United States or its agencies or obligations of a state, a
        territory, or a possession of the United States, or any political
        subdivision of any of the foregoing or of the District of Columbia,
        which investment shall be Graded in the highest three (3) major Grades
        as determined by at least one (1) national rating service, or banker's

                                       28
<PAGE>   48

        acceptances, commercial accounts, certificates of deposit, or depository
        receipts issued by a bank, trust company, savings and loan association,
        savings bank, credit union or other financial institution whose deposits
        are, as appropriate, insured by the Federal Deposit Insurance
        Corporation or the National Credit Union Administration or any successor
        entity, which investment shall be rated at the time of purchase within
        the two (2) highest classifications established by at least one (1)
        national rating service, and which matures within one hundred eighty
        (180) days; and (vi) such other reasonable conditions as Landlord or
        Lender may impose.

               (b)    Prior to commencement of restoration and at any time
during restoration, if the estimated cost of completing the restoration work
free and clear of all liens, as determined by Landlord, exceeds the amount of
the Net Award available for such restoration, the Tenant shall provide to
Landlord and Lender assurances reasonably satisfactory to Landlord and Lender of
the availability of funds necessary to complete such restoration work. Any sums
deposited by Tenant in the Restoration Fund which remain in the Restoration Fund
upon completion of restoration shall be refunded to Tenant. For purposes of
determining the source of funds with respect to the disposition of funds
remaining after the completion of restoration, the Net Award shall be deemed to
be disbursed prior to any amount added by Tenant.

               (c)    If any sum remains in the Restoration Fund after
completion of the restoration and any refund to Tenant pursuant to Paragraph
19(b), such sum (the "Remaining Sum") shall be retained by Landlord or, if
required by a Note or Mortgage, paid by Landlord to a Lender. If the Remaining
Sum is (i) retained by Landlord, that portion of each installment of Basic Rent
payable on or after the Retention Date shall be reduced by the amount, if any,
of the Remaining Sum not required to be paid to Lender, or (ii) paid to Lender,
then each installment of Basic Rent thereafter payable shall be reduced in the
same amount as payments are reduced under any Note if the Loan corresponding to
such Note is reamortized to reflect such payment, in each case until such
Remaining Sum has been applied in full or until the Term has expired, whichever
occurs first. Upon the expiration of the Term, any portion of the Remaining Sum
which has not been so applied shall be retained by Landlord.

        20.    Procedures Upon Purchase by Tenant. [INTENTIONALLY OMITTED].

        21.    Assignment and Subletting; Prohibition against Leasehold
Financing.

               (a)    Tenant shall have the right, upon thirty (30) days prior
written notice to Landlord, with no consent of Landlord whatsoever being
required or necessary ("Preapproved Assignment") to assign this Lease in any of
the circumstances set forth in subparagraphs (i) and (ii) below;

                      (i)    to any Person ("Preapproved Assignee") (whether by
        operation of law or in connection with the transfer or sale of all or
        substantially all of Tenant's business or the merger or consolidation of
        Tenant or similar transaction) which, immediately following such
        assignment has a publicly traded unsecured senior debt rating of "Baa2"
        or better from Moody's Investors Services, Inc. or a rating of "BBB" or
        better from Standard & Poor's Corporation, and in the event all of such
        rating agencies

                                       29
<PAGE>   49

        cease to furnish such ratings, then a comparable rating by any rating
        agency reasonably acceptable to Landlord and Lender; or

                      (ii)   to an Affiliate of Tenant.

               (b)    Tenant shall have the right, upon thirty (30) days prior
written notice to Landlord and Lender, to sublet (i) up to but not in excess of
twenty-five percent (25%) of the leasable space in the Structures to any Person,
or (ii) in excess of twenty-five percent (25%) of the leasable space within the
Structures to any Person who has, immediately following such sublease, the debt
rating described in Paragraph (a)(i) above, or (iii) to an Affiliate of Tenant,
in any such case with no consent of Landlord whatsoever being required or
necessary with respect thereto ("Preapproved Sublet").

               (c)    Except as provided in Paragraphs 21(a) and (b) above,
Tenant shall not have the right to assign this Lease or its interest herein or
to sublease more than twenty-five percent (25%) of the leasable space in the
Structures to any Person, without having first obtained the prior written
consent of Landlord, which consent shall not be unreasonably withheld,
conditioned or delayed, subject, however, to subparagraphs (i) and (ii) below.

                      (i)    If the proposed assignment will be to a Person
        which is not an Affiliate of Tenant's or to a Preapproved Assignee,
        Landlord shall have the right to consider the following criteria as they
        relate to the proposed assignee:

                             (A)    its credit history;

                             (B)    its capital structure, net worth and
               unsecured senior debt rating;

                             (C)    its management and real estate management
               record;

                             (D)    its operating history;

                             (E)    its intended use of the Leased Premises; and

                             (F)    other factors associated with the proposed
               assignee's business as it relates to the use of the Leased
               Premises, including potential environmental concerns and
               liabilities.

                      (ii)   In exercising its right of approval under this
        Paragraph 21(c) with respect to a sublease which is not a Preapproved
        Sublet, Landlord shall limit its consideration to whether or not the
        proposed sublessee, by virtue of its business, is significantly more
        likely to expose the Leased Premises to a higher risk of Environmental
        Violation than Tenant in Tenant's use of the Leased Premises prior to
        the date of such subletting.

               (d)    Any Preapproved Assignee or other assignee under any
assignment to which Landlord has consented shall expressly assume all the
obligations of Tenant hereunder pursuant to a written instrument delivered to
Tenant at the time of such assignment. In addition,

                                       30
<PAGE>   50

within ten (10) days after execution of any assignment, Tenant shall deliver to
Landlord and Lender a conformed copy thereof.

               (e)    No sublease or assignment entered into in accordance with
the provisions of this Paragraph 21 shall affect or reduce any obligations of
Tenant or rights of Landlord hereunder, and all obligations of Tenant hereunder
shall continue in full effect as the obligations of a principal and not a
guarantor or surety, as though no subletting or assignment had been made.

               (f)    With respect to any Preapproved Assignment or Preapproved
Sublet, Tenant shall provide to Landlord information reasonably required by
Landlord to establish that any proposed Preapproved Assignment or Preapproved
Sublet satisfies the criteria set forth above, it being agreed that Tenant shall
not be obligated to disclose to Landlord any confidential or proprietary
information.

               (g)    As of the date hereof, portions of the Structures are
subject to certain leases ("Existing Leases") described in Exhibit "F". Tenant
covenants and agrees that it has provided to Landlord true and correct copies of
the Existing Leases, that it will not extend the term of any Existing Lease
(except pursuant to any option contained therein that is exercised by the tenant
thereunder) but will enter into a new lease with any Tenant that desires to
extend its Existing Lease, and that any such new lease will expressly provide
that it is subject and subordinate to the terms of this Lease and the Mortgage.
It is understood that the Leased Premises include the space leased under the
Existing Leases.

               (h)    As security for performance of its obligations under this
Lease, Tenant hereby grants, conveys and assigns to Landlord all right, title
and interest of Tenant in and to all Existing Leases and any subleases
hereinafter entered into for any or all of the Leased Premises (the Existing
Leases and future subleases, collectively, the "Subleases"), any and all
extensions, modifications and renewals thereof and all rents, issues and profits
therefrom. Landlord hereby grants to Tenant a license to collect and enjoy all
rents and other sums of money payable under any Sublease of any of the Leased
Premises; provided, however, that following the occurrence of any Event of
Default Landlord shall have the absolute right at any time upon notice to Tenant
and any subtenants to revoke said license and to collect such rents and sums of
money and to retain the same. If Landlord collects such rents and sums of money,
Tenant shall receive a credit against installments of Basic Rent or against
damages (as the case may be) equal to any basic rent collected by Landlord under
the Subleases, less reasonable Costs incurred by Landlord in connection with
collecting from defaulting tenants or subtenants which are not paid or
reimbursed by such tenants. Tenant shall not consent to, cause or allow any
extension of the terms of any of the Subleases (except to the extent that such
Subleases already contain options to extend) or any reduction in the rentals
payable thereunder, without the prior written approval of Landlord, which
consent shall not be unreasonably withheld. In addition, Tenant shall not accept
any rents more than thirty (30) days in advance of the accrual thereof (other
than security deposits and first month's rent), permit anything to be done, the
doing of which, or omit or refrain from doing anything, the omission of which,
will or could be a breach of or default in the terms of any of the Subleases.

                                       31
<PAGE>   51

               (i)    Tenant shall not have the power to mortgage, pledge or
otherwise encumber its interest under this Lease or any Sublease, and any such
mortgage, pledge or encumbrance made in violation of this Paragraph 21 shall be
void.

               (j)    Subject to Tenant's rights under Paragraph 9(a) and
Paragraph 35, Landlord may sell or transfer the Leased Premises at any time
without Tenant's consent to any third party (each a "Third Party Purchaser"). In
the event of any such transfer, Tenant shall attorn to any Third Party Purchaser
as Landlord so long as such Third Party Purchaser assumes in writing the
obligations of Landlord hereunder and Third Party Purchaser and Landlord notify
Tenant in writing of such transfer. At the request of Landlord, Tenant will
execute such documents confirming the agreement referred to above and such other
agreements as Landlord may reasonably request, provided that such agreements do
not increase the liabilities and obligations of Tenant hereunder.

        22.    Events of Default.

               (a)    The occurrence of any one or more of the following (after
expiration of any applicable cure period as provided in Paragraph 22(c)) shall,
at the sole option of Landlord, constitute an "Event of Default" under this
Lease:

                      (i)    Subject to the provisions of Paragraph 29(a), a
        failure by Tenant to make any payment of any Monetary Obligation,
        regardless of the reason for such failure;

                      (ii)   Subject to the provisions of Paragraph 14, a
        failure by Tenant duly to perform and observe, or a violation or breach
        of, any other provision hereof in any material respect not otherwise
        specifically mentioned in this Paragraph 22(a); provided, however, that
        any failure to provide the insurance required by Paragraph 16 (except
        earthquake and flood insurance if such coverages are not available in
        the Southern California area) or any uncured Environmental Violation
        with respect to the Leased Premises shall be deemed to be material;

                      (iii)  any representation or warranty made by Tenant
        herein or in any certificate, demand or request made pursuant hereto
        proves to be incorrect, now or hereafter, in any material respect;

                      (iv)   a default beyond any applicable cure period by
        Tenant in any payment of principal or interest on any obligations for
        borrowed money having an original principal balance of $10,000,000 or
        more in the aggregate, or in the performance of any other provision
        contained in any instrument under which any such obligation is created
        or secured (including the breach of any covenant thereunder), if an
        effect of such default is to cause, or permit any Person to cause, such
        obligation to become due prior to its stated maturity;

                      (v)    a default by Tenant beyond any applicable cure
        period in the payment of rent or any other monetary obligation under any
        other leases in the United States with rental obligations over the terms
        thereof of $5,000,000 or more in the aggregate;

                                       32
<PAGE>   52

                      (vi)   a final, non-appealable judgment or judgments for
        the payment of money in excess of $15,000,000 in the aggregate shall be
        rendered against Tenant and the same shall remain undischarged for a
        period of sixty (60) consecutive days;

                      (vii)  a Covenant Event of Default shall exist;

                      (viii) Tenant shall (A) voluntarily be adjudicated a
        bankrupt or insolvent, (B) seek or consent to the appointment of a
        receiver or trustee for itself or for the Leased Premises, (C) file a
        petition seeking relief under the bankruptcy or other similar laws of
        the United States, any state or any jurisdiction, (D) make a general
        assignment for the benefit of creditors, or (E) be unable to pay its
        debts as they mature;

                      (ix)   a court shall enter an order, judgment or decree
        appointing, without the consent of Tenant, a receiver or trustee for it
        or for any of the Leased Premises or approving a petition filed against
        Tenant which seeks relief under the bankruptcy or other similar laws of
        the United States, any state or any jurisdiction, and such order,
        judgment or decree shall remain undischarged or unstayed ninety (90)
        days after it is entered;

                      (x)    either of the primary Structures shall have been
        vacated for one hundred twenty (120) days or abandoned or Tenant shall
        fail to occupy the Leased Premises for normal business operations within
        sixty (60) days after the Occupancy Date;

                      (xi)   Tenant shall be liquidated or dissolved or shall
        begin proceedings towards its liquidation or dissolution except in
        connection with a Preapproved Assignment pursuant to the terms of
        Paragraph 21(a) of this Lease;

                      (xii)  the estate or interest of Tenant in any of the
        Leased Premises shall be levied upon or attached in any proceeding and
        such estate or interest is about to be sold or transferred or such
        process shall not be vacated or discharged within ninety (90) days after
        it is made;

                      (xiii) a failure by Tenant to perform or observe, or a
        violation or breach of, the Acknowledgment, Subordination,
        Non-Disturbance and Attornment Agreement of even date (the
        "Subordination Agreement") among Landlord, Initial Lender and Tenant or
        any other document between Tenant and Lender, if such failure, violation
        or breach gives rise to a default beyond any applicable cure period with
        respect to any Loan;

                      (xiv)  Tenant shall sell or transfer all or substantially
        all of its assets, except to a Preapproved Assignee to whom this Lease
        has been assigned pursuant to the terms of Paragraph 21(a)(i) or except
        in a cash transaction which results in the retention by Tenant of all of
        the proceeds of such sale (net of normal and customary closing costs);

                      (xv)   an Event of Default (as defined in the Construction
        Management Agreement) shall exist under the Construction Management
        Agreement beyond any applicable cure period;

                      (xvi)  Tenant shall fail to restore any amounts drawn
        under the Letter of Credit within one hundred twenty (120) days
        following the date of such draw or shall fail

                                       33
<PAGE>   53

        to deliver to Landlord any Letter of Credit required under Paragraph 29
        within the applicable time period specified therein; or

                      (xvii) The Initial Lender shall draw all of the Letter of
        Credit following the occurrence of any of the events set forth in
        Paragraph 37(a)(i), (ii), (iii), (iv) or (v).

               (b)    No notice or cure period shall be required in any one or
more of the following events:

                             (A)    the occurrence of an Event of Default under
               clause (i) (except as otherwise set forth below), (iii), (iv),
               (v), (vi), (vii), (viii), (ix), (x), (xi), (xii), (xiii), (xiv),
               (xv), (xvi) or (xvii) of Paragraph 22(a); or

                             (B)    the default consists of a failure to provide
               any insurance required by Paragraph 16 except for the failure to
               provide earthquake or flood insurance if the same is not
               available or an assignment or sublease entered into in violation
               of Paragraph 21; or

                             (C)    the default is such that any delay in the
               exercise of a remedy by Landlord would reasonably be expected to
               cause irreparable harm to Landlord.

               (c)    If the default consists of the failure to pay any Monetary
Obligation under clause (i) of Paragraph 22(a), the applicable cure period
shall be five (5) Business Days from the date on which notice is given, but
Landlord shall not be obligated to give notice of, or allow any cure period for,
any such default more than twice during the Term. Subject to the limitation set
forth in the following sentence, if the default consists of a default under
clause (ii) of Paragraph 22(a), other than the events specified in clauses (B)
and (C) of Paragraph 22(b), the applicable cure period shall be thirty (30) days
from the date on which notice is given or, if the default cannot be cured within
such thirty (30) day period and delay in the exercise of a remedy would not (in
Landlord's reasonable judgment) cause any material adverse harm to Landlord or
any of the Leased Premises, the cure period shall be extended for the period
required to cure the default (but such cure period, including any extension,
shall not in the aggregate exceed sixty (60) days, provided that Tenant shall
commence to cure the default within the said thirty-day period and shall
actively, diligently and in good faith proceed with and continue the curing of
such default. Notwithstanding anything in this Paragraph 22 to the contrary, in
the event of an Environmental Violation such cure period shall not be limited to
said sixty (60) day period), provided that Tenant shall commence to cure the
default within the said thirty-day period, shall actively, diligently and in
good faith proceed with and continue the curing of the Environmental Violation
until it shall be fully cured and, for so long as the Initial Loan is
outstanding, shall have deposited an amount sufficient in Initial Lender's
reasonable judgment to cure such Event of Default in an escrow account
satisfactory to Initial Lender. Funds so deposited with Initial Lender shall be
disbursed to cure such Event of Default as provided in the Subordination
Agreement. Notwithstanding the foregoing, so long as the Initial Loan is in
effect Landlord shall not be obligated to give Tenant notice and an opportunity
to cure any default under Paragraph 22(a)(ii) more than two times.

                                       34
<PAGE>   54

        23.    Remedies and Damages Upon Default.

               (a)    If an Event of Default shall have occurred and is
continuing, Landlord shall have the right, at its sole option, then or at any
time thereafter, to exercise its remedies and to collect damages from Tenant in
accordance with this Paragraph 23, without demand upon or notice to Tenant
except as otherwise provided in Paragraph 22(c) and this Paragraph 23. Upon the
occurrence of an Event of Default, Landlord's remedies include the right to
elect to terminate the Lease or keep the Lease in effect and collect the damages
specified below.

               (b)    If Landlord elects to terminate the Lease, Landlord shall
give Tenant notice of Landlord's intention to terminate this Lease on a date
specified in such notice. Upon such date, this Lease, the estate hereby granted
and all rights of Tenant hereunder shall expire and terminate. Upon such
termination, Tenant shall immediately surrender and deliver possession of the
Leased Premises to Landlord in accordance with Paragraph 26. If Tenant does not
so surrender and deliver possession of the Leased Premises, Landlord may
re-enter and repossess the Leased Premises, as provided in Paragraph 23(f)
below.

               (c)    In addition to its other rights under this Lease, Landlord
has the remedy described in California Civil Code Section 1951.4 which provides
substantially as follows: Landlord may continue the Lease in effect after
Tenant's breach and abandonment and recover the Rent as it becomes due, provided
Tenant has the right to sublet or assign, subject to the limitations specified
in Paragraph 21. In accordance with California Civil Code Section 1951.4 (or any
successor statute), Tenant acknowledges that in the event Tenant breaches this
Lease and abandoned the Leased Premises, this Lease shall continue in effect for
so long as Landlord does not terminate Tenant's right to possession, and
Landlord may enforce all its rights and remedies under this Lease, including the
right to recover the rent as it becomes due under this Lease. Acts of
maintenance or preservation or efforts to relet the Leased Premises or the
appointment of a receiver upon initiative of Landlord to protect Landlord's
interest under this Lease shall not constitute a termination of Tenant's right
to possession.

               (d)    If Landlord elects, pursuant to Paragraph 23(b), to
terminate this Lease upon a default by Tenant, Landlord may collect from Tenant
damages computed in accordance with the following provisions in addition to
Landlord's other remedies under this Lease:

                      (i)    the worth at the time of award of any unpaid Rent
        which has been earned at the time of such termination; plus

                      (ii)   the worth at the time of award of the amount by
        which any unpaid Rent which would have been earned after termination
        until the time of award exceeds the amount of such rental loss that
        Tenant proves could have been reasonably avoided; plus

                      (iii)  the worth at the time of award of the amount by
        which the unpaid Rent for the balance of the Term after the time of
        award exceeds the amount of such rental loss that Tenant proves could be
        reasonably avoided, plus

                      (iv)   any other Cost necessary to compensate Landlord for
        all the detriment proximately caused by Tenant's failure to perform its
        obligations under this Lease or which in the ordinary course of things
        would be likely to result therefrom

                                       35
<PAGE>   55

        including, without limitation, brokerage commissions, the cost of
        repairing and reletting the Leased Premises and reasonable attorneys'
        fees; plus

                      (v)    at Landlord's election, such other amounts in
        addition to or in lieu of the foregoing as may be permitted from time to
        time by applicable state law. Damages shall be due and payable from the
        date of termination.

               For the purposes of clauses (i) and (ii) of this Paragraph, the
"worth at the time of award" shall be computed by adding interest at the Default
Rate (as specified in Paragraph 7(a)(iv)) to the past due Rent. For the purposes
of clause (iii) of this Paragraph 23(d), the "worth at the time of award" shall
be computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of the award, plus one percent (1%).

               (e)    If, in the Event of a Default by Tenant, Landlord elects
to keep the Lease in effect, Landlord may, to the extent permitted by applicable
Law, declare by notice to Tenant the entire Basic Rent (in the amount of Basic
Rent then in effect) for the remainder of the then current Term to be
immediately due and payable. Tenant shall immediately pay to Landlord all such
Basic Rent discounted to its Present Value, all accrued Rent then due and
unpaid, all other Monetary Obligations which are then due and unpaid and all
Monetary Obligations which arise or become due by reason of such Event of
Default (including any Costs of Landlord). Upon receipt by Landlord of all such
accelerated Basic Rent and Monetary Obligations, this Lease shall remain in full
force and effect and Tenant shall have the right to possession of the Leased
Premises from the date of such receipt by Landlord to the end of the Term, and
subject to all the provisions of this Lease, including the obligation to pay all
increases in Basic Rent and all Monetary Obligations that subsequently become
due, except that no Basic Rent which has been prepaid under this Lease shall be
due thereafter during the Term.

               (f)    Upon the occurrence of an Event of Default, Landlord shall
also have the right, with or without terminating this Lease, to enter the Leased
Premises in accordance with applicable Law and remove all persons and personal
property from the Leased Premises, such property being removed and stored in a
public warehouse or elsewhere at Tenant's sole cost and expense. No removal by
Landlord of any persons or property in the Leased Premises shall constitute an
election to terminate this Lease. Such an election to terminate may only be made
by Landlord in writing, or decreed by a court of competent jurisdiction.
Landlord's right of entry shall include the right to remodel the Leased Premises
and re-let the Leased Premises. All Costs incurred in such entry and re-letting
shall be paid by Tenant. Rents collected by Landlord from any other tenant which
occupies the Leased Premises shall be offset against the amounts owed to
Landlord by Tenant. Tenant shall be responsible for any amounts not recovered by
Landlord from any other tenant. Any payments made by Tenant shall be credited to
the amounts owed by Tenant in the sole order and discretion of Landlord,
irrespective of any designation or request by Tenant. No entry by Landlord shall
prevent Landlord from later terminating the Lease by written notice.

               (g)    Landlord shall be entitled to draw on the Letter of Credit
and apply the proceeds therefrom to any amounts due under Paragraph 23(d) hereof
if this Lease shall be terminated, or, if this Lease shall remain in full force
and effect, in the following order: (i) to

                                       36
<PAGE>   56

past due Basic Rent, (ii) to cure any other Monetary Event of Default and (iii)
to installments of Basic Rent in inverse order of maturity, commencing with the
last installment of the Term.

               (h)    Notwithstanding anything to the contrary herein contained,
in lieu of or in addition to any of the foregoing remedies and damages, Landlord
may exercise any remedies and collect any damages available to it at law or in
equity. If Landlord is unable to obtain full satisfaction pursuant to the
exercise of any remedy, it may pursue any other remedy which it has hereunder or
at law or in equity.

               (i)    Landlord shall not be required to mitigate any of its
damages hereunder unless required to by applicable Law. If any Law shall validly
limit the amount of any damages provided for herein to an amount which is less
than the amount agreed to herein, Landlord shall be entitled to the maximum
amount available under such Law.

               (j)    No termination of this Lease, repossession or reletting of
the Leased Premises, exercise of any remedy or collection of any damages
pursuant to this Paragraph 23 shall relieve Tenant of any Surviving Obligations.

               (k)    WITH RESPECT TO ANY REMEDY OR PROCEEDING OF LANDLORD
HEREUNDER, TENANT WAIVES ANY RIGHT TO A TRIAL BY JURY.

               (l)    Upon the occurrence of any Event of Default, Landlord
shall have the right (but no obligation) to perform any act required of Tenant
hereunder and, if performance of such act requires that Landlord enter the
Leased Premises, Landlord may enter the Leased Premises for such purpose.

               (m)    No failure of Landlord (i) to insist at any time upon the
strict performance of any provision of this Lease or (ii) to exercise any
option, right, power or remedy contained in this Lease shall be construed as a
waiver, modification or relinquishment thereof. A receipt by Landlord of any sum
in satisfaction of any Monetary Obligation with knowledge of the breach of any
provision hereof shall not be deemed a waiver of such breach, and no waiver by
Landlord of any provision hereof shall be deemed to have been made unless
expressed in a writing signed by Landlord.

               (n)    Tenant hereby waives and surrenders, for itself and all
those claiming under it, including creditors of all kinds, (i) any right and
privilege which it or any of them may have under any present or future Law to
redeem any of the Leased Premises or to have a continuance of this Lease after
termination of this Lease or of Tenant's right of occupancy or possession
pursuant to any court order or any provision hereof, and (ii) the benefits of
any present or future Law which exempts property from liability for debt or for
distress for rent.

               (o)    Except as otherwise provided herein, all remedies are
cumulative and concurrent and no remedy is exclusive of any other remedy. Each
remedy may be exercised at any time an Event of Default has occurred and is
continuing and may be exercised from time to time. No remedy shall be exhausted
by any exercise thereof.

        24.    Notices. All notices, demands, requests, consents, approvals,
offers, statements and other instruments or communications required or permitted
to be given pursuant to the

                                       37
<PAGE>   57

provisions of this Lease shall be in writing and shall be deemed to have been
given for all purposes when delivered in person or by Federal Express or other
reliable 24-hour delivery service or five (5) Business Days after being
deposited in the United States mail, by registered or certified mail, return
receipt requested, postage prepaid, addressed to the other party at its address
stated above. A copy of any notice given by Tenant to Landlord shall
simultaneously be given by Tenant to Reed Smith Shaw & McClay, 2500 One Liberty
Place, Philadelphia, PA 19103, Attention-Chairman, Real Estate Department. For
the purposes of this Paragraph, any party may substitute another address stated
above (or substituted by a previous notice) for its address by giving fifteen
(15) days' notice of the new address to the other party, in the manner provided
above.

        25.    Estoppel Certificates. Landlord or Tenant, as the case may be,
shall, at any time upon not less than ten (10) days' prior written request by
the other party, deliver to the other party a statement ("Tenant Estoppel
Certificate") in writing, executed by the president or a vice president of
Landlord or Tenant, as the case may be, certifying that:

               (a)    Except as otherwise specified, this Lease is unmodified
and in full force and effect;

               (b)    The Basic Rent, Additional Rent and all other Monetary
Obligations have been paid to the dates stated in such certificate;

               (c)    The certifying party has not filed a voluntary or
involuntary bankruptcy petition;

               (d)    To the knowledge of the signer, based on reasonable
inquiry and except as may otherwise be specified, no default by either Landlord
or Tenant exists under this Lease;

               (e)    Landlord or Tenant, as the case may be, has performed all
of its obligations under the Lease with respect to the construction of the
Tenant Improvements;

               (f)    The current amount of the Letter of Credit is as stated in
such certificate; and

               (g)    The correctness of the other matters specified in the form
of Tenant Estoppel Certificate attached hereto as Exhibit "H".

        26.    Surrender. Upon the expiration or earlier termination of this
Lease, Tenant shall peaceably leave and surrender the Leased Premises to
Landlord in the same condition in which the Leased Premises was at the Occupancy
Date, except as repaired, rebuilt, restored, altered, replaced or added to as
permitted or required by any provision of this Lease, and except for ordinary
wear and tear. Upon such surrender, Tenant shall (a) remove from the Leased
Premises all property which is owned by Tenant or third parties other than
Landlord and (b) repair any damage caused by such removal. Property of Tenant or
such third party not so removed shall become the property of Landlord, and
Landlord may thereafter cause such property to be removed from the Leased
Premises. The cost of removing and disposing of such property and repairing any
damage to any of the Leased Premises caused by such removal shall be paid by
Tenant to Landlord upon demand. Landlord shall not in any manner or to any
extent be

                                       38
<PAGE>   58

obligated to reimburse Tenant for any such property which becomes the property
of Landlord pursuant to this Paragraph 26.

        27.    No Merger of Title. There shall be no merger of the leasehold
estate created by this Lease with the fee estate in any of the Leased Premises
by reason of the fact that the same Person may acquire or hold or own, directly
or indirectly, (a) the leasehold estate created hereby or any part thereof or
interest therein and (b) the fee estate in any of the Leased Premises or any
part thereof or interest therein, unless and until all Persons having any
interest in the interests described in clauses (a) and (b) above which are
sought to be merged shall join in a written instrument effecting such merger and
shall duly record the same.

        28.    Books and Records. Tenant shall furnish Landlord with the
following:

                      (i)    As soon as available and in any event within sixty
        (60) days after the end of each quarterly accounting period in each
        fiscal year of Tenant (with the exception of the last quarter), Tenant
        shall furnish copies of a consolidated balance sheet of Tenant and its
        consolidated affiliates as of the last day of such quarterly accounting
        period, and copies of the related consolidated statements of income and
        of changes in shareholders' equity and in financial position of Tenant
        and its consolidated affiliates for such quarterly accounting period and
        for the elapsed portion of the current fiscal year ended with the last
        day of such quarterly accounting period. All such statements shall be
        prepared in accordance with GAAP (except that interim quarterly
        financials are not required to include notes) and, if Tenant ceases to
        be a publicly traded company, certified as complete and correct in all
        material respects by the chief financial officer of Tenant (subject to
        year-end audit adjustments).

                      (ii)   As soon as available and in any event within one
        hundred twenty (120) days after the end of each fiscal year of Tenant,
        Tenant shall furnish copies of a consolidated balance sheet of Tenant
        and its consolidated Affiliates as of the end of such fiscal year, and
        copies of the related consolidated statements of income and of changes
        in shareholders' equity and in financial position of Tenant and its
        consolidated affiliates for such fiscal year. All such statements shall
        be in reasonable detail and with appropriate notes, if any, and be
        prepared in accordance with GAAP and state in comparative form the
        corresponding figures as of the end of and for the previous fiscal year,
        and shall be accompanied by an opinion or report thereon, in scope and
        substance satisfactory to Landlord, by Tenant's nationally recognized
        independent certified public accountants.

                      (iii)  Tenant shall furnish copies of all regular and
        periodic reports or filings, including without limitation Form 10-K and
        Form 10-Q, which Tenant or any Affiliate shall make or be required to
        file with the Securities and Exchange Commission or any other federal or
        state regulatory agency or with any municipal or other local body, and
        such other public, non-proprietary information relating to the business,
        affairs and financial condition of Tenant as Landlord may from time to
        time reasonably request.

                      (iv)   As soon as available and in any event within one
        hundred twenty (120) days after the end of each fiscal year of Tenant,
        Tenant shall provide to Landlord and Lender unaudited financial
        statements on the Leased Premises which shall include

                                       39
<PAGE>   59

        reasonably detailed information about the cost of operating, maintaining
        and repairing the Leased Premises. Such information shall include,
        without limitation, information about the cost of utilities, taxes,
        tenant improvement costs, landscaping, janitorial services and other
        similar services and shall be certified as complete and correct by the
        chief financial officer of Tenant and that such statements have been
        prepared in accordance with GAAP.

                      (v)    Upon reasonable advance notice to Tenant, Landlord
        and Lender shall have the right to periodically visit the Leased
        Premises to meet with officers of Tenant for the purpose of discussing
        the operating history of the Leased Premises and the general condition
        of Tenant's business. At no time shall Tenant be obligated to disclose
        to Landlord, Lender or any third party any confidential or proprietary
        information about Tenant or Tenant's business. The scope and nature of
        the information to be so provided by Tenant to Landlord and/or Lender
        shall be limited to that which would be customarily provided to
        investment analysts employed by investment banking firms.

        29.    Security Deposit.

               (a)    Concurrently with the execution of this Lease, Tenant
shall deliver to Landlord a Letter of Credit in the amount of [INTENTIONALLY
OMITTED]. The Letter of Credit shall (subject to a reduction in the amount of
the Letter of Credit as set forth in Paragraph 29(b)) remain in full force and
effect until satisfaction of the Final Release Conditions (as hereinafter
defined), or with respect to any Letter of Credit issued pursuant to the terms
of Paragraph 29(e) or Paragraph 29(f), until satisfaction of the provisions for
release set forth therein. The Letter of Credit shall be security for the
payment by Tenant of the Rent and all other charges or payments to be paid
hereunder and the performance of the covenants and obligations contained herein,
and the Letter of credit shall be renewed at least thirty (30) days prior to any
expiration thereof. In addition to its other rights and remedies under the
Letter of Credit, Landlord shall have the right to draw on the Letter of Credit
to pay any installment of Basic Rent not paid within three (3) Business Days
after the due date thereof, and, with respect to the first three (3) (but in no
event more than three (3)) such draws so long as the Letter of Credit remains in
effect and Tenant replenishes any amount drawn under the Letter of Credit within
one hundred twenty (120) days (but in any event at least thirty (30) days prior
to the expiration thereof) after such draw no Event of Default shall exist by
reason of any such draw.

        [THE REMAINDER OF THIS PARAGRAPH INTENTIONALLY OMITTED].

        30.    Non-Recourse as to Landlord.

               (a)    Anything contained herein to the contrary notwithstanding,
any claim based on or in respect of any liability of Landlord under this Lease
shall be enforced only against the Leased Premises and not against any other
assets, properties or funds of (a) Landlord or any party thereof, (b) any
director, officer, general partner, shareholder, limited partner, employee or
agent of Landlord or any general partner of Landlord, GENA:11 or GENA:12 or any
of its general partners (or any legal representative, heir, estate, successor or
assign of any thereof), (c) any predecessor or successor partnership or
corporation (or other entity) of Landlord or any of its general partners,
shareholders, officers, directors, employees or agents, either directly or
through Landlord or its general partners, shareholders, officers, directors,
employees or agents or

                                       40
<PAGE>   60

any predecessor or successor partnership or corporation (or other entity), or
(d) any other Person (including Carey Property Advisors, Carey Fiduciary
Advisors, Inc., W. P. Carey & Co. Inc., and any Person affiliated with any of
the foregoing, or any director, officer, employee or agent of any thereof);
provided, however, that Landlord shall at all times maintain an "Equity
Interest" (as defined below) in the Leased Premises of at least the lesser of
(1) twenty percent (20%) of the Fair Market Value of the Leased Premises or (2)
Landlord's Cash Contribution ( "Landlord's Minimum Equity"). If Landlord fails
to maintain Landlord's Minimum Equity, the provisions of this Paragraph 30
limiting Tenant's right to recover damages from the Leased Premises as provided
above shall cease to be of any force or effect and Tenant shall have the right
to recover damages from any and all assets of Landlord. The term "Equity
Interest" shall mean the difference between the Fair Market Value of the Leased
Premises and the then outstanding principal amount of all Mortgages placed on
the Leased Premises by Landlord. For purposes of this definition of Equity
Interest, during the first five (5) years of the Term the Fair Market Value of
the Leased Premises shall be equal to the Project Cost. In the event that the
Leased Premises become part of a pool of properties securing the debt (the
"Blanket Indebtedness") of one Person, Landlord's Equity Interest shall be equal
to the difference between twenty percent (20%) of the Fair Market Value of the
Leased Premises and the portion of the Blanket Indebtedness reasonably allocated
to the Leased Premises by the Lender holding the Blanket Indebtedness.

               (b)    Nothing in this Paragraph 30 shall be construed as waiving
or limiting any equitable remedies which Tenant may have against Landlord and/or
any of the foregoing Persons by reason of any breach of this Lease by Landlord
and/or such Persons.

        31.    Financing.

               (a)    If Landlord desires to obtain or refinance any Loan,
Tenant shall negotiate in good faith with Landlord concerning any request made
by any Lender or proposed Lender for changes to or modifications of this Lease;
provided no such changes or modifications shall increase Tenant's obligations
under this Lease. In particular, Tenant shall agree, upon request of Landlord,
to supply any such Lender with such notices and information as Tenant is
required to give to Landlord hereunder and to acknowledge that the rights of
Landlord hereunder have been assigned by Landlord to such Lender and to consent
to such financing if such consent is requested by such Lender. Tenant shall
provide any other consent or statement and shall execute any and all other
documents that such Lender reasonably requires in connection with such
financing, including any environmental indemnity agreement and subordination,
non-disturbance and attornment agreement, so long as the same do not adversely
affect any right, benefit or privilege of Tenant under this Lease or materially
increase Tenant's obligations under this Lease; provided, however, that in no
event shall Tenant be obligated to provide any Lender with any confidential or
proprietary information about Tenant or its business. Such subordination,
non-disturbance and attornment agreement shall be in form and substance
reasonably satisfactory to Tenant and may require Tenant to confirm that (a)
Lender and its assigns will not be liable for any misrepresentation, act or
omission of Landlord and (b) Lender and its assigns will not be subject to any
counterclaim, demand or offset which Tenant may have against Landlord.

               (b)    During the Term the Leased Premises shall not be
encumbered by any Mortgage the original principal balance of which exceeds
[INTENTIONALLY OMITTED] unless the Leased Premises are part of a pool of
properties securing debt of one Person, in which

                                       41
<PAGE>   61

event such limit shall not apply. If the Leased Premises are part of such a pool
of properties, the deed of trust or mortgage which encumbers the Leased Premises
shall specify a release price for the Leased Premises not in excess of the
Project Cost.

        32.    Subordination. Subject to the provisions of Paragraph 31(a), this
Lease and Tenant's interest hereunder shall be subordinate to any Mortgage or
other security instrument hereafter placed upon the Leased Premises by Landlord,
and to any and all advances made or to be made thereunder, to the interest
thereon, and all renewals, replacements and extensions thereof, provided that
the holder of any such Mortgage or other security instrument enters into a
subordination, non-disturbance and attornment agreement with and reasonably
satisfactory to Tenant which recognizes this Lease and all Tenant's rights
hereunder unless and until (i) an Event of Default exists or (ii) Landlord shall
have the right to terminate this Lease pursuant to any applicable provision
hereof.

        33.    Financial Covenants. [INTENTIONALLY OMITTED].

        34.    Tax Treatment; Reporting. Landlord and Tenant each acknowledge
that each shall treat this transaction as a true lease for state law purposes
and shall report this transaction as a true lease for Federal income tax
purposes. For Federal income tax purposes each shall report this Lease with
Landlord as the owner of the Leased Premises, including the Building Systems
Equipment, and Tenant as the lessee of the Leased Premises and Building Systems
Equipment, including: (1) treating Landlord as the owner of the property
eligible to claim depreciation deductions under Section 167 or 168 of the
Internal Revenue Code of 1986 (the "Code") with respect to the Leased Premises
and the Building Systems Equipment, (2) Tenant reporting its Rent payments as
rent expense under Section 162 of the Code, and (3) Landlord reporting the Rent
payments as rental income.

        35.    Right of First Refusal. [INTENTIONALLY OMITTED].

        36.    Financing Major Alterations. [INTENTIONALLY OMITTED].

        37.    Initial Lender Rights re: Letter of Credit. [INTENTIONALLY
               OMITTED].

        38.    Miscellaneous.

               (a)    The paragraph headings in this Lease are used only for
convenience of reference and are not part of this Lease or to be used in
determining the intent of the parties or otherwise interpreting this Lease.

               (b)    As used in this Lease, the singular shall include the
plural and any gender shall include all genders as the context requires and the
following words and phrases shall have the following meanings: (i) "including"
shall mean "including without limitation"; (ii) "provisions" shall mean
"provisions, terms, agreements, covenants and/or conditions"; (iii) "lien" shall
mean "lien, charge, encumbrance, title retention agreement, pledge, security
interest, mortgage and/or deed of trust"; (iv) "obligation" shall mean
"obligation, duty, agreement, liability, covenant and/or condition"; (v) "any of
the Leased Premises" shall mean "the Leased Premises or any part thereof or
interest therein"; (vi) "any of the Land" shall mean "the Land or any part
thereof or interest therein"; (vii) "any of the Improvements" shall mean

                                       42
<PAGE>   62

"the Improvements or any part thereof or interest therein"; (viii) "any of the
Equipment" shall mean "the Equipment or any part thereof or interest therein";
and (ix) "any of the Adjoining Property" shall mean "the Adjoining Property or
any part thereof or interest therein".

               (c)    Any act which Landlord is permitted to perform under this
Lease may be performed at any time and from time to time by Landlord or any
person or entity designated by Landlord. Each appointment of Landlord as
attorney-in-fact for Tenant hereunder is irrevocable and coupled with an
interest. Except as otherwise specifically provided herein, Landlord shall have
the right, at its sole option, to withhold or delay its consent whenever such
consent is required under this Lease for any reason or no reason. Time is of the
essence with respect to the performance by Tenant of its obligations under this
Lease.

               (d)    Landlord shall in no event be construed for any purpose to
be a partner, joint venturer or associate of Tenant or of any subtenant,
operator, concessionaire or licensee of Tenant with respect to any of the Leased
Premises or otherwise in the conduct of their respective businesses.

               (e)    This Lease and any documents which may be executed by
Tenant on or about the effective date hereof at Landlord's request constitute
the entire agreement between the parties and supersede all prior understandings
and agreements, whether written or oral, between the parties hereto relating to
the Leased Premises and the transactions provided for herein. Landlord and
Tenant are business entities having substantial experience with the subject
matter of this Lease and have each fully participated in the negotiation and
drafting of this Lease. Accordingly, this Lease shall be construed without
regard to the rule that ambiguities in a document are to be construed against
the drafter.

               (f)    This Lease may be modified, amended, discharged or waived
only by an agreement in writing signed by the party against whom enforcement of
any such modification, amendment, discharge or waiver is sought.

               (g)    The covenants of this Lease shall run with the land and
bind Tenant, its successors and assigns and all present and subsequent
encumbrances and subtenants of any of the Leased Premises, and shall inure to
the benefit of Landlord, its successors and assigns. If there is more than one
Tenant, the obligations of each shall be joint and several.

               (h)    If any one or more of the provisions contained in this
Lease shall for any reason be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Lease, but this Lease shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.

               (i)    This Lease shall be governed by and construed and enforced
in accordance with the Laws of the State.

        IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
duly executed under seal as of the day and year first above written.

                                        LANDLORD:

                                       43
<PAGE>   63

                                        GENA PROPERTY COMPANY, a California
                                        partnership

                                        By:   GENA (CA) QRS 11-25, INC.,
ATTEST:                                       a general partner

By: ______________________________      By: ___________________________________
      Title: Assistant Secretary              Title: Executive Vice President

[Corporate Seal]

                                        By:   GENA (CA) QRS 12-1, INC.,
                                              a general partner
ATTEST:

                                        By: ___________________________________
By: ______________________________            Title: Executive Vice President
      Title: Assistant Secretary

[Corporate Seal]
                                        TENANT:

                                        GENSIA, INC.,
                                        a Delaware corporation
ATTEST:

                                        By: ___________________________________
By: ______________________________            Title: President
      Title: Vice President

[Corporate Seal]

                                       44
<PAGE>   64

                                    EXHIBIT A

                            LEGAL DESCRIPTION OF LAND

        The Land is located in the City of San Diego, County of San Diego, State
of California and is more particularly described as follows:

PARCEL A:

LOTS 1 AND 3 OF NEXUS TECHNOLOGY CENTRE UNIT NO. 1, IN THE CITY OF SAN DIEGO,
COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 11876,
FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, AUGUST 7, 1987.

PARCEL B:

NON-EXCLUSIVE EASEMENTS FOR VEHICULAR AND PEDESTRIAN INGRESS AND EGRESS ON AND
OVER DESIGNATED PEDESTRIAN AND VEHICULAR TRAFFIC CIRCULATION PATTERNS NOW
EXISTING OR CREATED, INCLUDING WITHOUT LIMITATIONS, ALL DRIVEWAYS, ROAD,
STREETS, WALKWAYS, SIDEWALKS AND SURFACE PARKING AREAS; FOR PARKING ON AND
ACROSS ALL SURFACE PARKING AREAS DESIGNATED FOR PARKING BY STRIPPING OR OTHER
MEANS; FOR PRIVATE AND COMMON UTILITIES AND INCIDENTAL THERETO; AND TEMPORARY
EASEMENTS FOR CONSTRUCTION PURPOSES, AS SET FORTH, DESCRIBED, CREATED AND
CONVEYED IN THAT CERTAIN DOCUMENT ENTITLED "RECIPROCAL EASEMENT AGREEMENT" BY
AND BETWEEN GENSIA, INC., A DELAWARE CORPORATION AND GENA PROPERTY COMPANY, A
CALIFORNIA GENERAL PARTNERSHIP, RECORDED ON DECEMBER _____, 1993 AS INSTRUMENT
NO. _______________ IN THE OFFICE OF THE COUNTY

                                      A-1
<PAGE>   65

                                    EXHIBIT B

                   DESCRIPTION OF BUILDING SYSTEMS EQUIPMENT

        "Building Systems Equipment" shall mean all plumbing, heating,
ventilation and air conditioning equipment, electrical systems, mechanical
equipment, lighting systems, emergency life support equipment, fire safety
equipment, sprinkler systems and other equipment which is customarily part of a
"shell building" for each Building. Building Systems Equipment shall include any
Alterations to the Building Systems Equipment, whether paid for by Landlord or
by Tenant, as may be required by the terms of this Lease.

                                      B-1
<PAGE>   66

                                    EXHIBIT C

                       SCHEDULE OF PERMITTED ENCUMBRANCES

                                      C-1
<PAGE>   67

                                    EXHIBIT D

                               BASIC RENT SCHEDULE

                             [INTENTIONALLY OMITTED]

                                      D-1
<PAGE>   68

                                    EXHIBIT E

                          TENANT'S FINANCIAL COVENANTS

                             [INTENTIONALLY OMITTED]

                                      E-1
<PAGE>   69

                                    EXHIBIT F

                           SCHEDULE OF EXISTING LEASES

                             [INTENTIONALLY OMITTED]

                                      F-1
<PAGE>   70

                                    EXHIBIT G

                           [Form of Letter of Credit]

                             [INTENTIONALLY OMITTED]

                                      G-1
<PAGE>   71

                                    EXHIBIT H

                           TENANT ESTOPPEL CERTIFICATE

                                    (Lender)

        The undersigned, _________________________________ ("Tenant"), hereby
certifies to ________________________, a ________________________________
("Lender") and/or ________________________ ("Purchaser"), as follows:

        1.     Attached hereto is a true, correct and complete copy of that
certain lease dated _________________, 19____, between ______________________, a
____________________ ("Landlord")', and Tenant (the "Lease"), the demised
premises of which ("Premises") are located at _________________ in the City of
_________________, County of _________________, state of _________________,
which Premises are more particularly described in the Lease. The Lease (as
attached) represents the entire agreement between the parties as to the
Premises, is now in full force and effect, and has not been amended, modified or
supplemented, except as set forth in Paragraph 5 below.

        2.     The term of the Lease commenced on _________________, 19___. Rent
commenced to accrue on ___________________ , 19___.

        3.     The undersigned is in occupancy of the Premises.

        4.     The initial term of the Lease shall expire on _________________,
19___ with ___ renewal option(s) of a period of _____ years each.

        5. The Lease has not been amended, modified, supplemented, extended,
renewed or assigned, except: __________________________________________________
_______________________________________________________________________________
______________.

        6.     All conditions of the Lease to be performed by Landlord
thereunder and necessary to the enforceability of the Lease have been satisfied,
except:________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
____________________________________________________________________________.

        7.     The amount of the installment of Basic Rent being paid currently
is $__________.

        8.     The current amount of the Letter of Credit outstanding under
Paragraph 29 of this Lease is $__________.

        9.     Tenant is paying the full Basic Rent under the Lease, which Rent
has been paid in full through _____________. No Basic Rent under the Lease has
been paid for more than thirty (30) days in advance of its due date.

                                      H-1
<PAGE>   72

        10.    To the best of the knowledge of the undersigned, based on
reasonable injury, Tenant has no defense as to its obligations under the Lease
and claims no set-off or counterclaim against Landlord.

        11.    To the best knowledge of the undersigned, there are no defaults
on the part of Landlord or Tenant under the Lease, and there are no events
currently existing (or with the passage of time, giving of notice or both, which
would exist) which give Tenant the right to cancel or terminate the Lease.

        12.    Tenant has no right to any concession (rental or otherwise) or
similar compensation in connection with renting the space it occupies, except as
provided in the Lease.

        13.    There are no actions, whether voluntary or otherwise, pending
against the undersigned or any guarantor of the undersigned's obligations under
the Lease pursuant to the bankruptcy or insolvency laws of the United States or
any state thereof.

        14.    It is Tenant's understanding that the present Landlord of the
Premises is _____________________________________________.

        15.    Tenant's address for notices under the terms of the Lease is:
_______________________________________________________________.

        16.    Tenant hereby acknowledges that Lender intends to make a loan to
Landlord for ___________________________________________ that Landlord intends
to assign the Lease to Lender in connection with such financing, and that Lender
is relying upon the representations herein made in funding such loan. Upon such
assignment and upon written request from Lender, Tenant agrees to send all
rents, payments and other amounts due under the Lease and assigned to Lender
pursuant to said financing to such address as may be indicated in writing by
Lender to Tenant. Tenant agrees that no modification, adjustment, revision,
cancellation or renewal of the Lease or amendments thereto shall be effective
unless the written consent of Lender is obtained. Tenant has not received any
notice of any other sale, pledge, transfer or assignment of the Lease or of the
rentals thereunder by Landlord.

        17.    Tenant shall deliver to Lender a copy of all notices of default
or termination served on or received from Landlord.

        18.    Lender is hereby given the right to cure Landlord's defaults
under the Lease within thirty (30) days after receipt of written notice by the
undersigned of Landlord's failure so to do; provided, however, that said thirty
(30) day period shall be extended (a) so long as within said thirty (30) day
period Lender has commenced to cure and is proceeding with due diligence to cure
said defaults, or (b) so long as Lender is proceeding with a foreclosure action
against Landlord and will commence to cure and will proceed with due diligence
to cure said defaults upon the resolution of said foreclosure action.

        19.    Tenant acknowledges that Lender shall assume no liability or
obligations under the Lease, or any renewal thereof, either by virtue of the
assignment thereof or any receipt or collection of rents under the Lease, except
in the event that Lender acquires title to the Leased Premises.

                                       2
<PAGE>   73

        20.    All provisions of the Lease and the amendments thereto (if any)
referred to above are hereby ratified.

DATED: ______________________           "Tenant"

                                        GENSIA, INC.,
                                        a Delaware corporation

                                        By: ___________________________________

                                        Its: __________________________________

                                        By: ___________________________________

                                        Its: __________________________________

                                       3
<PAGE>   74

                                  EXHIBIT "B"

                                 DEMISING PLAN

                                   [Attached]

                                      -17-
<PAGE>   75

                                    EXHIBIT B

                                   [DIAGRAM]

                        NOVATEL WIRELESS EXPANSION SPACE

<PAGE>   76

                                    EXHIBIT B

                                   [DIAGRAM]

                        NOVATEL WIRELESS EXISTING SPACE

<PAGE>   77

                                  EXHIBIT "C"

                                 EXPANSION PLAN

                                   [Attached]

                                      -18-
<PAGE>   78

                                    EXHIBIT C

                                   [DIAGRAM]

                        NOVATEL WIRELESS EXPANSION SPACE

<PAGE>   79

                                  EXHIBIT "D"

                              TENANT IMPROVEMENTS

                                   [Attached]

                                      -19-

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