Document:

<PAGE>

                                                                   Exhibit 10.28

                              [VIRAGE LOGIC LOGO]

                            VIRAGE LOGIC CORPORATION
                                FY2002 EXECUTIVE
                           VARIABLE INCENTIVE PAY PLAN

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                    <C>
SECTION 1:  POLICIES & PRACTICES.........................................................................3

   PURPOSE...............................................................................................3
   PREVIOUS PLANS........................................................................................3
   ELIGIBILITY SCOPE.....................................................................................3
   PARTICIPATION TARGETS.................................................................................3
   ENROLLMENT............................................................................................4
   NEW HIRES.............................................................................................4
   INTERNAL TRANSFERS....................................................................................4
   PROMOTION OUTSIDE FOCAL...............................................................................4
   PLAN METRICS..........................................................................................4
   PLAN CHANGES..........................................................................................4
   REORGANIZATIONS.......................................................................................4
   PAYMENT CYCLES........................................................................................4
   VIP CALCULATIONS......................................................................................5
   TERMINATIONS- VOLUNTARY AND INVOLUNTARY...............................................................5
   LEAVES OF ABSENCE-MEDICAL/FAMILY/PERSONAL/SABBATICAL..................................................5
   COMMUNICATION.........................................................................................5
   EXCEPTIONS............................................................................................6
   PLAN AMENDMENTS.......................................................................................6

SECTION 2:  VARIABLE INCENTIVE PAY PLANS.................................................................7

   VIRAGE LOGIC CORPORATE EXECUTIVE PAY PLAN.............................................................7
   APPENDIX "A"       VIP ENROLLMENT SHEET...............................................................9
   CHANGE RECORD - EXEC VIP PLANS.......................................................................10
</TABLE>

                                     Page 2
<PAGE>

Section 1: Policies & Practices

PURPOSE

        To enhance shareholder value by promoting strong linkages between
        employee contributions and company performance.

        To provide a variable pay plan that directly supports the achievement of
        company annual business objectives.

PREVIOUS PLANS

        Virage Logic Variable Incentive Pay Plan in effect prior to the FY2002
        plan does not apply to results achieved in FY2002.

ELIGIBILITY SCOPE

        The following exempt job types with pay grades equal to or higher than
        E06 with managing positions are eligible to participate in the FY2002
        Virage Logic Variable Incentive Pay Plan:

        E09 President, VP's
        E08 Directors
        E07 Managers
        E06 Employees with managing positions

        Participants may NOT be enrolled in more than one plan at a time.

        Participants must be employed as of the plan payout date with a
        performance rating of New in Job, Consistently Meets Peer Performance,
        or Consistently Exceeds Peer Performance to be eligible for payout.
        Employees on Performance Improvement Plans as of the plan payout date
        are not eligible for VIP payout.

        - State and Federal taxes are withheld at the supplemental rate

        - 401(k) contributions are deducted, if applicable.

PARTICIPATION TARGETS

<TABLE>
<CAPTION>
        PAY LEVEL                                      REQUIRED/OPTIONAL
        ---------                                      -----------------
<S>                                                    <C>
        E06 with managing positions                         Required
        E07                                                 Required
        E08                                                 Required
        E09-E10                                             Required
</TABLE>

                                     Page 3
<PAGE>

ENROLLMENT

        Annual enrollment is completed at the beginning of the Fiscal Plan year.
        If there is no enrollment sheet on file with Corporate Compensation by
        December 31, 2001 for the FY2002 plan, no portion of the variable
        component will be paid for FY2002 performance.

        All new VIP participants as of the Focal will be enrolled effective
        April 2002. An enrollment sheet for new participants must be completed
        and forwarded to compensation within 30 days of the Focal effective
        date.

        Any increase in participation level at Focal will be effective April 1,
        2002 and does not require a new enrollment form.

NEW HIRES

        New employees with VIP participation as part of the hire offer will be
        eligible effective the first day of the new quarter following effective
        date of hire. An enrollment sheet must be completed and forwarded to
        compensation within 30 days of the hire date.

INTERNAL TRANSFERS

        Not-applicable

PROMOTION OUTSIDE FOCAL

        When promoted from a non-eligible pay level to a pay level eligible for
        VIP, VIP (if elected by the manager when optional) is effective the
        first day of the new quarter following the promotion effective date. A
        new enrollment sheet must be completed and forwarded to compensation
        within 30 days of the promotion date.

PLAN METRICS

        All annual VIP targets are set by executive management, and are subject
        to change during the plan year.

PLAN CHANGES

        In the event of a material change to an existing plan (to be determined
        by the Corporate Compensation Committee), the plan administrator will
        coordinate distribution of new plans and enrollment forms to the
        affected participants.

REORGANIZATIONS

        The Corporate Compensation Committee will make the final decision
        regarding plan changes due to reorganizations.

PAYMENT CYCLES

        Quarterly VIP payouts are paid by the end of the proceeding month
        following the end of the fiscal quarter.

                                     Page 4
<PAGE>

VIP CALCULATIONS

        Quarterly VIP payouts are calculated based on individual target dollars
        and achievement of plan objectives. Individual target dollars are
        determined on an ongoing basis throughout the plan year. If individual
        base pay or quarterly VIP percentage changes, quarterly target dollars
        change. The VIP Plan is intended to recognize group performance.
        Individual payouts are non-discretionary below E09 (or equivalent) pay
        grade.

        Calculation Example:

<TABLE>
<CAPTION>
                                               BASE       VIP                                              TARGET
        DATE            ACTION                 PAY        PERCENTAGE       CALCULATION                    DOLLARS
        --------------- ---------------------- ---------- ---------------- --------------------------  ---------------
<S>                     <C>                    <C>        <C>              <C>                         <C>
        October 1       Plan Year Begins       100,000    15%              15,000 [divided by] 12 mo.       7,500
                                                                           X 6 mo.
        -------------------------------------- ---------- ---------------- --------------------------  ---------------
        April 1         Focal Pay Change       105,000    15%              15,750 [divided by] 12 mo.       3,938
                                                                           X 3 mo.
        -------------------------------------- ---------- ---------------- --------------------------  ---------------
        July 1          Promotion              130,000    25%              32,500 [divided by] 12 mo.       8,125
                                                                           X 3 mo.
        -------------------------------------- ---------- ---------------- --------------------------  ---------------
        TOTAL ANNUAL TARGET DOLLARS                                                                       $19,563
        -------------------------------------- ---------- ---------------- --------------------------  ---------------
</TABLE>

        (CERTAIN ONE-TIME CHARGES MAY BE EXCLUDED. THE UNPLANNED FINANCIAL
        IMPACTS OF ACQUISITIONS AND DIVESTITURES WILL NOT BE INCLUDED FOR THE
        YEAR IN WHICH THEY WERE ACQUIRED. THE BOARD OF DIRECTORS WILL REVIEW
        QUARTERLY RESULTS TO ENSURE CONSISTENCY WITH BUSINESS EXPECTATIONS. THE
        CORPORATE COMPENSATION COMMITTEE WILL REVIEW PAYOUTS ON A SEMI-ANNUAL
        BASIS).

TERMINATIONS- VOLUNTARY AND INVOLUNTARY

        To be eligible for payout under any FY2002 VIP plan, the participant
        must be a Virage Logic employee, or an employee of a subsidiary or
        branch office of Virage Logic Corporation as of the payout date.

        In the event of an employee's death, participation in any VIP plan will
        continue for 30 days following the date of death, or the end of the plan
        year, whichever occurs first. Earned prorated VIP payments will be paid
        to the employee's estate after the end of the quarterly payout schedule.

LEAVES OF ABSENCE-MEDICAL/FAMILY/PERSONAL/SABBATICAL

        Before a personal leave begins, employees must use all accrued PTO hours
        until depleted. Once PTO hours are depleted, employees will be placed on
        an unpaid leave status. VIP payout calculations will include time
        charged to PTO. Quarterly VIP Payouts for employees with leaves of
        absence less than or equal to 90 days during FY2002 will not be prorated
        to exclude the leave of absence.

        Quarterly VIP payouts for employees with unpaid leaves of absence over
        90 days in duration during FY2002 will be prorated to exclude the entire
        leave of absence.

COMMUNICATION

        VIP plan participation is communicated to participants by HR and the
        employees' manager at the beginning of the Plan year. Performance
        objectives are communicated to participants by the CFO and the
        Departmental Managers with approval of the CFO, as soon as the annual
        targets are finalized. The CFO on a quarterly basis communicates updates
        on progress toward objectives to participants.

                                     Page 5
<PAGE>

EXCEPTIONS

        Unique situations that were not anticipated in this document may require
        an adjustment to variable compensation. The Corporate Compensation
        Committee must approve all exceptions.

PLAN AMENDMENTS

        This plan reflects company structure at time of plan approval. Virage
        Logic reserves the right to amend this plan at any time with reasonable
        notice.

ROLES

       Corporate Compensation Committee                     Plan Administrator

       Adam Kablanian                                         Natasha Narron
       Alex Shubat
       James R. Pekarsky

                                     Page 6
<PAGE>

SECTION 2: VARIABLE INCENTIVE PAY PLANS

                         VIRAGE LOGIC EXECUTIVE PAY PLAN

<TABLE>
<S>                        <C>
PLAN TYPE:                 50% Revenue / 50% Operating Profit

PLAN YEAR:                 FY2002

PLAN PURPOSE:              The purpose of the Virage Logic VIP plan is to link employee contributions and company performance.

FY2002 ELIGIBILITY:        Employees in Pay Grades E06 (with managing positions) -- E09

PLAN METRIC:               Payout will be determined on achievement of corporate performance as measured by FY2002 planned
                           revenue and operating profit each quarter of the fiscal year. Operating Profit Dollars will be adjusted
                           for unusual accounting items (stock-based compensation charges, re-valuation of warrants) as directed by
                           the Board of Directors.

REVENUE
PAYOUT TABLE:              Payout is based on the following table. Performance and payout above Plan is capped at 2X. The payout is
                           interpolated; payout will be rounded to the nearest whole percent.  Individual quarterly payments will
                           be calculated as follows: (employee's salary paid during the quarter  X  employee's VIP percentage  X
                           payout %).
</TABLE>

- PLAN IS CAPPED AT 2X PAYOUT

  SPECIAL NOTE: The minimum quarterly operating profit of 30% of target
  (excluding extra ordinary charges) must be met first to qualify for the
  minimum revenue payout at 76% of target.

                                     Page 7
<PAGE>

<TABLE>
<S>                        <C>
OPERATING PROFIT
PAYOUT TABLE:              Payout is based on the following table. Performance and payout above Plan is capped at 2X. The payout is
                           interpolated; payout will be rounded to the nearest whole percent.  Individual quarterly payments will
                           be calculated as follows: (employee's salary paid during the quarter  X  employee's VIP percentage  X
                           payout %).

                           * PLAN IS CAPPED AT 2X PAYOUT
</TABLE>

SPECIAL NOTE: The minimum quarterly operating profit of 40% of target (excluding
              extraordinary charges) must be met first to qualify for the
              revenue accelerator otherwise the revenue payout caps at 100%.

                                     Page 8
<PAGE>

APPENDIX "A"   VIP ENROLLMENT SHEET

               VIRAGE LOGIC CORPORATION FY2002
               VARIABLE COMPENSATION ENROLLMENT FORM

--------------------------------------------------------------------------------
(PLEASE CHECK APPROPRIATE BOX)
[ ] ANNUAL ENROLLMENT        [ ] PARTICIPANT NEW TO PLAN
--------------------------------------------------------------------------------

(PLEASE CHECK APPROPRIATE BOX)
--------------------------------------------------------------------------------
[ ] EXECUTIVE VARIABLE INCENTIVE PAY PLAN
[ ]
[ ]
--------------------------------------------------------------------------------

THIS ENROLLMENT FORM IS TO BE USED FOR ALL FY2002 COMPENSATION PLANS FOR THE
GROUPS LISTED ABOVE. THIS FORM, COMBINED WITH A COPY OF THE VIRAGE LOGIC FY2002
VARIABLE INCENTIVE PAY PLAN AND A TARGET SUMMARY FROM THE FINANCE DEPARTMENT,
PROVIDES THE INFORMATION NECESSARY TO UNDERSTAND THE FY2002 VARIABLE
COMPENSATION EARNINGS OPPORTUNITIES.

All plans listed above share common eligibility requirements; see Section 1,
Policies and Practices, FY2002 Variable Incentive Pay Plan. Plan specifics are
listed in Section 2 of the Plan.

EMPLOYEE NAME:_____________________ LOCATION:_____________________________

EMPLOYEE #:________________________ MANAGER NAME: ________________________

PLAN # (See Plan)__________________ JOB TITLE:____________________________

PAY GRADE:_________________________ DATE OF HIRE:_________________________

--------------------------------------------------------------------------------
ANNUAL ENROLLMENT (FOR EXISTING VIP PARTICIPANT):
Percent participation as of 10-1-01: _______%

--------------------------------------------------------------------------------
NEW PARTICIPANT (FOR NEW HIRE, TRANSFER TO NEW PLAN, NEWLY ELIGIBLE (INCLUDES
NEW ON VIP AT FOCAL AND PROMOTED TO VIP DURING YEAR)
Percent Participation:     __________________%  Effective Date*: _______________
--------------------------------------------------------------------------------
*EFFECTIVE DATE FOR NEW HIRES, TRANSFERS TO NEW PLAN, NEWLY ELIGIBLE (AT
FOCAL/PROMO) IS FIRST OF MONTH FOLLOWING EVENT.

I have reviewed a copy of the FY2002 Virage Logic Executive Variable Incentive
Pay Plan and understand my participation in the plan and the payout
factors/targets that pertain to that plan. I also understand that this Plan is
subject to change at the discretion of Virage Logic Corporation.

Employee: ______________________________________    Date: ____________________

Manager:  ______________________________________    Date: ____________________

CEO:   _________________________________________    Date: ____________________

CFO:  __________________________________________    Date: ____________________

                                     Page 9
<PAGE>

CHANGE RECORD - EXEC VIP PLAN

<TABLE>
<CAPTION>
        VERSION        DATE        DESCRIPTION OF REVISION
     -------------- ----------- ------------------------------------------------
<S>                 <C>         <C>

     -------------- ----------- ------------------------------------------------
</TABLE>

                                    Page 10<PAGE>

                                                                   EXHIBIT 10.29

        THIS LEASE AGREEMENT (the "Lease") is entered into this 26th day of
January, 2001, between Rhoady Lee, Jr. and Jeanne Marie Lee, as Trustees under
that certain Living Trust Agreement dated June 9, 1994, ("Landlord"), and Virage
Logic Corporation, a Delaware corporation ("Tenant"). Landlord and Tenant agree
as follows:

1. LEASE SUMMARY.

        a. LEASED PREMISES. The leased premises (the "Premises") consist of
approximately 4,115 rentable square feet as outlined on the floor plan attached
as Exhibit A, located on the land legally described on attached Exhibit B, and
are commonly known as Suite 300, 14205 Building, 14205 SE 36th Street, Bellevue,
Washington 98006. The Premises do not include, and Landlord reserves, the
exterior walls and roof of the Premises, the land beneath the Premises, the
pipes and ducts, conduits, wires, fixtures, and equipment above the suspended
ceiling or structural elements of the building in which the Premises are located
(the "Building"). The Building, the land upon which it is situated, all other
improvements located on such land, and all common areas appurtenant to the
Building are referred to herein as the "Property."

        b. LEASE COMMENCEMENT DATE. The Lease shall commence on February 15,
2001, or such earlier or later date as provided in Section 3 (the "Commencement
Date").

        c. LEASE TERMINATION DATE. The Lease shall terminate at midnight on
February 14, 2004, or such earlier or later date as provided in Section 3 (the
"Termination Date").

        d. BASE RENT. The base monthly rent shall be:

<TABLE>
<CAPTION>
             MONTHS           ANNUAL RENT          MONTHLY INSTALLMENT
<S>                           <C>                  <C>
              1-12             $ 115,220               $ 9,601.67
              13-24            $ 119,335               $ 9,944.58
              25-36            $ 123,450               $10,287.50
</TABLE>

        Rent shall be payable at Landlord's address shown in Section 1(h) below,
or such other place designated in writing by Landlord.

        e. PREPAID RENT. Upon execution of this Lease, Tenant shall deliver to
Landlord the sum of $11,878.64 as prepaid rent, to be applied to the Rent due
for the first month of the Lease.

        f. SECURITY DEPOSIT. The amount of the security deposit is $12,564.47.

        g. PERMITTED USE. The Premises shall be used only for general office
purposes and for no other purpose without the prior written consent of Landlord.

        h. NOTICE AND PAYMENT ADDRESSES:

                Landlord: c/o TM Lee Development Company
                Attention: Tom Lee
                4000 East Madison Street, Suite 200
                Seattle, WA 98112
                Fax No.: (206) 322-5510

                Tenant:  Virage Logic Corporation
                           14205 Building, Suite 300
                           14205 SE 36th Street

                                       2
<PAGE>
                           Bellevue, WA 98006
               Fax No.:
                       -----------------------

        i. LEASE COMMISSION. Landlord shall pay a commission to Raskin &
Associates ("Landlord's Broker") equal to five percent (5%) of the Base Rent
payable by Tenant for the terms of the Lease. The commission shall be earned
upon occupancy of the Premises by Tenant, and paid one-half upon execution of
this Lease and one-half upon occupancy of the Premises by Tenant. Landlord's
Broker shall pay to Morris Piha Real Estate Services, Inc. ("Tenant's Broker")
one half of the commission paid to Landlord's Broker, within five (5) days after
receipt by Landlord's Broker.

        j. TENANT'S PRO RATA SHARE. Landlord and Tenant agree that Tenant's Pro
Rata Share is 10.17% based on the ratio of the agreed rentable area of the
Premises (4,115 square feet) to the agreed rentable area of the Building (40,461
square feet) as of the date of this Lease.

2. PREMISES. Landlord leases to Tenant, and Tenant leases from Landlord the
Premises upon the terms specified in this Lease.

3. TERM

        a. COMMENCEMENT DATE. The Lease shall commence on the date specified in
Section 1(b), or on such earlier or later date as may be specified by written
notice delivered by Landlord to Tenant advising Tenant that the Premises are
ready for possession and specifying the Commencement Date, which shall not be
less than ten (10) days following the date of such notice. If Tenant occupies
the Premises before the Commencement Date specified in Section 1(b), then the
Commencement Date shall be the date of occupancy. If Landlord acts diligently to
make the Premises available to Tenant, neither Landlord nor any agent or
employee of Landlord shall be liable for any damage or loss due to Landlord's
inability or failure to deliver possession of the Premises to Tenant as provided
in this Lease. The Termination Date shall be modified upon any change in the
Commencement Date so that the length of the Lease term is not changed. If
Landlord does not deliver possession of the Premises to Tenant within ninety
days (90) after the date specified in Section 1(b), Tenant may elect to cancel
this Lease by giving written notice to Landlord within 10 days after such time
period ends. If Tenant gives such notice, the Lease shall be cancelled, all
prepaid rent and security deposits shall be refunded to tenant, and neither
Landlord nor Tenant shall have any further obligations to the other. The first
"Lease Year" shall commence on the Commencement Date and shall end on the date
which is twelve (12) months from the end of the month in which the Commencement
Date occurs. Each successive Lease Year during the initial term and any
extension terms shall be twelve (12) months, commencing on the first day
following the end of the preceding Lease Year, except that the last Lease Year
shall end on the Termination Date.

        b. TENANT OBLIGATIONS. To the extent Tenant's tenant improvements are
not completed in time for the Tenant to occupy or take possession of the
Premises on the Commencement Date due to the failure of Tenant to fulfill any of
its obligations under this Lease, the Lease shall nevertheless commence on the
Commencement Date.

        Except as specified elsewhere in this Lease, Landlord makes no
representations or warranties to Tenant regarding the Premises, including the
structural condition of the Premises and the condition of all mechanical,
electrical, and other systems on the Premises. Except for any tenant
improvements described on attached Exhibit C to be completed by Landlord
(defined therein as "Landlord's Work"), Tenant shall be responsible for
performing any work necessary to bring the Premises into condition satisfactory
to Tenant. By signing this Lease, Tenant acknowledges that it has had adequate
opportunity to investigate the Premises, acknowledges responsibility for making
any corrections, alterations and repairs to the Premises (other than the
Landlord's Work), and acknowledges that the time needed to complete any such
items shall not delay the

                                       3
<PAGE>
Commencement Date. Notwithstanding the foregoing, Landlord represents that, to
the best of Landlord's knowledge, the systems and utilities serving the
Premises (electrical, plumbing, mechanical, etc.) are presently in good working
order.

        Attached Exhibit C sets forth all Landlord's Work, if any, and all
tenant improvements to be completed by Tenant ("Tenant's Work"), which is to be
performed on the Premises. Responsibilities for design, payment and performance
of all such work shall be as set forth on attached Exhibit C. If Tenant fails to
notify Landlord of any defects in the Landlord's Work within ten (10) days of
delivery of possession to Tenant, Tenant shall be deemed to have accepted the
Premises in their then condition. If Tenant discovers any major defects in the
Landlord's Work during this 10-day period that would prevent Tenant from using
the Premises for its intended purpose, Tenant shall so notify Landlord in
writing and the Commencement Date shall be delayed until after Landlord has
corrected the major defects and Tenant has had five (5) days to inspect and
approve the Premises after Landlord's correction of such defects. The
Commencement Date shall not be delayed if Tenant's inspection reveals minor
defects in the Landlord's Work that will not prevent Tenant from using the
Premises for their intended purpose. Tenant shall prepare a punch list of all
minor defects and provide the punch list to Landlord. Landlord shall promptly
correct all punch list items.

4. RENT. Tenant shall pay Landlord without demand, deduction or offset, in
lawful money of the United States, the monthly rental stated in Section 1(d) in
advance on or before the first day of each month during the Lease Term beginning
on the Commencement Date, and any other additional payments due to Landlord,
including Operating Costs (collectively the "Rent") when required under this
Lease. Payments for any partial month at the beginning or end of the Lease term
shall be prorated.

        If any sums payable by Tenant to Landlord under this Lease are not
received by the fifth (5th) day of each month, Tenant shall pay Landlord in
addition to the amount due, for the cost of collecting and handling such late
payment, an amount equal to the greater of $100 or five percent (5%) of the
delinquent amount. In addition, all delinquent sums payable by Tenant to
Landlord and not paid within five days of the due date shall, at Landlord's
option, bear interest at the rate of twelve percent (12%) per annum, or the
highest rate of interest allowable by law, whichever is less. Interest on all
delinquent amounts shall be calculated from the original due date to the date of
payment.

        Landlord's acceptance of less than the full amount of any payment due
from Tenant shall not be deemed an accord and satisfaction or compromise of such
payment unless Landlord specifically consents in writing to payment of such
lesser sum as an accord and satisfaction or compromise of the amount which
Landlord claims.

5. SECURITY DEPOSIT. Upon execution of this Lease, Tenant shall deliver to
Landlord a security deposit in the amount of $12,564.47. Landlord may commingle
the security deposit with its other funds. If Tenant breaches any covenant or
condition of this Lease, including but not limited to the payment of base or
additional Rent, Landlord may apply all or any part of the security deposit to
the payment of any sum in default and any damage suffered by Landlord as a
result of Tenant's breach. In such event, Tenant shall, within five (5) days
after written demand therefor by Landlord, deposit with Landlord the amount so
applied. Any payment to Landlord from the security deposit shall not be
construed as a payment of liquidated damages for any default. If Tenant complies
with all of the covenants and conditions of this Lease throughout the Lease
term, the security deposit shall be repaid to Tenant without interest within 30
days after the vacation of the Premises by Tenant.

6. USES. The Premises shall be used only for the use(s) specified in Section
1(g) above (the "Permitted Use"), and for no other business or purpose without
the prior written consent of Landlord. No act shall be done on or around the
Premises that is unlawful or that will increase the existing rate of insurance
on the Premises or the Building, or cause the cancellation of any insurance on
the Premises or the Building. Tenant

                                       4
<PAGE>
shall not commit or allow to be committed any waste upon the Premises, or any
public or private nuisance. Tenant shall not do or permit anything to be done in
the Premises or on the Property which will obstruct or interfere with the rights
of other tenants or occupants of the Property, or their customers, clients and
visitors, or to injure or annoy such persons. Tenant shall comply with such
reasonable rules and regulations as may be adopted and published by Landlord
from time to time for the safety, care and cleanliness of the Premises and the
Building, and for the preservation of good order therein.

7. COMPLIANCE WITH LAWS. Tenant shall not cause or permit the Premises to be
used in any way which violates any law, ordinance, or governmental regulation or
order. Landlord represents to Tenant, to the best of Landlord's knowledge, that
with the exception of any Tenant's Work, as of the Commencement Date, the
Premises comply with all applicable laws, rules, regulations, or orders,
including without limitation, the Americans With Disabilities Act, if
applicable, and Landlord shall be responsible to promptly cure any noncompliance
which existed on the Commencement Date. Tenant shall be responsible for
complying with all laws applicable to the Premises as a result of Tenant's
particular use, such as modifications required by the Americans With
Disabilities Act as a result of Tenant opening the Premises to the public as a
place of public accommodation. If the enactment or enforcement of any law,
ordinance, regulation or code during the Lease term requires any changes to the
Premises during the Lease term, the Tenant shall perform all such changes at its
expense if the changes are required due to the nature of Tenant's activities at
the Premises, or to alterations that Tenant seeks to make to the Premises;
otherwise, Landlord shall perform all such changes at its expense.

8. OPERATING COSTS.

        a. DEFINITION. As used herein, "Operating Costs" shall mean all costs of
operating, maintaining and repairing the Premises, the Building, and the
Property, determined in accordance with generally accepted accounting
principles, and including without limitation the following: all taxes and
assessments (including, but not limited to, real and personal property taxes and
assessments, local improvement district assessments and other special purpose
assessments, and taxes on rent or gross receipts); insurance premiums paid by
Landlord and (to the extent used) deductibles; water, sewer and all other
utility charges (other than utilities separately metered and paid directly by
Tenant or other tenants); janitorial and all other cleaning services; refuse and
trash removal; refurbishing and repainting; carpet replacement; air
conditioning, heating, ventilation and elevator service; pest control; lighting
systems, fire detection and security services; landscape maintenance; management
(fees and/or personnel costs); parking lot, road, sidewalk and driveway
patching, resurfacing and maintenance; snow and ice removal; amortization (in
accordance with generally accepted accounting principles) of capital
improvements as Landlord may in the future install to comply with governmental
regulations and rules or undertaken in good faith with a reasonable expectation
of reducing operating costs (the useful life of which shall be a reasonable
period of time as determined by Landlord); and costs of legal services (except
those incurred directly relating to a particular occupant of the Building);
accounting services, labor, supplies, materials and tools. Operating Costs shall
not include: Landlord's income tax or general corporate overhead; depreciation
on the Building or equipment therein; loan payments; real estate broker's
commissions; capital improvements to or major repairs of the Building shell
(i.e., the Building structure, exterior walls and roof) not described in this
paragraph; or any costs regarding the operation, maintenance and repair of the
Premises, the Building, or the Property paid directly by Tenant or other tenants
in the Building.

        b. PAYMENT. As additional Rent, Tenant shall pay to Landlord on the
first of each month with payment of Tenant's Base Rent one-twelfth of Tenant's
Pro Rata Share of Operating Costs.

        c. METHOD OF PAYMENT. Tenant shall pay to Landlord Operating Costs as
provided above pursuant to the following procedure:

                                       5
<PAGE>
               (i) Landlord shall provide to Tenant at or before the
Commencement Date, a good faith estimate of annual Operating Costs for the
calendar year in which the Commencement Date occurs. Landlord shall also provide
to Tenant, as soon as possible following the first day of each succeeding
calendar year, a good faith estimate of Tenant's annual Pro Rata Share of
Operating Costs for the then-current year;

               (ii) Each estimate of Tenant's annual Pro Rata Share of Operating
Costs determined by Landlord as described above, shall be divided into twelve
(12) equal monthly installments. Tenant shall pay to Landlord such monthly
installment of Operating Costs with each monthly payment of Base Rent. In the
event the estimated amount of Tenant's Pro Rata Share of Operating Costs has not
yet been determined for any calendar year, Tenant shall pay the monthly
installment in the estimated amount determined for the preceding calendar year
until the estimate for the current calendar year has been provided to Tenant. At
such time as the estimate for the current calendar year is received, Tenant
shall then pay any shortfall or receive a credit for any surplus for the
preceding months of the current calendar year and shall, thereafter, make the
monthly installment payment in accordance with the current estimate; and

               (iii) As soon as reasonably possible following the end of each
calendar year of the Lease term, Landlord shall determine and provide to Tenant
a statement (the "Operating Costs Statement") setting forth the amount of
Operating Costs actually incurred and the amount of Tenant's Pro Rata Share of
Operating Costs actually payable by Tenant with respect to such calendar year.
In the event the amount of Tenant's Pro Rata Share of Operating Costs exceeds
the sum of the monthly installments actually paid by Tenant for such calendar
year, Tenant shall pay to Landlord the difference within thirty (30) days
following receipt of the Operating Costs Statement. In the event the sum of such
installments exceeds the amount of Tenant's Pro Rata Share of Operating Costs
actually due and owing, the difference shall be applied as a credit to Tenant's
future Pro Rata Share of Operating Costs payable by Tenant pursuant to this
Section.

9. UTILITIES AND SERVICES. Landlord shall provide the Premises the following
services, the cost of which shall be included in the Operating Costs: water and
electricity for the Premises seven (7) days per week, twenty-four (24) hours per
day, and heating, ventilation and air conditioning from 8:00 a.m. to 6:00 p.m.
Monday through Friday, and 9:00 a.m. to 12:00 noon on Saturday, and shall
provide janitorial service to the Premises and Building five (5) nights each
week, exclusive of holidays. Heating, ventilation and air conditioning services
will also be provided by Landlord to the Premises during additional hours on
reasonable notice to Landlord, at Tenant's sole cost and expense, at an hourly
rate reasonably established by Landlord from time to time and payable by Tenant,
as billed, as additional Rent.

        Tenant shall furnish and pay, at Tenant's sole expense, all other
utilities (including, but not limited to, telephone and cable service if
available) and other services which Tenant requires with respect to the
Premises, except those to be provided by Landlord as described above.
Notwithstanding the foregoing, if Tenant's use of the Premises incurs utility
service charges which are above ordinary usage, Landlord reserves the right to
require Tenant to pay a reasonable additional charge for such usage. For
example, where Tenant installs and uses a number of electronic devices which is
greater than normal, the increased usage may result in higher electrical charges
and increased charges for cooling since overheating of rooms may result.

10. TAXES. Tenant shall pay all taxes, assessments, liens and license fees
("Taxes") levied, assessed or imposed by any authority having the direct or
indirect power to tax or assess any such liens, by reason of Tenant's use of the
Premises, and all Taxes on Tenant's personal property located on the Premises.
Landlord shall pay all Taxes with respect to the Building and the Project,
including any Taxes resulting from a reassessment of the Building or the Project
due to a change of ownership or otherwise, which shall be included in Operating
Costs.

11. COMMON AREAS.

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<PAGE>
        a. DEFINITION. The term "Common Areas" means all areas and facilities
that are provided and designated from time to time by Landlord for the general
non-exclusive use and convenience of Tenant with other tenants and which are not
leased or held for the exclusive use of a particular tenant. Common Areas may,
but do not necessarily include, hallways, entryways, stairs, elevators,
driveways, walkways, terraces, docks, loading areas, restrooms, trash
facilities, parking areas and garages, roadways, pedestrian sidewalks,
landscaped areas, security areas and lobby or mall areas. Tenant shall comply
with reasonable rules and regulations concerning the use of the common areas
adopted by Landlord from time to time. Without advance notice to Tenant and
without any liability to Tenant, Landlord may change the size, use, or nature of
any common areas, erect improvements on the Common Areas or convert any portion
of the Common Areas to the exclusive use of Landlord or selected tenants, so
long as Tenant is not thereby deprived of the substantial benefit of the
Premises. Landlord reserves the use of exterior walls and the roof, and the
right to install, maintain, use, repair and replace pipes, ducts, conduits, and
wires leading through the Premises in areas which will not materially interfere
with Tenant's use thereof.

        b. USE OF THE COMMON AREAS. Tenant shall have the non-exclusive right in
common with such other tenants to whom Landlord has granted or may grant such
rights to use the Common Areas. Tenant shall abide by rules and regulations
adopted by Landlord from time to time and shall use its reasonable efforts to
cause its employees, contractors, and invitees to comply with those rules and
regulations, and not interfere with the use of Common Areas by others, provided
that Landlord provides Tenant with a copy of such rules and regulations.

        c. MAINTENANCE OF COMMON AREAS. Landlord shall maintain the Common Areas
in good order, condition and repair. This maintenance cost shall be an
Operating Cost chargeable to Tenant pursuant to Section 8.

12. ALTERATIONS. Tenant may make alterations, additions or improvements to the
Premises, including any Tenant's Work identified on attached Exhibit C
("Alterations"), with the prior written consent of Landlord, provided that
Landlord will not unreasonably withhold or delay its consent to nonstructural
Alterations. The term "Alterations" shall not include the installation of
shelves, movable partitions, Tenant's equipment, and trade fixtures which may be
performed without damaging existing improvements or the structural integrity of
the Premises, and Landlord's consent shall not be required for Tenant's
installation of those items. Tenant shall complete all Alterations at Tenant's
expense in compliance with all applicable laws and in accordance with plans and
specifications approved by Landlord, using contractors approved by Landlord, and
in a manner so as to not unreasonably interfere with other tenants. Landlord
shall be deemed the owner of all Alterations except for those which Landlord
requires to be removed at the end of the Lease term. Tenant shall remove all
Alterations at the end of the Lease term unless Landlord conditioned its consent
upon Tenant leaving a specified Alteration at the Premises, in which case Tenant
shall not remove such Alteration. Tenant shall immediately repair any damage to
the Premises caused by removal of Alterations.

        Notwithstanding the foregoing, Landlord agrees to permit Tenant to
install a rooftop antenna and satellite dish, subject to the terms of this
paragraph. Prior to installation, Tenant shall submit plans and specifications
regarding the antenna and satellite dish installation, the contents and location
of which shall be subject to Landlord's prior written approval, which shall not
be unreasonably withheld or delayed. The installation shall be performed by a
contractor approved by Landlord, and shall be accomplished in such a way as to
not affect or compromise the Building roof warranty. At all times during and
after the installation of the antenna and satellite dish, Tenant shall not
permit any water penetration as a result of the installation, operation,
maintenance, repair or removal of the antenna and satellite dish. Tenant's use
and operation of the antenna and satellite dish shall not interfere with any
other telecommunications or other system serving the Building or the Property.
Tenant shall pay, upon demand, the cost of any utilities needed to operate the
antenna and satellite dish. Upon termination of this Lease, Tenant shall, unless
otherwise directed by

                                       7
<PAGE>
Landlord, remove the antenna and satellite dish, and leave the roof in
watertight condition following such removal.

13. REPAIRS AND MAINTENANCE. Tenant shall, at its sole expense, maintain the
Premises in good condition and promptly make all repairs and replacements,
whether structural or non-structural, necessary to keep the Premises safe and in
good condition, including all utilities and other systems serving the Premises.
Landlord shall maintain and repair the Building structure, foundation, exterior
walls, and roof, and the Common Areas (including utilities and other systems
serving the Property other than those located within a tenant's leased
premises), the cost of which shall be included as an Operating Cost. Tenant
shall not damage any demising wall or disturb the structural integrity of the
Premises and shall promptly repair any damage or injury done to any such
demising walls or structural elements caused by Tenant or its employees, agents,
contractors, or invitees. If Tenant fails to maintain or repair the Premises,
Landlord may enter the Premises and perform such repair or maintenance on behalf
of Tenant. In such case, Tenant shall be obligated to pay to Landlord
immediately upon receipt of demand for payment, as additional Rent, all costs
incurred by Landlord. Notwithstanding anything in this Section to the contrary,
Tenant shall not be responsible for any repairs to the Premises made necessary
by the acts of Landlord or its agents, employees, contractors or invitees
therein.

        Upon expiration of the Lease term, whether by lapse of time or
otherwise, Tenant shall promptly and peacefully surrender the Premises, together
with all keys, to Landlord in as good condition as when received by Tenant from
Landlord or as thereafter improved, reasonable wear and tear and insured
casualty excepted.

14. ACCESS. After reasonable notice from Landlord (except in cases of emergency;
where no notice is required), Tenant shall permit Landlord and its agents and
employees to enter the Premises at all reasonable times for the purposes of
repair or inspection. This Section shall not impose any repair or other
obligation upon Landlord not expressly stated elsewhere in this Lease. After
reasonable notice to Tenant, Landlord shall have the right to enter the Premises
for the purpose of showing the Premises to prospective purchasers or lenders at
any time, and to prospective tenants within 180 days prior to the expiration or
sooner termination of the Lease term.

15. SIGNAGE. Tenant shall obtain Landlord's written consent before installing
any signs upon the Premises. Tenant shall install any approved signage at
Tenant's sole expense and in compliance with all applicable laws. Tenant shall
not damage or deface the Premises in installing or removing signage and shall
repair any injury or damage to the Premises caused by such installation or
removal. Landlord shall provide, at its sole cost and expense, building and
standard suite entry signage and main lobby directory signage for Tenant.

16. DESTRUCTION OR CONDEMNATION.

        a. DAMAGE and REPAIR. If the Premises or the portion of the Property
necessary for Tenant's occupancy are partially damaged but not rendered
untenantable, by fire or other insured casualty, then Landlord shall diligently
restore the Premises and the portion of the Property necessary for Tenant's
occupancy and this Lease shall not terminate; provided, however, Tenant may
terminate the Lease if Landlord is unable to restore the Premises within six (6)
months of the casualty event. The Premises or the portion of the Property
necessary for Tenant's occupancy shall not be deemed untenantable if less than
twenty-five percent (25%) of each of those areas is damaged. Notwithstanding the
foregoing, Landlord shall have no obligation to restore the Premises or the
portion of the Property necessary for Tenant's occupancy if insurance proceeds
are not available to pay the entire cost of such restoration. If insurance
proceeds are available to Landlord but are not sufficient to pay the entire cost
of restoration, then Landlord may elect to terminate this Lease and keep the
insurance proceeds, by notifying Tenant within sixty (60) days of the date of
such casualty.

                                       8
<PAGE>
        If the Premises, the portion of the Property necessary for Tenant's
occupancy, or 50% or more of the rentable area of the Property are entirely
destroyed, or partially damaged and rendered untenantable, by fire or other
casualty, Landlord may, at its option: (a) terminate this Lease as provided
herein, or (b) restore the Premises and the portion of the Property necessary
for Tenant's occupancy to their previous condition; provided, however, if such
casualty event occurs during the last 6 months of the Lease term (after
considering any option to extend the term timely exercised by Tenant) then
either Tenant or Landlord may elect to terminate the Lease. If, within 60 days
after receipt by Landlord from Tenant of written notice that Tenant deems the
Premises or the portion of the Property necessary for Tenant's occupancy
untenantable, Landlord fails to notify Tenant of its election to restore those
areas, or if Landlord is unable to restore those areas within six (6) months of
the date of the casualty event, then Tenant may elect to terminate the Lease.

        If Landlord restores the Premises or the Property under this Section
16(a), Landlord shall proceed with reasonable diligence to complete the work,
and the base Rent shall be abated in the same proportion as the untenantable
portion of the Premises bears to the whole Premises, provided that there shall
be a rent abatement only if the damage or destruction of the Premises or the
Property did not result from, or was not contributed to directly or indirectly
by the act, fault or neglect of Tenant, or Tenant's officers, contractors,
licensees, agents, servants, employees, guests, invitees or visitors. Provided,
Landlord complies with its obligations under this Section, no damages,
compensation or claim shall be payable by Landlord for inconvenience, loss of
business or annoyance directly, incidentally or consequentially arising from any
repair or restoration of any portion of the Premises or the Property. Landlord
will not carry insurance of any kind for the protection of Tenant or any
improvements paid for by Tenant or as provided in Exhibit C or on Tenant's
furniture or on any fixtures, equipment, improvements or appurtenances of Tenant
under this Lease, and Landlord shall not be obligated to repair any damage
thereto or replace the same unless the damage is caused by Landlord's
negligence.

        b. CONDEMNATION. If the Premises, the portion of the Property necessary
for Tenant's occupancy, or 50% or more of the rentable area of the Property are
made untenantable by eminent domain, or conveyed under a threat of condemnation,
this Lease shall terminate at the option of either Landlord or Tenant as of the
earlier of the date title vests in the condemning authority or the condemning
authority first has possession of the Premises or the portion of the Property
and all Rents and other payments shall be paid to that date. In case of taking
of a part of the Premises or the portion of the Property necessary for Tenant's
occupancy that does not render those areas untenantable, then this Lease shall
continue in full force and effect and the base Rent shall be equitably reduced
based on the proportion by which the floor area of any structures is reduced,
such reduction in Rent to be effective as of the earlier of the date the
condemning authority first has possession of such portion or title vests in the
condemning authority. The Premises or the portion of the Property necessary for
Tenant's occupancy shall not be deemed untenantable if less than twenty-five
percent (25%) of each of those areas is condemned. Landlord shall be entitled to
the entire award from the condemning authority attributable to the value of the
Premises or the Property and Tenant shall make no claim for the value of its
leasehold. Tenant shall be permitted to make a separate claim against the
condemning authority for moving expenses or damages resulting from interruption
in its business, provided that in no event shall Tenant's claim reduce
Landlord's award.

17. INSURANCE.

        a. LIABILITY INSURANCE. During the Lease term, Tenant shall pay for and
maintain commercial general liability insurance with broad form property damage
and contractual liability endorsements. This policy shall name Landlord as an
additional insured, and shall insure Tenant's activities and those of Tenant's
employees, officers, contractors, licensees, agents, servants, employees,
guests, invitees or visitors with respect to the Premises against loss, damage
or liability for personal injury or death or loss or damage to

                                       9
<PAGE>
property with a combined single limit of not less than $1,000,000, and a
deductible of not more than $5,000. The insurance will be noncontributory with
any liability insurance carried by Landlord.

        b. CASUALTY INSURANCE. During the Lease term, Tenant shall pay for and
maintain casualty insurance coverage for its property located at the Premises.
Landlord shall not be responsible for losses to Tenant's property at the
Premises, and Tenant's property shall be kept at the Premises at Tenant's risk.

        c. MISCELLANEOUS. Insurance required under this Section shall be with
companies rated A-XV or better in Best's Insurance Guide, and which are
authorized to transact business in the State of Washington. No insurance policy
shall be cancelled or reduced in coverage and each such policy shall provide
that it is not subject to cancellation or a reduction in coverage except after
thirty (30) days' prior written notice to Landlord. Tenant shall deliver to
Landlord upon commencement of the Lease and from time to time thereafter, copies
or certificates of the insurance policies required by this Section. In no event
shall the limit of such policies be considered as limiting the liability of
Tenant under this Lease.

        d. LANDLORD INSURANCE. Landlord shall carry standard form extended
coverage fire insurance of the building shell and core in the amount of their
full replacement value, and such other insurance of such types and amounts as
Landlord, in its discretion, shall deem reasonably appropriate. The cost of any
such insurance may be included in the Operating Costs by a "blanket policy"
insuring other parties and/or locations in addition to the Building, in which
case the portion of the premiums therefor allocable to the Building and Project
shall be included in the Operating Costs. In addition to the foregoing, in the
event Tenant fails to provide or keep in force any of the insurance as required
above, Landlord, in its discretion, may provide such insurance, in which event,
the cost thereof shall be payable by Tenant to Landlord as additional rent on
the first day of the calendar month immediately following demand therefor from
Landlord.

        e. WAIVER OF SUBROGATION. Landlord and Tenant hereby release each other
and their agents or employees, from responsibility for, and waive their entire
claim of recovery for any loss or damage arising from any cause covered by
insurance required to be carried by each of them. Each party shall provide
notice to the insurance carrier or carriers of this mutual waiver of
subrogation, and shall cause its respective insurance carriers to waive all
rights of subrogation against the other. This waiver shall not apply to the
extent of the deductible amounts to any such policies or to the extent of
liabilities exceeding the limits of such policies.

18. INDEMNIFICATION. Tenant shall defend, indemnify, and hold Landlord harmless
against all liabilities, damages, costs, and expenses, including attorneys'
fees, arising from any negligent or wrongful act or omission of Tenant or
Tenant's officers, contractors, licensees, agents, servants, employees, guests,
invitees, or visitors on or around the Premises or arising from any breach of
this Lease by Tenant. Tenant shall use legal counsel acceptable to Landlord in
defense of any action within Tenant's defense obligation. Landlord shall defend,
indemnify and hold Tenant harmless against all liabilities, damages, costs, and
expenses, including attorneys' fees, arising from any negligent or wrongful act
or omission of Landlord or Landlord's officers, contractors, licensees, agents,
servants, employees, guests, invitees, or visitors on or around the Premises or
visitors, or arising from any breach of this Lease by Landlord. Landlord shall
use legal counsel acceptable to Tenant in defense of any action within
Landlord's defense obligation.

19. ASSIGNMENT AND SUBLETTING. Tenant shall not assign, sublet, mortgage,
encumber or otherwise transfer any interest in this Lease (collectively referred
to as a "Transfer") or any part of the Premises, without first obtaining
Landlord's written consent, which shall not be unreasonably withheld or delayed.
No Transfer shall relieve Tenant of any liability under this Lease
notwithstanding Landlord's consent to such transfer. Consent to any Transfer
shall not operate as a waiver of the necessity for Landlord's consent to any
subsequent Transfer.

                                       10
<PAGE>
        If Tenant is a partnership, limited liability company, corporation, or
other entity, any transfer of this Lease by merger, consolidation, redemption or
liquidation, or any change(s) in the ownership of, or power to vote, which
singularly or collectively represents a majority of the beneficial interest in
Tenant, shall constitute a Transfer under this Section.

        As a condition to Landlord's approval, if given, any potential assignee
or sublessee otherwise approved by Landlord shall assume all obligations of
Tenant under this Lease and shall be jointly and severally liable with Tenant
and any guarantor, if required, for the payment of Rent and performance of all
terms of this Lease. In connection with any Transfer, Tenant shall provide
Landlord with copies of all assignments, subleases and assumption instruments.

        Notwithstanding any of the provisions in this Section 19 to the
contrary, as a condition to Tenant assigning or subleasing any portion of its
interest in the Lease, Tenant shall give Landlord written notice at least thirty
(30) days in advance of the date on which Tenant desires to make such assignment
or sublease, which notice shall specify (a) name and business of the proposed
assignee or sublessee, (b) the amount and location of the space affected, (c)
the proposed effective date and duration of the subletting or assignment, and
(d) the proposed rental to be paid to Tenant by such sublessee or assignee.
Landlord shall then have a period of fifteen (15) days following receipt of such
notice within which to notify Tenant in writing that Landlord elects to either
(1) terminate this Lease as of the space so affected as of the date so specified
by Tenant and reclaim that space, (2) permit Tenant to assign or sublet such
space, in which event if the proposed rental rate between Tenant and sublessee
or assignee is greater than the rental rate of this Lease, then such excess rent
shall be deemed additional rent owed by Tenant to Landlord under this Lease, and
the amount of such excess, excluding any subsequent increases due to escalation
or otherwise, shall be paid by Tenant to Landlord in the same manner that the
Tenant pays the rental hereunder and in addition thereto, or (3) to withhold
consent to Tenant's assignment or subleasing of such space and to continue this
Lease in full force and effect as to the entire Premises, provided, however,
that Landlord's consent will not be unreasonably withheld or delayed. If
Landlord does not respond to Tenant within such 15 day period, then Landlord
shall be deemed to have withheld its consent to the proposed assignment or
subletting.

        Upon the exercise by Landlord of the option of termination of this Lease
as to the space requested to be assigned or subleased, Tenant shall surrender
the space to be reclaimed, and the Agreed Floor Area of the Premises and rent
pursuant to this Lease shall be reduced proportionately. All other terms and
conditions of this Lease shall otherwise remain in full force and effect. If the
portion of the Premises to be sublet or assigned is inaccessible from any public
hallway in the Building, Landlord may reclaim a comparable area of similar size
elsewhere in the Premises that is accessible from such hallway and require
Tenant to occupy such inaccessible area, provided that Tenant shall not be
required to occupy any area that is not accessible from and contiguous to the
remainder of the Premises. Landlord may make any alterations, modifications or
improvements to the Premises it deems necessary for the reclaiming of any
portion of the Premises.

20. LIENS. Tenant shall keep the Premises free from any liens created by or
through Tenant. Tenant shall indemnify and hold Landlord harmless from liability
from any such liens including, without limitation, liens arising from any
Alterations. If a lien is filed against the Premises by any person claiming by,
through or under Tenant, Tenant shall, upon request of Landlord, at Tenant's
expense, immediately furnish to Landlord a bond in form and amount and issued by
a surety satisfactory to Landlord, indemnifying Landlord and the Premises
against all liabilities, costs and expenses, including attorneys' fees, which
Landlord could reasonably incur as a result of such lien(s).

21. DEFAULT. The following occurrences shall each be deemed an Event of Default
by Tenant:

        a. FAILURE TO PAY. Tenant fails to pay any sum, including Rent, due
under this Lease following five (5) days written notice from Landlord of the
failure to pay.

                                       11
<PAGE>
        b. VACATION/ABANDONMENT. Tenant vacates the Premises (defined as an
absence for at least 15 consecutive days without prior notice to Landlord), or
Tenant abandons the Premises (defined as an absence of five (5) days or more
while Tenant is in breach of some other term of this Lease). Tenant's vacation
or abandonment of the Premises shall not be subject to any notice or right to
cure.

        c. INSOLVENCY. Tenant becomes insolvent, voluntarily or involuntarily
bankrupt, or a receiver, assignee or other liquidating officer is appointed for
Tenant's business, provided that in the event of any involuntary bankruptcy or
other insolvency proceeding, the existence of such proceeding such constitute an
Event of Default only if such proceeding is not dismissed or vacated within 60
days after its institution or commencement.

        d. LEVY OR EXECUTION. Tenant's interest in this Lease or the Premises,
or any part thereof, is taken by execution or other process of law directed
against Tenant, or is taken upon or subjected to any attachment by any creditor
of Tenant, if such attachment is not discharged within 15 days after being
levied.

        e. OTHER NON-MONETARY DEFAULTS. Tenant breaches any agreement, term or
covenant of this Lease other than one requiring the payment of money and not
otherwise enumerated in this Section, and the breach continues for a period of
30 days after notice by Landlord to Tenant of the breach.

        f. FAILURE TO TAKE POSSESSION. Tenant fails to take possession of the
Premises on the Commencement Date.

22. REMEDIES.

        Landlord shall have the following remedies upon an Event of Default.
Landlord's rights and remedies under this Lease shall be cumulative, and none
shall exclude any other right or remedy allowed by law.

        a. TERMINATION OF LEASE. Landlord may terminate Tenant's interest under
the Lease, but no act by Landlord other than written notice from Landlord to
Tenant of termination shall terminate this Lease. The Lease shall terminate on
the date specified in the notice of termination. Upon termination of this Lease,
Tenant will remain liable to Landlord for damages in an amount equal to the base
Rent, additional Rent, and other sums that would have been owing by Tenant under
this Lease for the balance of the Lease term, less the net proceeds, if any, of
any reletting of the Premises by Landlord subsequent to the termination, after
deducting all Landlord's Reletting Expenses (as defined below). Landlord shall
be entitled to either collect damages from Tenant monthly on the days on which
rent or other amounts would have been payable under the Lease, or alternatively,
Landlord may accelerate Tenant's obligations under the Lease and recover from
Tenant: (i) unpaid rent which had been earned at the time of termination; (ii)
the amount by which the unpaid rent which would have been earned after
termination until the time of award exceeds the amount of rent loss that Tenant
proves could reasonably have been avoided; (iii) the amount by which the unpaid
rent for the balance of the term of the Lease after the time of award exceeds
the amount of rent loss that Tenant proves could reasonably be avoided
(discounting such amount by the discount rate of the Federal Reserve Bank of San
Francisco at the time of the award, plus 1%); and (iv) any other amount
necessary to compensate Landlord for all the detriment proximately caused by
Tenant's failure to perform its obligations under the Lease, or which in the
ordinary course would be likely to result from the Event of Default, including
without limitation Reletting Expenses described in Section 22b.

        b. RE-ENTRY AND RELETTING. Landlord may continue this Lease in full
force and effect, and without demand or notice, re-enter and take possession of
the Premises or any part thereof, expel the Tenant from the Premises and anyone
claiming through or under the Tenant, and remove the personal property of

                                       12
<PAGE>
either. Landlord may relet the Premises, or any part of them, in Landlord's or
Tenant's name for the account of Tenant, for such period of time and at such
other terms and conditions, as Landlord, in its discretion, may determine.
Landlord may collect and receive the rents for the Premises. Re-entry or taking
possession of the Premises by Landlord under this Section shall not be construed
as an election on Landlord's part to terminate this Lease, unless a written
notice of termination is given to Tenant. Landlord reserves the right following
any re-entry or reletting, or both, under this Section to exercise its right to
terminate the Lease. During the Event of Default, Tenant will pay Landlord the
rent and other sums which would be payable under this Lease if repossession had
not occurred, plus the net proceeds, if any, after reletting the Premises, after
deducting Landlord's Reletting Expenses. "Reletting Expenses" is defined to
include all expenses incurred by Landlord in connection with reletting the
Premises, including without limitation, all repossession costs, brokerage
commissions, attorneys' fees, remodeling and repair costs, costs for removing
and storing Tenant's property and equipment, and rent concessions granted by
Landlord to any new Tenant, prorated over the life of the new lease.

        c. WAIVER OF REDEMPTION RIGHTS. Tenant, for itself, and on behalf of any
and all persons claiming through or under Tenant, including creditors of all
kinds, hereby waives and surrenders all rights and privileges which they may
have under any present or future law, to redeem the Premises or to have a
continuance of this Lease for the Lease term, as it may have been extended.

        d. NONPAYMENT OF ADDITIONAL RENT. All costs which Tenant agrees to pay
to Landlord pursuant to this Lease shall in the event of nonpayment be treated
as if they were payments of Rent, and Landlord shall have all the rights herein
provided for in case of nonpayment of Rent.

        e. FAILURE TO REMOVE PROPERTY. If Tenant fails to remove any of its
property from the Premises at Landlord's request following an uncured Event of
Default, Landlord may, at its option, remove and store the property at Tenant's
expense and risk. If Tenant does not pay the storage cost within five (5) days
of Landlord's request, Landlord may, at its option, have any or all of such
property sold at public or private sale (and Landlord may become a purchaser at
such sale), in such manner as Landlord deems proper, without notice to Tenant.
Landlord shall apply the proceeds of such sale: (i) to the expense of such sale,
including reasonable attorneys' fees actually incurred; (ii) to the payment of
the costs or charges for storing such property; (iii) to the payment of any
other sums of money which may then be or thereafter become due Landlord from
Tenant under any of the terms hereof; and (iv) the balance, if any, to Tenant.
Nothing in this Section shall limit Landlord's right to sell Tenant's personal
property as permitted by law to foreclose Landlord's lien for unpaid rent.

23. MORTGAGE SUBORDINATION AND ATTORNMENT. This Lease shall automatically be
subordinate to any mortgage or deed of trust created by Landlord which is now
existing or hereafter placed upon the Premises including any advances, interest,
modifications, renewals, replacements or extensions ("Landlord's Mortgage"),
provided the holder of any Landlord's Mortgage or any person(s) acquiring the
Premises at any sale or other proceeding under any such Landlord's Mortgage
shall elect to continue this Lease in full force and effect. Tenant shall attorn
to the holder of any Landlord's Mortgage or any person(s) acquiring the Premises
at any sale or other proceeding under any Landlord's Mortgage provided such
person(s) assume the obligations of Landlord under this Lease. Tenant shall
promptly and in no event later than fifteen (15) days execute, acknowledge and
deliver documents which the holder of any Landlord's Mortgage may reasonably
require as further evidence of this subordination and attornment.
Notwithstanding the foregoing, Tenant's obligations under this Section are
conditioned on the holder of each of Landlord's Mortgage and each person
acquiring the Premises at any sale or other proceeding under any such Landlord's
Mortgage not disturbing Tenant's occupancy and other rights under this Lease, so
long as no uncured Event of Default exists.

                                       13
<PAGE>
24. NON-WAIVER. Landlord's waiver of any breach of any term contained in this
Lease shall not be deemed to be a waiver of the same term for subsequent acts of
Tenant. The acceptance by Landlord of Rent or other amounts due by Tenant
hereunder shall not be deemed to be a waiver of any breach by Tenant preceding
such acceptance.

25. HOLDOVER. If Tenant shall, without the written consent of Landlord, hold
over after the expiration or termination of the Term, such tenancy shall be
deemed to be on a month-to-month basis and may be terminated according to
Washington law. During such tenancy, Tenant agrees to pay to Landlord 125% the
rate of rental last payable under this Lease, unless a different rate is agreed
upon by Landlord and Tenant. All other terms of the Lease shall remain in
effect.

26. NOTICES. All notices under this Lease shall be in writing and effective (i)
when delivered in person, (ii) three (3) days after being sent by registered or
certified mail to Landlord or Tenant, as the case may be, at the Notice
Addresses set forth in Section 1(h); or (iii) upon confirmed transmission by
facsimile to such persons at the facsimile numbers set forth in Section 1(h) or
such other addresses/facsimile numbers as may from time to time be designated by
such parties in writing.

27. COSTS AND ATTORNEYS' FEES. If Tenant or Landlord engage the services of an
attorney to collect monies due or to bring any action for any relief against the
other, declaratory or otherwise, arising out of this Lease, including any suit
by Landlord for the recovery of Rent or other payments, or possession of the
Premises, the losing party shall pay the prevailing party a reasonable sum for
attorneys' fees in such suit, at trial and on appeal.

28. ESTOPPEL CERTIFICATES. Tenant shall, from time to time, upon written request
of Landlord, execute, acknowledge and deliver to Landlord or its designee a
written statement specifying the following, subject to any modifications
necessary to make such statements true and complete: (i) the date the Lease term
commenced and the date it expires; (ii) the amount of minimum monthly Rent and
the date to which such Rent has been paid; (iii) that this Lease is in full
force and effect and has not been assigned, modified, supplemented or amended in
any way; (iv) that this Lease represents the entire agreement between the
parties; (v) that all conditions under this Lease to be performed by Landlord
have been satisfied; (vi) that there are no existing claims, defenses or offsets
which the Tenant has against the enforcement of this Lease by Landlord; (vii)
that no Rent has been paid more than one month in advance; and (viii) that no
security has been deposited with Landlord (or, if so, the amount thereof). Any
such statement delivered pursuant to this Section may be relied upon by a
prospective purchaser of Landlord's interest or assignee of any mortgage or new
mortgagee of Landlord's interest in the Premises. If Tenant shall fail to
respond within ten (10) days of receipt by Tenant of a written request by
Landlord as herein provided, Tenant shall be deemed to have given such
certificate as above provided without modification and shall be deemed to have
admitted the accuracy of any information supplied by Landlord to a prospective
purchaser or mortgagee.

29. TRANSFER OF LANDLORD'S INTEREST. This Lease shall be assignable by Landlord
without the consent of Tenant. In the event of any transfer or transfers of
Landlord's interest in the Premises, other than a transfer for security purposes
only, upon the assumption of this Lease by the transferee, Landlord shall be
automatically relieved of obligations and liabilities accruing from and after
the date of such transfer, except for any retained security deposit or prepaid
rent, and Tenant shall attorn to the transferee.

30. RIGHT TO PERFORM. If Tenant shall fail to timely pay any sum or perform any
other act on its part to be performed hereunder, Landlord may make any such
payment or perform any such other act on Tenant's part to be made or performed
as provided in this Lease. Tenant shall, on demand, reimburse Landlord for its
expenses incurred in making such payment or performance. Landlord shall (in
addition to any other right or remedy of Landlord provided by law) have the same
rights and remedies in the event of the nonpayment of sums due under this
Section as in the case of default by Tenant in the payment of Rent.

                                       14
<PAGE>
31 HAZARDOUS MATERIAL. Landlord represents and warrants to Tenant that, to the
best of Landlord's knowledge, there is no "Hazardous Material" (as defined
below) on, in, or under the Premises as of the Commencement Date except as
otherwise disclosed to Tenant in writing before the execution of this Lease. If
there is any Hazardous Material on, in, or under the Premises as of the
Commencement Date which has been or thereafter becomes unlawfully released
through no fault of Tenant, then Landlord shall indemnify, defend and hold
Tenant harmless from any and all claims, judgments, damages, penalties, fines,
costs, liabilities or losses including without limitation sums paid in
settlement of claims, attorneys' fees, consultant fees and expert fees, incurred
or suffered by Tenant either during or after the Lease term as the result of
such contamination.

        Tenant shall not cause or permit any Hazardous Material to be brought
upon, kept, or used in or about, or disposed of on the Premises by Tenant, its
agents, employees, contractors or invitees, except in strict compliance with all
applicable federal, state and local laws, regulations, codes and ordinances. If
Tenant breaches the obligations stated in the preceding sentence, then Tenant
shall indemnify, defend and hold Landlord harmless from any and all claims,
judgments, damages, penalties, fines, costs, liabilities or losses including,
without limitation, diminution in the value of the Premises, damages for the
loss or restriction on use of rentable or usable space or of any amenity of the
Premises, or elsewhere, damages arising from any adverse impact on marketing of
space at the Premises, and sums paid in settlement of claims, attorneys' fees,
consultant fees and expert fees incurred or suffered by Landlord either during
or after the Lease term. These indemnifications by Landlord and Tenant include,
without limitation, costs incurred in connection with any investigation of site
conditions or any clean-up, remedial, removal or restoration work, whether or
not required by any federal, state or local governmental agency or political
subdivision, because of Hazardous Material present in the Premises, or in soil
or ground water on or under the Premises. Tenant shall immediately notify
Landlord of any inquiry, investigation or notice that Tenant may receive from
any third party regarding the actual or suspected presence of Hazardous Material
on the Premises.

        Without limiting the foregoing, if the presence of any Hazardous
Material brought upon, kept or used in or about the Premises by Tenant, its
agents, employees, contractors or invitees, results in any unlawful release of
Hazardous Materials on the Premises or any other property, Tenant shall
promptly take all actions, at its sole expense, as are necessary to return the
Premises or any other property, to the condition existing prior to the release
of any such Hazardous Material; provided that Landlord's approval of such
actions shall first be obtained, which approval may be withheld at Landlord's
sole discretion.

        As used herein, the term "Hazardous Material" means any hazardous,
dangerous, toxic or harmful substance, material or waste including biomedical
waste which is or becomes regulated by any local governmental authority, the
State of Washington or the United States Government, due to its potential harm
to the health, safety or welfare of humans or the environment.

32 QUIET ENJOYMENT. So long as Tenant pays the Rent and performs all of its
obligations in this Lease, Tenant's possession of the Premises will not be
disturbed by Landlord or anyone claiming by, through or under Landlord, or by
the holders of any Landlord's Mortgage or any successor thereto.

33 RIGHT OF ENTRY. Landlord and its agents, employees and contractors shall have
the right to enter the Premises at reasonable times for inspection, to make
repairs, alterations, and improvements, to show the Premises to prospective
purchasers and, within six (6) months prior to the expiration of the Lease term,
to show the Premises to prospective tenants.

34 GENERAL.

                                       15
<PAGE>
        a HEIRS AND ASSIGNS. This Lease shall apply to and be binding upon
Landlord and Tenant and their respective heirs, executors, administrators,
successors and assigns.

        b BROKERS' FEES. Tenant represents and warrants to Landlord that it has
not engaged any broker, finder or other person who would be entitled to any
commission or fees for the negotiation, execution, or delivery of this Lease
other than as disclosed in Section 1(i) or elsewhere in this Lease. Tenant shall
indemnify and hold Landlord harmless against any loss, cost, liability or
expense incurred by Landlord as a result of any claim asserted by any such
broker, finder or other person on the basis of any arrangements or agreements
made or alleged to have been made by or on behalf of Tenant. This subparagraph
shall not apply to brokers with whom Landlord has an express written brokerage
agreement.

        c ENTIRE AGREEMENT. This Lease contains all of the covenants and
agreements between Landlord and Tenant relating to the Premises. No prior
agreements or understanding pertaining to the Lease shall be valid or of any
force or effect and the covenants and agreements of this Lease shall not be
altered, modified or added to except in writing signed by Landlord and Tenant.

        d SEVERABILITY. Any provision of this Lease which shall prove to be
invalid, void or illegal shall in no way affect, impair or invalidate any other
provision of this Lease.

        e FORCE MAJEURE. Time periods for either party's performance under any
provisions of this Lease (excluding payment of Rent) shall be extended for
periods of time during which the party's performance is prevented due to
circumstances beyond such party's control, including without limitation, fires,
floods, earthquakes, lockouts, strikes, embargoes, governmental regulations,
acts of God, public enemy, war or other strife.

        f GOVERNING LAW. This Lease shall be governed by and construed in
accordance with the laws of the State of Washington.

        g MEMORANDUM OF LEASE. This Lease shall not be recorded. However,
Landlord and Tenant shall, at the other's request, execute and record a
memorandum of Lease in recordable from that identifies Landlord and Tenant, the
commencement and expiration dates of the Lease, and the legal description of the
Premises as set forth on attached Exhibit B.

        h SUBMISSION OF LEASE FORM NOT AN OFFER. One party's submission of this
Lease to the other for review shall not constitute an offer to lease the
Premises. This Lease shall not become effective and binding upon Landlord and
Tenant until it has been fully signed by both Landlord and Tenant.

        i NO LIGHT, AIR OR VIEW EASEMENT. Tenant has not been granted an
easement or other right for light, air or view to or from the Premises. Any
diminution or shutting off of light, air or view by any structure which may be
erected on or adjacent to the Building shall in no way effect this Lease or the
obligations of Tenant hereunder or impose any liability on Landlord.

        j AUTHORITY OF PARTIES. Any individual signing this Lease on behalf of
an entity represents and warrants to the other that such individual has
authority to do so and, upon such individual's execution, that this Lease shall
be binding upon and enforceable against the party on behalf of whom such
individual is signing.

        k ARBITRATION. Any controversy or claim arising out of or relating to
this Lease, or the breach thereof, other than an action by Landlord against
Tenant for nonpayment of Rent, or for unlawful detainer or ejectment, shall be
settled by arbitration in accordance with the Commercial Arbitration Rules of
the

                                       16
<PAGE>
American Arbitration Association, and judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof.

        l LANDLORD'S LIABILITY. Landlord and Tenant agree that Tenant's recourse
against Landlord for any obligations of Landlord under this Lease shall be
limited to Tenant's execution against Landlord's right, title and interest from
time to time in the Premises. Neither Landlord nor any of its partners,
shareholders, members, officers, directors, trustees, or other principals shall
have any personal liability to Tenant as the result of any breach or default by
Landlord under this Lease. Tenant further agrees that Landlord is executing this
Lease in its fiduciary capacity only, and Landlord and its agent are not and
shall not be liable hereunder, directly or indirectly, except for their willful
misconduct, under or by execution of this Lease. The rights and claims of Tenant
shall be limited exclusively to such rights as Tenant may have against the trust
or other estate or entity represented herein by Landlord.

        m PARKING. Tenant will have the right to use sixteen (16) unreserved
parking spaces on the Property on a first come, first served basis in common
with all other tenants of the Building.

35 EXHIBITS. The following exhibits are made a part of this Lease:

      Exhibit A Floor Plan Outline of the Premises
      Exhibit B Legal Description
      Exhibit C Tenant Improvement Schedule

   TENANT: Virage Logic Corporation, a          LANDLORD: Rhoady Lee, Jr. and
           Delaware Corporation                           Jeanne Marie Lee, as
                                                          Trustees under that
                                                          certain Living Trust
                                                          Agreement dated
                                                          June 9, 1994

   By: [SIGNATURE ILLEGIBLE]                    By: /s/ RHOADY LEE, JR. BY
       -----------------------------                MAUREEN LEE, ATTY. IN FACT
       Its President, CEO & Chairman                ----------------------------
       -----------------------------                Its: Trustee
                                                         -----------------------

STATE OF WASHINGTON          )
                             ) ss.
COUNTY OF KING               )

        I certify that I know or have satisfactory evidence that Maureen Lee is
the person who appeared before me and said person acknowledged that she signed
this instrument, on oath stated that she was authorized to execute the
instrument and acknowledged it as the trustee of that certain Living Trust
Agreement dated June 9, 1994 to be the free and voluntary act of such party for
the uses and purposes mentioned in the instrument.

         DATED: February 5, 2001.

                                               /s/ DARLA D. BENNETT
                                               ---------------------------------
                                               Printed Name: DARLA BENNETT
                                               NOTARY PUBLIC in and for the
                                               State of Washington, residing
                                               at Renton.
                                               My Commission expires: 2-10-03

(Seal or stamp)

             DARLA D. BENNETT
            STATE OF WASHINGTON
             NOTARY -- PUBLIC
          MY COMMISSION EXPIRES 2-10-03

                                       17
<PAGE>
STATE OF CALIFORNIA          )
                               ss.
COUNTY OF ALAMEDA            )

        I certify that I know or have satisfactory evidence that Adam Kablanian
is the person who appeared before me and said person acknowledged that he signed
this instrument, on oath stated that he was authorized to execute the instrument
and acknowledged it as the President, CEO of Virage Logic Corporation to be the
free and voluntary act of such party for the uses and purposes mentioned in the
instrument.

         DATED: January 31, 2001.

                                            /s/ CAROLYN KOGURA
                                            ---------------------------------
                                            Printed Name: Carolyn Kogura
                                            NOTARY PUBLIC in and for the
                                            State of California, residing at
                                            San Jose, Ca.
                                            My Commission expires: July 14, 2002

(Seal or stamp)

              CAROLYN KOGURA
            Commission # 1187486
        Notary Public - California
           San Francisco County
     My Comm. Expires Jul. 14, 2002

                                       18
<PAGE>
                                    EXHIBIT A

                            [Outline of the Premises]

                                       19
<PAGE>

                                   EXHIBIT B

                              [Legal Description]

Lot 2, as delineated on City of Bellevue Short Plat No. 84-04, recorded under
Recording No. 8412059001 and found in Book 42 of Surveys, page 222, being a
portion of the northwest quarter of the southeast quarter of Section 10,
Township 24 North, Range 5 East, W.M., in King County, Washington.

                                       20
<PAGE>
                                    EXHIBIT C

                          [Tenant Improvement Schedule]

Landlord shall provide the following improvements to the Premises.

1.      Replacement of Damaged or Stained Ceiling Tiles.

2.      Patching as needed and painting of all interior office walls in the
        building standard color selected by Landlord.

3.      Cleaning as needed of all doors, moldings and other stained woodwork to
        Building standard.

4.      Installation of new Building standard carpeting and base molding in all
        areas (except the kitchen) in a color selected by Landlord.

5.      Removal of Reception area counter/work station.

6.      Demolition of walls as follows:

        (a)     East end of premises.

        (b)     Easterly two storage closets in center of premises in accordance
                with the floor plan attached as Exhibit A to the Lease.

                                       21

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