Document:

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                                                                    EXHIBIT 10.5

This Lease, between the parties named below as Landlord and Tenant, is dated
January 17, 1996, for reference purposes only.

SALIENT LEASE TERMS AND DEFINITIONS.

1.1     Salient Lease Terms.

               a.     Rent Payment Address:
                      c/o Birtcher Property Services
                      177 Bovet Road, Suite 200
                      San Mateo, CA 94402

               b.     Parties and Notice Addresses:

                      Landlord:

                             Casiopea Venture Corporation
                             c/o Birtcher Property Services
                             177 Bovet Road, Suite 200
                             San Mateo, CA 94402

                      Tenant:

                             Virage, Inc.
                             9605 Scranton Road, Suite 240
                             San Diego, CA 92121-1768

               c.     Premises:

                      1.     Name and Location of Facility where the Building is
                             located: Bovet Office Centre

                      2.     Street Address of Building: 177 Bovet Road

                      3.     Suite No. of Premises: 520, located on the fifth
                             floor of the Building.

                      4.     Approximate No. of net rentable square feet:

                             i.     the Premises: 5,674;

                             ii.    the Building: 92,099.

               d.     Term:

                      1.     A period of five years.

                      2.     Scheduled to commence on April 1, 1996, and end on
                             March 31, 2001.

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               e.     Monthly Rent:

                      1.     Initial Monthly Rent: $10,213.20/month (subject to
                             adjustment per Exhibit F)

                      2.     Prepaid Rent: $10,213.20 (24th month)

               f.     Deposit: $10,213.20

               g.     Permitted Uses: The Premises shall be used solely for the
                      following uses: General office use, software development,
                      and incidental uses directly related thereto.

               h.     Tenant's Percentage Share: 6%. (Subsection 5.1)

               i.     Base Years: The Base Expense Year for Operating Expenses
                      shall be calendar year 1996, and the Base Tax Year shall
                      be the fiscal tax year 1996-1997

               j.     Landlord's Broker: Cornish & Carey Commercial Tenant's
                      Broker: Cornish & Carey Commercial

               k.     Vehicle Parking Privileges Allocated to Tenant: 20.

               l.     Contents: This Lease consists of:

                      Pages 1 through 25, and Sections 1 through 48
                      Exhibits:

                             Lease Rider No. 1
                             Lease Rider No. 2
                             Lease Rider No. 3

                             A-1.   Site Plan or Legal Description of the
                                    Facility
                             A-2.   Floor Plan of the Premises
                             B.     Work Letter
                             C.     Rules and Regulations
                             D.     Standards for Utilities and Services
                             E.     Acknowledgment of Commencement of Term
                             F.     Adjustments to Monthly Rent

        1.2 Definitions. For the convenience of the parties, a listing of
            certain defined terms used in this Lease is set forth below:

<TABLE>
<CAPTION>
                   Section Where                              Section Where
   Term               Defined                Term                Defined
   ----           ----------------     ------------------    ----------------
<S>               <C>                  <C>                   <C>
ALTERATIONS       Subsection 9.1       OPERATING EXPENSES    Subsection 5.3.1

ASSESSMENTS       Subsection 5.2.2     OPTION                Subsection 36.1
</TABLE>

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<TABLE>
<S>                            <C>                   <C>                        <C>
BASE EXPENSE YEAR              Subsection 1.1(i)     PERSONAL PROPERTY          Subsection 9.3.2

BASE TAX YEAR                  Subsection 1.1(i)     PREMISES                   Subsection 1.2

BUILDING                       Subsection 1.2        REAL PROPERTY              Subsection 1.2

CASUALTY                       Subsection 23.2       READY FOR OCCUPANCY        Exhibit B

CLAIMS                         Subsection 14.1       RENT                       Subsection 4.3

COMMENCEMENT DATE              Subsection 1.2        RULES AND REGULATIONS      Section 18

DEPOSIT                        Subsection 6.1        SCHEDULED COMMENCEMENT     Subsection 1.2
                                                     DATE

ENVIRONMENTAL REQUIREMENTS     Subsection 7.1        TAXES                      Subsection 5.2.1

EVENT OF DEFAULT               Subsection 22.1.1     TENANT DELAYS              Exhibit B

FACILITY                       Subsection 1.2        TENANT IMPROVEMENTS        Exhibit B & Subsection 9.1

FORCE MAJEURE                  Section 17

GROSS RENT                     Subsection            TENANT PARTIES             Subsection 10.1
                               13.5.1(iii)

HAZARDOUS SUBSTANCE            Subsection 7.1        TENANT'S PERCENTAGE        Subsection 5.1
                                                     SHARE

LANDLORD PARTIES               Subsection 14.1       TERM                       Subsection 1.2

LAWS                           Subsection 2.2        TRANSFER                   Subsection 13.1

MINIMUM MONTHLY RENT           Subsection 4.1
</TABLE>

        1. Lease Of Premises:

               1.1 Demising Clause. Landlord hereby leases to Tenant, and Tenant
hires from Landlord, the Premises for the entire Term. Said letting and hiring
are upon and subject to the terms, covenants, and conditions set forth in this
Lease, including the Salient Terms and Definitions in Section 1 and the attached
exhibits. Tenant covenants as a material part of the consideration for this
Lease to keep and perform each and all of said terms, covenants, and conditions
applicable to Tenant hereunder. This Lease is made upon the condition of such
performance. Landlord reserves to Landlord the areas beneath and above the
Premises and the use thereof together with the right to install, maintain, use,
repair and replace pipes, ducts, conduits, wires, and structural elements
leading through the Premises and serving other parts of the Facility, so long as
such items are concealed by walls, flooring or ceilings. Such reservation shall
in no way affect the maintenance obligations imposed herein.

               1.2 Description. As used herein, the following capitalized terms
shall have the indicated meanings;

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                             (a) The "Facility" shall mean that certain real
property (including the building(s), parking facilities, if any, and other
improvements now located and/or subsequently constructed thereon) owned by
Landlord and described in Exhibit A-1 attached hereto, said real property being
described generally in Subsection 1.1(c)(1) above.

                             (b) The "Building" shall mean that certain building
in which the Premises are located, said Building being a part of the Facility
and being more particularly described in Subsection 1.1(c)(2) above.

                             (c) The "Premises" shall mean that certain space
located in the Building and described in Subsection 1. I (c)(3) above and
delineated on Exhibit A-2 attached hereto, which space consists of the
approximate amount of rentable square footage specified in said Subsection
1.1(c)(4).

                             (d) The Term of the Lease shall be for the period
shown in Item 1.1(d) of the Salient Lease Terms commencing, subject to the
provisions of the "Work Letter" attached hereto as Exhibit "B," on the date the
Premises shall be tendered to Tenant ready for occupancy or such earlier date as
Tenant takes possession or commences use of the Premises for any purpose
including construction (the "Lease Commencement Date"). The Premises shall be
deemed ready for occupancy on the date of issuance of a Certificate of
Occupancy, Temporary Certificate of Occupancy or other equivalent approval by
the City of San Mateo of the improvements required by this Lease to be
constructed by Landlord. Landlord agrees to use its best efforts to give Tenant
estimates of the schedule for completion of the improvements and to give Tenant
ten (10) days prior notice of the anticipated date the Premises will be ready
for occupancy. The Target Commencement Date is a date which Landlord has
projected for occupancy, based upon its present estimates of construction
schedules. Subject to "Force Majeure" (as that term is defined below), Tenant
shall have the right to cancel this Lease in the event Landlord has not
delivered the Premises to Tenant within one hundred twenty (120 days after the
Target Commencement Date, as such date may be modified by the provisions of the
"Work Letter" attached hereto as Exhibit "B," which right is exercisable by
Tenant by delivering written notice to Landlord within five (5) business days
following expiration of said one hundred twenty (120) day period. "Force
Majeure" is hereby defined to mean any cause beyond the reasonable control of
Landlord, including but not limited to, strikes, acts of God, war, governmental
laws and regulations or restrictions, including delays in the issuance of
permits, inspections and approvals, shortages of labor or materials, or delays
caused by acts of Tenant as more particularly set forth in paragraph "7." of the
"Work Letter" attached hereto as Exhibit "B." In the event permission is given
to Tenant to enter or occupy all or a portion of the Premises prior to the
Target Commencement Date, such occupancy shall be subject to all of the terms
and conditions of this Lease. When the Lease Commencement Date has been
determined, the parties shall execute an amendment to this Lease in the form of
Exhibit "E" attached hereto and incorporated herein by this reference, stating
the actual Lease Commencement Date and the date for expiration of the Term (the
"Expiration Date") and setting forth an acknowledgment by Tenant that Landlord
has completed all improvements to the Premises in accordance with this Lease and
to the satisfaction of Tenant, subject to the items listed in a punch list, if
any, delivered to Landlord.

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        2. Uses:

               2.1 Permitted Uses. Except as otherwise expressly provided
herein, the Premises shall be used only for the Permitted Uses specified in
subsection 1.1(g) and for no other use or purpose.

               2.2 Restriction on Use. Without limitation to the generality of
the foregoing use restriction, Tenant specifically covenants and agrees that it
shall not (a) do, bring, or keep, or permit to be done, brought, or kept,
anything in or about the Premises that will in any way (1) obstruct or interfere
with the rights of any other tenants or occupants of the Facility or injure or
annoy them, (2) cause a weight load or stress on the floor or any other portion
of the Premises in excess of the weight load or stress that the floor or other
portion of the Premises is designed to bear, (3) increase the existing rate of,
or adversely affect, any fire or other insurance upon the Building or its
contents, or (4) violate any of Landlord's Rules and Regulations; (b) use the
Premises, or allow them to be used, for any residential or disreputable purpose;
(c) commit or suffer to be committed any waste in or upon the Premises or the
Facility; or (d) provided such exclusive does not prohibit Tenant from primarily
using the Premises for the Permitted Uses specified in Subsection 1.1(g), Tenant
shall not conduct or permit to be conducted on or from the Premises activities
that violate any exclusive use right presently or subsequently granted by
Landlord to another tenant. Tenant, at Tenant's sole cost, shall comply with all
laws, statutes, rules, regulations, ordinances, codes, licenses, permits,
orders, decrees, judgments, approvals, plans, authorizations, and similar items
of any local, state, or federal governmental or quasi-governmental authority
(collectively, "Laws," or individually, a "Law") affecting the Premises, and
with the requirements of any Board of Fire Underwriters or other similar body
now or hereafter instituted, and shall also comply with any order, directive or
certificate of occupancy, issued pursuant to any Laws, that affects the
condition, use, or occupancy of the Premises, including, but not limited to, any
requirements of structural changes related to or affected by Tenant's acts or
use of the Premises.

               2.3 Compliance by Other Tenants. Upon Landlord's receipt of
Tenant's written notice that another tenant or occupant of the Facility is
engaging in conduct prohibited by this Section, to the material detriment of
Tenant, Landlord agrees to use commercially reasonable efforts, consistent with
Landlord's rights under the lease of such other tenant or occupant, to cause
such party to desist from such prohibited conduct. Notwithstanding the
foregoing, Landlord shall not be liable to Tenant for any such conduct on the
part of other tenants or occupants of the Building.

               2.4 Compliance by Landlord. Landlord represents and warrants to
Tenant that as of the Commencement Date, Tenant is or will be able to use the
Premises for general office uses and that the Premises and the Building are in
compliance with all laws, including the Americans with Disabilities Act ("ADA"),
regulating Tenant's intended use of the Premises.

        3. Condition Of The Premises. Except as otherwise expressly provided in
Exhibit B attached hereto, it is specifically understood and agreed that (a)
Landlord has no obligation and has made no promises to alter, remodel, improve,
repair, decorate, or paint the Premises or any part thereof, (b) Landlord has
made no representations to Tenant respecting the condition of the Premises or
the Building or the suitability or legality of the Premises for the uses
contemplated

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by this Lease, and (c) by accepting possession of the Premises after substantial
completion of the work (if any) to be performed by Landlord pursuant to such
Exhibit B, Tenant acknowledges that the Premises are in good condition, and with
such acceptance of possession Tenant waives any claim against Landlord or
Landlord's agents or contractors for the condition or functioning of any
improvements within or about the Premises.

        4. Rent.

               4.1 Monthly Rent. From and after the Commencement Date, Tenant
shall pay to the Landlord, for each calendar month of the Term, the Monthly Rent
set forth in Subsection 1.1(e)(1), as the same may be adjusted from time to time
as provided in Section 4.2. Monthly Rent shall be due and payable to Landlord in
lawful money of the United States, in advance, on the first (1st) day of each
calendar month of the Term, without abatement, deduction, claim or offset, and
without prior notice, invoice or demand, at Landlord's address set forth in
Subsection 1.1.(a) or at such place as Landlord may from time to time designate.
Tenant's payment of Monthly Rent for the first (1st) month of the Term shall be
delivered to Landlord concurrently with Tenant's execution of this Lease.

                      4.1.1 Adjustments. Monthly Rent shall be adjusted from
time to time as provided in Exhibit F.

               4.2 In the event that Landlord is unable to deliver to Tenant the
notice of the increased Minimum Monthly Rent at least five (5) business days
prior to the Adjustment Date, Tenant shall commence to pay the increased Minimum
Monthly Rent on the first day of the month following the receipt of such notice,
which notice must be sent at least five (5) business days prior to the first day
of such month ("Payment Date"), and shall also pay, together with the first
payment of the increased Minimum Monthly Rent, an amount determined by
multiplying the amount of the increase in Minimum Monthly Rent times the number
of months which have elapsed between the Adjustment Date and the Payment Date.
Should the Bureau discontinue the publication of the Index, or publish the same
less frequently, or alter the same in some other manner, Landlord, in its
discretion, shall adopt a substitute index or procedure that reasonably reflects
and monitors consumer prices.

               4.3 Definition of "Rent"; Prorations. Any and all payments of
Minimum Monthly Rent and any and all taxes, assessments, fees, charges, costs,
expenses, insurance obligations, late charges, Common Area Costs, and all other
payments, disbursements, or reimbursements that are attributable to, payable by
or the responsibility of Tenant under this Lease shall constitute "rent" for all
purposes of this Lease and any applicable unlawful detainer statute. Any rent
payable to Landlord by Tenant for any fractional month shall be prorated based
upon the actual number of days in such calendar month.

               4.4 Place and Manner of Payment. All rent shall be paid by Tenant
to Landlord in lawful money of the United States of America at Landlord's
address set forth in Subsection 1.1(a) above, or to such other person or at such
other place as Landlord may from time to time designate. All payments of rent
shall be payable without prior notice or demand and shall be paid without
deduction, setoff or counterclaim for any reason whatsoever.

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               4.5 Late Charges. Tenant acknowledges that the late payment of
rent will cause Landlord to incur damages, the exact amount of which would be
impractical and extremely difficult to ascertain. Such damages may include,
without limitation, processing, accounting, and other administrative costs, loss
of use of the overdue funds, and late charges that may be imposed on Landlord by
the terms of any encumbrance and note secured by any encumbrance covering the
Premises. Landlord and Tenant agree that if Landlord does not receive a payment
of rent within ten (10) days after such payment becomes due, Tenant shall pay to
Landlord a late charge in an amount equal to ten percent (10%) of such overdue
rent. If Landlord does not receive a payment of rent within thirty (30) days
after such payment becomes due, Tenant shall pay to Landlord additional late
charges computed at the interest rate of ten percent (10%) per annum or, if
lower, the maximum interest rate allowed by law. Such interest shall begin to
accrue as of such 30th day after such rent payment became due. The parties agree
that such late charges represent a fair and reasonable estimate of the cost that
Landlord will incur by reason of late payment by Tenant. Acceptance of any late
charge by Landlord shall not cure or waive Tenant's default, nor prevent
Landlord from exercising, before or after such acceptance, any of the rights and
remedies for a default provided by this Lease or at law. Tenant shall be liable
for late charges regardless of whether Tenant's failure to pay the rent when due
constitutes an Event of Default under this Lease.

               4.6 Time of Payment; Disputed Amounts. Tenant agrees to pay all
rent required under this Lease within the applicable time limits set forth in
this Lease. If no such time period is elsewhere specified herein for payment of
a particular amount, then such amount shall be paid within ten (10) days after
Landlord's delivery of an invoice or demand therefor. If Tenant receives from
Landlord an invoice or statement, sent by Landlord in good faith, and Tenant in
good faith disputes whether all or any part of such rent is due and owing,
Tenant shall nevertheless pay to Landlord the amount of the rent indicated on
the invoice or statement until such time as the dispute is resolved by mutual
agreement of the parties or by final judgment from a court of competent
jurisdiction (or when arbitration is permitted or required, by a final award
from an arbitrator) relieving or mitigating Tenant's obligation to pay such
rent. Failure by Tenant to pay any disputed amounts when due (as if there were
no dispute) shall constitute an Event of Default under this Lease, and
Landlord's rights shall be as provided for in Section 22 (Defaults and
Remedies). In such instance where Tenant disputes its obligations to pay all or
part of the rent indicated on such invoice or statement, Tenant shall,
concurrently with the payment of such rent, provide Landlord with a written
notice specifying in detail why Tenant is not required to pay all or part of
such rent. Tenant shall be deemed to have waived its right to contest any past
payment of rent unless it has filed a lawsuit against Landlord (or when
arbitration is permitted or required, filed for arbitration) and has served
Landlord with notice of such filing within one (1) year after such payment.

               4.7 Partial Payments. Any partial payment of rents outstanding
hereunder shall be allocated to such outstanding rental charges as Landlord may
elect. In the absence of a contrary election made by Landlord, payments by
Tenant shall be applied against the then outstanding rental charges that first
became due.

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        5. Payment Of Taxes, Assessments, And Operating Expenses.

               5.1 Tenant's Percentage Share. In addition to paying the Minimum
Monthly Rent, Tenant shall pay to Landlord the percentage set forth in
Subsection 1.1(h) ("Tenant's Percentage Share") of the amounts set forth below
in Subsections 5.2 and 5.3. Tenant's Percentage Share has been calculated by
dividing the number of square feet of rentable area of the Premises by the
number of square feet of rentable area in the Building, based upon the best
information available to Landlord as of the execution of this Lease. Said
Tenant's Percentage Share shall not be subject to correction or recalculation,
except in the event the rentable area of the Building is changed due to events
of damage, destruction, demolition, or construction. Tenant hereby approves and
accepts Landlord's calculations of the Tenant's Percentage Share as set forth in
Subsection 1.1(h).

               5.2 Taxes and Assessments.

                      5.2.1 Tenant shall pay to Landlord an amount equal to
Tenant's Percentage Share of any increase in Taxes above the amount of Taxes
levied or assessed for the Base Tax Year set forth in Subsection 1.1(i), either
by way of increase in the rate or in the assessed valuation of the Real Property
(or any portion thereof) or by imposition of any such charges by ordinance or
statute of any authority having jurisdiction. As used in this Section 5, the
term "Taxes" shall mean all taxes, excises, penalties (unless due solely to
Landlord's negligence or willful misconduct), fees (including, without
limitation, all license, permit and inspection fees), and other charges (but
excluding Assessments, as defined in Subsection 5.2.2 below) assessed, levied,
charged, confirmed, or imposed by any federal, state, or local government, any
political subdivision, public corporation, district, or other political or
public entity or public authority (a) on the Real Property (or any portion
thereof), (b) on Landlord with respect to the Real Property (or any portion
thereof), (c) on the act of leasing or entering into leases of space in the Real
Property, (d) on or measured by the rent payable under leases of space, or in
connection with the business of leasing space, in the Real Property, or (e) on
personal property of Landlord used in the operation of the Real Property (or any
portion thereof). Such Taxes may be general or specific, ordinary or
extraordinary, or of any kind or nature whatsoever, whether or not now customary
or within the contemplation of the parties to this Lease. Notwithstanding the
foregoing, documentary transfer taxes, gift, inheritance, succession, and estate
taxes, and federal and state income taxes computed on Landlord's income shall
not be included as Taxes, nor shall the computation of increases in Taxes for
which Tenant shall pay Tenant's Percentage Share include any amounts paid by
Tenant under Subsections 5.2.3 and 5.2.4 or any amounts separately billed to a
particular tenant of the Real Property with respect to similar matters (other
than as its percentage share of increases in Taxes or Assessments).

                      5.2.2 Tenant shall also pay to Landlord an amount equal to
Tenant's Percentage Share of any increase in Assessments above the amount of
Assessments levied or assessed against the Real Property for the Base Tax Year.
As used in this Section 5, the term "Assessments" shall mean all assessments,
transit charges, housing charges, and levies assessed, charged, levied,
confirmed, or imposed by any federal, state, or local government, any political
subdivision, public corporation, district, or other political or public entity
or public authority on or with respect to any of the items described in clauses
(a) through (e) of Subsection 5.2.1 or with respect to the use, occupancy,
management, maintenance, alteration, repair, or operation of

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the Real Property (or any portion thereof) or any services or utilities
furnished or consumed in connection therewith.

                      5.2.3 In addition to paying Tenant's Percentage Share of
increases in the Taxes and Assessments described in Subsections 5.2.1 and 5.2.2,
Tenant shall pay one hundred per cent (100%) of the following, as reasonably
determined by Landlord: any increase in Taxes or Assessments caused by the
improvements described in Exhibit B or any other improvements or installations
at any time made to the Premises by or at the instance of Tenant. The total
amounts due under this Subsection 5.2.3 shall be paid to Landlord on or before
the date full payment of such Taxes or Assessments shall become due, or if
payable in installments, the date payment of the first installment of such Taxes
or Assessments shall become due. In the event such Taxes or Assessments are paid
by Landlord, Tenant forthwith upon demand therefor shall reimburse Landlord for
all amounts of such Taxes or Assessments chargeable against Tenant pursuant to
this Subsection 5.2.3.

                      5.2.4 Tenant shall pay, before delinquency, any and all
levied or assessed taxes that become payable during or with respect to the Term
upon Tenant's equipment, furnishings, fixtures, and other personal property
located in the Premises, including carpeting installed by or at the instance of
Tenant, even though said carpeting has become a part of the Premises. In the
event said taxes are paid by Landlord, Tenant forthwith upon demand therefor
shall reimburse Landlord for all such taxes paid by Landlord.

                      5.2.5 Any Taxes or Assessments that may be paid over more
than a one-year period shall be apportioned evenly over the maximum period of
time permitted by Law and only the portion thereof attributable to a given year
shall be included in Taxes or Assessments for that year. In the event that
Landlord contests the amount of any Taxes or Assessments and receives a refund
or credit as a result thereof, then Landlord shall pay Tenant its pro rata share
of such refund to the extent that the refund relates to Taxes or Assessments
that have been paid by Tenant. Upon Tenant's request, Landlord shall provide a
copy of all applicable tax bills.

               5.3 Operating Expense Increases.

                      5.3.1 Tenant shall pay to Landlord an amount equal to
Tenant's Percentage Share of any increase in Operating Expenses above the
Operating Expenses for the Base Expense Year. As used in this Section 5, the
term "Operating Expenses" shall mean all costs and expenses paid or incurred by
Landlord in connection with the operation, management, or maintenance of the
Real Property (which costs shall be accounted for under generally accepted
accounting principles and shall be amortized when and as required thereunder),
excluding, however, the items described in Subsection 5.3.2 below, which items
shall not be included in Operating Expenses for purposes of this Lease. By way
of illustration but not limitation, Operating Expenses shall include (subject to
the specific exclusions described in Subsection 5.3.2 below) all (a) costs for
heating, cooling, ventilation, fuel, and utilities; (b) costs and expenses for
maintenance, ordinary and extraordinary repairs and replacements, testing, and
operation of building systems and components; (c) costs and expenses for
security, landscaping, refuse disposal, janitorial services, labor, supplies,
materials, equipment, and tools, including any sales, use, or excise taxes
thereon; (d) reasonable management fees and other costs of managing the Real
Property, whether managed by Landlord or an independent contractor; (e) the
wages,

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salaries, bonuses, employee benefits and payroll burden of all Landlord's (or
its agents') on-site employees engaged in the operation, maintenance,
management, or security of the Real Property, including employers' payroll,
social security, workers' compensation, unemployment, and similar taxes with
respect to such employees; (f) all insurance premiums paid or incurred by
Landlord with respect to the Real Property and all amounts paid in connection
with claims or losses that are less than the amount of such deductibles or
self-insured retentions as Landlord may have deemed reasonable for its insurance
policies; (g) all costs and expenses of contesting by appropriate proceeding the
amount or validity of any Taxes or Assessments; (h) the cost of any capital
improvements or capital assets constructed, made, purchased, or installed in
order to comply with the requirements of any governmental or quasi-governmental
law or authority, or constructed, made, purchased, or installed in order to
conserve energy or reduce other Operating Expenses, amortized over the useful
life of such capital improvements or capital assets, as reasonably determined by
Landlord, together with such interest and finance charges as Landlord may pay in
financing such costs or (if such financing is not obtained) interest on the
unamortized balance of such costs accruing at an annual interest rate equal to
the interest rate from time to time publicly announced by the San Francisco Main
office of Bank of America, NT&SA (or any successor bank thereto), as its prime
annual interest rate (or "reference rate") charged to substantial commercial
borrowers for 90-day loans; (i) the fair market rental value of the building
office and other space in the building occupied by Landlord or its manager in
connection with the operation or management of the Real Property; and (j) and
all other costs and expenses that under generally accepted accounting principles
and practices would clearly be included in operating expenses.

                      5.3.2 The following costs and expenses shall be excluded
from the definition of "Operating Expenses" for purposes of this Lease: (a) any
and all Taxes and Assessments, as defined in Subsections 5.2.1 and 5.2.2 above;
(b) any costs or expenses separately billed to a particular tenant of the Real
Property and not billed as such tenant's percentage share of costs or expenses
of that type (provided, however, Tenant's Percentage Share, as applied to such
cost categories, shall be recomputed to exclude the rentable area of premises of
tenants being so billed separately); (c) costs for tenant improvements and
leasing commissions; (d) depreciation on the Building and the equipment therein;
(e) costs of capital improvements, other than such as are specifically included
as Operating Expenses in Subsection 5.3.1 above; (f) any costs recovered from
condemnation or insurance proceeds; (g) depreciation, amortization, and interest
on and capital retirement of debt, except to the extent such costs shall have
been elsewhere expressly included in the definition of Operating Expenses; (h)
attorneys' fees, costs and disbursements and other expenses incurred in
connection with negotiations or disputes with tenants, other occupants, or
prospective tenants or other occupants of the Building; (i) costs of Landlord's
general administration, other than as specifically set forth in Subsection
5.3.1; (j) costs incurred in advertising and promotional activities for
marketing of the Building to persons other than the then occupants of the
Building; (k) when and if any service (such as janitorial service) that is
normally provided by Landlord to tenants of the Building is not provided by
Landlord to Tenant in the Premises pursuant to agreement with Tenant under the
specific terms of this Lease, then in determining Operating Expenses for Tenant,
the cost of that service (except as it relates to common areas) shall be
excluded; and (1) unless specifically included under Subsection 5.3.1 above, any
other expense that under generally accepted accounting principles and practice
would clearly be excluded from operating expenses.

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                      5.3.3 If at any time less than ninety-five percent (95%)
of the rentable area of the Building is occupied, the Operating Expenses shall
be reasonably adjusted by Landlord to approximate such operating and maintenance
costs as would have been incurred if the Building had been at least ninety-five
percent (95%) occupied.

               5.4 Allocations of Certain Costs. If any Taxes, Assessments, or
Operating Expenses paid in one year relate to more than one calendar year,
Landlord shall allocate such Taxes, Assessments, or Operating Expenses among the
appropriate calendar years. If the Term ends other than on December 31, Tenant's
obligations to pay Tenant's Percentage Share of estimated and actual amounts of
increases in Taxes, Assessments, and Operating Expenses for such final calendar
year shall be prorated to reflect the portion of such year included in the Term.
Such proration shall be made by multiplying the total estimated or actual (as
the case may be) Taxes, Assessments, and Operating Expenses for such calendar
year by a fraction, the numerator of which shall be the number of days of the
Term during such calendar year, and the denominator of which shall be 365.
Landlord may, but shall not be required to, calculate prorations with regard to
when during a calendar year particular items of Taxes, Assessments, and
Operating Expenses were incurred. If any Taxes, Assessments, or Operating
Expenses are not separately assessed against or separately charged to the Real
Property, but are (a) jointly assessed against or changes to the Real Property
and other land or improvements in the Facility, or (b) assessed against or
charged to land or improvements in the Facility that are used as common areas
for the benefit of the Building and one or more other buildings in the Facility,
an equitable portion, as reasonably determined by Landlord, of such Taxes,
Assessments, or Operating Expenses shall be allocated to the Real Property for
purposes of this Section 5.

               5.5 Estimated Payments. Landlord shall notify Tenant of the
estimated monthly amount of Tenant's Percentage Share of increases in Taxes,
Assessments, or Operating Expenses and Tenant shall pay Landlord such estimated
amount at the same time as and together with Tenant's Minimum Monthly Rent.
Landlord may from time to time, by notice to Tenant, change such estimated
monthly or quarterly amounts based upon Landlord's actual or projected Taxes,
Assessments, or Operating Expenses.

               5.6 Statement of Expenses. Landlord shall, after December 31 of
each year, determine and furnish to Tenant a notice containing a computation of
the charge or credit to Tenant for any difference between (a) Tenant's allocable
share of the actual Taxes, Assessments, and Operating Expenses and (b) the
estimated portion(s) thereof paid by Tenant for the preceding calendar year, and
the amount of any underpayment shall be paid by Tenant within ten (10) days
after delivery of said notice. Such notice shall contain a line item detail
setting forth by categories the actual Operating Expenses incurred by Landlord
for the previous year. In the event of overpayment by Tenant, Landlord shall
credit such overpayment in full against Tenant's payment of rent next coming due
hereunder. Upon expiration or sooner termination of this Lease, if Tenant was
not in material default hereunder immediately prior thereto, Landlord shall
refund to Tenant any overpayment.

               5.7 Non-Waiver of Rights. Without limitation to the provisions of
Section 31 (Non-Waiver), no failure or determination of Landlord in any one year
to include or exclude certain items in its computation of Taxes, Assessments, or
Operating Expenses or to invoice Tenant for the full amount of Tenant's
allocable share of Taxes Assessments, or Operating

                                       11
<PAGE>   12

Expenses shall be construed as depriving Landlord of the right to include such
items as Taxes, Assessments, or Operating Expenses or to invoice Tenant for the
full amount of Tenant's allocable share thereof in any subsequent year in strict
accordance with the provisions of this Section 5.

               5.8 Right to Audit.

                      5.8.1 The good-faith determination of the accountant then
serving Landlord shall be conclusive and determinative of what constitutes a
Tax, Assessment, or Operating Expense each year. During the 30-day period
commencing upon Tenant's receipt of any statement provided by Landlord under
Subsection 5.6 above, Tenant shall have the right, at Tenant's expense and upon
not less than forty-eight (48) hours' prior notice to Landlord, to inspect at
reasonable times Landlord's books and records for the Facility for the calendar
year covered by such statement, for purposes of verifying Landlord's calculation
of Taxes, Assessments, and Operating Expenses. Such inspection may only be done
by an accounting firm which is generally considered to be one of the ten (10)
largest accounting firms headquartered in the United States. If Tenant shall not
have availed itself of such inspection, Tenant shall be deemed to have accepted
as final and determinative the amounts shown on the statement of expenses. If
Tenant shall have availed itself of its right to inspect the books and records,
and then disputes the accuracy of the information set forth in Landlord's books
and records with respect to the statement of expenses, Tenant shall nevertheless
continue to pay the amounts as required by the provisions of this Section 5;
provided however, that no later than six (6) months after receipt of the
statement of expenses, Tenant must (or its right to contest such charges shall
be deemed waived) institute arbitration proceedings against Landlord, in an
arbitration proceeding governed by the rules of the American Arbitration
Association, to collect and recover any overpayment made by Tenant resulting
from errors in the books and records of Landlord; and provided further, that
Tenant shall, within ten (10) days after filing of the complaint, serve Landlord
with a copy of the complaint filed in any such proceeding. Tenant shall be
precluded from contesting Taxes, Assessments, or Operating Expenses, or
Landlord's computations of the amounts payable by Landlord or Tenant pursuant to
this Section 5, unless an arbitration complaint is filed and served within such
six (6) month period. Should the arbitrator find errors in excess of ten percent
(10%) of the statement of expenses, then Landlord shall be responsible for all
reasonable fees incurred by Tenant with respect to the arbitration proceeding.
Should the arbitrator find errors of less than four percent (4%) of the
statement, then Tenant shall be responsible for all the reasonable fees incurred
by Landlord with respect to the arbitration proceeding. Should the arbitrator
find errors of between four percent (4%) and ten percent (10%) of the statement,
then each party shall be responsible for all fees incurred by it with respect to
the arbitration proceeding.

                      5.8.2 If Tenant institutes such arbitration procedures,
then the arbitrator shall determine whether or not Tenant was over-charged for
Tenant's Percentage Share of increases in Taxes, Assessments, or Operating
Expenses or undercharged for its share of increases. At the conclusion of the
arbitration, the arbitrator shall issue a ruling as to what the Taxes,
Assessments, and Operating Expenses, and Tenants Percentage Share of increases
therein, should have been had Landlord strictly complied with the provisions of
this Lease. If Landlord overcharged Tenant for increases in Taxes, Assessments,
or Operating Expenses, the amount of the overcharge shall be returned to Tenant
within thirty (30) days following the

                                       12
<PAGE>   13

conclusion of the arbitration. If the arbitrator determines that Tenant was
undercharged for increases in Taxes, Assessments, or Operating Expenses, Tenant
shall pay the amount of such undercharge to Landlord within thirty (30) days
following the issuance of the arbitration ruling.

        6. Security.

               6.1 Deposit. Concurrently with the execution of this Lease,
Tenant shall deposit with Landlord the amount specified in Subsection 1.1(f)
(the "Deposit"), which shall be held by Landlord as security for the full and
faithful performance of Tenant's covenants and obligations under this Lease. The
Deposit is not an advance Minimum Monthly Rent deposit, an advance payment of
any other kind, or a measure of Landlord's damages in case of Tenant's default.
If Tenant fails to comply with the full and timely performance of any or all of
Tenant's covenants and obligations set forth in this Lease, then Landlord may
(but shall not be required to), from time to time, without waiving any other
remedy available to Landlord use the Deposit, or any portion of it, to the
extent necessary to cure or remedy such failure or to compensate Landlord for
all damages sustained by Landlord resulting from Tenant's failure to comply
fully and timely with its obligations pursuant to this Lease. No acceptance of
such payment shall be construed as an admission that Tenant has performed all of
its obligations hereunder. If Landlord elects to make such application of all or
any portion of the Deposit, Landlord shall notify Tenant of the nature and
amount thereof and Tenant shall within ten (10) days thereafter deposit with
Landlord an amount sufficient to increase the Deposit to an amount equal to one
hundred ten percent (110%) of the amount thereof set forth in Subsection 1.1(f),
as the same may have been increased by prior applications of this Subsection
6.1, and any Tenant failure to immediately do so shall constitute an Event of
Default under this Lease. If Tenant is in compliance with this Lease's covenants
and obligations as of the sixtieth (60th) day after the expiration or earlier
termination of this Lease and Tenant's vacating of the Premises, Landlord shall
thereupon, return to Tenant the unused portion of the Deposit and any advance
rent paid by Tenant. Each time the Minimum Monthly Rent shall increase pursuant
to the provisions of this Lease, within five (5) business days thereafter,
Tenant shall pay to Landlord as additional Deposit an amount equal to the
difference between the new Minimum Monthly Rent and the Minimum Monthly Rent in
effect immediately prior to such increase. Landlord's obligations with respect
to the Deposit are those of a debtor and not a trustee. Landlord shall not be
required to maintain the Deposit separate and apart from Landlord's general or
other funds, and Landlord may commingle the Deposit with any of Landlord's
general or other funds. Tenant shall not at any time be entitled to interest on
the Deposit.

               6.2 No Bar or Defense to Other Remedies. No security or guaranty
that may now or hereafter be furnished to Landlord for the payment of the rent
herein reserved or for performance by Tenant of the other covenants or
conditions of this Lease shall in any way be a bar or defense to any action in
unlawful detainer, or for the recovery of the Premises, or to any action that
Landlord may at any time commence for a breach of any of the covenants or
conditions of this Lease.

        7. Hazardous Substances.

               7.1 Definitions. As used herein, "Hazardous Substance" shall mean
any substance, material, or waste that is or becomes regulated by any federal,
state, or local

                                       13
<PAGE>   14

governmental authority because of its toxicity, infectiousness, radioactivity,
explosiveness, ignitability, corrosiveness, or reactivity; and "Environmental
Requirements" shall mean all Laws relating to industrial hygiene, protection of
human health, warnings, hazard communication, employee rights-to-know,
environmental protection, or any Hazardous Substance.

               7.2 Consent Required for Hazardous Substances. Tenant shall not
cause or permit any Hazardous Substance to be brought upon, generated, produced,
kept or used in or about the Facility by Tenant or any Tenant Parties unless (a)
such Hazardous Substance is necessary for Tenant's business (and such business
is a Permitted Use) and (b) Tenant first obtains the consent of Landlord if such
Hazardous Substance is other than (i) an "Article" (as defined in 29 C.F.R.
Section 1910.1200) that is free of asbestos (whether friable or nonfriable) and
polychlorinated biphenyls (PCBs) or (ii) a consumer product that is used on the
Premises in quantities that would not require any notification or reporting
under any Environmental Requirement, or any warnings to any persons located
anywhere outside the Premises, if the entire quantities were released into the
environment. Any request by Tenant for such consent shall be in writing and
shall demonstrate to the reasonable satisfaction of Landlord that such Hazardous
Substance will be stored, used, and disposed of in a manner that complies with
all Environmental Regulations applicable to such Hazardous Substance. Such
consent shall not be unreasonably withheld, but Landlord shall in no case be
obligated to consent to the presence of any Hazardous Substance that will
increase the likelihood or magnitude of Landlord's liability, or to any
treatment, storage, or disposal upon the Premises or the Facility of any
Hazardous Substance whose treatment, storage, or disposal requires a permit or
variance under applicable Environmental Requirements. In no event shall Landlord
ever be obligated to execute any application for any such permit or variance.

               7.3 Notices. Tenant shall promptly deliver to Landlord copies of
any reports made to any environmental agency arising out of or relating to any
Hazardous Substances in, on, or from the Premises and copies of all hazardous
waste manifests reflecting the legal and proper disposal of all hazardous wastes
removed by Tenant from the Facility. If at any time Tenant shall become aware,
or have reasonable cause to believe that any Hazardous Substances, other than
those already known by Landlord or permitted under this Lease, have come to be
located in or about the Premises, or that any known Hazardous Substances have
been, are being, or threaten to be released into the environment, Tenant shall,
immediately upon discovering same, give notice of that condition to Landlord.

               7.4 Compliance with Environmental Requirements. Without
limitation to the generality of Subsection 2.2 (Restriction on Use), Tenant
shall at its own expense fully comply with all Environmental Requirements,
prudent industry practices, and Landlord's Rules and Regulations regarding use,
handling, disturbance, management, or disposal of Hazardous Substances, except
as otherwise provided in Subsection 7.5 below. Except as discharged into the
sanitary sewer in strict accordance and conformity with all applicable
Environmental Requirements, Tenant shall cause any and all Hazardous Substances
removed from the Premises (or from any other portion of the Facility, if their
removal is at the instance or direction of Tenant) to be removed and transported
solely by duly licensed haulers to duly licensed facilities for final disposal
of such materials and wastes. Upon expiration or earlier termination of the
Term, Tenant shall cause to be removed from the Premises and the Facility all
Hazardous Substances that Tenant or any Tenant Parties caused or permitted to be
located there. If the

                                       14
<PAGE>   15

presence of Hazardous Substances brought onto the Facility by any of such
persons results in contamination of any portion of the Facility, Tenant shall be
solely responsible, at its sole expense, for taking any and all necessary steps
to return the affected portion of the Facility to its condition prior to such
contamination, as reasonably determined by Landlord; provided, however, that
Tenant shall not take any remedial action (except in emergencies) in response to
the presence of, nor enter into any settlement agreement, consent decree, or
other compromise in respect to any claims relating to, any Hazardous Substance
in any way connected with the Facility, without first notifying Landlord of
Tenant's intention to do so and affording Landlord ample opportunity to appear,
intervene, or otherwise appropriately assert and protect Landlord's interest
with respect thereto; and further provided, that Landlord shall have the right
(but not the obligation) to perform any such remediation on Tenant's behalf, in
which event Tenant shall reimburse Landlord for all of Landlord's reasonable
costs and expenses incurred in connection therewith.

               7.5 Landlord's Obligation. Subject to Landlord's right to
reimbursement of certain costs or expenses under other provisions of this Lease,
Landlord. agrees to use commercially reasonable efforts to comply with all
applicable Environmental Requirements regarding the use, management, or disposal
of Hazardous Substances (a) that were existing on the Premises as of the date
Tenant originally took occupancy thereof under a prior lease or (b) that were
otherwise brought upon or kept or used in or about the Facility by Landlord, its
agents, employees, or contractors.

        8. No Light, Air Or View Easement. No diminution or shutting off of
light, air, or view by any structure that may be erected on the lands of the
Facility or other nearby lands shall in any way affect this Lease, abate any
rent hereunder, or otherwise impose any liability on Landlord.

        9. Alterations.

               9.1 Tenant's Right to Make Alterations. Tenant shall not make or
suffer to be made any alterations, additions, improvements, or utility
installations (collectively, "Alterations") to the Premises or any part thereof
of an amount greater than $2,500.00 without the prior consent of Landlord which
shall not be unreasonably withheld. Tenant specifically acknowledges that it
shall not be unreasonable for Landlord to withhold approval of any proposed
contractor or subcontractor of Tenant on the grounds that Landlord believes that
the performance of work in the Building by such contractor or subcontractor
could result in labor disputes with Landlord's own contractors or Building
employees of Landlord or Landlord's contractors. Landlord may, at any time
during the Term, require Tenant to remove any or all Alterations made without
Landlord's consent or otherwise made in material violation of any of the
provisions of this Section 9. In no event shall Landlord be required to consent
to any Alterations that would not be normal for the Permitted Uses, that might
adversely affect the utility or value of the Premises or the Building for future
tenants, that would alter the exterior appearance of the Building, that would be
of a structural nature, that could adversely affect the plumbing, mechanical, or
electrical systems servicing the Facility, that would be excessively expensive
to remove, or that would otherwise be prohibited under this Lease. All permitted
Alterations shall be made in conformity with the requirements of Subsection 9.2
below. Once

                                       15
<PAGE>   16

any such Alterations have been completed, whether prior to or during the Term of
this Lease, they shall thereafter be included in the designation of the Tenant
Improvements.

               9.2 Installation of Alterations. Any Alterations installed by
Tenant during the Term shall be done in strict compliance with all of the
following requirements:

                      9.2.1 No such work shall proceed without Landlord's prior
written approval of (i) Tenant's contractor(s); (ii) certificates of insurance
from a company or companies approved by Landlord, furnished to Landlord by
Tenant's contractor, for combined single limit bodily injury and property damage
insurance covering comprehensive general liability and automobile liability, in
an amount not less than One Million Dollars ($1,000,000) per occurrence and
endorsed to show Landlord, Landlord's property manager, and each general partner
of Landlord (if Landlord is a partnership) as additional insureds, and for
workers' compensation as required by law, endorsed to show a waiver of
subrogation by the insurer to any claims Tenant's contractor may have against
Landlord (provided, however, nothing in this Subsection 9.2.1 shall release
Tenant of its other insurance obligations hereunder); and (iii) detailed plans
and specifications for such work. Any changes in, deviations from, modifications
of, or amendments to the approved plans and specifications shall also require
Landlord's prior written approval.

                      9.2.2 Tenant shall cause its contractor(s) to coordinate
with Landlord's building management all construction and installation activities
covered by this Subsection 9.2. All such work shall be done in a skillful and
first class workmanlike manner, consistent with the best practices and standards
of the construction industry, and shall be pursued diligently and continuously
until completed, always in conformity with the approved plans and
specifications. All materials, equipment, and articles incorporated into the
Alterations shall be new, and of recent manufacture, and of the most suitable
grade for the purpose intended.

                      9.2.3 No Alterations shall be commenced without Tenant
first having obtained a valid building permit and/or all other permits or
licenses when and where required, copies of which shall be furnished to Landlord
before the work is commenced. Any work not acceptable to any governmental
authority or agency having or exercising jurisdiction over such work, or not
reasonably satisfactory to Landlord, shall be promptly replaced and corrected at
Tenant's expense. Landlord's approval or consent to any such work shall not
impose any liability upon Landlord. No work shall commence until and unless
Landlord has received at least ten (10) days' notice that such work is to
commence.

                      9.2.4 Tenant shall immediately reimburse Landlord for any
reasonable expense incurred by Landlord in reviewing and approving the plans and
specifications (and any modifications thereto) for such work or the work itself.

                      9.2.5 If the estimated cost of the Alterations exceeds
$15,000.00, then (a) Tenant shall obtain any bonds required by Landlord pursuant
to Section 12 below and (b) during all such times as the work is being
performed, Tenant shall carry, or cause its approved contractors to carry,
builder's risk completed value insurance, in an amount approved by Landlord.

                                       16
<PAGE>   17

                      9.2.6 Prior to undertaking any physical work in or around
the Premises, Tenant shall notify Landlord, in writing, of the exact nature and
location of the proposed work and shall promptly supply such additional
information regarding the proposed work as Landlord shall request. After receipt
of Tenant's notice, Landlord may, to the extent appropriate, supply Tenant with
the Building regulations and procedures for working in areas where there is a
risk of coming into contact with materials or building systems that, if not
properly handled, could cause health or safety risks or that could damage such
systems and/or the Building. Tenant shall cause its contractors, at Tenant's
sole cost and expense, strictly to comply with all such Building regulations and
procedures established by Landlord and with all applicable Laws. Landlord shall
have the right at all times to monitor the work for compliance with the Building
regulations and any applicable Laws. If Landlord determines that any applicable
Law or any Building regulations and/or procedures are not being strictly to
complied with, Landlord may immediately require the cessation of all work being
performed in or around the Premises until such time as Landlord is satisfied
that the applicable Laws and Building regulations and procedures will be
observed. Neither Landlord's review and approval of the plans and specifications
nor Landlord's monitoring of any work in or around the Premises shall not be
deemed a certification by Landlord of compliance with any applicable Laws or
with the Building regulations and procedures or a waiver by Landlord of its
right to require strict compliance with such Laws, regulations, or procedures,
nor shall such monitoring relieve Tenant from any liabilities relating to such
work.

                      9.2.7 Upon completion of any Alterations, Tenant shall
provide Landlord with construction plans, copies of all construction contracts,
and proof of payment for all labor and materials.

               9.3 Tenant Improvements - Treatment at End of Lease.

                      9.3.1 All Tenant Improvements (and all Alterations, upon
their completion) made by or for Tenant, whether temporary or permanent in
character, and whether made by Landlord or Tenant, shall be Landlord's property,
and shall be surrendered to Landlord in good order, condition, and repair
(ordinary wear and tear excepted), broom clean, upon the expiration or earlier
termination of the Term, and Tenant shall not be entitled to any compensation
therefor; provided however, that at the election of Landlord, exercisable by
notice to Tenant, Tenant shall, at Tenant's sole expense, prior to the
expiration of the Term, remove from the Premises all Tenant Improvements and
Alterations (or such portion thereof as Landlord may require to be removed) and
repair all damage to the Premises caused by such removal. At least thirty (30)
days prior to the termination of this Lease, Tenant shall submit by notice to
Landlord a written request of Landlord for instructions as to whether or not
Landlord elects to require any such removal of Tenant Improvements or
Alterations. Any damage or deterioration of the Premises or any Tenant
Improvements that could have been prevented by good maintenance practices shall
not be deemed to be ordinary wear and tear.

                      9.3.2 All of Tenant's furniture, furnishings, trade
fixtures, equipment not attached to the Building or the Premises, other personal
property, and all trash and debris (collectively, the "Personal Property"),
shall be completely removed by Tenant prior to the expiration of the Term;
provided, however, that Tenant shall repair all damage caused by such removal
prior to the expiration of the Term, and provided further, that any of Tenant's
Personal

                                       17
<PAGE>   18

Property not so removed shall, at the option of Landlord, automatically become
the property of Landlord. Thereafter, Landlord may retain or in any manner
dispose of said Personal Property not so removed, without liability to Tenant.

               9.4 Other Improvements in the Building. If as a result of any
Alterations or Tenant Improvements or as a result of Tenant's particular use of
the Premises, Landlord shall be required by any applicable Law to make other
improvements (including, without limitation, upgrading of installations of life
safety systems or compliance with standards for handicapped persons) in or upon
the Premises or any other portion of the Building or Facility, then Landlord
shall have the right to charge Tenant for the cost of such other improvements.

        10. Repair Obligations.

               10.1 Tenant's Obligations. Except as otherwise provided in
Section 9 (Alterations), Section 16 (Building Services), and Section 23 (Damage
or Destruction), Tenant, at its sale cost and expense, shall keep the Premises
and every part thereof in good, clean, pest-free, and sanitary condition and
repair at all times during the Term. All damage, injury or breakage to any part
or portion of the Premises or the Facility caused by the willful or negligent
act or omission of Tenant or any of its officers, directors, trustees, partners,
agents, contractors, employees, licensees, invitees, visitors, customers, or
trespassers (collectively, the "Tenant Parties") shall be promptly repaired at
Tenant's sole cost and expense, to the satisfaction of Landlord; provided,
however, that Tenant shall be entitled to receive reimbursement for such expense
to the extent that the cost of any such repair is covered by insurance obtained
by Landlord as part of Operating Expenses. Landlord shall have the right to
perform such repair work. Tenant shall be solely responsible for the design and
function of all of Tenant Improvements, whether or not installed by Landlord at
Tenant's request. Tenant waives all rights to make repairs to the Premises or to
the Facility at the expense of Landlord, or to deduct the cost of such repairs
from any payment owed to Landlord under this Lease.

               10.2 Landlord's Obligations. Provided that no Event of Default
shall have occurred and then remain uncured, Landlord shall keep in good
condition and repair the foundations, exterior walls, structural condition of
the interior bearing walls, and the roof of the Building, as well as any parking
lots, parking structures, walkways, driveways, landscaping, fences, signs, and
utility installations of the common areas. Landlord's obligations under this
Subsection shall not apply to any non-insured damage or wear and tear caused by
any breach or default by Tenant under this Lease or by any negligent or willful
act or omission of Tenant or the Tenant Parties. Landlord shall not be obligated
to perform repairs for which Tenant has expressly assumed responsibility under
other provisions of this Lease. Landlord shall have no obligation to make any
repairs under this Subsection until a reasonable time after receipt of notice
from Tenant of the need for such repairs. Tenant hereby acknowledges that the
foregoing description of certain obligations and rights of Landlord is not
intended to limit or restrict Landlord's rights under other provisions of this
Lease to reimbursement for costs and expenses incurred in connection with such
matters.

        11. Liens. Tenant shall keep the Premises, the Building, and the rest of
the Facility free from liens arising out of any work or materials actually or
allegedly performed or furnished, or obligations incurred, by or for Tenant. At
any time Tenant either desires or is required to

                                       18
<PAGE>   19

make any Alterations whose estimated cost is greater than $5,000.00, Landlord
may, without limitation to the provisions of Section 9 (Alterations) above, (a)
require Tenant, at Tenant's sole cost and expense, to obtain and provide to
Landlord a completion or performance bond, in a form and by a surety acceptable
to Landlord and in an amount not less than one and one-half (1-1/2) times the
estimated cost of such Alterations, to insure Landlord against liability from
mechanics' and materialmen's liens and to insure completion of the work, and (b)
require such additional items or assurances as Landlord in its sole discretion
may deem reasonable or desirable. Tenant agrees to indemnify and hold Landlord
harmless from and against any and all claims for mechanics', materialmen's or
other liens in connection with any Alterations, repairs, or any work performed,
materials furnished, or obligations incurred by or for Tenant. In the event any
such lien is filed or asserted, Tenant shall immediately post any bond required
to release the Premises and the Facility therefrom.

        12. Signs; Names Of Building And Facility. Except for a sign (which
shall comply Landlord's with building standard criteria) placed on the entry
door to the Premises, Tenant shall not place any logo, sign, advertisement,
announcement, warning, or notice upon or in front of the Premises or any common
areas. Tenant shall not use any name, insignia, or logotype of the Building or
Facility for any purpose. Tenant shall not use any picture of the Building or
Facility in its advertising or stationery or in any other manner. Landlord
expressly reserves the right, in Landlord's sole and absolute discretion, at any
time to change the name, insignia, logotype, or street address of the Building
or the Facility without in any manner being liable to Tenant.

        13. Assignment And Subletting

               13.1 "Transfer" Defined. As used herein, the term "Transfer"
shall mean any assignment of this Lease (including, without limitation,
assignment by operation of law--e.g., death of an individual tenant or merger,
dissolution, consolidation, or other reorganization of a corporate tenant),
subletting of all or any part the Premises, or transfer of possession, or right
of possession or contingent right of possession of all or any portion of the
Premises, including without limitation, concession, mortgage, encumbrance,
devise, hypothecation, agency, franchise, or management agreement, or to suffer
any other person (the agents and employees of Tenant excepted) to occupy or use
the said Premises or any portion thereof. If Tenant is a corporation that is not
deemed a public corporation, or is an unincorporated association or partnership,
or if Tenant consists of more than one party, the transfer, assignment
(including, without limitation, assignment by operation of law), or
hypothecation of any stock of or interest in Tenant in the aggregate in excess
of forty percent (40%), shall also be deemed to be a "Transfer." If Tenant is a
partnership or consists of more than one party, then any of the foregoing events
with respect to any such party comprising Tenant, or with respect to any general
partner of Tenant or any such party, shall also be deemed to be a "Transfer."
Notwithstanding the foregoing, occupancy of all or part of the Premises by
parent, subsidiary, or affiliated companies of Tenant shall not be deemed a
"Transfer," provided that such parent, subsidiary or affiliated companies were
not formed as a subterfuge to avoid the obligations of this Section 13.
Notwithstanding the foregoing, Landlord's prior consent shall not be required
for an assignment or sublease to any corporation, partnership or other entity
resulting from any merger, consolidation, stock purchase, reorganization or
other restructuring of Tenant, provided such successor entity has the financial
capacity to perform the obligations of Tenant under the Lease.

                                       19
<PAGE>   20

               13.2 No Transfer Without Consent. Tenant shall not, either
voluntarily or by operation of law or otherwise, suffer a Transfer without the
prior written consent of Landlord, which consent shall not be unreasonably
withheld, except as otherwise expressly provided below. Landlord's consent to
one Transfer shall not be deemed to be a consent to any subsequent Transfer; nor
shall Landlord's consent constitute an acknowledgment that no default then
exists under this Lease of the obligations to be performed by Tenant; nor shall
such consent be deemed a waiver of any then existing default, except as may be
otherwise stated in writing by Landlord at the time; nor shall Landlord's
acceptance of rent from any person be deemed a waiver by Landlord of any
provision of this Section 13. If Landlord's approval or consent for any
agreement or instrument is required hereunder, then no amendment or modification
shall be made thereto without Landlord's prior consent. Any Transfer that is not
in compliance with the provisions of this Section 13 shall be voidable at
Landlord's election.

               13.3 Procedure for Assignment and Subletting/Landlord's Recapture
Rights. Tenant shall advise Landlord by written notice of (a) Tenant's intent to
make a Transfer, (b) the name of the proposed transferee, and evidence
reasonably satisfactory to Landlord that such proposed transferee is comparable
in reputation, stature and financial condition to the other tenants then leasing
comparable space in the Facility (such evidence shall include, without
limitation, (i) a description of the proposed transferee's business background
and experience, (ii) the past two year's Federal Income Tax returns of the
proposed transferee, (iii) the proposed transferee's audited annual Balance
Sheets and Profit and Loss Statements for the past two years, certified correct
by a Certified Public Accountant, (iv) banking references of the proposed
transferee, and (vi) at least five business and three personal references for
the proposed transferee), and (c) the terms of the proposed assignment or
subletting (including the financial terms and the intended use of the Premises),
together with a copy of the proposed Transfer documents. Landlord need not
commence its review of any proposed Transfer, or respond to any request by
Tenant with respect to such, unless and until Landlord has received all of the
foregoing documentation from Tenant. Landlord shall, within thirty (30) days
after receipt of such notice and documentation, and any additional information
reasonably requested by Landlord, elect one of the following:

                                    (i) Consent to such proposed Transfer;

                                    (ii) Refuse such consent, which refusal
shall be on reasonable grounds, subject to the provisions of Subsection 13.4
below; or

               13.4 Conditions to Approval.

                      13.4.1 It is understood and agreed that, without limiting
Landlord's right of consent as provided herein, Landlord's withholding consent
shall be deemed reasonable if the proposed assignment or sublease fails to meet
any one or more of the following criteria: (i) neither the proposed Transfer nor
the proposed use of the Premises by the proposed transferee shall conflict with
or result in a breach of Subsections 2.2 (Restriction on Use), 7.2 (Consent
Required for Hazardous Substances), or 13.8 (Non-Competition), or any other
provision of this Lease, nor shall it violate any exclusivity arrangement that
Landlord may then have with any other tenant of the Facility; (ii) the proposed
transferee shall not be a governmental entity; (iii) if Tenant's obligations
under this Lease have been guaranteed by one or more third parties, then

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<PAGE>   21

each such guarantor's written consent to the proposed Transfer shall have been
furnished to Landlord; (iv) the tenancy of the proposed transferee shall not
have a disadvantageous impact on the Common Areas or the other occupants of the
Facility; (v) the occupation of the proposed transferee in the Premises shall
not cause a diminution in the reputation of the Facility or the other businesses
located therein; (vi) the proposed transferee shall be at least comparable in
reputation, stature and financial condition to the other tenants then leasing
comparable space in the Facility; and (vii) the rent payable by any proposed
assignee or subtenant be at least at the then current rental rates for the
Premises or comparable premises in the Facility, but not less than the then
current Minimum Monthly Rent under this Lease.

                      13.4.2 In the event that Landlord shall consent to a
proposed Transfer, or shall reasonably disapprove a proposed Transfer (other
than in connection with an exercise of Landlord's recapture rights under
Subsection 13.3), pursuant to the provisions of this Section 13, Tenant shall
pay Landlord's processing costs and attorneys' fees (including reasonable costs
of Landlord's in-house counsel) incurred in connection with such matter, as
reasonably determined by Landlord.

               13.5 Landlord's Right to Bonus Rentals.

                      13.5.1 If Tenant at any time duly assigns this Lease
(including, without limitation, a sale of all or substantially all of Tenant's
assets or corporate stock) or subleases the Premises or any part thereof, then
Tenant shall pay to Landlord, immediately upon Tenant's receipt thereof, ninety
percent (90%) of the "Rent Differential" received by Tenant in connection with
or in respect to such assignment or subletting. For purposes of this Subsection,
the following definitions shall apply:

                                    (i) the term "Rent Differential" shall mean
the excess of (a) any and all "Proceeds" payable to Tenant over (b) Tenant's
"Allowed Costs";

                                    (ii) the term "Proceeds" shall mean any and
all fees, rents, charges, payments, or other sums or consideration payable or
deliverable to Tenant in connection with such assignment or subletting,
regardless of whether any or all of such Proceeds are deemed to be allocable to
the leasehold or to Tenant's corporate stock or to Tenant's business at the
Premises or to Tenant's trade fixtures, equipment, furnishings, accounts
receivable, or inventory at the Premises or to any other tangible or intangible
personal property of Tenant connected with the Premises or Tenant's business
there conducted; and the term "Allowed Costs" shall mean (a) reasonable
attorneys' fees and reasonable broker's commissions and fees paid by Tenant to
nonaffiliated attorneys or brokers in connection with such assignment or
subletting, plus (b) the reasonable costs of constructing any tenant
improvements Tenant is required to furnish to such assignee or subtenant, plus
(c) in the case of an assignment, all of the Gross Rent, or in the case of a
subletting, the proportionate amount of the Gross Rent allocable to the portion
of the Term and portion of the Premises (if less than all) covered by such
subletting, as reasonably determined by Landlord, plus (d) the lesser of (1) the
fair market value, as reasonably determined by Landlord, of any of Tenant's
trade, fixtures, equipment, furniture, accounts receivable, and/or tangible or
intangible personal property sold to such subtenant or assignee in connection
with such assignment or subletting or (2) the actual consideration therefor
received by Tenant. For purposes of this Lease, the term "Gross Rent" shall mean
Minimum

                                       21
<PAGE>   22

Monthly Rent and the sums payable pursuant to Subsections 5.1, 5.2.1, 5.2.2,
5.2.3, 5.3.1, and 5.5 of this Lease.

                      13.5.2 In the event the Proceeds are paid in installments
(e.g., monthly sub-rent), then the Allowed Costs shall be amortized over the
scheduled number of installment payments, and Landlord's share of the Rent
Differential shall be payable at the same time such installment payments are
made.

                      13.5.3 Tenant covenants that any allocation of payments or
other consideration payable or deliverable to Tenant in connection with any
subletting of the Premises or assignment of this Lease shall be made in good
faith and not with a purpose to avoid Tenant's obligation to pay 50% of the Rent
Differential to Landlord.

               13.6 Joint and Several Obligations. Each permitted subtenant or
assignee shall assume all obligations of Tenant under this Lease with respect to
the Premises, or such portion thereof as may be covered by the sublease, and
shall be and remain jointly and severally liable with Tenant for the payment of
Minimum Monthly Rent and additional rent and the performance of all of the
terms, covenants, conditions, and agreements herein contained on Tenant's part
to be performed with respect to such space; provided, however, that without
limiting the obligations of Tenant under this Lease, such subtenant shall be
liable to Landlord for rent only in the amount set forth in the sublease, unless
otherwise agreed in writing by the parties thereto. No Transfer shall be valid
and no transferee shall take possession of the Premises or any part thereof
unless, within ten (10) days after the execution of the documentary evidence
thereof, Tenant shall deliver to Landlord a duly executed duplicate original of
the Transfer instrument in a form satisfactory to Landlord that (i) provides
that the transferee assumes Tenant's obligations for the payment of rent and for
the full and faithful observance and performance of the covenants, terms and
conditions contained herein, applicable to the Premises in the event of an
assignment or applicable to the subleased space in the event of a sublease, (ii)
provides that the transferee will, at Landlord's election, attorn directly to
Landlord in the event Tenant's Lease is terminated for any reason on the terms
set forth in the instrument of transfer, and (iii) contains such other
assurances as Landlord reasonably deems necessary. The failure or refusal of a
transferee to execute such an instrument of assumption shall not release or
discharge the assignee from its obligations set forth above.

               13.7 Assignment of Subrents. Tenant hereby assigns and transfers
to Landlord all of Tenant's interest in any rentals or other income arising from
any sublease heretofore or hereafter made by Tenant. Landlord may collect such
rentals and income and apply same toward Tenant's obligations under this Lease;
provided, however, that until an Event of Default shall have occurred, Tenant
shall be entitled to receive, collect, and enjoy such rentals and income,
subject to the provisions of Subsection 13.5 above. Landlord shall not, by
reason of this or any other assignment of any sublease to Landlord, nor by
reason of any collection of rentals from a subtenant, be deemed liable to such
subtenant for any failure of Tenant to perform or comply with any of Tenant's
obligations to such subtenant under its sublease. Tenant hereby irrevocably
authorizes and directs any such subtenant, upon receipt of a written notice from
Landlord stating that an Event of Default has occurred under this Lease, to pay
to Landlord the rentals due and to become due under the sublease. Tenant agrees
that such subtenant shall have the right to rely upon any such statement and
request from Landlord, and that such subtenant shall pay such rents

                                       22
<PAGE>   23

to Landlord without any obligation or right to inquire as to whether such Event
of Default has occurred and notwithstanding any notice from or claim from Tenant
to the contrary. Tenant shall have no right or claim against such subtenant or
Landlord for any such rentals so paid by such subtenant to Landlord.

               13.8 Non-Competition. In no event shall Tenant, without
Landlord's prior consent, assign this Lease or sublet the Premises or any
portion thereof to any then tenant or occupant of space in the Facility, or any
prospective tenant with whom Landlord is then, or has within six (6) months
prior thereto, engaged in lease negotiations or discussions that included the
delivery of written correspondence concerning same by at least one of the
parties thereto, or by its broker agent or representative.

               13.9 No Merger. The voluntary or other surrender of this Lease by
Tenant or mutual cancellation of this Lease shall not work a merger. At the
option of Landlord, any such surrender or cancellation of this Lease shall
either terminate any and all then existing subleases or subtenancies or operate
as an assignment to Landlord of Tenant's interest in any and all such subleases
or subtenancies.

               13.10 Landlord's Right to Assign. Landlord shall have the right
to sell, encumber, convey, transfer, and/or assign any of its rights and
obligations under this Lease.

        14. Indemnification; Insurance; Allocation Of Risk.

               14.1 Indemnification. Tenant agrees to indemnify, defend and hold
Landlord and its officers, directors, partners and employees entirely harmless
from and against all liabilities, losses, demands, actions, expenses or claims,
including attorneys' fees and court costs, for injury to or death of any person
or for damages to any property arising out of or in any manner connected with:

                                    (i) the use, occupancy or enjoyment of the
Premises and Common Areas and all facilities and amenities located within the
Common Areas by Tenant or Tenant's agents, employees, invitees or contractors
(the "Tenant's Agents") or any work, activity or other things allowed or
suffered by tenant or Tenant's Agents to be done in or about the Common Area or
Premises,

                                    (ii) any breach or default in the
performance of any obligation of Tenant under this Lease, and

                                    (iii) any act or failure to act, whether
negligent or otherwise tortious, by Tenant or Tenant's Agents on or about the
Premises, Building or Common Area.

Notwithstanding the foregoing, Tenant shall not be liable and Landlord shall
indemnify and hold Tenant free and harmless to the extent that damage or injury
is ultimately determined to be caused by the active negligence or willful
misconduct of Landlord. All property of Tenant kept or stored on the Premises or
in the Building shall be so kept or stored at the risk of Tenant only, and
Tenant shall hold Landlord harmless from any claims arising out of damage to the
same, including subrogation claims by Tenant's insurance carriers, unless such
damage shall be caused

                                       23
<PAGE>   24

by the negligence of Landlord. The indemnification contained herein shall
survive the expiration or earlier termination of this Lease.

               14.2 Tenant's Insurance. Tenant shall have the following
insurance obligations:

                      14.2.1 Liability Insurance. Tenant shall, at Tenant's
expense, obtain and keep in force at all times during the Term, a policy of
commercial general liability and property damage insurance (including automobile
liability). The minimum limits of liability shall be a combined single limit of
not less than ONE MILLION DOLLARS ($1,000,000.00) per occurrence. The policy
shall state that Landlord and the Landlord Parties are named as additional
insureds and are entitled to recovery for the negligence of Tenant. The policy
shall also provide for severability of interest; shall provide that an act or
omission of one of the insured or additional insureds that would void or
otherwise reduce coverage shall not void or reduce coverages as to other insured
or additional insureds; shall insure performance by Tenant of the indemnity
provisions of this Lease; and shall afford coverage after the Term of this Lease
(by separate policy or extension if necessary) for all claims based on acts,
omissions, injury or damage that occurred or arose in whole or in part during
the term of this Lease. The policy shall be primary coverage for Tenant and
Landlord for any liability arising out of Tenant's and the Tenant Parties' use,
occupancy or maintenance of the Premises and all areas appurtenant thereto. The
limits of said insurance shall not, however, limit any liability of Tenant under
Subsection 14.1.

                      14.2.2 Personal Property Insurance. Tenant shall maintain
in full force and effect on all of its fixtures, personal property, and
equipment in the Premises a policy or, policies of fire and casualty insurance
in "all risk" form (including water damage) to the extent of at least ninety
percent (90%) of their replacement cost (without deduction for depreciation), or
that percentage of the replacement cost required to negate the effect of a
coinsurance provision, whichever is greater. No such policy shall have a
deductible in a greater amount than FIVE HUNDRED DOLLARS ($500.00). Tenant shall
also insure in the same manner the physical value of all its leasehold
improvements, if any, in the Premises. The "full replacement value" of the
improvements to be insured under this Subsection 14.2.2 shall be determined by
the company issuing the insurance policy at the time the policy is initially
obtained. Not less frequently than once every three (3) years, Landlord shall
have the right to notify Tenant that it elects to have the replacement value
redetermined by an insurance company or insurance consultant. The
redetermination shall be made promptly and in accordance with the rules and
practices of the Board of Fire Underwriters, or a like board recognized and
generally accepted by the insurance company, and each party shall be promptly
notified of the results by the company. The insurance policy shall be adjusted
according to the redetermination. During the Term, the proceeds from any such
policy or policies of insurance shall be used for the repair or replacement of
the fixtures, equipment, and leasehold improvements so insured. Landlord shall
have no interest in said insurance, and will sign all documents necessary or
proper in connection with the settlement of any claim or loss by Tenant. Tenant
shall also maintain insurance for all plate glass upon the Premises. All such
insurance shall contain waivers of subrogation to the extent available on a
commercially reasonable basis.

                                       24
<PAGE>   25

                      14.2.3 Worker's Compensation Insurance. Tenant shall carry
and maintain Workers Compensation and Employer's Liability insurance as required
by applicable Laws.

                      14.2.4 Business Interruption. Tenant shall maintain loss
of income and business interruption insurance in such amounts as will reimburse
Tenant for direct or indirect loss of earnings attributable to all perils
commonly insured against by prudent tenants or attributable to prevention of
access to the Premises or to the Building as a result of such perils, but in no
event in an amount less than the Gross Rent payable hereunder for six (6)
months. All such insurance shall contain waivers of subrogation to the extent
available on a commercially reasonable basis.

                      14.2.5 Other Coverage. Not more frequently than every
three (3) years, if, in the reasonable opinion of Landlord's lender or of the
insurance consultant retained by Landlord, the amount of public liability and
property damage insurance coverage at that time is not adequate, or additional
coverages not specified above should be obtained, Tenant, at its cost, shall
increase such insurance coverage, and/or obtain such additional coverages, as
required by either Landlord's lender or Landlord's insurance consultant,
consistent with the then prevailing custom for new leases of similar space in
the business district where the Facility is located.

                      14.2.6 Insurance Criteria. All the insurance required to
be carried by Tenant (except Tenant's Personal Property Insurance and Workers
Compensation Insurance) hereunder shall:

                                    (i) Be issued by insurance companies that
are qualified and admitted to do business in the State where the Facility is
located and that carry a designation in "Best's Insurance Reports," as issued
from time to time throughout the Term, as follows: Policy holders' rating of A;
financial rating of not less than X;

                                    (ii) Be issued in a form acceptable to
Landlord.

                                    (iii) Contain an endorsement requiring
thirty (30) days' written notice from the insurance company to both parties and
to Landlord's lender before cancellation or expiration or decrease in the
coverage, scope, or amount of any policy.

                                    (iv) Waive subrogation, as required by
Subsections 14.2.2, 14.2.4, and 14.5, with respect to property loss or damage by
fire or other casualty.

                                    (v) Name Landlord and its property manager
as additional insureds and, at Landlord's request, shall carry a lender's loss
payee endorsement in favor of Landlord's lender and such other endorsements as
Landlord may reasonably require from time to time.

                      14.2.7 Evidence of Coverage. An executed copy of each
insurance policy, or a certificate thereof with the actual policy attached,
shall be delivered to Landlord prior to Tenant's commencing remodeling work in
or taking occupancy of the Premises, and Tenant shall keep each such policy in
full force and effect throughout the Term. Renewal

                                       25
<PAGE>   26

policies or certificates thereof shall be delivered to Landlord at least thirty
(30) days in advance of the expiration dates of the expiring policies.

                      14.2.8 Tenant Insurance Default. In the event that Tenant
fails to deliver to Landlord any policy, certificate, or renewal notice
hereunder required within the prescribed time period, or if any such policy is
canceled or modified during the Term without Landlord's consent, Landlord may at
its option, but shall not be obligated to, obtain such insurance on behalf of
Tenant and bill Tenant, as additional rent, for the cost thereof. The provisions
of this Section 14 are for the benefit of Landlord and its lenders only and are
not nor shall they be construed to be for the benefit of any employee of Tenant,
any other tenant or occupant of the Building or the Facility, or any other
person whatsoever.

               14.3 Landlord's Insurance. Landlord shall maintain policies of
insurance covering loss of or damage to the Building in the full amount of its
replacement cost. Such policies shall provide protection (subject to reasonable
deductibles) against all perils included within the classification of fire,
extended coverage, vandalism, malicious mischief, special extended perils (all
risk), sprinkler leakage, and any other perils (e.g., flood and earthquake) that
Landlord reasonably deems appropriate. Landlord shall not obtain insurance for
Tenant's trade fixtures or equipment.

               14.4 Exculpation. Except to the extent otherwise expressly
provided below in this Subsection, Tenant hereby waives all Claims against
Landlord and the Landlord Parties for any loss, theft, or damage to Tenant's
business or Personal Property or injury (including death and physical,
psychological, and emotional injuries) to persons, in, upon or about the
Premises and/or the Facility from any cause whatsoever, except for the active or
passive negligence of Landlord or the Landlord Parties. Without limiting the
generality of the foregoing, Tenant specifically acknowledges that such waived
Claims includes injuries, losses, and damage resulting from the following
causes:

        Fire; smoke; explosion; falling plaster, ceiling tiles, fixtures, or
signs; broken glass; steam; gas; fumes; vapors; odors; dust; dirt; grease; acid;
oil; any other Hazardous Substance; debris; noise; air or noise pollution;
vibration; theft; breakage; vermin; electricity; computer or electronic
equipment or systems malfunction or stoppage; water; rain; flooding; freezing;
windstorm; snow; sleet; hail; frost; ice; excessive heat or cold; sewage; sewer
backup; toilet overflow; leaks or discharges from or into the Premises or any
other part of the Facility, or from any pipes, sprinklers, appliances, equipment
(including, without limitation, heating, ventilating, and air-conditioning
equipment); electrical or other wiring; plumbing fixtures; roofs; windows;
skylights; doors; trapdoors; the surface or subsurface of any floor or ceiling
of any part of the Facility; dampness or climatic conditions; maintenance,
repair, or construction activities; renovation work; and any interruption,
cessation, or failure of any public or other utility service.

        The foregoing notwithstanding, neither Landlord nor the Landlord Parties
shall be released from liability for their own gross negligence or willful
misconduct or Landlord's negligent failure to respond to written notice from
Tenant of deficiencies that result in such loss, damage, or injury (provided
that the correction of such deficiencies is the obligation of Landlord
hereunder). However, Landlord's liability shall be subject to the further
limitations set forth in Subsection 22.6. BY SIGNING ITS INITIALS BELOW, TENANT
ACKNOWLEDGES THAT

                                       26
<PAGE>   27
IT HAS READ AND UNDERSTANDS THE MEANING AND RAMIFICATIONS OF THE PROVISIONS SET
FORTH IN THIS SUBSECTION AND FURTHER ACKNOWLEDGES THAT SUCH PROVISIONS WERE
SPECIFICALLY NEGOTIATED.

        /s/ P. G. L.   TENANT'S INITIALS
        --------------

               14.5 Allocation of Insured Risks/Subrogation.

                      14.5.1 Landlord and Tenant release each other from any
Claims of whatever nature for damage, loss, or injury to the Premises, the
Building, and/or the Facility, or to the other's property in, on, or about the
Premises and the Facility, to the extent of any insurance proceeds that are
received or receivable (or that would have been receivable but for such
releasing party's breach or default of its obligations under this Lease), even
if such damage, loss, or injury shall have been caused by the fault or
negligence (but not willful misconduct) of the other party or anyone for whom
such party may be responsible. Landlord and Tenant shall each cause their
respective insurance policies to provide that the insurance company waives all
right of recovery by way of subrogation against either Landlord or Tenant in
connection with any damage covered by any policy. To the extent of any insurance
proceeds actually received, or that would have been payable but for a breach of
this Lease, neither Landlord nor Tenant shall be liable to the other for any
damage caused by fire or any of the risks insured against under any insurance
policy required by this Lease.

                      14.5.2 If an insurance policy cannot be obtained with a
waiver of subrogation, or is obtainable only by the payment of an additional
premium charge above that charged by insurance companies issuing policies
without waiver of subrogation, the party undertaking to obtain the insurance
shall notify the other party of this fact. The other party shall have a period
of ten (10) days after receiving the notice either to place the insurance with a
company that is reasonably satisfactory to the other party and that will carry
the insurance with a waiver of subrogation, or to agree to pay the additional
premium if such a policy is obtainable at additional cost. If the insurance
cannot be obtained or the party in whose favor a waiver of subrogation is
desired refuses to pay the additional premium charged, the other party is
relieved of the obligation to obtain a waiver of subrogation with respect to the
particular insurance involved.

        15. Security Services.

               15.1 Landlord's Obligation to Furnish Security Services. Landlord
may, but shall not be obligated to, furnish security services for the Premises
and/or the Building and/or the Facility as Landlord deems appropriate in its
sole and absolute discretion. In the event Landlord does furnish or contract to
furnish any such services, Tenant shall nevertheless have sole responsibility
for the protection of itself, the Tenant Parties and all property of Tenant and
the Tenant Parties located in, on, or about the Premises or the Building or the
Facility, and the provisions of Section 15 shall nevertheless continue in full
force and effect.

               15.2 Tenant's Right to Install Security System. If Tenant wishes
to establish or install any automated and/or non-automated security system in,
on, or about the Premises, Tenant shall first notify Landlord of Tenant's plan
for any such system, and Landlord shall have the

                                       27
<PAGE>   28

right to review and approve or disapprove said plan in Landlord's discretion. If
Landlord approves any such plan and Tenant establishes or installs any automated
and/or nonautomated security system in, on, or about the Premises, and should
such system adversely affect the Premises or the Facility or the desirability of
the Premises or the Facility as commercial space for its then current uses, or
have an adverse effect on other tenants, respectively, Landlord shall
subsequently have the right to review Tenant's security system from time to time
and request Tenant to make such changes in personnel and/or equipment. Tenant
shall make said requested changes immediately thereafter.

        16. Building Services.

               16.1 Standard Building Services. Subject to the full performance
by Tenant of all of Tenant's obligations under the Lease, Landlord shall furnish
the Premises with the standard building services and utilities as set forth in
the attached Exhibit D.

               16.2 Additional Services. Tenant shall not, without the consent
of Landlord, (a) use any equipment, apparatus, or device in the Premises that
will in any way increase the amount of electricity, cooling capacity, or water
usually furnished or supplied for use of the Premises for general office
purposes or (b) connect with electric current, except through existing
electrical outlets in the Premises, or connect to water pipes, any apparatus or
device for the purpose of using electric current or water. Tenant agrees to pay
immediately upon demand all reasonable charges imposed by Landlord from time to
time for all building services and utilities supplied to or used by Tenant in
excess of or in addition to those standard building services and utilities
described in Exhibit D. Such excess and additional building services and
utilities are hereinafter referred to as "Additional Services." Landlord may at
any time cause a switch and/or metering system to be installed at Tenant's
expense (which expense Tenant shall pay within ten (10) working days after
receipt of an invoice from Landlord covering the installment cost of such switch
or metering system) to measure the amount of building services, utilities,
and/or Additional Services consumed by Tenant or used in the Premises.

               16.3 Conservation. Tenant shall cooperate fully with Landlord to
effect conservation of all utilities in the Building and shall use its best
efforts to minimize its use of water, heat, electricity, and air conditioning.

               16.4 Landlord's Right to Cease Providing Services. Landlord
reserves the right, in its sole and absolute discretion with respect to item (a)
below, and in its reasonable discretion with respect to item (b) below, to
reduce, interrupt, or cease service of the heating, air conditioning,
ventilation, elevator, plumbing, electrical systems, telephone systems, and/or
utility services of the Premises, the Building, or the Facility, for any of the
following reasons or causes:

                             (a) any accident, emergency, Law, or Force Majeure
(as defined in Section 17); or

                             (b) the making of any repairs, additions,
alterations, or improvements to the Premises, the Building, or the Facility,
until such repairs, additions, alterations, or improvements shall have been
completed.

                                       28
<PAGE>   29

        No such interruption, reduction, or cessation of any such building
services or utilities shall constitute an eviction or disturbance of Tenant's
use or possession of the Premises or common areas, or a breach of Landlord's
obligations hereunder, or render Landlord liable for any damages (including,
without limitation, any damages, compensation, or claims arising from any
interruption or cessation of Tenant's business), or entitle Tenant to be
relieved from any of its obligations under the Lease, or result in any abatement
of rent. However, Landlord shall use commercially reasonable diligence to
restore such service, and to minimize any disturbance to Tenant, where it is
within Landlord's commercially reasonable control to do so. Notwithstanding the
foregoing, if any of the utilities and services cease to be provided to Tenant
as a result of the negligence or willful misconduct of Landlord, resulting in
the Premises being rendered uninhabitable, and if such interruption continues in
excess of five (5) consecutive business days, then all rent payable by Tenant to
Landlord under this Lease shall be abated for the period the Premises are
rendered uninhabitable for such reasons.

        17. Force Majeure. Except as otherwise expressly provided elsewhere in
this Lease with respect to Tenant's right to abatement of Gross Rent under
certain circumstances, Landlord shall not be chargeable with, liable for, or
responsible to Tenant for anything or in any amount for any failure to perform
or delay caused by any of the following events (collectively, "Force Majeure"):
fire; earthquake; explosion; flood; hurricane; the elements; acts of God or the
public enemy; actions, restrictions, limitations or interference of governmental
or quasi-governmental authorities or agents; war; invasion; insurrection;
rebellion; riots; strikes or lockouts; inability to obtain necessary materials,
goods, equipment, services, utilities or labor; accident; breakage; or any other
cause whether similar or dissimilar to the foregoing which is beyond the
reasonable control of Landlord; and any such failure or delay due to said causes
or any of them shall not be deemed a breach of or default in the performance of
this Lease by Landlord.

        18. Rules And Regulations. Tenant, its agents, employees, and servants
and those claiming under Tenant will at all times observe, perform, and abide by
all of the general rules and regulations promulgated by Landlord as set forth in
Exhibit C, and as reasonably modified, supplemented, or amended by Landlord from
time to time (the "Rules and Regulations"). Landlord shall not be responsible to
Tenant for the nonperformance by any other tenant or occupant of the Facility of
any of said rules and regulations, and Landlord reserves the right to make
reasonable exceptions for specific tenants or occupants with respect to the
application of certain rules and regulations. Subject to the foregoing, Landlord
agrees to use commercially reasonable efforts, consistent with Landlord's rights
under applicable leases, to apply the Rules and Regulations in a fair,
responsible, and equitable manner. If there is a conflict between the Rules and
Regulations and any provision of this Lease, the provisions of this Lease shall
prevail.

        19. Holding Over.

               19.1 Surrender of Possession. Tenant shall surrender possession
of the Premises immediately upon the expiration of the Term or termination of
this Lease. If Tenant retains possession of the Premises or any part thereof
after the expiration or earlier termination of the Term, whether with or without
Landlord's consent, all of the provisions of this Lease pertaining to the
obligations of Tenant and the rights of Landlord during the Term shall apply to
such holdover period, except as expressly modified by this Section 19.

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<PAGE>   30

               19.2 Holding Over With Consent. If Tenant, with Landlord's
consent, retains possession of the Premises after the expiration of the Term,
Tenant shall become a tenant from month-to-month, at a monthly rental equal to
one hundred fifty percent (150%) of the Minimum Monthly Rent applicable
immediately prior to the expiration of the Term. Such month-to-month tenancy
shall be terminable in the manner provided by law.

               19.3 Holding Over Without Consent. If Tenant, without Landlord's
consent, retains possession of the Premises after the expiration or earlier
termination of Term (or, in the case of a month-to-month tenancy under
Subsection 19.2, after the duly noticed termination date of such tenancy), then
Tenant shall pay to Landlord monthly rental equal to two hundred percent (200%)
of the Minimum Monthly Rent applicable immediately prior to the expiration or
earlier termination of the Term, and Tenant shall indemnify Landlord from and
against all losses, costs, claims, liabilities, and expenses (including, without
limitation, reasonable' attorneys' fees and disbursements) sustained by Landlord
by reason of such retention (including, without limitation, claims for damages
by any other person to whom Landlord may have agreed to lease all or any part of
the Premises effective on or after the date Tenant was obligated to surrender
possession of the Premises). No acceptance by Landlord of rent during any such
holding over without Landlord's approval shall reinstate, continue, or extend
the Term of this Lease or shall affect any notice of termination given to Tenant
prior to the payment of such money, it being agreed that after the service of
such notice or the commencement of any suit by Landlord to obtain possession of
the Premises, Landlord may receive and collect when due any and all payments
owed by Tenant under this Lease, and otherwise exercise its rights and remedies.
The making of any such payments by Tenant shall not waive such notice, or in any
manner affect any pending suit or judgment obtained.

        20. Subordination. This Lease shall, at Landlord's sole option, be
subject and subordinate at all times to the lien of any mortgages or deeds of
trust in any amounts whatsoever now or hereafter placed on or against the
Facility (or any portion thereof) or on or against Landlord's interest or estate
therein without the necessity of having further interests on the part of Tenant
to effectuate such subordination. Notwithstanding such subordination, Tenant's
right to quiet possession of the Premises shall not be disturbed as a result of
any foreclosure or deed in lieu of any mortgage or deed of trust hereafter
placed on or against the Facility, if and so long as Tenant is not in default of
any of its obligations under this Lease, unless this Lease is otherwise
terminated pursuant to its terms. If any mortgagee, trustee or ground lessor
shall elect to have this Lease deemed to be prior to the lien of its mortgage,
deed of trust, or ground lease, and shall give written notice thereof to Tenant,
then this Lease shall be deemed to be prior to such instrument, regardless of
whether this Lease is dated prior or subsequent to the execution or recording
date thereof. Tenant covenants and agrees to execute and deliver, upon demand,
such further instruments evidencing such subordination of this Lease as may be
required by Landlord, provided that said instruments recognize that Tenant's
right to quiet possession of the Premises shall not be disturbed if and so long
as Tenant is not in default of its obligations under this Lease. Tenant hereby
irrevocably appoints Landlord the attorney-in-fact of Tenant to execute and
deliver any such instruments for or in the name of Tenant.

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<PAGE>   31

        21. Entry By Landlord.

               21.1 Landlord reserves and shall have the right to enter the
Premises at any and all reasonable times to inspect the same, to verify Tenant's
compliance with its obligations under this Lease, to post notices of
non-responsibility (if permitted by the Laws of the State where the Facility is
located), to post any notices Landlord reasonably believes are required by law
to be posted on the Premises, to deliver notices to Tenant or any subtenant or
occupant of any portion of the Premises, to supply any service to be provided by
Landlord to Tenant hereunder, to submit the Premises to prospective lender,
purchasers, investors, or tenants. Landlord may, during the last six (6) months
of the Term, place "For Lease" signs on or about the Premises.

               21.2 Landlord also reserves and shall have the right to enter the
Premises, upon reasonable prior written notice (except in emergencies), to
alter, improve, renovate, or repair the Premises and any portion of the Facility
or its mechanical systems, and Landlord may for such purposes erect scaffolding
and other appropriate structures where reasonably required by the character of
the work to be performed. In the event that any such entry by Landlord into the
Premises, or such work performed by Landlord at the Facility, prevents Tenant
from gaining access to all or any significant portion of the Premises for more
than five (5) consecutive business days, then Minimum Monthly Rent shall be
abated in proportion to the part of the Premises (if less than all) to which
Tenant shall have been denied access, but there shall be no abatement of rent by
reason of all or any portion of the Premises being inaccessible for a period of
five (5) or fewer consecutive business days. Further, Tenant shall not be
entitled to any abatement of rent on account of any noise, vibration, or other
disturbance to Tenant's business at the Premises that may arise out of any such
entry by Landlord into the Premises or out of Landlord's performance of any such
work at the Facility, and under no circumstances shall any such noise,
vibration, disturbance, work, or entry by Landlord be construed or deemed to be
a forcible or unlawful entry into or a detainer of the Premises or an eviction
of Tenant from the Premises or any portion thereof. Landlord shall use
commercially reasonable efforts (which shall not include any obligation to
employ labor at overtime rates) to avoid or minimize disruption of Tenant's
business during any such entry or work by Landlord.

               21.3 Landlord shall have the right to use any and all means that
Landlord may deem appropriate to open any doors in an emergency in order to
obtain entry to the Premises.

        22. Defaults And Remedies.

               22.1 Events of Default.

                      22.1.1 Definition. In addition to those events designated
as Events of Default in other provisions of this Lease, each of the following
shall constitute an "Event of Default" by Tenant and a material breach of this
Lease:

                                            (1) Tenant's failure to make any
payment owed by Tenant under this Lease, as and when due, where such failure is
not cured within five (5) business days following Tenant's receipt of Landlord's
written notice thereof; or

                                            (2) Tenant's failure to observe,
keep, or perform any of the terms, covenants, agreements, or conditions under
this Lease that Tenant is obligated

                                       31
<PAGE>   32

to observe or perform, other than that described in subdivision (1) above, for a
period of thirty (30) days after delivery of notice to Tenant of said failure;
provided however, that if the nature of Tenant's default is such that more than
thirty (30) days are reasonably required for its cure, then Tenant shall not be
deemed to be in default under this Lease if Tenant shall commence the cure of
such default so specified within said ten (10) day period and diligently
prosecute the same to completion; or

                                            (3) Landlord's discovery that any
financial statement given to Landlord by Tenant, by any assignee or subtenant of
Tenant, by any successor in interest of Tenant, or by any guarantor of any
obligations of Tenant under this Lease, was materially false, where Tenant
fails, within ten (10) days after delivery of Landlord's written demand, to give
Landlord such additional assurances or security for the full and faithful
performance of all Tenant's obligations under this Lease as Landlord shall
reasonably have demanded; or

                                            (4) The occurrence of any of the
events described in Subsection 36.5 (Events of Bankruptcy) below with respect to
any guarantor of any obligations of Tenant under this Lease, where Tenant fails
to furnish a substitute guarantor, or alternative security, satisfactory to
Landlord within ten (10) days after Landlord's delivery of Landlord's written
demand therefor.

                      22.1.2 Notice of Default. The notices of default provided
for in Subsection 22.1.1(1) and (2), and the written demands provided for in
Subsection 22.1.1(3) and (4), shall in each case be in lieu of, and not in
addition to, any notice required under applicable unlawful detainer Laws;

               22.2 Remedies. Upon the occurrence of any Event of Default,
Landlord may exercise any one or more of the termination rights and other
remedies, in addition to all other rights and remedies now or hereafter provided
at law or in equity.

               22.3 Right to Cure. All covenants and agreements to be performed
by Tenant under this Lease shall be performed by Tenant at Tenant's sole cost
and expense. If Tenant shall fail to perform any act on its part to be performed
under this Lease, and such failure shall continue for five (5) business days
after notice thereof to Tenant (except that no notice shall be required in cases
of emergency), Landlord may, but shall not be obligated to do so, without
waiving or releasing Tenant from any obligations of Tenant, perform any such act
on Tenant's part to be performed as provided in this Lease. All costs incurred
by Landlord with respect to any such performance by Landlord (including
reasonable attorneys' fees) shall be paid by Tenant to Landlord immediately upon
demand.

               22.4 Waiver of Redemption. Tenant hereby waives, for itself and
all persons claiming by and under Tenant, all rights and privileges which it
might have under any present or future law to redeem the Premises or to continue
the Lease after being dispossessed or ejected from the Premises.

               22.5 Remedies Cumulative. All remedies of Landlord under this
Lease are cumulative. Efforts by Landlord to mitigate the damages caused by
Tenant's default shall not

                                       32
<PAGE>   33

constitute a waiver of Landlord's right to recover damages, nor shall Landlord
have any obligation to mitigate damages, except to the extent otherwise provided
by applicable Laws.

               22.6 Default by Landlord. In no event shall Landlord be deemed to
be in default of any obligation hereunder unless and until thirty (30) days have
expired after delivery of notice of such deficiency to Landlord and to anyone
else, or to any lien holder, to whom Landlord has instructed Tenant to send
duplicative notices, specifying in detail Landlord's failure to perform, to
Landlord and to the holder of any recorded interest pertaining to the Building;
provided, however, that if such deficiency cannot be cured or corrected within
such 30-day period Landlord shall not be in default if Landlord or anyone on
behalf of Landlord commences such cure or correction within such 30-day period
and thereafter diligently prosecutes the same to completion. If Landlord is
deemed to be in default under the provisions of this Subsection, Tenant shall be
entitled to bring an action for declaratory judgment or specific performance, or
for damages (subject to the provisions of this Lease limiting Landlord's
liability) shown by Tenant to have been proximately caused by such default.
Notwithstanding anything to the contrary in this Lease, Tenant agrees that, in
the event that it becomes entitled to receive damages from Landlord, Tenant
shall not be allowed to recover from Landlord consequential damages or damages
in excess of the out-of-pocket expenditures incurred by Tenant as a result of a
default by Landlord. Landlord's liability to Tenant for damages resulting from
Landlord's breach of any provision or provisions of the Lease shall not exceed
the value of Landlord's equity interest in the Facility. Tenant hereby expressly
waives its rights under any and all Laws, now or hereafter in effect, to
terminate this Lease (whether prior to or after the commencement of the Term) or
to withhold any payment owed by Tenant under this Lease, on account of any
damage, condemnation, destruction, or state of disrepair of the Premises, or any
part thereof, it being the parties' intent that the provisions of this Lease
shall govern the parties' rights and obligations with respect to such matters.

        23. Damage Or Destruction.

               23.1 Total or Substantial Destruction. In the event that the
Facility or Building shall be destroyed to the extent of forty percent (40%) or
more of the replacement cost thereof, Landlord may elect to terminate this
Lease, whether the Premises be damaged or not, upon written notice to Tenant not
later than the 60th day after the date of such destruction.

               23.2 Loss Covered by Insurance. If, at anytime prior to the
expiration or termination of this Lease, (a) all or any portion of the Premises,
or any portion of the Common Areas whose use is required for Tenant's business,
shall be wholly or partially damaged or destroyed by fire or other casualty or
peril (collectively, a "Casualty"), and (b) at least ninety percent (90%) of the
total costs of performing the necessary repairs and replacements under then
applicable Law will be fully covered and paid for by available proceeds of
insurance maintained by Landlord, and (c) such damage or destruction shall
render the Premises totally or partially inaccessible or unusable by Tenant in
the ordinary conduct of Tenant's business, then:

                      23.2.1 Repairs That Can Be Completed Within One Hundred
Eighty Days. Within sixty (60) days after the date of Tenant's notice to
Landlord of such damage or destruction (the "Damage Notice Date"), Landlord
shall give Tenant notice of Landlord's good faith determination of whether the
damage or destruction can be repaired under applicable Laws,

                                       33
<PAGE>   34

without the payment of overtime or other premiums, within one hundred eighty
(180) days after the date such determination of Landlord is made. If all such
repairs to the Premises and/or such portions of the Common Areas can, in
Landlord's good faith judgment, be substantially completed in such manner within
such one hundred eighty (180) day period, Landlord shall undertake such repairs
and this Lease shall remain in full force and effect.

                      23.2.2 Repairs That Cannot Be Completed Within One Hundred
Eighty Days. In the event that Landlord ever determines that such repairs to the
Premises or to such portions of the Common Areas cannot, in Landlord's good
faith judgment, be substantially completed under applicable Laws, without the
payment of overtime or other premiums, within one hundred eighty days after the
date of such casualty, then Landlord shall notify Tenant of such determination
within ten (10) days of such casualty. In such notice Landlord shall either
agree to undertake such repairs (in which even the notice shall include
Landlord's estimate of the time required to complete same) or elect to terminate
this Lease. If Landlord so agrees to undertake repairs, but states that the
required repairs will not be completed within 180 days after delivery of such
notice, then Tenant shall have an option, exercisable by written notice thereof
delivered to Landlord not later than the tenth (10th) day after Landlord's
delivery of Landlord's notice that the repairs will not be completed within such
180-day period, to terminate this Lease. If neither Landlord nor Tenant exercise
such a right of termination following Landlord's determination that repairs will
take more than 180 days, then Landlord shall diligently undertake to repair such
damage or destruction.

               23.3 Loss Not Covered By Insurance. If, at anytime prior to the
expiration or termination of this Lease, (a) all or any portion of the Premises,
or any portion of the Common Areas whose use is required for Tenant's business,
is wholly or partially damaged or destroyed by a Casualty, and (b) less than
ninety percent (90%) (if any) of the total costs of performing the necessary
repairs and replacements will be fully covered and paid for by available
proceeds of insurance maintained by Landlord, and (c) such damage or destruction
renders the Premises totally or partially inaccessible or unusable by Tenant in
the ordinary conduct of Tenant's business, then:

                      23.3.1 Landlord shall deliver to Tenant, within sixty (60)
days after the Damage Notice Date, a written notice whereby Landlord shall
either (a) elect to terminate this Lease or (b) agree to undertake such repairs,
in which latter event such notice shall include a statement of Landlord's good
faith estimate of the number of days required in order to achieve substantial
completion, under applicable Laws, of such repair and restoration work. If
Landlord does not elect by such notice to Tenant to repair such damage, this
Lease shall be deemed to have been terminated by Landlord.

                      23.3.2 If pursuant to Subsection 23.3.1 Landlord elects to
undertake such repairs, but states that the required repairs will not be
completed within 180 days after delivery of such notice, then Tenant shall have
an option, exercisable by written notice thereof delivered to Landlord not later
than the tenth (10th) day after Landlord's delivery of Landlord's notice that
the repairs will not be completed within such 180-day period, to terminate this
Lease. If neither Landlord nor Tenant exercise such a right of termination with
respect to a Casualty covered by this Subsection 23.3, then Landlord shall
diligently undertake to repair such damage or destruction.

                                       34
<PAGE>   35

               23.4 Destruction During Final Year. Notwithstanding anything to
the contrary contained in Subsections 23.1 or 23.2, if the Premises or the
Building or a portion of the Common Areas required for Tenant's business are
wholly or partially damaged or destroyed within the final twelve (12) months of
the Term of this Lease, and no renewal rights have been exercised prior to such
damage or destruction, and if as a result of such damage or destruction Tenant
is denied access or use of the Premises for the conduct of its business
operations for a period of ten (10) consecutive business days, Landlord or
Tenant may, at its option, by giving the other written notice prior to
substantial completion of the repairs, and in no event later than the 60th day
after the Damage Notice Date, elect to terminate this Lease.

               23.5 Effective Date of a Lease Termination. Any notice of
Tenant's election to terminate under this Section 23 shall include a statement
of the effective date of such termination, which shall not be more than sixty
(60) days after the date such notice is delivered. Any notice of Landlord's
election to terminate under this Section 23 shall be effective (a) on the tenth
(10th) day after delivery of the notice, if the damage or destruction shall have
prevented Tenant from conducting business at the Premises, or (b) on the
sixtieth (60th) day after delivery of the notice, in the event that Tenant shall
not have been so prevented from conducting business at the Premises.

               23.6 Abatement of Gross Rent. In the event that all or any
portion of the Premises shall be rendered inaccessible or unusable to Tenant,
and unused by Tenant, for a period of more than ten (10) consecutive days as a
result of any damage or destruction caused by any Casualty (and provided that
such Casualty shall not have arisen in whole or in part out of any gross
negligence or willful misconduct on Tenant), then Gross Rent shall be reduced
proportionately for such portion of the Premises as shall be rendered
inaccessible or unusable to Tenant, and unused by Tenant, during the period of
time that such portion is unusable or inaccessible to Tenant, and unused by
Tenant.

               23.7 Destruction of Tenant's Personal Property, Tenant
Improvements or Property of the Tenant Parties. In the event a Casualty causes
damage to or destruction of the Premises or the Building or the Facility, under
no circumstances shall Landlord be required to repair damage to, or make any
repairs to or replacements of, Tenant's Personal Property. However, as part of
Common Area Costs, Landlord shall cause to be insured Tenant Improvements and
Alterations that do not consist of Tenant's Personal Property and shall cause
proceeds of such insurance to be applied to the cost of repairing or restoring
such Tenant Improvements and Alterations, but Tenant shall pay for such portion
of those costs as may be uninsured or be subject to a deductible. Landlord shall
have no responsibility for any contents placed or kept in or on the Premises or
the Building or the Facility by Tenant or the Tenant Parties.

               23.8 Exclusive Remedy. The remedies provided for in this Section
23 shall be Tenant's sole and exclusive remedy in the event a Casualty causes
damage to or destruction of all or any portion of the Premises, Building, or
Facility, and Tenant, as a material inducement to Landlord's entering into this
Lease, irrevocably waives and releases the provisions of any Law that would
automatically terminate this Lease or otherwise be contrary to the provisions of
this Section in the event of any such damage or destruction.

                                       35
<PAGE>   36

        24. Eminent Domain.

               24.1 Definitions. The following terms shall have the indicated
definitions as used herein: (a) "Condemnation" or "Taking" means (i) the
exercise of any governmental or power, whether by legal proceedings or
otherwise, by a Condemnor and/or (ii) a voluntary sale or transfer by Landlord
to any Condemnor, either under threat of eminent domain or while legal
proceedings for eminent domain are pending; (b) "Date of Taking" means the date
the Condemnor has the right to possession of the property being condemned; (c)
"Award" means all compensation, sums, or anything of value awarded, paid, or
received on a total or partial Condemnation; and (d) "Condemnor" means any
public or quasi-public authority, or private corporation or individual, having
the power of eminent domain.

               24.2 Permanent Taking.

                      24.2.1 Total Taking. If the Premises are totally taken by
Condemnation, this Lease shall terminate on the Date of Taking.

                      24.2.2 Partial Taking; Common Areas.

                             24.2.2.1 If any portion of the Premises is taken by
Condemnation, this Lease shall remain in effect, except that Tenant shall have
the right to elect to terminate this Lease if forty percent (40%) or more of the
rentable square footage of the Premises is taken, or if the portion taken
renders the remainder of the Premises economically unusable by Tenant, as
determined by condemning authority. To be effective, such election to terminate
must be made by written notice delivered to Landlord within twenty (20) days
after Tenant's obtaining knowledge of the impending acquisition of such portion
of the Premises by Condemnation. Tenant shall be deemed to have knowledge of
such impending acquisition if Tenant enters into negotiations with the
Condemnor's representatives, on receipt of service of complaint and summons or
order for immediate possession, or on receipt of a letter of inquiry from
Landlord advising Tenant of the impending acquisition and requesting notice of
Tenant's resulting elections and contentions. Tenant's notice shall contain a
clear and unequivocal statement of its election to terminate, and its reasons
for this election.

                             24.2.2.2 If any part of the common areas of the
Facility is taken by Condemnation, this Lease shall remain in full force and
effect so long as there is no material interference with the access to the
Premises. If such a Taking materially interferes with access to the Premises,
either party shall have the election to terminate this Lease pursuant to this
Section 24.

                             24.2.2.3 If forty percent (40%) or more of the
Building or the Facility is taken by Condemnation (whether or not any Portion of
the Premises shall have been taken), Landlord shall have the election to
terminate this Lease in the manner prescribed herein.

                      24.2.3 Termination or Abatement. If either party elects to
terminate this Lease under the provisions of Subsection 24.2.2 (such party is
hereinafter referred to as the "Terminating Party"), it must terminate by giving
notice to the other party (the "Nonterminating Party") within twenty (20) days
after the nature and extent of the Taking have been finally determined (the
"Decision Period"). The Terminating Party shall notify the Nonterminating

                                       36
<PAGE>   37

Party of the date of termination, which date shall not be earlier than sixty
(60) days after the Terminating Party has notified the Nonterminating Party of
its election to terminate, nor later than the Date of Taking. If such notice of
termination is not given within the Decision Period, this Lease shall continue
in full force and effect except that the Gross Rent shall be reduced by
subtracting therefrom an amount calculated by multiplying the Gross Rent in
effect prior to the Taking by a fraction the numerator of which is the square
footage taken from the Premises and the denominator of which is the square
footage in the Premises prior to the Taking.

                      24.2.4 Restoration. If there is a partial Taking of the
Premises and this Lease remains in full force and effect pursuant to this
Section 24, Landlord, at its cost, shall accomplish all necessary restoration so
that the Premises are returned as near as practical to their condition
immediately prior to the Date of Taking, but in no event shall Landlord be
obligated to expend more for such restoration than the extent of funds actually
paid to Landlord by the Condemnor.

                      24.2.5 Award. Any Award arising from the Condemnation or
the settlement thereof shall belong to and be paid to Landlord and Tenant hereby
assigns to Landlord any right of Tenant thereto, except that Tenant shall
receive from the Award compensation for the following, if specified by amount in
the Award by the Condemnor: Tenant's trade fixtures, tangible personal property,
goodwill, loss of business, and relocation expenses. Tenant shall have the right
to participate in condemnation proceedings for the purposes permitted under this
Section 24 and to complain against the Condemnor authority for a separate award
for such losses. At all events, Landlord shall be solely entitled to all Awards
in respect of the real property, including the bonus value of the leasehold.
Tenant shall not be entitled to any Award until Landlord has received the total
amount to which Landlord is entitled hereunder.

               24.3 Temporary Taking. No temporary taking of the Premises or any
part of the Premises and/or of Tenant's rights to the Premises or under this
Lease shall terminate this Lease or give Tenant any right to any abatement of
any rents owed to Landlord pursuant to this Lease. Any award made to Tenant by
reason of such temporary taking shall belong entirely to Tenant.

        25. Sale By Landlord. In the event Landlord shall sell, assign, convey,
or transfer all or a part of its interest in the Facility or any part of the
Facility, Tenant agrees to attorn to such transferee, assignee, or new owner. If
all of Landlord's interest in the Facility shall be sold, assigned, conveyed, or
transferred, then upon consummation of such sale, assignment, conveyance, or
transfer, Landlord shall automatically be freed and relieved from all liability
and obligations accruing or to be performed from and after the date of such
sale, assignment, transfer, or conveyance, and in such event Tenant agrees to
look solely to the responsibility of such transferee, assignee, or new owner. In
the event of such sale, assignment, transfer, or conveyance, Landlord shall
transfer, or in lieu thereof grant a credit at closing, to such transferee,
assignee, or new owner of the Facility the balance of the Deposit, if any,
remaining after lawful deductions and in accordance with applicable Law, after
notice to Tenant, and Landlord hall thereupon be relieved of all liability with
respect to the Deposit.

        26. Estoppel Certificates. Upon either party's prior request from time
to time, but not more than once a year, the other party shall execute,
acknowledge, and deliver to the requesting

                                       37
<PAGE>   38

party, not later than ten (10) days after such request, a statement (i)
certifying the date of commencement of this Lease, (ii) stating that this Lease
is unmodified and in full force and effect (or if there have been modifications,
that this Lease is in full force and effect as modified and the date and nature
of such modifications), (iii) stating the dates to which rent has been paid,
(iv) acknowledging that there are not, to the certifying party's knowledge, any
uncured defaults on the part of the other party, or specifying each such default
if any are claimed, and (v) setting forth such other matters as may reasonably
be requested. Landlord and Tenant intend that any such statement delivered
pursuant to this Section may be relied upon by any permitted subtenant,
assignee, or lender of Tenant, by the mortgagee or the beneficiary of any deed
of trust, or by any purchaser or prospective purchaser of the Real Property. If
Tenant's failure to deliver such statement within the required time is not cured
within three (3) days after Landlord's delivery of written notice of such
default, such failure to deliver the statement shall, at Landlord's option, be
an Event of Default under this Lease by Tenant, or it shall be conclusive upon
Tenant that (a) this Lease is then in full force and effect, without
modification except as may be represented by Landlord, (b) there are no uncured
defaults in Landlord's performance, and (c) not more than one month's rent has
been paid in advance. Tenant further agrees, from time to time upon Landlord's
request, promptly to furnish to Landlord financial statements reflecting
Tenant's then current financial condition and, if rendered in the ordinary
course of conducting Tenant's business, a copy of Tenant's then most current
certified financial statements.

        27. Requirements Of Landlord's Lenders.

               27.1 Financing Condition. Landlord may from time to time desire
to mortgage all or a portion of the Facility for the purpose of securing
financing from an institutional lender. In the event such institutional lender
requires, as a condition of granting Landlord such financing, that this Lease be
amended or modified, then Tenant shall, within thirty (30) days after Landlord's
request, consent to and execute any such reasonable amendment or modification of
this Lease; provided, however, that such modification or amendment only concerns
(a) the lender's right to notification, (b) the lender's right to cure defaults
by Landlord, (c) requirements for the lender's consent or approval when
Landlord's consent or approval is required hereunder, (d) requirements for the
lender's prior consent or approval for any amendment, modification, or early
termination of the Lease, for any waiver of any of the terms or conditions of
the Lease to be performed or observed by Tenant, or for any estoppel certificate
to be provided by Landlord, (e) restrictions on prepayments of rent, (f) the
lender's right to require that rents be paid directly to the lender, (g) the
resolution of ambiguities or correction or errors or omissions contained in this
Lease, and/or (h) such other matters as Tenant may consent to, which consent
shall not be unreasonably withheld. At Landlord's option, Tenant's failure to
execute and deliver such a Lease modification or amendment within the required
time shall be an Event of Default under this Lease by Tenant, without any
further notice to Tenant.

               27.2 Mortgagee Protection. Tenant agrees to give any present or
future mortgagee and/or trust deed holders, by registered mail, a copy of any
notice of default served upon Landlord, provided that prior to such notice
Tenant has been notified, in writing (by way of notice of assignment of rents
and leases, or otherwise), of the address of such mortgagee and/or trust deed
holder. Tenant further agrees that if Landlord shall have failed to cure such
default within the time provided for in this Lease (if any), then the
mortgagees and/or trust deed holders shall have an additional thirty (30) days
within which to cure such default or if such default

                                       38
<PAGE>   39

cannot be cured within that time, then such additional time as may be necessary
if, within such thirty (30) days, any mortgagee and/or trust deed holder has
commenced and is diligently pursuing the remedies necessary to cure such default
(including but not limited to commencement of foreclosure proceedings, if
necessary to effect such cure), in which event this Lease shall not be
terminated while such remedies are being diligently pursued.

        28. Substitution Of Premises. Landlord hereby reserves the right, from
time to time prior to the Commencement Date or during the Term, to relocate
Tenant to other premises in the Facility on the following terms and conditions:
(a) the new premises shall be substantially the same in size, dimensions,
configuration, decor, and quality as the Premises described in this Lease, and
shall be placed in that condition by Landlord at its cost; (b) the physical
relocation of the Premises shall be accomplished by Landlord at its cost; (c)
Landlord shall give Tenant at least sixty (60) days' notice of Landlord's
intention to relocate the Premises; (d) the physical relocation of the Premises
shall take place on a weekend, if practicable, and shall be accomplished as
quickly as reasonably practicable; (e) all reasonable actual out-of-pocket costs
incurred by Tenant as a result of the relocation, including, without limitation,
costs incurred in changing addresses on stationery, business cards, directories,
advertising, and other such items, but excluding any lost revenues or any
intangible costs, shall be paid by Landlord; (f) if the relocated premises are
smaller than the Premises as they existed before the relocation, Gross Rent
shall be reduced to a sum computed by multiplying the Gross Rent specified in
Sections 4 and 5 by a fraction, the numerator of which shall be the total number
of rentable square feet in the relocated premises, and the denominator of which
shall be the total number of rentable square feet in the Premises before
relocation; and (g) from and after the date of such relocation and substitution,
the term "premises" as used in this Section shall mean the substituted premises
in the Facility, and Landlord and Tenant shall execute an amendment to this
Lease stating the relocation of the Premises and the reduction of Gross Rent, if
any.

        29. Attorneys' Fees. In the event either party requires the services of
an attorney in connection with enforcing the terms of this Lease (including an
action or proceeding between one party and the trustee or debtor in possession
while the other party is a debtor in a proceeding under the Bankruptcy Code
(Title 11 of the United States Code or any successor statute to such Code)), or
in the event suit is brought for the recovery of any amount due and owing under
this Lease, the prevailing party shall be entitled to recover all its costs and
expenses in connection therewith (including court costs and reasonable
attorneys' fees, costs and disbursements) from the unsuccessful party, whether
or not such action, proceeding or appeal is prosecuted to judgment or other
final determination. The term "prevailing party" shall include, without
limitation, a party who obtains legal counsel or brings an action against the
other party by reason of the other party's breach or default and obtains
substantially the relief sought, whether by compromise, settlement, or judgment.
If such prevailing party shall recover in any such action, proceeding, or
appeal, such costs and expenses (including court costs and reasonable attorneys'
fees, costs and disbursements) shall be included in and as a part of such
judgment.

        30. Non-Waiver. The waiver by Landlord or Tenant of any term, covenant,
agreement or condition contained in this Lease shall not be deemed to be a
waiver of any subsequent breach of the same or of any other term, covenant,
agreement, condition or provision of this Lease. Nor shall any consent by
Landlord or Tenant in any one instance dispense with necessity of consent in any
subsequent or other instance. Nor shall any custom or practice that

                                       39
<PAGE>   40

may develop between the parties in the administration of this Lease be construed
to waive or lessen the right of Landlord or Tenant to insist upon performance by
the other in strict accordance with all of the terms, covenants, agreements,
conditions, and provisions of this Lease. The subsequent acceptance by Landlord
of any payment owed by Tenant to Landlord under this Lease, or the payment of
rent by Tenant, shall not be deemed to be a waiver of any preceding breach by
Tenant of any term, covenant, agreement, condition, or provision of this Lease,
other than the failure of Tenant to make the specific payment so accepted by
Landlord, regardless of Landlord's or Tenant's knowledge of such preceding
breach at the time of the making or acceptance of such payment.

        31. Notices. All notices, notifications, demands, requests, consents,
approvals, designations, elections, and waivers that may or are required to be
given by either party to the other hereunder shall be in writing and shall be
deemed to have been duly given when delivered personally, or one business day
after such notice or demand is sent by a reliable overnight courier service, or
three (3) business days after it is sent by United States certified or
registered mail, in each case with postage prepaid and the notice or demand
addressed to the other party at its address set forth in Subsection 1.1(b) of
this Lease, or to such other place as such party may from time to time by like
notice designate. Written notice given in any other manner shall have been duly
given when actually received by Landlord's manager of the Facility (in the case
of notice to Landlord) or by any of the undersigned representatives of Tenant or
any other executive level employee or officer of Tenant. If there is more than
one tenant under this Lease, then notice to any one of them shall constitute
notice to all and notice from any one of them shall constitute notice from all.

        32. Joint And Several Liability. If Tenant consists of more than one
person or other entity, Tenant's obligations hereunder shall be joint and
several as between such persons and/or entities.

        33. Time. Subject to provisions of Section 17 (Force Majeure), time is
of the essence of this Lease and each and all of its provisions.

        34. Successors. Subject to the provisions of Section 13 (Assignment and
Subletting) and Section 25 (Sale by Landlord), and except as otherwise provided
to the contrary in this Lease, the terms, covenants, and conditions herein
contained shall apply to, bind, and inure to the benefits of the heirs,
successors, executors, administrators, and permitted assigns of the respective
parties hereto.

        35. Entire Agreement. This Lease (including the exhibits, riders,
addenda, and schedules referred to herein and made a part hereof) embodies the
entire agreement between, and understanding of, the parties and supersedes all
prior agreements and understandings (oral or written) between the parties with
respect to the subject matter hereof. This Lease shall not be modified by any
oral agreement, either express or implied, and all modifications hereof shall be
in writing and signed by both Landlord and Tenant.

                                       40
<PAGE>   41

        36. Restrictions On Options.

               36.1 Definition. As used in this Section 36, the word "Option"
shall mean any of the following rights or options of Tenant, if any such rights
or options are granted pursuant to an addendum or other modification to this
standard lease form: (1) any right or option to extend the term of this Lease,
(2) any option or any right of first refusal or first offer to lease the
Premises or any other space within the Facility or other property of Landlord or
its affiliates, and (3) any right or option of Tenant to terminate or cancel
this Lease prior to the last day of the initial Term contemplated by Subsection
1.2(d).

               36.2 Options Personal. Each Option, if any, granted to Tenant in
this Lease is personal to the original Tenant and may be exercised only by the
original Tenant while directly (and not through subleases) occupying more than
sixty percent (60%) of the Premises, and may not be exercised or assigned,
voluntarily or involuntarily, by or to any person or entity other than the
original Tenant. If the original Tenant consists of more than one person or
other entity, each such person or entity must join in the exercise of the Option
in order for it to be effective. The Options, if any, herein granted to Tenant
are not assignable separate and apart from this Lease, nor may any Option be
separated from this Lease in any manner, by reservation or otherwise.

               36.3 Multiple Options. In the event that Tenant has multiple
Options to extend or renew the term of this Lease, a later Option cannot be
exercised unless the prior Option to extend or renew this Lease has been so
exercised.

               36.4 Strict Enforcement of Conditions and Limitations Upon
Options.

                      36.4.1 Tenant hereby specifically acknowledges and agrees
that the time limitations upon the exercise of any Option will be strictly
enforced, that any attempt to exercise such Option at any other time shall be
void and of no force or effect, and that if any such Option is not exercised
within the applicable time period, Landlord intends immediately thereafter to
undertake appropriate efforts relating to the marketing or management of the
space affected by the Option. The period of time within which an Option may be
exercised shall not be extended or enlarged by reason of Tenant's inability to
exercise such Option because of the provisions of this Subsection or for any
other reason whatsoever.

                      36.4.2 Tenant further agrees that if Tenant is in default
hereunder on the date of giving the required notice of exercise of such Option,
such notice shall be totally ineffective, and if Tenant is in default hereunder
on the date any extension or renewal of the term of this Lease was to commence,
such extension or renewal of the term shall not commence, and this Lease shall
expire at the end of the Term as theretofore in effect. Notwithstanding any
provision of this Lease to the contrary, all Options shall automatically be
void, and shall have no effect, upon the commencement of any holdover by Tenant
after the expiration or earlier termination of the Term.

                      36.4.3 Tenant further agrees that if (a) more than once
during the twelve (12) month period immediately preceding delivery of a notice
of exercise of Option Tenant shall have failed to make timely payment of any
rent or any Event of Default shall have occurred, or (b) more than three (3)
times during the twenty-four (24) month period immediately preceding

                                       41
<PAGE>   42

delivery of such notice Tenant shall have failed to make timely payment of rent
or any Events of Defaults shall have occurred, then such Option of Tenant shall
at once be void and of no further effect, notwithstanding Tenant's timely
exercise of such Option.

               36.5 Events of Bankruptcy. In addition to those events and
occurrences constituting defaults or Events of Default under other provisions of
this Lease, the occurrence of any of the following events shall also constitute
a default and Event of Default for purposes of Subsection 36.4:

                      36.5.1 Filing by Tenant of a voluntary petition under any
applicable bankruptcy Law, or the issuance of an order for relief entered under
any applicable bankruptcy Law, or the filing by Tenant of any petition or answer
seeking any reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief for Tenant under the present or any future
applicable Law relative to bankruptcy, insolvency, or other relief for debtors,
or Tenant's consent to or acquiescence in the appointment of any trustee,
receiver, conservator, or liquidator of Tenant or of all or any substantial part
of its properties or its interest in the Premises (the term "acquiesce," as used
in this clause, includes but is not limited to the failure to file a petition or
motion to vacate, appeal, or discharge any order, judgment, or decree within ten
(10) days after entry of such order, judgment, or decree);

                      36.5.2 Issuance or entry, by a court of competent
jurisdiction, of any order, judgment, or decree approving a petition filed
against Tenant seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any present or
future applicable Law relating to bankruptcy, insolvency, or other relief for
debtors, and acquiescence by Tenant in the entry of such order, judgment, or
decree; or the failure of such order, judgment, or decree to be vacated or
stayed within an aggregate of thirty (30) days (whether or not consecutive)
after the date of entry thereof; or the appointment, without the consent or
acquiescence of Tenant, of any trustee, receiver, conservator, or liquidator of
Tenant or of all or any substantial part of its properties or its interest in
the Premises and the failure of such appointment to be vacated or stayed within
an aggregate of thirty (30) days (whether or not consecutive);

                      36.5.3 The inability of Tenant, or Tenant's admitting in
writing its inability, to pay its debts as they mature;

                      36.5.4 Tenant's giving notice to any governmental body of
Tenant's insolvency or pending insolvency, or suspension or pending suspension
of operations; or

                      36.5.5 Tenant's making a general arrangement or general
assignment for the benefit of creditors or taking any other similar action for
the protection or benefit of creditors.

        37. Recording. Tenant shall not record this Lease or any memorandum
hereof without Landlord's prior consent.

        38. Authorization To Sign Lease. If Tenant is a corporation, each
individual executing this Lease on behalf of Tenant represents and warrants that
he/she is duly authorized to execute and deliver this Lease on behalf of Tenant
in accordance with a duly adopted resolution

                                       42
<PAGE>   43

of Tenant's Board of Directors, and that this Lease is binding upon Tenant in
accordance with its terms, and Tenant shall, concurrently with its execution of
this Lease, deliver to Landlord upon its request a certified copy of a
resolution of its Board of Directors authorizing the execution of this Lease. If
Tenant is a partnership or trust, each individual executing this Lease on behalf
of Tenant represents and warrants that he/she is duly authorized to execute and
deliver this Lease on behalf of Tenant in accordance with the terms of such
entity's partnership agreement or trust agreement, respectively, and that this
Lease is binding upon Tenant in accordance with its terms, and Tenant shall,
concurrently with its execution of this Lease, deliver to Landlord upon its
request such certificates or written assurances from the partnership or trust as
Landlord may request authorizing the execution of this Lease. If Tenant consists
of more than one legal entity, the foregoing representations, warranties, and
covenants shall apply to any such entity that is a corporation or partnership,
as the case may be. Each individual signing this Lease on behalf of Tenant shall
personally indemnify, defend, and hold harmless Landlord from and against any
claim arising out of any actual or alleged breach or inaccuracy of any of the
foregoing representations and warranties or any loss suffered by reason thereof.

        39. Broker Participation. In consideration for brokerage services
rendered to Landlord in this transaction, Landlord shall pay its licensed real
estate broker named in Subsection 1.1(j) a commission as set forth in a separate
agreement between Landlord and said broker. Tenant's broker, if any is named in
Subsection 1.1(j), will be paid its commission from a portion of the commission
paid to Landlord's Broker, as set forth in a separate agreement between
Landlord's Broker and Tenant's Broker. Except as otherwise set forth in the
preceding sentence, each party agrees to indemnify, defend, and hold harmless
the other party from any claim or loss arising out of any actual or alleged
dealings of the indemnifying party with any real estate broker, agents or finder
in connection with this transaction.

        40. Survival Of Certain Rights And Obligations. The respective parties'
remedies, payment obligations, indemnities, waivers and releases under this
Lease, with respect to Tenant's use or possession of the Premises during the
Term and any holdover period, and with respect any cost or expense incurred
during or with respect to the Term or any holdover period, shall survive the
termination of this Lease.

        41. Parking. Landlord shall have the right, by written notice to Tenant,
to designate specific areas of the Facility for employee parking. If Landlord
designates an employee parking area, then automobiles of Tenant, its employees,
and agents shall not park within the parking area except in areas delineated by
Landlord as "employee parking." Subject to the foregoing, Tenant shall be
entitled to use, in common with other tenants and Landlord, the number of
undesignated vehicle parking spaces allocated to Tenant in Subsection 1.1(k).
Tenant's use of such parking spaces shall be subject to payment by Tenant of
such standard monthly parking rates, if any, as may be charged from time to time
to persons other than the officers and employees of Landlord and its affiliates,
and subject to such rules and regulations as may be established or altered from
time to time by Landlord or its manager of such parking facilities. At
Landlord's request, Tenant (or its designated employees with parking privileges)
shall enter into parking licenses or lease agreements or other arrangements then
in use by Landlord (or Landlord's operator of the parking facilities) with
respect to such monthly parking. Tenant agrees not to overburden the parking
facilities and agrees to cooperate with Landlord and other tenants in the use of
parking facilities. Landlord reserves the right, in its absolute discretion, to

                                       43
<PAGE>   44

determine whether parking facilities are becoming crowded and, in such event, to
allocate and assign parking spaces among Tenant and other tenants. Upon request,
Tenant shall provide Landlord with the license plate numbers of all vehicles
used at the Facility by Tenant's employees. In the event that, pursuant to any
modification or amendment to this standard form lease, Tenant is at any time
given any right to the exclusive use of any designated parking stalls or
facilities, Landlord shall nevertheless have the right from time to time to
substitute other designated parking stalls or facilities therefor, so long as
such substitute stalls or facilities are, in Landlord's judgment, reasonably
comparable. If Tenant parks more vehicles in the Facility's parking area than
are permitted under this Section, Landlord shall have the right, without
limitation to Landlord's other remedies under this Lease, to collect from Tenant
a daily charge, to be determined by Landlord, for each such additional vehicle.

        42. Severability. Should any provision of this Lease be illegal, void,
invalid, inoperative, or unenforceable, no other provision of this Lease shall
be affected thereby, and the remainder of this Lease shall be effective as
though such illegal, void, invalid, inoperative, or unenforceable provision had
not been included herein.

        43. Certain Rights Reserved By Landlord. Landlord hereby expressly
reserves the rights set forth in the Subsections of this Section 43. Such rights
shall be exercisable (a) without notice, (b) without liability to Tenant for
damage or injury to property, persons, or business, (c) without effecting a
constructive or actual eviction of Tenant or disturbance of Tenant's use,
possession, or enjoyment of its Premises, and (d) without giving rise to any
claim for setoff or abatement of rent. The enumeration of such rights of
Landlord in the following Subsections is not intended to limit any other rights
of Landlord, whether expressed or implied, at law or under other provisions of
this Lease.

               43.1 Landlord shall have the right to decorate and make repairs,
alterations, additions, changes, and/or improvements, whether structural or
otherwise, in and about the Building and elsewhere in the Facility, including,
without limitation, construction of additional buildings or other new
improvements and changes in the location, size, shape, and number of driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, landscaped areas, sidewalks, and walkways. For
such purposes Landlord may enter upon the Premises and, during the continuance
of any such work, temporarily close doors, entryways, public space and corridors
in the Building or elsewhere in the Facility, to interrupt or temporarily
suspend building services and facilities and to change the arrangement and
location of entrances, or passageways, doors and doorways, corridors, elevators,
stairs, toilets, or other public parts of the Building or Facility, all without
abatement of rent and without affecting any of Tenant's obligations hereunder,
except as otherwise expressly provided in this Lease (e.g., Subsections 21.2 and
23.6).

               43.2 Landlord shall have the right to designate additional land
outside the current boundaries of the Facility to be a part of the Common Areas.

               43.3 Landlord shall have the right to take all such reasonable
measures as Landlord may deem advisable for the security of the Building or the
Facility and their occupants, including, without limitation, the search or any
person entering or leaving the Building, the evacuation of the Building (or any
part thereof) for cause, suspected cause, or for drill purposes,

                                       44
<PAGE>   45

the temporary denial of access to the Building (or any part thereof), and the
closing of the Building after normal business hours and on Sundays and holidays,
subject, however, to Tenant's right to admittance, when the Building is so
closed, under such reasonable regulations as Landlord may prescribe from time to
time.

        44. Waiver Of Jury Trial. EACH PARTY HEREBY WAIVES THE RIGHT TO A TRIAL
BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT
MATTER OF THIS LEASE. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY
MADE BY TENANT AND TENANT ACKNOWLEDGES THAT NEITHER LANDLORD NOR ANY PERSON
ACTING ON BEHALF OF LANDLORD HAS MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS
WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. TENANT
FURTHER ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED (OR HAS HAD THE OPPORTUNITY TO
BE REPRESENTED) IN THE SIGNING OF THIS LEASE AND IN THE MAKING OF THIS WAIVER BY
INDEPENDENT LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS HAD
THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL. TENANT FURTHER ACKNOWLEDGES
THAT IT HAS READ AND UNDERSTANDS THE MEANING AND RAMIFICATIONS OF THIS WAIVER
PROVISION AND AS EVIDENCE OF THIS FACT SIGNS ITS INITIALS.

        /s/ P. G. L.   TENANT'S INITIALS
        --------------

        45. Interpretation. The words "Landlord" and "Tenant" as used herein
shall include the plural as well as the singular and, when appropriate, shall
refer to action taken by or on behalf of Landlord or Tenant by their respective
employees, agents, or authorized representatives. Words in masculine gender
include the feminine and neuter. The titles of the Sections, Subsections, and
other provisions of this Lease are for convenience only and they shall not in
any way limit or amplify the terms or provisions of this Lease. All provisions,
whether covenants or conditions, on the part of Tenant shall be deemed to be
both covenants and conditions. In the event of variation or discrepancy, the
duplicate original of this Lease (including Exhibits, if any) held by Landlord
shall control. This Lease shall in all respects be governed by and construed and
enforced in accordance with the Laws of the State where the Facility is located,
and any litigation concerning this Lease between the parties hereto shall be
initiated in the county where the Facility is located.

        46. Cooperation With Government Sponsored Programs. Tenant hereby
covenants and agrees, at its sole cost and expense, to participate in and
cooperate with the requirements of any and all government promulgated or
sponsored programs adopted for the Building or the Facility concerning
transportation system management, child care facilities, recycling, energy or
water conservation, safety, or the like.

        47. Parties To Act Reasonably And In Good Faith. Except in those
instances where this Lease provides for a contrary standard, whenever in this
Lease the consent or approval of the Landlord or Tenant is required, such
consent or approval shall not be unreasonably withheld or delayed (except,
however, with respect to any Landlord consent, for matters which could possibly
have an adverse effect on the Building's plumbing, heating, mechanical, life
safety,

                                       45
<PAGE>   46

ventilation, air conditioning, or electrical systems, which could affect the
structural integrity of the Building, or which could affect the exterior
appearance of the Building, Landlord may withhold such consent or approval in
its sole discretion but shall act in good faith). Except in those instances
where a contrary standard or right is set forth in this Lease, whenever the
Landlord or Tenant is granted a right to take action, exercise discretion, or
make an allocation, judgment, or other determination, such party shall act
reasonably and in good faith and take no action that might result in the
frustration of the reasonable expectations of a sophisticated tenant and a
sophisticated landlord concerning the benefits to be enjoyed under this Lease.

        48. Offer. Preparation of this Lease by Landlord or Landlord's agent and
submission of same to Tenant shall not be deemed an offer to lease and neither
party shall act in reliance on said Lease being thereafter signed. This Lease
shall become binding upon Landlord and Tenant only when fully executed by both
Landlord and Tenant; provided, however, that in the event Landlord or Landlord's
agent permits Tenant to take occupancy of all or any portion of the Premises
without Landlord first having executed this Lease, then in the event that
Landlord elects not to execute this Lease, Tenant's occupancy of the Premises
shall automatically be deemed to be a tenancy-at-will, subject to all the terms,
provisions, and conditions of this Lease, except those terms, provisions, and
conditions pertaining to the Term. Any such tenancy-at-will may be terminated by
Landlord or Tenant upon five (3) days' prior notice to the other party.

        IN WITNESS WHEREOF, the parties have executed this Lease as of the date
first set forth above, acknowledging that each party has carefully read each and
every provision of this Lease, that each party has freely entered into this
Lease of its own free will and volition, and that the terms, conditions, and
provisions of this Lease are commercially reasonable as of said date.

Landlord:  CASIOPEA VENTURE CORPORATION

By:  BIRTCHER PROPERTY SERVICES, its authorized agent

By: /s/ Jonathan J. Feucht                       Date: 2/8/96
   ----------------------------------------           ------------
   Jonathan J. Feucht

Tenant:  VIRAGE, INC.

By: /s/ Paul Lego                                Date: 2/5/96
   ----------------------------------------           ------------
   Paul Lego

                                       46
<PAGE>   47

LEASE RIDER NO. 1

        This Lease Rider is attached to and made a part of that certain Standard
Form Lease dated January 31, 1996, by and between Casiopea Venture Corporation,
as ("Landlord,") and Virage, Inc., as ("Tenant,") for the Premises known as 177
Bovet Road, Suite 520, San Mateo, California.

        The capitalized terms used and not otherwise defined herein shall have
the same definitions as set forth in the Lease. The provisions of this Lease
Rider shall supersede any inconsistent or conflicting provisions of the Lease.

        1. Option To Extend Term.

               1.1 Grant of Option. Landlord hereby grants to Tenant the option
(the "Option") to extend the Term of the Lease for an additional consecutive
term of five (5) years (the "Extension"), on the same terms and conditions as
set forth in the Lease, except the Monthly Rent shall be the amount determined
as set forth below. The Option shall be exercised only by written notice
delivered to Landlord at least one hundred eighty (180) days before the
expiration of the initial Term of the Lease. If Tenant fails to deliver to
Landlord written notice of the exercise of the Option within the time period
prescribed above, the Option shall be exercisable by Tenant on the express
conditions that (i) at the time of the exercise of the Option, and thereafter at
all times prior to the commencement of the Extension, an Event of Default shall
not have occurred and be continuing under the Lease, and (ii) Tenant has not
been ten (10) or more days late in the payment of Rent more than a total of
three (3) times during the Term of the Lease. If Tenant properly exercises the
Option, "Term," as used herein and in the Lease, shall be deemed to include the
Extension, unless specified otherwise herein or in the Lease.

               1.2 Personal Option. The Option is personal to Tenant. If Tenant
subleases or assigns or otherwise transfers any interest under the Lease prior
to the exercise of the Option, the Option shall lapse. If Tenant subleases or
assigns or otherwise transfers any interest of Tenant under the Lease after the
exercise of the Option but prior to the commencement of the Extension, the
Option shall lapse and the Term of the Lease shall expire as if the Option were
not exercised.

        2. Calculation of Monthly Rent.

               2.1 Initial Monthly Rent. The Monthly Rent during the extension
shall be increased, as of the commencement of the Extension (the "Rental
Adjustment Date") to the "Fair Market Value" of the Premises, determined in the
following manner: Not later than one hundred (100) days prior to the Rental
Adjustment Date, Landlord and Tenant shall meet in an effort to negotiate, in
good faith, the Fair Market Value of the Premises as of the Rental Adjustment
Date. If Landlord and Tenant have not agreed upon the Fair Market Value of the
Premises at least ninety (90) days prior to the Rental Adjustment Date, the Fair
Market Value shall be determined by the following appraisal method:

                      2.1.1 If Landlord and Tenant are not able to agree upon
the Fair Market Value of the Premises within the time period described above,
then Landlord and Tenant shall attempt to agree in good faith upon a single
appraiser not later than seventy-five (75) days prior

                                        1
<PAGE>   48

to the Rental Adjustment Date. If Landlord and Tenant are unable to agree upon a
single appraiser within such time period, then Landlord and Tenant shall each
appoint an appraiser not later than sixty-five (65) days prior to the Rental
Adjustment Date, and Landlord and Tenant shall each give written notice to the
other of such appointment at the time of such appointment. Within ten (10) days
thereafter, the two appointed appraisers shall appoint a third appraiser. If
either Landlord or Tenant fails to appoint its appraiser and to give written
notice thereof to the other party within the prescribed time period, the single
appraiser appointed shall determine the Fair Market Value of the Premises. If
both parties fail to appoint appraiser within the prescribed time periods, then
the first appraiser thereafter selected by a party (such selection to be by
written notice thereof to such appraiser and the other party) shall determine
the Fair Market Value of the Premises. Each party shall bear the cost of its own
appraiser and the parties shall share equally the cost of the single or third
appraiser if applicable. All appraisers shall have at least five (5) years'
experience in the appraisal of commercial/industrial real property in the area
in which the Premises are located and shall be members of professional
organization such as MAI or its equivalent.

                      2.1.2 For the purposes of such appraisal, the term "Fair
Market Value" shall mean the price that a ready and willing tenant would pay, as
of the Rental Adjustment Date, as monthly rent, to a ready and willing Landlord
of property comparable to the Premises if such property were exposed for Lease
on the open market for a reasonable period of time and taking into account all
of the purposes for which such property may be used. If a single appraiser is
chosen, then such appraiser shall determine the Fair Market Value of the
Premises. Otherwise, the Fair Market Value of the Premises shall be the
arithmetic average of the two (2) of the three (3) appraisals which are closest
in amount, and the third appraisal shall be disregarded. Landlord and Tenant
shall instruct the appraisers to complete their determination of the Fair Market
Value not later than thirty (30) days prior to the Rental Adjustment Date. If
the Fair Market Value is not determined prior to the Rental Adjustment Date,
then Tenant shall continue to pay to Landlord the Monthly Rent applicable to the
Premises immediately prior to the Rental Adjustment Date until the Fair Market
Value is determined. When the Fair Market Value of the Premises is determined,
Landlord shall deliver notice thereof to Tenant, and Tenant shall pay to
Landlord, within ten (10) days after receipt of such notice, the difference
between the Monthly Rent actually paid by Tenant to Landlord for the period
after the Rental Adjustment Date and the new Monthly Rent determined hereunder
effective as of the Rental Adjustment Date. In no event shall the Monthly Rent
be reduced below the Monthly Rent applicable to the Premises immediately prior
to the Rental Adjustment Date.

                                        2
<PAGE>   49

LEASE RIDER NO. 2

        This Lease Rider is attached to and made a part of that certain Standard
Form Lease dated January 31, 1996, by and between Casiopea Venture Corporation,
as ("Landlord,") and Virage, Inc., as ("Tenant,") for the Premises known as 177
Bovet Road, Suite 520, San Mateo, California.

        The capitalized terms used and not otherwise defined herein shall have
the same definitions as set forth in the Lease. The provisions of this Lease
Rider shall supersede any inconsistent or conflicting provisions of the Lease.

        1. First Opportunity To Lease Additional Space. Provided Tenant is not
in default and has performed all of its obligations hereunder and subject to,
but only to, existing rights held by existing tenants, Tenant shall have the
on-going first opportunity to lease such other contiguous space in the Building
that is currently leased provided such contiguous space becomes available for
leasing during the Lease Term ("First Opportunity") at the then prevailing fair
market rental rates and upon such other terms and conditions as are then being
offered by Landlord to the general public for such space. Upon notification in
writing by Landlord that such space is available, Tenant shall have ten (10)
business days in which to elect in writing so to lease such space, in which
event negotiations will the lease for same shall commence not more than thirty
(30) days from Tenant's notification of its intent to lease such space. In the
event Tenant declines or fails to elect so to lease such space, then the First
Opportunity hereby granted shall automatically terminate and shall thereafter be
null and void as to such space. It is understood that this First Opportunity
shall not be construed to prevent any tenant in the Building from extending or
renewing its lease.

                                        1
<PAGE>   50

LEASE RIDER NO. 3

        This Lease Rider is attached to and made a part of that certain Standard
Form Lease dated January 31, 1996, by and between Casiopea Venture Corporation,
as ("Landlord,") and Virage, Inc., as ("Tenant,") for the Premises known as 177
Bovet Road, Suite 520, San Mateo, California. Except as otherwise set forth in
this Rider, all terms used in this Rider shall have the same meaning as when
used in the foregoing portion of the Lease. To the extent of any inconsistencies
between the foregoing provisions of the Lease and the provisions of this Rider,
the former are hereby amended.

ARTICLE 1:     LETTER OF CREDIT

        1. Landlord Costs. Landlord and Tenant acknowledge and agree that the
Landlord is investing at least Sixty-Five Thousand Dollars ($65,000.00) towards
constructing improvements to the Premises and broker's commissions ("Landlord
Costs").

        2. Obligation To Pay For Landlord's Costs. In the event of a termination
of this Lease prior to the expiration of its Term, due to any Default by Tenant,
Tenant shall pay to Landlord, within five (5) days after the effective date of
such termination (the "Termination Date"), Sixty-Five Thousand Dollars
($65,000.00) paid by Landlord for Landlord's Costs, prorated by the remaining
term of the Lease.

        3. Security Of Payment Of Landlord's Costs.

               a. Contemporaneously with the execution of this Lease, Tenant
shall cause to be delivered to Landlord, as security for Tenant's obligation to
pay Landlord's Costs as set forth in Section 1 of this Rider, in addition to
Monthly Rent for Month 1 and Month 24 and funds otherwise deposited with the
Landlord as Tenant's Security Deposit pursuant to the terms of this Lease, an
irrevocable straight Letter of Credit issued by Wells Fargo Bank of Silicon
Valley Bank in the amount of Sixty-Five Thousand Dollars ($65,000.00). Said
Letter of Credit shall include the following language:

                      (i) Upon Landlord's written certification to Issuer:

                             (a) Stating that the Lease has been terminated by
reason of events other than Landlord's default, and the effective date of such
termination ("Termination Date"); and

                             (b) stating that there is due and owing from Tenant
to Landlord, that amount which is equal to Landlord's Costs'.

        Issuer shall thereupon pay to Landlord an amount equal to the entire
Unpaid Balance of Landlord's Costs thereon from the Termination Date, as
certified to the Issuer by Landlord.

               b. Provided tenant has not defaulted in the performance of any of
its obligations under the Lease; at any time during the second year of the Term,
Tenant may reduce the face amount of the Letter of Credit to Fifty-Two Thousand
Dollars ($52,000.00); and at any time during the third year of the Term, Tenant
may reduce the face amount of the Letter of

                                        1
<PAGE>   51

Credit to Thirty-Nine Thousand Dollars ($39,000.00). After the third lease year
the Letter of Credit requirement will be waived by the Landlord if:

                             (a) Tenant has not been in default anytime during
the previous three years; and

                             (b) Tenant has successfully sold its initial public
offering of common stock.

        If any letter of credit issued by reason of the provisions of this Rider
should expire sooner than the Expiration Date of the Lease, then in such case,
not later than fifteen (15) days prior to the expiration date of the
then-existing Letter of Credit, Tenant shall replace said Letter of Credit with
a new Letter of Credit meeting the requirements specified this Rider.

Tenant:  VIRAGE, INC.

By: /s/ Paul Lego                                Date: 2/5/96
   ----------------------------------------           ------------
   Paul Lego

Landlord:  CASIOPEA VENTURE CORPORATION

By: /s/ Jonathan J. Feucht                       Date: 2/8/96
   ----------------------------------------           ------------
   Jonathan J. Feucht

                                        2
<PAGE>   52

                                   EXHIBIT A-1

                 Site Plan or Legal Description of the Facility

                                        1
<PAGE>   53

                                   EXHIBIT A-2

                           Floor Plan of the Premises

                                        1
<PAGE>   54

                                    EXHIBIT B

                                   WORK LETTER

        This Exhibit "B" is attached to and made a part of that certain Lease
dated January 31, 1996 by and between CASIOPEA VENTURE CORPORATION,
("Landlord"), and Virage, Inc. ("Tenant") for the Premises known as Bovet Office
Centre, 177 Bovet Road, Suite 520, San Mateo, California 94404

        1. APPLICATION OF EXHIBIT

               Capitalized terms used and not otherwise defined herein shall
have the same definitions as set forth in the Lease. The provisions of this Work
Letter shall apply to the planning and completion of leasehold improvements
requested by Tenant (the "Tenant Improvements") for the fitting out of the
initial Premises, as more fully set forth herein.

        2. LANDLORD AND TENANT PRE-CONSTRUCTION OBLIGATIONS

               a) Preliminary Space Plans. Attached to this Work Letter as
Schedule "1" are preliminary space plans for the Tenant Improvements ("the
Preliminary Space Plans"), which include without limitations sketches and/or
drawings showing locations of doors, partitioning, electrical fixtures, outlets
and switches, plumbing fixtures and other requirements, mutually agreed upon by
Landlord and Tenant and determined by Tenant as required for its use of the
Premises. Tenant acknowledges that the Preliminary Space Plans have been
prepared by Landlord's Architect after consultation and cooperation between
Tenant and Landlord's Architect regarding the proposed Tenant Improvements and
Tenant's requirements and that the Preliminary Space Plans are complete with
respect thereto. Landlord and Landlord's Architect shall be entitled, in all
respects, to rely upon all information supplied by Tenant regarding the Tenant
Improvements.

               b) Working Drawings. Within twenty-one (21) days following full
execution of this Lease by both Landlord and Tenant, Landlord's Architect shall
prepare working drawings ("the Working Drawings") for the Tenant Improvements
based upon the approved Preliminary Space Plans. The Working Drawings shall
include architectural drawings for the Tenant Improvements based on the
Preliminary Space Plans. Notwithstanding the Preliminary Space Plans, in all
cases the Working Drawings (i) shall be subject to Landlord's final approval,
which approval shall not be unreasonably withheld, (ii) shall not be in conflict
with building codes for the City or County or with insurance requirements for a
fire resistive Class A office building, and (iii) shall be in a form
satisfactory to appropriate governmental authorities responsible for issuing
permits and licenses required for construction.

               c) Approval of Working Drawings. Landlord or Landlord's Architect
shall submit the Working Drawings to Tenant for Tenant's review to confirm
compliance with the Preliminary Space Plan, and Tenant shall notify Landlord and
Landlord's Architect within five (5) business days, after delivery thereof of
any requested revisions. Within five (5) days after receipt of Tenant's notice,
Landlord's Architect shall make all approved revisions to the Working Drawings
and submit two copies thereof to Tenant for its final review and approval,

                                        1
<PAGE>   55

which approval shall be given within three (3) business days thereafter.
Concurrently with the above review and approval process, Landlord may submit all
plans and specifications to City or other governmental agencies in an attempt to
expedite City approval and issuance of all necessary permits and Licenses to
construct the Tenant Improvements as shown on the Working Drawings. Any changes
which are required by City or other governmental agencies shall be immediately
submitted to Landlord for Landlord's review and reasonable approval, and
Landlord shall promptly notify Tenant of such changes.

               d) Schedule of Critical Dates. Set forth below is a schedule of
certain critical dates relating to Landlord's and Tenant's respective
obligations for the design and construction of the Tenant Improvements. Such
dates and the respective obligations of Landlord and Tenant are more fully
described elsewhere in the Work Letter. The purpose of the following schedule is
to provide a reference for Landlord and Tenant and to make certain the Final
Approval Date occurs as set forth herein. Following the Final Approval Date,
Tenant shall be deemed to have released Landlord to commence construction of the
Tenant Improvements as set forth in Section 4 below.

<TABLE>
<CAPTION>
     Reference                           Date Due                   Responsible Party
     ---------                           --------                   -----------------
<S>                             <C>                                 <C>
A.     "Preliminary Space       Contemporaneously with Lease        Tenant & Landlord
       Plan Approval"           execution

B.     "Working Drawings        Twenty-one (21) days after full     Landlord
       Completion"              execution of the Lease

C.     "Working Drawing         Five (5) business days after        Landlord
       Review"                  Tenant submits Working Drawings
                                to Tenant

D.     "Working Drawing         Five (5) business days after
       Revisions"               Tenant Landlord returns Working
                                Drawings to Landlord

E.     "Final Approval Date"    Three business days after           Tenant
                                Landlord submits revised
                                Working Drawings to Tenant
</TABLE>

        3. BUILDING PERMIT

               After the Final Approval Date has occurred, Landlord shall, if
Landlord has not already done so, submit the Working Drawings to the appropriate
governmental body or bodies for final plan checking and a building permit.
Landlord, with Tenant's cooperation, shall cause to be made any change in the
Working Drawings necessary to obtain the building permit; provided, however,
after the Final Approval Date, no changes shall be made to the Working Drawings
without the prior written approval of both Landlord and Tenant, and then only
after agreement by tenant to pay any excess costs resulting from such changes.

                                        2
<PAGE>   56

        4. CONSTRUCTION OF TENANT IMPROVEMENT'S

               After the Final Approval Date has occurred and a building permit
for the work has been issued, Landlord shall, through a construction contract
("Construction Contract") with a reputable, licensed contractor selected by
Landlord ("Contractor"), cause the construction of the Tenant Improvements to be
carried out in substantial conformance with the Working Drawings in a good and
workmanlike manner using first class materials. The costs associated with the
construction of the Tenant Improvements shall be paid as set forth in Section 5
and 6 of this Work Letter. Landlord shall see that the construction complies
with all applicable building, fire, health, and sanitary codes and regulations,
the satisfaction of which shall be evidenced by a certificate of occupancy for
the Premises. Landlord or Contractor shall maintain a comprehensive general
liability insurance policy with a limit of not less than One Million Dollars
($1,000,000.00) to insure against bodily injury and property damage during the
construction work prior to the Lease Commencement Date.

        5. TENANT IMPROVEMENT ALLOWANCE

               Landlord shall provide Tenant with a Tenant Improvement Allowance
towards the cost of the design, purchase and construction of the Tenant
Improvements, including without limitation design, engineering and consulting
fees (collectively, the "Tenant Improvement Costs"). The Tenant Improvement
Allowance shall be used for payment of the following Tenant Improvement Costs:

               (i) Preparation by Landlord's Architect of the Preliminary Space
Plans and the Working Drawings as provided in Section 2 of this Work Letter,
including without limitation all fees charged by City (including without
limitation fees for building permits and plan checks) in connection with the
Tenant Improvements work in the Premises;

               (ii) Construction work for completion of the Tenant Improvements
as reflected in the Construction Contract;

               (iii) All contractor's charges, general conditions, performance
bond premiums and construction fees; and

               (iv) Tenant Improvements as shown on the approved Preliminary
Space Plans dated January 9, 1996, attached hereto as Schedule "A-2".

        In the event that Tenant does request modifications, changes or
alterations of the Tenant Improvements from what is shown on said approved
Preliminary Space Plans, or causes any Tenant Delays as defined in Section 7 or
this Work Letter, then all associated costs shall be borne by Tenant. If Tenant
does seek to modify, change or alter the Tenant Improvements from the approved
Preliminary Space Plans, or does cause a Tenant Delay, Tenant shall pay to
Landlord any excess costs resulting therefrom in accordance with Section 6 of
this Work Letter.

        6. CHANGE ORDERS

               Tenant may from time to time request and obtain change orders
before or during the course of construction provided that: (i) each such request
shall be reasonable, shall be in

                                        3
<PAGE>   57

writing and signed by or on behalf of Tenant, and shall not result in any
structural change in the Building, as reasonably determined by Landlord, (ii)
all additional charges and costs, including without limitation architectural and
engineering costs, construction and material costs, and processing costs of any
governmental entity shall be the sole and exclusive obligation of Tenant, and
(iii) any resulting delay in the completion of the Tenant Improvements shall be
deemed a Tenant Delay and in no event shall extend the Commencement Date of the
Lease. Upon Tenant's request for a change order, Landlord shall as soon as
reasonably possible submit to Tenant a written estimate of the increased or
decreased cost and anticipated delay if any, attributable to such requested
change. Within three (3) business days of the date such estimated cost
adjustments and delays are delivered to Tenant, Tenant shall advise Landlord
whether it wishes to proceed with the change order, and if Tenant elects to
proceed with the change order, Tenant shall remit, concurrently with Tenant's
notice to proceed, the amount of the increased costs, if any, attributable to
such change order. Unless Tenant includes in its initial change order request
that the work in process at the time such request is made be halted pending
approval and execution of a change order, Landlord shall not be obligated to
stop construction of the Tenant Improvements, whether or not the change order
relates to the work then in process or about to be started.

        7. TENANT DELAYS

               In no event shall the Commencement Date of the Lease be extended
or delayed due or attributable to delays due to the fault of Tenant ("Tenant
Delays"). Tenant Delays shall include, but are not limited to, delays caused by
or resulting from any one or more of the following:

               a) Tenant's failure to timely review and reasonably approve the
Working Drawings or to furnish information to Landlord or Landlord's Architect
for the preparation by Landlord or Landlord's Architect of the Working Drawings;

               b) Tenant's request for or use of special materials, finishes or
installations which are not readily available, provided that Landlord shall
notify Tenant in writing that the particular material, finish, or installation
is not readily available promptly upon Landlord's discovery of same;

               c) Change orders requested by Tenant;

               d) Interference by Tenant or by Tenant's Agents with Landlord's
construction activities;

               e) Tenant's failure to approve any other item or perform any
other obligation in accordance with and by the dates specified herein or in the
Construction Contract;

               f) Tenant's requested changes in the Preliminary Space Plans,
Working Drawings or any other plans and specifications after the approval
thereof by Tenant or submission thereof by Tenant to Landlord;

               g) Tenant's failure to approve written estimates of costs in
accordance with this Work Letter; and

                                        4
<PAGE>   58

               h) Tenant's obtaining or failure to obtain any necessary
governmental approvals or permits for Tenant's intended use of the Premises.

        If the Commencement Date of the lease is delayed by any Tenant delays,
whether or not within the control of Tenant, then the Commencement Date of the
Lease and the payment of Rent shall be accelerated by the number of days of such
delay. Landlord shall give Tenant written notice within a reasonable time of any
circumstance that Landlord believes constitute a Tenant Delay.

        8. TRADE FIXTURES AND EQUIPMENT

               Tenant acknowledges and agrees that Tenant is solely responsible
for obtaining, delivering and installing in the Premises all necessary and
desired furniture, trade fixtures, equipment and other similar items, and that
Landlord shall have no responsibility whatsoever with regard thereto. Tenant
further acknowledges and agrees that neither the Commencement Date of the Lease
nor the payment of Rent shall be delayed for any period of time whatsoever due
to any delay in the furnishing of the Premises with such items.

        9. FAILURE OF TENANT TO COMPLY

               Any failure of Tenant to comply with any of the provisions
contained in this Work Letter within the times for compliance herein set forth
shall be deemed a default under the Lease. In addition to the remedies provided
to Landlord in this Work Letter upon the occurrence of such a default by Tenant,
Landlord shall have all remedies available at law or equity to a landlord
against a defaulting tenant pursuant to a written lease, including but not
limited to those set forth in the Lease.

                                        5
<PAGE>   59

                                    EXHIBIT C

                              Rules and Regulations

                    ATTACHED TO AND MADE A PART OF THIS LEASE

                                       1
<PAGE>   60

                              RULES AND REGULATIONS
                                       OF
                               BOVET OFFICE CENTRE

        1. Building Hours. Normal hours for the operation of the building HVAC
systems shall be 8:00 a.m. to 6:00 p.m., Monday through Friday, excluding
generally observed Federal holidays and the Friday following Thanksgiving. HVAC
service for additional hours shall be available at Landlord's then standard
hourly rates (two-hour minimum). Any tenant requiring service during nonstandard
hours, weekends, or holidays shall submit its request for additional HVAC
service on Landlord's standard form to the management office prior to 3:00 p.m.
on the same business day, or 3:00 p.m. on the preceding business day, in the
case of holiday and weekend service.

        2. On weekends and holidays observed by the Office Centre, and between
the hours of 6:00 p.m. and 8:00 a.m., Monday through Friday, access to any
building may be refused unless the person seeking access is known to the person
charged with responsibility for the safety and protection of such building, or
such person seeking access has a building key or is properly identified. In no
case shall Landlord be liable for any loss or damage for any error with respect
to any person's admission to or exclusion from any building. Landlord reserves
the right to lock the building entry doors on weekends and holidays and from
8:00 p.m. until 7:45 a.m. on business days and during such other hours as
Landlord deems necessary for the safety and protection of the building or its
tenants or contents. Further, in case of invasion, mob, riot, public excitement,
or other commotion and at such times as Landlord deems necessary for the safety
and protection of any building, its tenants, or the property located therein,
Landlord may prohibit and prevent access to such building by all persons by any
reasonable means Landlord deems appropriate.

        3. Securing the Premises. Each tenant shall see that the exterior doors
of its premises are closed and securely locked when not in use and at all times
described in the first sentence of Rule and Regulation No. 2 above. Each tenant
shall keep its corridor doors closed except for normal ingress and egress to and
from its premises. Each tenant shall exercise extraordinary care and caution
that all water faucets or water apparatus are entirely shut off each day before
its premises are left unoccupied and that all electricity or gas shall likewise
be carefully shut off so as to prevent waste of such utility or possible
property damage or injury to Landlord's janitor or other employees or
representatives or to other occupants of the building. No tenant shall tamper
with or attempt to adjust temperature control thermostats in its premises or
elsewhere in any building. Landlord shall adjust thermostats as required to
maintain the building standard temperatures.

        4. Signs. Except as provided or required by Landlord in accordance with
the office Centre's building standards, no tenant shall inscribe, display,
print, paint, or affix any sign, notice, placard, picture, advertisement, or
name on or to any part of the building or exterior of such tenant's premises or
to door thereof without the prior written consent of Landlord. Landlord shall
have the right, without notice and at the expense of any tenant who violates the
foregoing restriction, to remove any such sign, notice, placard, picture,
advertisement, or name that does not comply herewith.

                                       2
<PAGE>   61

        5. Use of Bovet Office Centre's Name. No tenant shall, without
Landlord's prior written consent, use the name of the Office Centre in
connection with any promotion or advertising of the tenant's business, except as
such tenant's address.

        6. Building Directories. The building directories shall be used
primarily for display of the name and location of tenants. Landlord reserves the
right to exclude any other names therefrom, to limit the number of names
associated with tenants to be placed thereon, and to charge for names associated
with tenants to be placed thereon at rates generally applicable to all tenants.

        7. Building Address. Landlord, without notice and without liability to
any tenant, may at any time change the name or the street address of any
building or any premises therein.

        8. Window Coverings. Except as provided or required by Landlord in
accordance with the Office Centre's building standards, no draperies, curtains,
blinds, shades, screens, awnings, hangings, decorations, or other devices shall
be attached to, hung at, placed in, or used in connection with any window or
exterior door of any tenant's premises. Any articles placed or kept on the
window sills or next to the sills so as to be visible from the exterior of the
building shall be immediately and permanently removed upon Landlord's written
request. No doors, windows, light fixtures, or any lights or skylights that
reflect or admit light into halls or other places of any building shall be
covered or obstructed.

        9. Wall Decorations. Except as expressly approved in writing by
Landlord, no tenant shall mark, drive nails, screw, or drill into any woodwork
or any brick or masonry walls or in any way deface any building or any premises
for any purpose whatsoever, except that tenants may drive nails or screws into
sheetrock or plaster walls as necessary for supporting pictures, paintings, and
other similar decorative items, provided that the weight thereof does not exceed
fifteen (15) pounds.

        10. Ceiling Clearance. No tenant shall stock, pile, store, or place any
objects closer than 18 inches to the ceiling of its premises. All costs of
relocating or adding sprinkler heads (if any) due to walls or objects in a
tenant area that project closer than 18 inches to the ceiling, shall be at such
tenant's cost.

        11. Floor Coverings. No tenant shall affix any floor covering in any
manner except as approved by Landlord.

        12. Corrosion Damage; Chair Mats. Each tenant shall be responsible for
any damage to carpeting and flooring as a result of rust or corrosion of such
tenant's file cabinets, pot holders, roller chairs, or other metal objects.
Chair mats shall be placed under all non-stationary chairs.

        13. Telecommunication Devices. No tenant shall install any radio or
television antenna, loudspeaker, earth station, or any other device on the
exterior walls or the roof of any building without Landlord's prior written
approval. No tenant shall interfere with radio or television broadcasting or
reception from or in any building in the Office Centre.

                                       3
<PAGE>   62

        14. Telephone and Electric Wires. No boring or cutting for telephone or
electric wires shall be allowed without the written consent of Landlord and any
such wires shall be introduced at the place and in the manner required by
Landlord. The location of each tenant's call boxes, telephones, speakers, fire
extinguishers, and all other office equipment affixed to its premises shall be
subject to the approval of Landlord. Each tenant shall pay all expenses incurred
in connection with the installation of its equipment, including any telephone
and electricity distribution equipment.

        15. Burglar Alarms. No burglar alarm system may be installed without
Landlord's prior written approval of such system, which approval shall not be
unreasonably withheld.

        16. Extension Cords. Landlord reserves the right to restrict the use of
any electrical extension cord. At no time shall more than two electrical devices
be connected to any one duplex outlet. Multiple adapters are prohibited. Any
extension cord used shall be a two-wire cord with ground, and shall be sized
according to the power draw on the circuit.

        17. Use of Passageways and Roof. No tenant shall obstruct, or sweep or
throw dirt or any other substance into, or temporarily or permanently store or
dispose of any trash, garbage, waste, or refuse in, any sidewalk, hall, passage,
balcony, exit, entrance, elevator, or stairway of any building or other area of
the Office Centre or use the same for any purpose other than for ingress to and
egress from such tenant's premises. The halls, passages, exits, entrances,
elevators, stairways, and balconies of each building in the Office Centre are
not for the use of the general public, and Landlord in all cases reserves the
right to control the same and prevent access thereto by any person whose
presence, in the judgment of Landlord, is or may be prejudicial to the safety,
character, reputation, or interests of such building or its tenants; provided
however, that Landlord shall not prevent such access to persons with whom
tenants deal in the ordinary course of business unless such persons are engaged
in illegal or disruptive activities. No person shall go upon or use the roof of
any building unless expressly so authorized by Landlord.

        18. Deliveries and Use of Elevators. No mail, furniture, packages,
supplies, equipment, merchandise, or deliveries of any kind shall be received in
any building or carried up or down in the elevators except between such hours
and in such elevators as shall be designated by Landlord. All routine deliveries
to any tenant's premises shall be made through the elevators designated for
freight usage. Passenger elevators shall be used only for the movement of
persons, except as otherwise approved in writing by Landlord.

        19. Moving and Installation of Equipment. Furniture, freight, and
equipment of every kind shall be moved into or out of buildings only at such
times and in such manner as Landlord shall designate. All hand trucks used
anywhere in any building shall be equipped with rubber tires and side guards.
Landlord may prescribe and limit the weight, size, or position of any equipment
to be used by tenants, other than standard office desks, chairs, tables, and
portable office machines. Safes and other heavy equipment, if any, approved by
Landlord shall stand on wood strips of such thickness as Landlord deems
necessary to distribute properly the weight thereof. If moving or maintaining
any property of a tenant causes any damage to the premises or any other portion
of the building, the damage shall be repaired at such tenant's expense. All
removals, or the carrying in or out of any building or moving within any
building, of any safe, freight, furniture, fixtures, or bulky matter of any
description shall only take place during such

                                       4
<PAGE>   63

hours as Landlord may determine from time to time. The moving of all such items
shall only be made upon previous written notice to Landlord and under its
supervision, and the persons employed by any tenant for such work must be
acceptable to Landlord. Landlord reserves the right to inspect all safes,
furniture, fixtures, freight, and other bulky matter to be brought into any
building and to exclude therefrom any such item that violates any of these rules
and regulations or the lease of the tenant responsible for such item.

        20. Trash Disposal. No trash, garbage, waste, or refuse shall be stored
or disposed of in any common area of the Office Centre, except in the dumpsters
or trash containers provided by Landlord for that purpose. All cardboard and
wooden boxes shall be broken down and flattened before the nightly janitorial
crew will dispose of them. Tenants shall only use such dumpsters and trash
containers for disposal of nonhazardous trash or waste generated at the Office
Centre in connection with the ordinary conduct of such tenants' business at the
Office Centre in accordance with the terms and conditions of their respective
leases. Any tenant desiring Landlord's services for removal or disposal of
additional quantities of nonhazardous trash or waste generated by such tenant at
the Office Centre shall so notify Landlord, and Landlord shall endeavor to
provide such service at its then standard charges.

        21. Tenant's Authorized Representative. Each tenant shall by written
notice to Landlord appoint a person to act as such tenant's Authorized
Representative. All tenant requests to Landlord or its management for services
shall be made through the Authorized Representatives. Each tenant's Authorized
Representative shall also serve as the tenant contact in the event of building
emergencies, interruptions of services, or security problems.

        22. Services. Except as may otherwise be agreed to in writing by
Landlord, no tenant shall hire, employ, or contract with any person or firm for
janitorial, maintenance, or other like service to be provided to such tenant's
premises, and no person shall be permitted to enter any building for such
purpose. Tenants shall not cause any unnecessary labor by carelessness or
indifference to the preservation of good order and cleanliness in their premises
or any other area of their building or the Office Centre. Landlord shall not be
responsible to any tenant for loss of property in its premises or elsewhere in
the Office Centre, however occurring, or for any damage to the property of any
tenant caused by the employees or independent contractors of Landlord or by any
other person. Janitor service shall not be furnished when rooms are occupied
during the regular hours when janitor service is provided. Regular janitor
service provided by Landlord shall include ordinary dusting and cleaning, but
shall not include cleaning of carpets or rugs (except normal vacuuming) or
moving of furniture, file cabinets, or equipment. Window cleaning shall be done
only at the times determined by Landlord, in accordance with its normal business
practice, for such services.

        23. Landlord's Employees. Special requirements of tenants shall be
attended to only upon application to Landlord at its office in the Office
Centre. Employees of Landlord shall not perform any work for tenants outside
such employees' regular duties unless under special instructions from Landlord,
and no employee of Landlord shall be required to admit any person (tenant or
otherwise) to any premises in any building.

        24. Preparation for Maintenance/Repairs/Alterations. In the event
Landlord shall elect, or be required, to perform any maintenance, repairs,
alterations, improvements, or

                                       5
<PAGE>   64

installations on a tenant's premises, such tenant shall, upon Landlord's
request, move any file cabinets, furniture, or equipment as required by
Landlord's workers in order for them to obtain full, unobstructed access to the
area where their work is to be performed.

        25. Locks and Keys Furnished by Landlord. Landlord shall at its expense
provide a lockset and two keys for each corridor door entering the tenant's
premises. No tenant shall make or cause to be made any copies of such keys,
except through Landlord, who shall make additional keys available upon request
at Landlord's then standard charges. Landlord shall endeavor to provide such
additional keys within five (5) working days after the tenant's request. Upon a
tenant's written request, Landlord shall rekey, any locksets, or install
additional locksets, on corridor or interior doors of such tenant's premises,
and such tenant shall pay Landlord for such service at Landlord's then standard
charge therefor. Landlord shall endeavor to rekey or install such locksets (if
available locally) within five (5) working days after the tenant's request
therefor. In emergencies, a temporary lockset may be installed, and the same
shall be replaced as soon as the permanent lockset is available. No tenant shall
rekey or install, or cause to be rekeyed or installed, any lockset on any door
except in the foregoing manner. All such locksets and keys shall be keyed to the
building master lock system. Notwithstanding the foregoing, no tenant shall be
required to provide Landlord with keys to such tenant's safes or vaults or to
those areas of its premises appropriately designated by such tenant in writing
to Landlord as "Restricted Areas."

        26. Return of Keys. All door keys and locksets furnished to any tenant
shall remain the property of Landlord. Upon termination of occupancy of its
premises, each tenant shall deliver to Landlord all keys furnished by Landlord,
and any reproductions thereof made by or at the direction of such tenant. In the
event of loss of any keys so furnished, the affected tenant shall immediately
report the loss to Landlord and such tenant shall reimburse Landlord, at
Landlord's then standard rate, for (a) the cost of replacing such keys or (b)
should Landlord decide that rekeying the locks is necessary for the security of
such premises, the cost (including labor and materials) of rekeying all locks
keyed to such lost keys. Upon termination of occupancy of its premises, each
tenant shall also deliver to Landlord all keys to any other locks remaining in
the premises and shall give Landlord written notice of the combinations of any
locks to any safes, cabinets, vaults, or doors to "Restricted Areas", if the
same are not removed by such tenant.

        27. Hazardous Substances. The following rule concerns "Hazardous
Substances", which term shall mean any kerosene, gasoline, oils, solvents, paint
thinner, acids, caustics, insecticides, pesticides, herbicides, corrosives,
flammable explosives, asbestos, PCBs, vinyl chloride, cyanide solutions, urea
formaldehyde, waste chemicals, sludges, radioactive materials, infectious or
medical waste, or other substance or material that, after release into the
environment and upon exposure, ingestion, inhalation, or assimilation, either
directly from the environment or indirectly by ingestion through food chains,
will or may reasonably be anticipated to cause death, disease, behavior
abnormalities, cancer, reproductive harm, or genetic abnormalities. No tenant
shall cause or permit any Hazardous Substance to be brought upon or kept, used,
or generated in or about its premises or any other area of its building or the
Office Centre unless (a) such Hazardous Substance is necessary for the tenant's
business (and such business is a permitted use under its lease) and (b) the
tenant first obtains the written consent of Landlord if such Hazardous Substance
is other than an ordinary consumer product that is used at

                                       6
<PAGE>   65

the premises in the same manner as an ordinary consumer use and is present in
quantities that are not substantially greater quantities than may be present in
an ordinary household and that would not require reporting under any federal,
state, or local law or regulation if such quantities were released into the
environment. Any tenant who at any time becomes aware, or has reasonable cause
to believe, that any Hazardous Substance, other than those permitted under these
rules and regulations, has come to be located in, on, or beneath its premises or
any other area of its building or the Office Centre, such tenant shall,
immediately upon discovering such presence or suspected presence of such
Hazardous Substance, give Landlord written notice, in reasonable detail, of such
condition.

        28. Nuisance. No tenant shall, in or about its premises, (a) use or keep
or permit to be used or kept any foul or noxious gas or substance, (b) engage in
or permit any activities or uses offensive or objectionable to Landlord or other
tenants or occupants by reason of noise, odors, or vibrations, (c) interfere in
any way with other tenants or persons having business in any building in the
Office Centre, or (d) without Landlord's prior written consent, bring or keep,
or permit to be brought or kept, any pets or animal life form, other than human,
except seeing eye dogs when in the company of their masters.

        29. Certain Other Prohibited Uses. No cooking shall be done or permitted
by tenants in their premises or elsewhere in the Building or on the grounds of
the Office Centre, except as otherwise specifically consented to in writing by
Landlord. No premises shall be used for the storage of merchandise (except
storage incidental to a use expressly permitted under tenant's lease), washing
clothes, lodging, sleeping or any improper, objectionable, or immoral purpose.
No tenant shall, without Landlord's prior written consent, use any method of
heating or air-conditioning other than that supplied by Landlord.

        30. No Smoking. Smoking of cigarettes, cigars, and pipes is prohibited
in the buildings. All cigarettes, cigars, and pipes shall be extinguished before
entering any building.

        31. Intoxication. Landlord may exclude or expel from the Office Centre
any person who, in the judgment of Landlord, is intoxicated or under the
influence of liquor or drugs, or who shall in any manner do any act in material
violation of any of the rules or regulations of the Office Centre.

        32. No Soliciting. Canvassing, soliciting, peddling, and distribution of
written material in any building or in the parking lots or grounds of the Office
Centre are prohibited, and each tenant shall cooperate to prevent the same.

        33. No Loitering. No one shall loiter in any entrances, exits,
stairways, elevators, or corridors, or, except as otherwise consented to in
writing by Landlord, in any way obstruct any sidewalk, driveway, lobby,
stairway, or elevator.

        34. No Shopping Carts. No shopping carts may be brought onto the grounds
of the Office Centre or into any building.

        35. No Vehicles in Premises. No bicycles or vehicles of any kind shall
be brought into or kept in or about any tenant's premises or other area of any
building. Please contact the Property Management Office for keys to the enclosed
bicycle rack.

                                       7
<PAGE>   66

        36. Christmas Trees. Live/Cut Christmas trees, wreaths, etc. are allowed
in the buildings. The local fire department dictates that they be fireproofed.
Keep the fireproof tag throughout the season.

        37. Vending Machines. No vending, arcade, game, or food or beverage
dispensing machine of any description shall be installed, maintained, or
operated in any tenant's premises or elsewhere in any building without the prior
written consent of Landlord.

        38. Toilet Fixtures. No toilet room, toilet, urinal, wash bowl, or other
apparatus shall be used for any purpose other than that for which it was
constructed and no foreign substance of any kind whatsoever shall be thrown or
placed therein. The expense of any breakage, stoppage, or damage resulting from
the violation of this rule shall be borne by the tenants who, or whose employees
or invitees, cause such breakage, stoppage, or damage.

        39. Parking Rules and Regulations.

            a. Landlord reserves the right to designate the use of parking
spaces at the Office Centre, and parking shall be prohibited except in areas
specifically marked for parking. All parked vehicles shall be parked within (and
never across) the striped lanes designated for such purpose, and no portion of
any parked vehicle may block any driveway. Parking spaces marked as reserved for
visitors, handicapped persons, or a specific occupant of the Office Centre shall
only be used by such persons for whom the spaces are reserved.

            b. Areas marked as "loading" zones shall be used solely for purposes
of loading and unloading of equipment, personal property, or materials used at
the Office Centre. Any vehicles being loaded or unloaded shall be properly
parked in a parking space or stopped in such a marked "loading" zone. No vehicle
stopped in a "loading" zone may be left unattended.

            c. Only passenger vehicles may be parked at the office Centre. The
parking of trucks, trailers, recreational vehicles, and boats is specifically
prohibited. Landlord may, in its sole discretion, designate separate areas for
bicycles and motorcycles.

            d. No "For Sale" or other advertising signs or signs referring to
the Office Centre may be placed on or about any vehicle parked at the office
Centre.

            e. No vehicles may be parked overnight at the Office Centre without
Landlord's prior written consent.

            f. No vehicle that exceeds thirty (30) feet in length may enter the
Office Centre for any purpose.

            g. While driving in the driveways and parking lots, drivers shall
comply with all directional signs and arrows and shall not exceed the speed
limit of 5 miles per hour.

            h. Washing, waxing, cleaning, and servicing of vehicles in the
Office Centre are prohibited.

                                       8
<PAGE>   67

            i. Upon Landlord's request to any tenant, such tenant shall provide
Landlord with a list of license plate numbers of all automobiles used by its
employees and agents who are authorized to park at the Office Centre.

            j. Landlord reserves the right to have any vehicle that violates any
provision of these parking rules and regulations towed at the vehicle owner's
expense.

            k. Parking stickers or any other device or form of identification
supplied by Landlord shall remain the property of Landlord. Such parking
identification device shall be displayed as requested and may not be mutilated
in any manner. Such devices shall not be transferable, and any device in the
possession of an unauthorized holder shall be void. There shall be a replacement
charge to the tenant, at Landlord's then standard rates (currently $25), for
loss of any such device. Loss or theft of any such device shall be reported to
Landlord immediately. Any parking identification devices found on or used for an
unauthorized car may be confiscated and the illegal holder shall be subject to
prosecution. Lost or stolen devices previously reported and then found shall be
reported found to Landlord immediately.

        40. Responsibility for Employees and Guests. Each tenant shall be
responsible for the observance of all the rules and regulations by such tenant's
employees, agents, clients, customers, contractors, invitees, visitors, and
guests.

        41. Enforcement of Rules. Each tenant shall be liable to Landlord and to
each other tenant of the Office Centre for any loss, cost, expense, damage, or
liability, including attorneys' fees, caused or occasioned by the failure of
such first named tenant to comply with these rules and regulations, but Landlord
shall have no liability for such failure or for failing or being unable to
enforce compliance therewith by any tenant and such failure by Landlord or
non-compliance by any other tenant shall not be a ground for abatement of rent
or termination of any lease.

        42. Collection of Charges. Landlord' s right to charge particular
tenants for certain costs and expenses pursuant to these rules and regulations
shall not impose any obligation upon Landlord to impose or collect such charges
from any such particular tenant, and in the event Landlord, for whatever reason,
is not reimbursed by any tenant for such costs and expenses, the same may be
included in the calculation of building operating expenses for purposes of
determining each tenant's percentage share of increases therein in accordance
with the provisions of its lease.

        43. Waivers. Landlord may waive any one or more of these rules and
regulations for the benefit of any particular tenant or tenants, but no such
waiver by Landlord shall constitute a waiver of such rule or regulation in favor
of any other tenant.

        44. Changes to Rules. Landlord reserves the right to rescind any of
these rules and regulations and to make such changes therein, and add such other
and further rules and regulations, as Landlord in its reasonable judgment shall,
from time to time, deem appropriate. Such changed or additional rules and
regulations shall be binding upon each tenant upon Landlord's giving such tenant
written notice thereof.

                                       9
<PAGE>   68

                                    EXHIBIT D

                              Utilities and Service

                    ATTACHED TO AND MADE A PART OF THIS LEASE

        The furnishing of building services and utilities to Tenant shall be
accomplished in accordance with and subject to the terms and conditions set
forth in this Exhibit D and elsewhere in the Lease. Landlord reserves the right
to adopt from time to time such reasonable modifications and additions hereto as
Landlord may deem appropriate.

        1. Subject to the full performance by Tenant of all of Tenant's
obligations under the Lease, Landlord shall provide the standard building
services and utilities set forth in this Paragraph 1. Landlord shall:

            a. Provide to the Premises heating, ventilation, and air
conditioning ("HVAC") in accordance with the terms and provisions set forth in
the Lease.

            b. Provide electric current to the Premises, for purposes consistent
with the Permitted Uses specified in Section 1.1(g) of the Lease and in
accordance with the terms and provisions set forth in the Lease.

            c. Provide at all times reasonably necessary amounts of hot and cold
water for restrooms furnished by Landlord.

            d. Provide janitorial services to the Common Areas and to any
exterior window coverings. Landlord shall not be responsible or liable for any
act or omission or commission on the part of the persons employed to perform
said janitorial services, and said janitorial services shall be performed at
Landlord's direction without interference by Tenant or Tenant's employees.

            e. Provide trash removal services from the trash disposal areas
located in the Facility. Landlord shall only be responsible for the removal and
disposal of properly containerized, nonhazardous, ordinary trash or waste in
quantities ordinary and customary for the Permitted Uses, as reasonably
determined by Landlord.

            f. When reasonably necessary, provide appropriate vermin and pest
control services to the Common Areas.

        2. Landlord shall have the exclusive right to make any replacement of
electric light bulbs, tubes and ballasts in the Premises throughout the Term.
The Landlord may, at Landlord's sole discretion, adopt a system of revamping and
reballasting periodically on a group basis in accordance with good practice.

        3. Landlord shall not provide in the Premises any reception outlets or
television or radio antennas for television or radio broadcast or reception, and
Tenant shall not install any such equipment without the prior consent of
Landlord which can be withheld in Landlord's sole and absolute discretion.

                                       1
<PAGE>   69

        4. Tenant acknowledges and understands that at the commencement of the
Term, if this is a new Building, portions of the Building and the Property and
the Building's HVAC, security (if any), electrical and plumbing systems may not
be fully completed, adjusted, and running smoothly and that Tenant will suffer
certain annoyances and inconveniences. These annoyances and inconveniences shall
not give rise to any rent abatement or reduction or create any other claim by
Tenant against the Landlord.

                                       2
<PAGE>   70

                                    EXHIBIT E

                  Sample Acknowledgment of Commencement of Term

                    ATTACHED TO AND MADE A PART OF THIS LEASE

                     ACKNOWLEDGMENT OF COMMENCEMENT OF TERM

        THIS ACKNOWLEDGMENT is made as of ________________________, 19___ by and
between _____________________________ ("Landlord") and ______________________
("Tenant").

                                    RECITALS

        A. Pursuant to a written lease dated as of _________________, 2___ (the
"Lease"), Tenant leases from Landlord certain premises commonly known as
Suite/Unit(s) ___________ of the _________________-story building located at
________________ __________________________ in the City of ________________,
State of __________________ (the "Premises"), as more particularly described in
the Lease.

        B. Subject to and upon the terms and conditions set forth in this
Acknowledgment, the parties desire to confirm the term of the Lease.

        ACCORDINGLY, the parties agree as follows:

                                    AGREEMENT

        1. The parties to this Acknowledgment hereby agree to confirm the
establishment of the commencement and expiration dates of the term of the Lease,
and the rental commencement date as follows:

            a. the date of ____________________, 2____ shall be the commencement
date of the term of the Lease;

            b. the date of ____________________, 2____ shall be the scheduled
expiration date of the term of the Lease;

            c. the period commencing on ____________________, 2____, and ending
on ____________________, 2____ shall be the period to which Tenant's rent
payment of $__________ made pursuant to Subsections 1.1(e)(2) and 5.1 (prepaid
rent) of the Lease (receipt of which amount is hereby acknowledged, by
Landlord), shall be applied;

            d. subject to the provisions of the Lease concerning the recapture
of "free rent" upon any early termination of the Lease, no scheduled monthly
rent shall be payable for the months of ___________; and

            e. the date of ____________________, 2____ is the next date on which
scheduled monthly rent shall be paid by Tenant, which payment shall be in the
amount of

                                        1
<PAGE>   71

$_____________ and shall cover the period commencing on ____________________,
2____ and ending on ____________________, 2____. Thereafter, scheduled monthly
rent shall be payable as provided in the Lease, except as follows [if no
modifications, write "none"]:

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

        2. Tenant hereby confirms the following:

            a. that it has accepted possession of the Premises pursuant to the
terms of the Lease;

            b. that the improvements and space required to be furnished by
Landlord according to the Lease have been furnished;

            c. that other than this Acknowledgment there has been no
modification, alteration, or amendment to the Lease, except as follows [if none,
write "none"]:

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

            d. that there are no offsets or credits against rentals, nor has any
security deposit been paid, except as provided by the Lease;

            e. that Tenant has not made any assignment of the Lease or any
sublease of all or any portion of the Premises; and

            f. that the Lease, as confirmed, modified, and amended by this
Acknowledgment, is in full force and effect and represents the entire agreement
between Landlord and Tenant concerning the Premises and the matters covered by
the Lease.

        3. This Acknowledgment, and each and all of the provisions hereof, shall
inure to the benefit of, or bind, as the case may require, the parties hereto,
and their respective heirs, successors, and assigns subject to the restrictions
upon assignment and subletting contained in the Lease.

                                        2
<PAGE>   72

                                    EXHIBIT F

                           ADJUSTMENT TO MONTHLY RENT

                                Fixed Adjustment

        This Exhibit is attached to and made a part of that certain Standard
Form Lease dated January 31, 1996, by and between Casiopea Venture Corporation
c/o Birtcher Property Services as "Landlord", and Virage, Enc., as "Tenant", for
the Premises known as Bovet Office Centre, 177 Bovet Road, Suite 520, San Mateo,
California.

        The capitalized terms used and not otherwise defined in this Exhibit
shall have the same definitions as set forth in the Lease. The provisions of
this Exhibit shall supersede any inconsistent or conflicting provisions of this
Lease.

        The Monthly Rent shall be adjusted, as of the commencement of the dates
set forth below, in accordance with the following schedule:

                    Months During Term                   Monthly Rent
                    1-30                                 $10,213.20

                    31-60                                $10,780.60

                                        1
<PAGE>   73

                            FIRST AMENDMENT TO LEASE

        This First Amendment to Lease ("Amendment") is entered into and made as
of this Twentieth clay of March 1997, by and between Casiopea Venture
Corporation, ("Landlord"), and Virage, Inc. ("Tenant"), with respect to the
following facts:

I.      RECITALS

        A. Whereas, Landlord and Tenant have heretofore entered into a certain
Lease, dated January 17, 1996 (the "Lease") under which Landlord leased to
Tenant the Premises containing 5,674 rentable square feet commonly known as
Suite 520, 177 Bovet Road, San Mateo, California (the "Original Space") and

        B. Subject to and upon the terms and conditions set forth below,
Landlord and Tenant desire to modify the Lease to expand the Premises to include
the adjacent office space, Suite 575, 177 Bovet Road, (the "Expansion Space")
consisting of approximately 4,134 rentable square feet and the additional office
space, Suite 303, 155 Bovet Road, (the "Additional Space") consisting of
approximately 2,997 rentable square feet as shown on Exhibit "A" attached
hereto.

II.     MODIFICATIONS

        Landlord and Tenant hereby agree that the Lease shall be modified and/or
supplemented as follows:

        1. Premises.

            A. Section 1.1(c) 4 of the Lease entitled "Premises", is amended to
include the adjacent Suite 575 comprising of 4,134 rentable square feet (the
"Expansion Space") which when added to the Premises will contain approximately
9,808 rentable square feet.

            B. Section 1.1(c) 4 of the Lease entitled "Premises", is further
amended to include Suite 303 at 155 Bovet Road comprising of 2,997 rentable
square feet (the "Additional Space").

            C. The total Premises will include the "Original Space", the
"Expansion Space" and the "Additional Space" ("Total Premises") which when added
will contain approximately 12,805 rentable square feet.

        2. Term.

            A. Section 1.1(d) of the Lease is hereby amended to extend the
Original Term of the Lease for a period 13 months commencing on April 1, 2001
and expiring on April 30, 2002 (the "Extended Term").

            B. The Term of the Lease for the "Expansion Space", Suite 575, 177
Bovet Road, shall commence on November 1, 1997 and expire on April 30, 2002.

                                        1
<PAGE>   74

        The "Expansion Space" as provided in this First Amendment to Lease is
specifically contingent upon Landlord obtaining possession of the "Expansion
Space" from the Tenant in Suite 575, Paul Revere and by Paul Revere vacating the
Premises or relinquishing 4,134 rentable square feet to accommodate Tenant's
expansion pursuant to this First Amendment.

        Landlord advises Tenant that Paul Revere has no options to renew their
Lease. Landlord shall not offer to Paul Revere a renewal of their Lease for
Suite 575. Landlord further acknowledges that other tenants with rights have
been offered the Expansion Space in accordance with the terms of their Lease and
have until April 9, 1997 to waive the offer.

        However, Tenant acknowledges and agrees that Paul Revere may not comply
with the terms of their Lease and vacate the Premises on or before the Lease
expiration date. In the event that Paul Revere does not vacate the Premises
within thirty (30) days after expiration of the Lease, Landlord will use
commercially reasonable efforts to make other comparable space available in 177
for Tenant.

        Should any of the above prerequisites or alternatives not occur or be
available by February 1, 1998 and for reasons beyond the commercially reasonable
efforts of Landlord, this paragraph of the First Amendment to Lease shall be
void,

        C. The Term of the Lease for the "Additional Space", Suite 303 as
provided in the First Amendment will be for a period of five (5) years
commencing on June 1, 1997 or upon substantial completion of the tenant
improvements and expiring on May 31, 2002.

        Landlord further acknowledges that other tenants with rights have been
offered the Expansion Space in accordance with the terms of their Lease and have
until April 9, 1997 to waive the offer.

        3. Rent.

        A. Section 1.1(e) of the Lease is amended such that during the Extended
Term for the "Original Space", notwithstanding any provision of the Lease,
Tenant shall pay to Landlord , scheduled monthly rent of Fourteen Thousand Four
Hundred Sixty-Eight Dollars and 70/00 ($14,468.70) per month, subject to further
adjustment as provided below:

<TABLE>
<CAPTION>
From                      Through                 Monthly                 Rent
-------------             ------------            ----------              -------------
<S>                       <C>                     <C>                     <C>
April 1, 2001             May 31, 2001            $14,468.70              $2.55 RSF/FSG
June 1, 2001              May 31, 2002            $14,752.40              $2.60 RSF/FSG
</TABLE>

        B. Commencing on November 1, 1997, the scheduled monthly rent for the
"Expansion Space", Suite 575, provided for in Exhibit "F" of the Lease shall be
increased further to add an additional sum (the "Suite 575 Rent") which shall be
in the amount of $9,921.60, subject to further adjustment as provided below:

<TABLE>
<CAPTION>
From                      Through                 Monthly                 Rent
-------------             ------------            ----------              -------------
<S>                       <C>                     <C>                     <C>
November 1, 1997          May 31, 1998            $ 9,921.60              $2.40 RSF/FSG
June 1, 1998              May 31, 1999            $10,128.30              $2.45 RSF/FSG
June 1, 1999              May 31, 2000            $10,335.00              $2.50 RSF/FSG
June 1, 2000              May 31, 2001            $10,541.70              $2.55 RSF/FSG
June 1, 2001              May 31, 2002            $10,748.40              $2.60 RSF/FSG
</TABLE>

                                        2
<PAGE>   75

        C. Commencing on June 1, 1997, the scheduled monthly rent for the
"Additional Space", Suite 303, 155 Bovet Road, shall be Seven Thousand One
Hundred Ninety-Two and 80/00 ($7,192.80) per month, subject to further
adjustment as provided below:

<TABLE>
<CAPTION>
From                      Through                 Monthly                 Rent
-------------             ------------            ----------              -------------
<S>                       <C>                     <C>                     <C>
June 1, 1997              May 31, 1998            $ 7,192.80              $2.40 RSF/FSG
June 1, 1998              May 31, 1999            $ 7,342.65              $2.45 RSF/FSG
June 1, 1999              May 31, 2000            $ 7,492.50              $2.50 RSF/FSG
June 1, 2000              May 31, 2001            $ 7,642.35              $2.55 RSF/FSG
June 1, 2001              May 31, 2002            $ 7,792.20              $2.60 RSF/FSG
</TABLE>

        4. Tenant's Percentage Share.

            A. Section 1.1(h) of the Lease is hereby amended such that the
Tenant's Percentage Share for the "Original Space" and "Expansion Space" shall
be 10.67% effective as of the "Expansion Space" Commencement Date.

            B. Tenant Percentage Share for the "Additional Space" is 2.3%.

        5. Base Years.

            A. Section 1.1(i) of the Lease is hereby amended such that the Base
Expense Year for Operating Expenses for the "Total Premises" shall be calendar
year 1997, and shall be effective as of January 1, 1997.

            B. Section 1.1(i) of the Lease is hereby amended such that the Base
Tax Year for the "Total Premises" shall be the fiscal tax year commencing July
1, 1996 and ending June 30, 1997 and shall be effective as of January 1, 1997.

        6. Security Deposit.

            A. Section 1.1(f) of the Lease is hereby amended such that the
Security Deposit shall be $25,500.80. Landlord currently holds $10,213.20 as a
security deposit, leaving a balance due in the amount of $15,287.60, which
amount shall be paid to Landlord upon execution of the First Amendment.

            B. Security Deposit for the "Additional Space", Suite 303, 155 Bovet
Road, shall be $7,792.20 and shall be paid to Landlord upon execution of the
First Amendment.

                                        3
<PAGE>   76

        7. Vehicle Parking Spaces.

            The number of undesignated Vehicle Parking Spaces shall be increased
to 44. Such increase shall take effect as of the "Expansion Space" and
"Additional Space" commencement dates.

        8. Tenant Improvement Work.

            A. Landlord to install, at Landlord's expense, tenant improvements
within the "Expansion Space", in accordance with Tenant's proposed space plan,
Exhibit "B" and the Work Letter, Exhibit "C", provided however, Landlord's
construction costs shall not exceed $28,938.00/$7.00 RSF. Any and all costs in
excess of the Allowance required to complete the construction of the Tenant
Improvements shall be the sole and exclusive obligation and responsibility of
Tenant.

            B. Landlord to install, at Landlord's expense, tenant improvements
within the "Additional Space", in accordance with Tenant's proposed space plan
and the Work Letter, Exhibit "D", provided however, Landlord's construction
costs shall not exceed $49,450.00/$16.50 RSF. Any and all costs in excess of the
Allowance required to complete the construction of the Tenant Improvements shall
be the sole and exclusive obligation and responsibility of Tenant.

III.    GENERAL

            A. Effect of Amendment; Ratification. Except to the extent the Lease
is modified by this Amendment, the terms and provisions of the Lease shall
remain unmodified and in full force and effect. In the event of conflict between
the terms of the Lease and the terms of this Amendment, the terms of the
Amendment shall prevail.

            B. Attorney's Fees. The provisions of the Lease respecting payment
of attorney's fee shall also apply to this Amendment.

            C. Counterparts. If this Amendment is executed in counterparts, each
counterpart shall be deemed in original.

            D. Authority to Execute Amendment. Each individual executing this
amendment on behalf of a partnership or corporation represents that lie or she
is duly authorized to execute and deliver this Amendment on behalf of tile
partnership and/or corporation and agrees to deliver evidence of his or her
authority to Landlord upon request by Landlord.

            E. Governing Law. This Amendment and any enforcement of the
agreements and modifications set forth above shall be governed by and construed
in accordance with tile laws of the State of California.

            F. Broker Participation. In consideration for brokerage services
rendered to Landlord in this transaction, Landlord shall pay its licensed real
estate broker named in Subsection 1.1(j) a commission as set forth in a separate
agreement between Landlord and said broker. Tenant's broker, if any is named in
Subsection 1.1(j), will be paid its commission from a

                                       4
<PAGE>   77

portion of the commission paid to Landlord's Broker, as set forth in a separate
agreement between Landlord's Broker and Tenant's Broker. Except as otherwise set
forth in the preceding sentence, each party agrees to indemnify, defend, and
hold harmless the other party from any claim or loss arising out of any actual
or alleged dealings of the indemnifying party with any real estate broker,
agents or finder in connection with this transaction.

        IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date and year first above written.

Tenant:                                   Landlord:

VIRAGE, INC.                              CASIOPEA VENTURE CORPORATION a
                                          California corporation
                                          By:  Birtcher Property Services,
                                               its managing agent

By: /s/ Paul Lego                         By: /s/ Jonathan J. Feucht
    ------------------------------            ----------------------------------

Its: CEO                                  Its: Assistant Secretary
     -----------------------------             ---------------------------------

Date: 4/10/97                             Date: 4/27/97
      ----------------------------              --------------------------------

                                       5
<PAGE>   78

                                   EXHIBIT "A"

                                       6
<PAGE>   79

                                   EXHIBIT "B"

                                       7
<PAGE>   80

                                   EXHIBIT "C"

                         Schedule of Tenant Improvements

                    ATTACHED TO AND MADE A PART OF THIS LEASE

        1. "Expansion Space", Suite 575

            Carpet, paint, replace defective ceiling tiles, demo two offices and
remove demising walls.

        All work to be performed during normal working business hours except
that efforts will be taken to minimize noise and inconvenience insofar as this
can be done without effecting cost.

                                       8
<PAGE>   81

                                   EXHIBIT "D"

           WORK LETTER - "ADDITIONAL SPACE", 155 BOVET ROAD, SUITE 303

        This Exhibit "B" is attached to and made a part of that certain Lease
dated January 31, 1996, by and between Casiopea Venture Corporation,
("Landlord"), and Virage, Inc. ("Tenant") for the Premises known as Bovet Office
Centre, 177 Bovet Road, Suite 520, San Mateo, California 94402

        1. APPLICATION OF EXHIBIT

            Capitalized terms used and not otherwise defined herein shall have
the same definitions as set forth in the Amendment. The provisions of this Work
Letter shall apply to the planning and completion of leasehold improvements
requested by Tenant (the "Tenant Improvements") for the fitting out of the
"Additional Space", as more full set forth herein.

        2. LANDLORD AND TENANT PRE-CONSTRUCTION OBLIGATIONS

            a) Preliminary Space Plans. Attached to this Work Letter as Exhibit
"B" are preliminary space plans for the Tenant Improvements ("the Preliminary
Space Plans"), which include without limitation, sketches and/or drawings
showing locations of doors, partitioning, electrical fixtures, outlets and
switches, plumbing fixtures and other requirements, mutually agreed upon by
Landlord and Tenant and determined by Tenant as required for its use of the
Premises. Tenant acknowledges that the Preliminary Space Plans have been
prepared by Landlord's Architect after consultation and cooperation between
Tenant and Landlord's Architect regarding the proposed Tenant Improvements and
Tenant's requirements and that the Preliminary Space Plans are complete with
respect thereto. Landlord and Landlord's Architect shall be entitled, in all
respects, to rely upon all information supplied by Tenant regarding the Tenant
Improvements.

            b) Working Drawings. Within twenty-one (21) days following full
execution of this Amendment by both Landlord and Tenant, Landlord's Architect
shall prepare working drawings ("the Working Drawings") for the Tenant
Improvements based upon the approved Preliminary Space Plans. The Working
Drawings shall include architectural drawings for the Tenant Improvements based
on the Preliminary Space Plans. Notwithstanding the Preliminary Space Plans, in
all cases the Working Drawings (i) shall be subject to Landlord's final
approval, which approval shall not be unreasonably withheld, (ii) shall not be
in conflict with building codes for the City or County or with insurance
requirements for a fire resistive Class A office building, and (iii) shall be in
a form satisfactory to appropriate governmental authorities responsible for
issuing permits and licenses required for construction.

            c) Approval of Working Drawings. Landlord or Landlord's Architect
shall submit the Working Drawings to Tenant for Tenant's review to confirm
compliance with the Preliminary Space Plan, and Tenant shall notify Landlord and
Landlord's Architect within five (5) business days, after delivery thereof of
any requested revisions. Within five (5) days after receipt of tenant's notice,
Landlord's Architect shall make all approved revisions to the Working Drawings
and submit two copies thereof to Tenant for its final review and approval, which

<PAGE>   82

approval shall be given within three (3) business days thereafter. Concurrently
with the above review and approval process, Landlord may submit all plans and
specifications to City or other governmental agencies in an attempt to expedite
City approval and issuance of all necessary permits and Licenses to construct
the Tenant Improvements as shown on the Working Drawings. Any changes which are
required by City or other governmental agencies shall be immediately submitted
to Landlord for Landlord's review and reasonable approval, and Landlord shall
promptly notify Tenant of such changes.

            d) Schedule of Critical Dates. Set forth below is a schedule of
certain critical dates relating to Landlord's and Tenant's respective
obligations for the design and construction of the Tenant Improvements. Such
dates and the respective obligations of Landlord and Tenant are more fully
described elsewhere in the Work Letter. The purpose of the following schedule is
to provide a reference for Landlord and Tenant and to make certain the Final
Approval Date occurs as set forth herein. Following the Final Approval Date,
Tenant shall be deemed to have released Landlord to commence construction of the
Tenant Improvements as set forth in Section 4 below.

<TABLE>
<CAPTION>
Reference                                     Date Due                               Responsible Party
---------                                     --------                               -----------------

<S>                                           <C>                                    <C>
A. "Preliminary Space Plan Approval"          Contemporaneously with Lease           Tenant & Landlord
                                                                                     execution

B. "Working Drawings Completion"              Twenty-one (21) days after full        Landlord
                                              execution of the Lease

C. "Working Drawing Review"                   Five (5) business days after           Tenant
                                              Landlord submits Working
                                              Drawings to Tenant

D. "Working Drawing Revisions"                Five (5) business days after           Landlord
                                              Tenant returns Working Drawings
                                              to Landlord

E. "Final Approval Date"                      Three business days after              Tenant
                                              Landlord submits revised
                                              Working Drawings to Tenant
</TABLE>

        3. BUILDING PERMIT

            After the Final Approval Date has occurred, Landlord shall, if
Landlord has not already done so, submit the Working Drawings to the appropriate
governmental body or bodies for final plan checking and a building permit.
Landlord, with Tenant's cooperation, shall cause to be made any change in the
Working Drawings necessary to obtain the building permit; provided, however,
after the Final Approval Date, no changes shall be made to the Working Drawings
without the prior written approval of both Landlord and Tenant, and then only
after agreement by tenant to pay any excess costs resulting from such changes.

        4. CONSTRUCTION OF TENANT IMPROVEMENTS

            After the Final Approval Date has occurred and a building permit for
the work has been issued, Landlord shall, through a construction contract
("Construction Contract") with a

                                       2
<PAGE>   83

reputable, licensed contractor selected by Landlord ("Contractor"), cause the
construction of the Tenant Improvements to be carried out in substantial
conformance with the Working Drawings in a good and workmanlike manner using
first-class materials. The costs associated with the construction of the Tenant
Improvements shall be paid as set forth in Section 5 and 6 of this Work Letter.
Landlord shall see that the construction complies with all applicable building,
fire, health, and sanitary codes and regulations, the satisfaction of which
shall be evidenced by a certificate of occupancy for the Premises. Landlord or
Contractor shall maintain a comprehensive general liability insurance policy
with a limit of not less than One Million Dollars ($1,000,000.00) to insure
against bodily injury and property damage during the construction work prior to
the Lease Commencement Date.

        5. TENANT IMPROVEMENT ALLOWANCE

            Landlord shall provide Tenant with a Tenant Improvement Allowance
towards the cost of the design, purchase and construction of the Tenant
Improvements, including without limitation design, engineering and consulting
fees (collectively, the "Tenant Improvement Costs"). The Tenant Improvement
Allowance shall be used for payment of the following Tenant Improvement Costs:

            (i) Preparation by Landlord's Architect of the Preliminary Space
Plans and the Working Drawings as provided in Section 2 of this Work Letter,
including without limitation all fees charged by City (including without
limitation fees for building permits and plan checks) in connection with the
Tenant Improvements work in the Premises;

            (ii) Construction work for completion of the Tenant Improvements as
reflected in the Construction Contract;

            (iii) All contractor's charges, general conditions, performance bond
premiums and construction fees; and

            (iv) Tenant Improvements as shown on the approved Preliminary Space
Plans dated March 17, 1997, attached hereto as Exhibit "B". Tenant Improvements
to included carpet, paint, ceiling and light fixtures to current building
standard and the building of a storage room by tile entry door.

        In the event that Tenant does request modifications, changes or
alterations of the Tenant Improvements from what is shown on said approved
Preliminary Space Plans, or causes any Tenant Delays as defined in Section 7 or
this Work Letter, then all associated costs shall be home by Tenant. If Tenant
does seek to modify change or after the Tenant Improvements from the approved
Preliminary Space Plans, or does cause a Tenant Delay, Tenant shall pay to
Landlord any excess costs resulting therefrom in accordance with Section 6 of
this Work Letter.

        6. CHANGE ORDERS

            Tenant may from time to time request and obtain change orders before
or during the course of construction provided that: (i) each such request shall
be reasonable, shall be in writing and signed by or on behalf of tenant, and
shall not result in any structural change in the Building, as reasonably
determined by Landlord, (ii) all additional charges and costs, including

                                       3
<PAGE>   84

without limitation architectural and engineering costs, construction and
material costs, and processing costs of any governmental entity shall be the
sole and exclusive obligation of tenant, and (iii) any resulting delay in the
completion of the Tenant Improvements shall be deemed a Tenant Delay and in no
event shall extend the Commencement Date of the Lease. Upon Tenant's request for
a change order, Landlord shall as soon as reasonably possible submit to Tenant a
written estimate of the increased or decreased cost and anticipated delay if
any, attributable to such requested change. Within three (3) business days of
the date such estimated cost adjustments and delays are delivered to Tenant,
Tenant shall advise Landlord whether it wishes to proceed with the change order,
and if Tenant elects to proceed with the change order, Tenant shall remit,
concurrently with Tenant's notice to proceed, the amount of the increased costs,
if any, attributable to such change order. Unless Tenant includes in its initial
change order request that the work in process at the time such request is made
be halted pending approval and execution of a change order, Landlord shall not
be obligated to stop construction of the Tenant Improvements, whether or not the
change order relates to the work then in process or about to be started.

        7. TENANT DELAYS

            In no event shall the Commencement Date of the "Additional Space" be
extended or delayed due or attributable to delays due to the fault of Tenant
("Tenant Delays"). Tenant Delays shall include, but are not limited to, delays
caused by or resulting from any one or more of the following:

            a) Tenant's failure to timely review and reasonably approve the
Working Drawings or to furnish information to Landlord or Landlord's Architect
for the preparation by Landlord or Landlord's Architect of the Working Drawings;

            b) Tenant's request for or use of special materials, finishes or
installations which are not readily available, provided that Landlord shall
notify Tenant in writing that the particular material, finish, or installation
is not readily available promptly upon Landlord's discovery of same;

            c) Change orders requested by Tenant;

            d) Interference by Tenant or by Tenant's Agents with Landlord's
construction activities;

            e) Tenant's failure to approve any other item or perform any other
obligation in accordance with and by the dates specified herein or in the
Construction Contract;

            f) Tenant's requested changes in the Preliminary Space Plans,
Working Drawings or any other plans and specifications after the approval
thereof by Tenant or submission thereof by Tenant to Landlord;

            g) Tenant's failure to approve written estimates of costs in
accordance with this Work Letter; and

                                       4
<PAGE>   85

            h) Tenant's obtaining or failure to obtain any necessary
governmental approvals or permits for Tenant's intended use of the Premises.

        If the Commencement Date of the "Additional Space" is delayed by any
Tenant delays, whether or not within the control of Tenant, then the
Commencement Date of the "Additional Space" and the payment of rent shall be
accelerated by the number of days of such delay. Landlord shall give Tenant
written notice within a reasonable time of any circumstance that Landlord
believes constitute a Tenant Delay.

        8. TRADE FIXTURES AND EQUIPMENT

            Tenant acknowledges and agrees that Tenant is solely responsible for
obtaining, delivering and installing in the Premises all necessary and desired
furniture, trade fixtures, equipment and other similar items, and that Landlord
shall have no responsibility whatsoever with regard thereto. Tenant further
acknowledges and agrees that neither the Commencement Date of the "Additional
Space" nor the payment of rent shall be delayed for any period of time
whatsoever due to any delay in the furnishing of the Premises with such items.

        9. FAILURE OF TENANT TO COMPLY

            Any failure of tenant to comply with any of the provisions contained
in this Work Letter within the times for compliance herein set forth shall be
deemed a default tinder the Lease. In addition to the remedies provided to
Landlord in this Work Letter upon the occurrence of such a default by Tenant,
Landlord shall have all remedies available at law or equity to a landlord
against a defaulting tenant pursuant to a written lease, including but not
limited to those set forth in the Lease.

                                       5
<PAGE>   86

                            SECOND AMENDMENT TO LEASE

        This Second Amendment to Lease ("Amendment") is entered into and made as
of this Seventeenth day of October 1997, by and between Casiopea Venture
Corporation, ("Landlord"), and Virage, Inc. ("Tenant"), with respect to the
following facts:

I.      RECITALS

            A. Whereas, Landlord and Tenant have heretofore entered into a
certain Lease, dated January 17, 1996 (the "Lease") under which Landlord leased
to Tenant the Premises containing 5,674 rentable square feet commonly known as
Suite 520, 177 Bovet Road, San Mateo, California (the "Original Space"). Said
Lease, as previously amended and confirmed by the instrument dated March 20,
1997 (First Amendment), herein referred to as the "Lease".

            B. Whereas, Landlord and Tenant desire to modify said Lease as
described below.

II.     MODIFICATIONS

        Landlord and Tenant hereby agree that the Lease shall be modified and/or
supplemented as follows:

        1. Term.

            The Term of the Lease for the "Expansion Space", Suite 575, 177
Bovet Road, shall commence on December 1, 1997 and expire on May 31, 2002.

        2. Rent.

            Commencing on December 1, 1997, the scheduled monthly rent for the
"Expansion Space", Suite 575, provided for in Exhibit "P" of the Lease shall be
increased further to add an additional sum (the "Suite 575 Rent") which shall be
in the amount of $9,921.60, subject to further adjustment as provided below:

<TABLE>
<CAPTION>
From                      Through                 Monthly                 Rent
----------------          ------------            ----------              -------------
<S>                      <C>                     <C>                     <C>
December 1, 1997          May 31, 1998            $ 9,921.60              $2.40 RSF/FSG
June 1, 1998              May 31, 1999            $10,128.30              $2.45 RSF/FSG
June 1, 1999              May 31, 2000            $10,335.00              $2.50 RSF/FSG
June 1, 2000              May 31, 2001            $10,541.70              $2.55 RSF/FSG
June 1, 2001              May 31, 2002            $10,748.40              $2.60 RSF/FSG
</TABLE>

III.    GENERAL

        A. Effect of Amendment; Ratification. Except to the extent the Lease is
modified by this Amendment, the terms and provisions of the Lease shall remain
unmodified and in full force and effect. In the event of conflict between the
terms of the Lease and the terms of this Amendment, the terms of the Amendment
shall prevail.

                                       1
<PAGE>   87

        B. Attorney's Fees. The provisions of the Lease respecting payment of
attorney's fees shall also apply to this Amendment.

        C. Counterparts. If this Amendment is executed in counterparts, each
counterpart shall be deemed an original.

        D. Authority to Execute Amendment. Each individual executing this
amendment on behalf of a partnership or corporation represents that he or she is
duly authorized to execute and deliver this Amendment on behalf of the
partnership and/or corporation and agrees to deliver evidence of his or her
authority to Landlord upon request by Landlord.

        E. Governing Law. This Amendment and any enforcement of the agreements
and modifications set forth above shall be governed by and construed in
accordance with the laws of the State of California.

        IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date and year first above written.

Tenant:                                    Landlord:

VIRAGE, INC.                               CASIOPEA VENTURE CORPORATION a
                                           California corporation
                                           By:  Birtcher Property Services,
                                                its managing agent

By: /s/ Paul Lego                          By: /s/ Jonathan J. Feucht
   ---------------------------------           ---------------------------------

Its: CEO                                   Its: Assistant Secretary
   ---------------------------------            --------------------------------

Date: 10/27/97                             Date: 11/7/97
   ---------------------------------             -------------------------------

                                       2
<PAGE>   88

                            THIRD AMENDMENT TO LEASE
                                 BY AND BETWEEN
                    CASIOPEA VENTURE CORPORATION, AS LANDLORD
                                       AND
                             VIRAGE, INC., AS TENANT

        This Third Amendment to Lease is entered into and made as of this 29TH
DAY of DECEMBER 1998, by and between CASIOPEA VENTURE CORPORATION ("LANDLORD")
and VIRAGE INC. ("TENANT"), with respect to the following facts:

        A. Whereas, Landlord and Tenant have heretofore entered into that
certain lease, dated January 17, 1996, (the "Original Lease") under which
Landlord leased to Tenant that certain space containing 5,674 rentable square
feet commonly known as 177 Bovet Road, Suite 520 in San Mateo, California (the
"Initial Premises"), which was amended on March 20, 1997 (the "First Amendment")
for that certain space containing 4,134 rentable square feet commonly known as
177 Bovet Road, Suite 575 (the "Expansion Space") and 2,997 rentable square feet
commonly known as 155 Bovet Road, Suite 303 (the "Additional Space") in San
Mateo, California, and on October 17, 1997 (the "Second Amendment"),
collectively herein referred to as the "Lease", upon terms and conditions
described in said Lease;

        B. Whereas, Landlord and Tenant desires to amend said Lease as described
below:

        NOW THEREFORE, in consideration of the Premises, and of the rents
reserved and of the covenants and agreements herein set forth, it is agreed that
the Lease is hereby amended from and after the date hereof as follows:

        1. Premises.

            (a) Section 1.1(c) entitled "Premises" shall be modified to include
that certain space containing 5,461 rentable square feet commonly known as 177
Bovet Road, Suite 350 in San Mateo, California (the "Relocation Premises").

            (b) Section 1.1(c) entitled "Premises" shall be reduced by that
certain space containing 2,997 rentable square feet commonly known as 155 Bovet
Road, Suite 303 in San Mateo, California (the "Terminated Premises").

            (c) The Entire Premises will include the Initial Premises, the
Expansion Premises, and the Relocation Premises for a total of 15,269 rentable
square feet.

        2. Term.

            (a) Section 1.1(d) entitled "Term" for the Relocation Premises shall
commence on March 1, 1999, or upon substantial completion of the tenant
improvements, whichever is sooner (the "Relocation Commencement Date"), and
terminate on May 31, 2002 (the "Termination Date").

                                        1
<PAGE>   89
            (b) Section 1.1(d) entitled "Term" shall be modified such that the
termination date for the Terminated Premises shall be effective as of the
commencement date of the Relocation Premises.

        3. Monthly Rent.

            (a) Section 1.1 (e) entitled "Monthly Rent" for the Relocation
Premises shall be as follows:

<TABLE>
<CAPTION>
PERIOD                                             RATE PSF/MO           MONTHLY RENT
-------------------------------------------------------------------------------------
<S>                                                <C>                   <C>
Relocation Commencement Date-05/31/2000            $3.35                 $18,294.35
06/01/2000-05/31/2001                              $3.45                 $18,840.45
06/01/2001-05/31/2002                              $3.55                 $19,386.55
</TABLE>

        4. Section 1.1(f) entitled "Deposit" shall be $19,387.00 for the
Relocation Premises. Landlord currently holds Tenant's security deposit of
$7,792.00 for the Terminated Premises; such amount shall be transferred and
applied to the security deposit for the Relocation Premises, leaving a balance
due in the amount of $11,595.00, which amount shall be paid to the Landlord upon
execution of this Third Amendment.

        5. Section 1.1(h) entitled "Tenant's Percentage Share" shall be amended
to 6.16% for the Initial Premises, 4.49% for the Expansion Premises, and 5.93%
for the Relocation Premises; or 16.58% for the Entire Premises.

        6. Section 1.1(i) entitled "Base Years" for the Relocation Premises
shall be such that the Base Expense Year for Operating Expenses shall be
calendar year 1999, and the Base Tax Year shall be the fiscal tax year
1999-2000.

        7. Section 1.1(k) entitled "Vehicle Parking Privileges Allocated to
Tenant" shall be amended to 51 parking stalls for the Entire Premises. During
the term of the Lease, Tenant shall have the option of obtaining additional
temporary monthly parking permits, on an as available basis, at a nominal fee of
$5.00 per additional monthly permit.

        8. Tenant Improvements for Relocation Premises. In consideration for
this expansion and relocation, Landlord shall complete the tenant improvements
per the attached Preliminary Space Plan (attached hereto as Exhibit A),
including without limitation design, engineering, permitting and consulting fees
(collectively the "Tenant Improvement Costs"), however Landlord's contribution
towards such tenant improvements shall not exceed $5.00 per square foot or
$27,305.00 for the entire Relocation Premises. Landlord and Tenant acknowledge
that the tenant improvements contemplated in the Preliminary Space Plan will
exceed Landlord's contribution.

        Tenant shall be responsible for the amount (Over Contribution Amount)
equal to the difference between (i) the amount of the cost proposal to complete
such improvements, and (ii) the amount of Landlord's contribution. Prior to the
commencement of construction, Tenant shall deliver to Landlord an amount equal
to 50% of the Over Contribution Amount; the remaining 50% shall be payable from
the Tenant to the Landlord upon final completion of the

                                        2
<PAGE>   90

improvements. In the event that, any revisions, changes or substitutions shall
be made to the Tenant Improvements, 50% of any additional costs shall be paid by
Tenant to Landlord immediately upon Landlord's request as an addition to the
Over Contribution Amount, with the remaining 50% payable upon completion of the
improvements. The combination of Landlord and Tenant's contribution shall be
used for payment of the following Tenant Improvement Costs:

            (a) Preparation by Landlord's Architect of the Construction Working
Drawings, including without limitation all fees charged by City (including
without limitation fees for building permits, and plan checks) in connection
with the Tenant Improvement work in the Premises:

            (b) Demolition and construction work for completion of the Tenant
Improvements;

            (c) All contractor's charges, general conditions, performance bonds
premiums and construction fees;

            (d) Tenant Improvements as shown on the approved Preliminary Space
Plan attached hereto as Exhibit A;

            (e) Excluding the cost of telecom or computer wiring (temporary and
permanent), furniture, furniture installation, power poles or whips which
connect to partition furniture, moving, storage and relocation expense; and
Construction management fee of 5%.

        In the event that Tenant does request modifications, changes or
alterations of the Tenant Improvements from what is shown on said Preliminary
Space Plan, or causes any delay, then all associated costs shall be home by
Tenant. If Tenant does seek to modify, change or alter the Tenant Improvements
from the Preliminary Space Plan or does cause a delay, Tenant shall pay to
Landlord any excess costs resulting therefrom in accordance with this Section 8.

        9. During the term of the Lease, Tenant shall have the option to install
a satellite dish or antennae on the roof, at a rate of $300.00 per month per
satellite dish / antennae, subject to Landlord's standard antennae license
agreement.

                                        3
<PAGE>   91

        Except as set forth above, all terms, provisions, covenants and
conditions of the Lease shall remain unchanged and in full force and effect, and
the same are hereby ratified and confirmed, as of the date first set forth
above.

LANDLORD                                 TENANT

Casiopea Venture Corporation             Virage, Inc.
By:     Rim Pacific Management Inc.      a California Corporation
Its:    Authorized Agent

/s/ Jonathan J. Feucht                   /s/ Paul Lego
-------------------------------------    ---------------------------------------
By:     Jonathan J. Feucht               By:     Paul Lego
Its:    Managing Director                Its:    President
Date:   January 19, 1999                 Date:   January 15, 1999

                                         /s/ Frank Pao
                                         ---------------------------------------
                                         By:     Frank Pao
                                         Its:    Secretary
                                         Date:   January 13, 1999

                                        4
<PAGE>   92

                            FOURTH AMENDMENT TO LEASE
                                 BY AND BETWEEN
                    CASIOPEA VENTURE CORPORATION, AS LANDLORD
                                       AND
                             VIRAGE, INC., AS TENANT

        This Third Amendment to Lease is entered into and made as of this 27TH
day of JULY, 1999, by and between CASIOPEA VENTURE CORPORATION ("LANDLORD") and
VIRAGE, INC. ("TENANT"), with respect to the following facts:

        A. Whereas, Landlord and Tenant have heretofore entered into that
certain lease, dated January 17, 1996, (the "Original Lease") under which
Landlord leased to Tenant that certain space containing 5,674 rentable square
feet commonly known as 177 Bovet Road, Suite 520 in San Mateo, California (the
"Initial Premises"), which was amended on March 20, 1997 (the "First Amendment")
for that certain space containing 4,134 rentable square feet commonly known as
177 Bovet Road, Suite 575 (the "Expansion Space") and 2,997 rentable square feet
commonly known as 155 Bovet Road, Suite 303 (the "Additional Space") in San
Mateo, California, and on October 17, 1997 (the "Second Amendment"), and 5,461
rentable square feet commonly known as 177 Bovet Road, Suite 350 (the
"Relocation Premises") in San Mateo, California which was amended on December
29, 1998 (the "Third Amendment"), collectively herein referred to as the
"Lease", upon terms and conditions described in said Lease;

        B. Whereas, Landlord and Tenant desires to amend said Lease as described
below:

        NOW THEREFORE, in consideration of the Premises, and of the rents
reserved and of the covenants and agreements herein set forth, it is agreed that
the Lease is hereby amended from and after the date hereof as follows:

        1. Premises.

            (a) Section 1.1(c) entitled "Premises" shall be modified to include
that certain space containing 2,740 rentable square feet commonly known as 177
Bovet Road, Suite 550 in San Mateo, California (the "Second Expansion
Premises").

            (b) The Entire Premises will include the Initial Premises, the
Expansion Premises, and the Relocation Premises, and the Second Expansion
Premises for a total of 18,009 rentable square feet.

        2. Term.

            (a) Section 1.1(d) entitled "Term" for the Second Expansion Premises
shall commence on October 1, 1999, or upon substantial completion of the tenant
improvements, whichever is sooner (the "Second Expansion Commencement Date"),
and terminate on May 31, 2002 (the "Termination Date").

                                       1
<PAGE>   93

        3. Monthly Rent.

               (a) Section 1.1(e) entitled "Monthly Rent" for the Second
Expansion Premises shall be as follows:

<TABLE>
<CAPTION>
PERIOD                                          RATE PSF/MO            MONTHLY RENT
-----------------------------------------------------------------------------------
<S>                                            <C>                    <C>
Second Expansion
Commencement Date-05/31/2000                    $3.35                  $ 9,179.00
06/01/2000-05/31/2001                           $3.45                  $ 9,453.00
06/01/2001-05/31/2002                           $3.55                  $ 9,727.00
</TABLE>

        4. Section 1.1(f) entitled "Deposit" shall be $9,727.00 for the Second
Expansion Premises.

        5. Section 1.1(h) entitled "Tenant's Percentage Share" shall be amended
to 6.16% for the Initial Premises, 4.49% for the Expansion Premises, 5.93% for
the Relocation Premises, and 3% for the Second Expansion Premises or 19.580/o
for the Entire Premises.

        6. Section 1.1(i) entitled "Base Years" for the Second Expansion
Premises shall be such that the Base Expense Year for Operating Expenses shall
be calendar year 1999, and the Base Tax Year shall be the fiscal tax year
1999-2000.

        7. Section 1.1(k) entitled "Vehicle Parking Privileges Allocated to
Tenant" shall be amended to 60 parking stalls for the Entire Premises. During
the term of the Lease, Tenant shall have the option of obtaining additional
temporary monthly parking permits, on an as available basis, at a nominal fee of
$5.00 per additional monthly permit.

        8. Tenant Improvements for Relocation Premises. In consideration for
this expansion, Landlord shall complete the tenant improvements per the attached
Preliminary Space Plan (attached hereto as Exhibit A), including without
limitation design, engineering, permitting and consulting fees (collectively the
"Tenant Improvement Costs"), however Landlord's contribution towards such tenant
improvements shall not exceed $3.00 per square foot or $8,220.00. Landlord and
Tenant acknowledge that the tenant improvements contemplated in the Preliminary
Space Plan will exceed Landlord's contribution.

        Tenant shall be responsible for the amount (Over Contribution Amount)
equal to the difference between (i) the amount of the cost proposal to complete
such improvements, and (ii) the amount of Landlord's contribution. Prior to the
commencement of construction, Tenant shall deliver to Landlord an amount equal
to 50% of the Over Contribution Amount; the remaining 50% shall be payable from
the Tenant to the Landlord upon final completion of the improvements. In the
event that, any revisions, changes or substitutions shall be made to the Tenant
Improvements, 50% of any additional costs shall be paid by Tenant to Landlord
immediately upon Landlord's request as an addition to the Over Contribution
Amount, with the remaining 50% payable upon completion of the improvements. The
combination of Landlord and Tenant's contribution shall be used for payment of
the following Tenant Improvement Costs:

                                       2
<PAGE>   94
            (a) Preparation by Landlord's Architect of the Construction Working
Drawings, including without limitation all fees charged by City (including
without limitation fees for building permits, and plan checks) in connection
with the Tenant Improvement work in the Premises:

            (b) Demolition and construction work for completion of the Tenant
Improvements;

            (c) All contractor's charges, general conditions, performance bonds
premiums and construction fees;

            (d) Tenant Improvements as shown on the approved Preliminary Space
Plan attached hereto as Exhibit A;

            (e) Excluding the cost of telecom or computer wiring (temporary and
permanent), furniture, furniture installation, power poles or whips which
connect to partition furniture, moving, storage and relocation expense; and

            (f) Construction management fee of 5%.

        In the event that Tenant does request modifications, changes or
alterations of the Tenant Improvements from what is shown on said Preliminary
Space Plan, or causes any delay, then all associated costs shall be borne by
Tenant. If Tenant does seek to modify, change or alter the Tenant Improvements
from the Preliminary Space Plan or does cause a delay, Tenant shall pay to
Landlord any excess costs resulting therefrom in accordance with this Section 8.

        Except as set forth above, all terms, provisions, covenants and
conditions of the Lease shall remain unchanged and in full force and effect, and
the same are hereby ratified and confirmed, as of the date first set forth
above.

LANDLORD                                   TENANT

Casiopea Venture Corporation               Virage, Inc.
By:     Rim Pacific Management Inc.        a California Corporation
Its:    Authorized Agent

/s/ Jonathan J. Feucht                     /s/ Paul Lego
---------------------------------------    -------------------------------------
By:     Jonathan J. Feucht                 By:     Paul Lego
Its:    Managing Director                  Its:    President
Date:   September 10, 1999                 Date:   August 30, 1999

                                           /s/ Frank Pao
                                           -------------------------------------
                                           By:     Frank Pao
                                           Its:    Secretary
                                           Date:   August 30, 1999

                                       3
<PAGE>   95

                            FIFTH AMENDMENT TO LEASE
                                 BY AND BETWEEN
                    CASIOPEA VENTURE CORPORATION, AS LANDLORD
                                       AND
                             VIRAGE, INC., AS TENANT

        This Fifth Amendment to Lease is entered into and made as of this 22ND
day of NOVEMBER 1999, by and between CASIOPEA VENTURE CORPORATION ("LANDLORD")
and VIRAGE, INC. ("TENANT"), with respect to the following facts:

        A. Whereas, Landlord and Tenant have heretofore entered into that
certain lease, dated January 17, 1996, (the "Original Lease") under which
Landlord leased to Tenant that certain space containing 5,674 rentable square
feet commonly known as 177 Bovet Road, Suite 520 in San Mateo, California (the
"Initial Premises"), which was amended on March 20, 1997 (the "First Amendment")
for that certain space containing 4,134 rentable square feet commonly known as
177 Bovet Road, Suite 575 (the "Expansion Space") and 2,997 rentable square feet
commonly known as 155 Bovet Road, Suite 303 (the "Additional Space") in San
Mateo, California, and on October 17, 1997 (the "Second Amendment"), and 5,461
rentable square feet commonly known as 177 Bovet Road, Suite 350 (the
"Relocation Premises") in San Mateo, California which was amended on December
29, 1998 (the "Third Amendment"), and for that certain space containing 2,740
rentable square feet commonly known as 177 Bovet. Road, Suite 550 (the "Second
Expansion Premises") in San Mateo, California which was amended on July 27, 1999
(the "Fourth Amendment"), collectively herein referred to as the "Lease", upon
terms and conditions described in said Lease;

        B. Whereas, Landlord and Tenant desires to amend said Lease as described
below:

        NOW THEREFORE, in consideration of the Premises, and of the rents
reserved and of the covenants and agreements herein set forth, it is agreed that
the Lease is hereby amended from and after the date hereof as follows:

        1. Premises.

            (a) Section 1.1(c) entitled "Premises" shall be modified to include
that certain space containing 2,661 rentable square feet commonly known as 177
Bovet Road, Suite 150 in San Mateo, California (the "Third Expansion Premises").

            (b) The Entire Premises will include the Initial Premises, the
Expansion Premises, the Relocation Premises, the Second Expansion Premises, and
the Third Expansion Premises for a total of' 20,670 rentable square feet.

        2. Term.

            (a) Section 1.1(d) entitled "Term" for the Third Expansion Premises
shall commence on February 1, 2000, or upon substantial completion of the tenant
improvements, whichever is sooner (the "Third Expansion Commencement Date"), and
terminate on May 31, 2002 (the "Termination Date").

                                        1
<PAGE>   96

        3. Monthly Rent.

            (a) Section 1.1(e) entitled "Monthly Rent" for the Third Expansion
Premises shall be as follows:

<TABLE>
<CAPTION>
PERIOD                            RATE PSF/MO                     MONTHLY RENT
------------------------------------------------------------------------------
<S>                              <C>                             <C>
02/01/2000 - 01/31/2001           $3.35                           $ 8,914.35
02/01/2001 - 01/31/2002           $3.45                           $ 9,180.45
02/01/2002 - 05/31/2002           $3.55                           $ 9,446.55
</TABLE>

        4. Section 1.1(f) entitled "Deposit" shall be $9,446.55 for the Third
Expansion Premises.

        5. Section 1.1(h) entitled "Tenant's Percentage Share" shall be amended
to 6.16% for the Initial Premises, 4.49% for the Expansion Premises, 5.93% for
the Relocation Premises, 3% for the Second Expansion Premises, and 2.85% for the
Third Expansion Premises or 22.43% for the Entire Premises.

        6. Section 1.1(i) entitled "Base Years" for the Third Expansion Premises
shall be such that the Base Expense Year for Operating Expenses shall be
calendar year 2000, and the Base Tax Year shall be the fiscal tax year
1999-2000.

        7. Section 1.1(k) entitled "Vehicle Parking Privileges Allocated to
Tenant" shall be amended to 69 parking stalls for the Entire Premises. During
the term of the Lease, Tenant shall have the option of obtaining additional
temporary monthly parking permits, on an as available basis, at a nominal fee of
$5.00 per additional monthly permit.

        8. Tenant Improvements for Relocation Premises. In consideration for
this expansion, Landlord shall complete the tenant improvements to be provided
after Tenant meets with the architectural firm of S. J. Sung on Wednesday,
November 24, 1999 including without limitation design, engineering, permitting
and consulting fees (collectively the "Tenant Improvement Costs"), however
Landlord's contribution towards such tenant improvements shall not exceed $3.50
per square foot or $9,313.50. Landlord and Tenant acknowledge that the tenant
improvements to be contemplated in the Preliminary Space Plan will exceed
Landlord's contribution. Landlord acknowledges that all costs associated with
recapturing the hallway will be at Landlord's sole cost.

        Tenant shall be responsible for the amount (Over Contribution Amount)
equal to the difference between (i) the amount of the cost proposal to complete
such improvements, and (ii) the amount of Landlord's contribution. Prior to the
commencement of construction, Tenant shall deliver to Landlord an amount equal
to 50% of the Over Contribution Amount; the remaining 50% shall be payable from
the Tenant to the Landlord upon final completion of the improvements. In the
event that, any revisions, changes or substitutions shall be made to the Tenant
Improvements, 50% of any additional costs shall be paid by Tenant to Landlord
immediately upon Landlord's request as an addition to the Over Contribution
Amount, with the remaining 50% payable upon completion of the improvements. The
combination of Landlord and Tenant's contribution shall be used for payment of
the following Tenant Improvement Costs:

                                        2
<PAGE>   97
            (a) Preparation by Landlord's Architect of the Construction Working
Drawings, including without limitation all fees charged by City (including
without limitation fees for building permits, and plan checks) in connection
with the Tenant Improvement work in the Premises:

            (b) Demolition and construction work for completion of the Tenant
Improvements;

            (c) All contractor's charges, general conditions, performance bonds
premiums and construction fees;

            (d) Excluding the cost of telecom or computer wiring (temporary and
permanent), furniture, furniture installation, power poles or whips which
connect to partition furniture, moving, storage and relocation expense; and

            (e) Construction management fee of 5%.

        In the event that Tenant does request modifications, changes or
alterations of the Tenant Improvements from what is shown on Preliminary Space
Plan to be provided, or causes any delay, then all associated costs shall be
home by Tenant. If Tenant does seek to modify, change or alter the Tenant
Improvements from the Preliminary Space Plan or does cause a delay, Tenant shall
pay to Landlord any excess costs resulting therefrom in accordance with this
Section 8.

        Except as set forth above, all terms, provisions, covenants and
conditions of the Lease shall remain unchanged and in full force and effect, and
the same are hereby ratified and confirmed, as of the date first set forth
above.

LANDLORD                                   TENANT

Casiopea Venture Corporation               Virage, Inc.
By:     Rim Pacific Management Inc.        a California Corporation
Its:    Authorized Agent

/s/ Jonathan J. Feucht                     /s/ Paul Lego
---------------------------------------    -------------------------------------
By:     Jonathan J. Feucht                 By:     Paul Lego
Its:    Managing Director                  Its:    President
Date:   November 29, 1999                  Date:
                                                 -------------------------------

                                           /s/ Frank Pao
                                           -------------------------------------
                                           By:     Frank Pao
                                           Its:    Vice President of Business
                                                   Affairs and General Counsel
                                           Date:   November 23, 1999

                                       3<PAGE>   1
                                                                   EXHIBIT 10.6

                          STANDARD FORM OF OFFICE LEASE
                     THE REAL ESTATE BOARD OF NEW YORK, INC.

        AGREEMENT OF LEASE, made as of this 15th day of November, 1999, between
1995 CAM LP, a New York Partnership, c/o Cammeby's International, 42 Broadway,
New York, New York 10004 party of the first part, hereinafter referred to as
OWNER, and Virage, Inc., California corporation having an office at 1120 6th
Ave. New York, New York party of the second part, hereinafter referred to as
TENANT,

                                   WITNESSETH:

        Owner hereby leases to Tenant and Tenant hereby hires from Owner Suite
502 in the Building known as 1995 Broadway, Borough of Manhattan, City of New
York for the term of 5 YEARS (or until such term shall sooner cease and expire
as hereinafter provided) to commence on the 1st day of April, TWO THOUSAND and
to end on the thirty-first day of March, TWO THOUSAND FIVE both dates inclusive.

        Effective April 1, 2000, the basic annual rent payable by Tenant under
the lease shall be One Hundred Ninety Seven Thousand Six Hundred and 00/100
Dollars ($197,600) per annum for the period from April 1, 2000 through March 31,
2001; Two Hundred Three Thousand Five Hundred Twenty Eight and 00/100 Dollars
($203,528) per annum for the period from April 1, 2001 through March 31, 2002;
Two Hundred Nine Thousand Six Hundred Thirty Three and 84/100 Dollars
($209,633.84) per annum for the period from April 1, 2002 through March 31,
2003; Two Hundred Fifteen Thousand Nine Hundred Twenty Two and 85/100 Dollars
($215,922.85) per annum for the period from April 1, 2003 through March 31.
2004; Two Hundred Twenty Two Thousand Four Hundred and 53/100 Dollars
($222,400.53) per annum for the period from April 1, 2004 through March 31,
2005, all payable in equal monthly installments due on the first of each month,
which Tenant agrees to pay in lawful money of the United States which shall be
legal tender in payment of all debts and dues, public and private, at the time
of payment, in equal monthly installments in advance on the first day of each
month during said term, at the office of Owner or such other place as Owner may
designate, without any set off or deduction whatsoever, except that the Tenant
shall pay the first monthly installments on the execution hereof (unless this
Lease be a renewal).

        In the event that, at the commencement of the term of this Lease, or
thereafter, Tenant shall be in default in the payment of rent to Owner pursuant
to the terms of another Lease with Owner or with Owner's predecessor in
interest, Owner may at Owner's option and without notice to Tenant add the
amount of such arrears to any monthly installment of rent payable hereunder and
the same shall be payable to Owner as additional rent.

        The parties hereto, for themselves, their heirs. distributees,
executors, administrators, Legal representatives, successors and assigns, hereby
covenant as follows:

<PAGE>   2

        1. RENT OCCUPANCY. Tenant shall pay the rent as above and as hereinafter
provided.

        2. Tenant shall use and occupy Demised Premises for executive and
administrative offices in connection with Tenant's business and for no other
purpose.

        3. TENANT ALTERATIONS. Tenant shall make no changes in or to the Demised
Premises of any nature without Owner's prior written consent. Subject to the
prior written consent of Owner, and to the provisions of this Article, Tenant at
Tenant's expense, may make alterations, installations, additions or improvements
which are nonstructural and which do not affect utility services or plumbing and
electrical lines, on or to the interior of the Demised Premises by using
contractors or mechanics first approved by Owner. Tenant shall, before making
any alterations, additions, installations or improvements, at its expense,
obtain all permits, approvals and certificates required by any government or
quasi-governmental bodies and (upon completion) certificates of final approval
thereof and shall deliver promptly duplicates of all such permits, approvals and
certificates to Owner and Tenant agrees to carry and will cause Tenant's
contractors and subcontractors to carry such workman's compensation, general
liability, personal and property damage insurance as Owner may require. If any
mechanic's lien is filed against the Demised Premises, or the Building of which
the same forms a part, for work claimed to have been done for, or materials
furnished to, Tenant, whether or not done pursuant to this Article, the same
shall be discharged by Tenant within thirty days thereafter, at Tenant's
expense, by filing the bond required by law. All fixtures and all paneling,
partitions, railings and like installations, installed in the premises at any
time, either by Tenant or by Owner in Tenant's behalf, shelf, upon installation,
become the property of Owner and shall remain upon and be surrendered with the
Demised Premises unless Owner, by notice to Tenant no later than twenty days
prior to the date fixed as termination of this Lease, elects to relinquish
Owner's right thereto and to have them removed by Tenant, in which event the
same shall be removed from the premises by Tenant prior to the expiration of the
Lease, at Tenant's expense, Nothing in this Article shall be construed to give
Owner title to or to prevent Tenant's removal of trade fixtures, moveable office
furniture and equipment, but upon removal of any such from the premises or upon
removal of other installations as may be required by Owner, Tenant shall
immediately and at its expense, repair and restore the premises to the condition
existing prior to installation and repair any damage to the Demised Premises or
the Building due to such removal. All property permitted or required to be
removed, by Tenant at the end of the term remaining In the premises after
Tenant's removal shall be deemed abandoned and may, at the election of Owner,
either be retained as Owner's property or may be removed from the premises by
Owner, at Tenant's expense.

        4. MAINTENANCE AND REPAIRS. Tenant shall, throughout the term of this
Lease, take good care of the Demised Premises and the fixtures and appurtenances
therein. Tenant shall be responsible for all damage or injury to the Demised
Premises or any other part of the Building, the systems and equipment thereof,
whether requiring structural or nonstructural repairs caused by or resulting
from carelessness, omission, neglect or improper conduct of Tenant, Tenant's
subtenants, agents, employees, invitees or licenses, or which arise out of any
works labor, service or equipment done for or supplied to Tenant or any
subtenant or arising out of the installation, use or operation of the property
or equipment of Tenant or any subtenant. Tenant shall also repair all damage to
the Building and the Demised Premises caused by the moving Tenant's fixtures,
furniture and equipment. Tenant shall promptly make, at Tenant's expense, all
repairs

                                       2
<PAGE>   3

in and to the Demised Premises for which Tenant is responsible, using only the
contractor for the trade or trades in question, selected from a list of at least
two contractors per trade submitted by Owner. Any other repairs in or to the
Building or the facilities and systems thereof for which Tenant is responsible
shall be performed by Owner at the Tenant's expense. Owner shall maintain in
good working order and repair the exterior and the structural portions of the
Building, including the structural portions of its Demised Premises, and the
public portions of the Building interior and the Building plumbing, electric,
heating and ventilating systems (to the extent such systems presently exist)
serving the Demised Premises. Tenant agrees to give prompt notice of any
defective condition in the premises for which Owner may be responsible
hereunder. There shall be no allowance to Tenant for diminution of rental value
and no liability on the part of Owner by reason of inconvenience, annoyance or
injury to business arising from Owner or others making repairs, alterations,
additions or improvements in or to any portion of the Building or the Demised
Premises or in and to the fixtures, appurtenances or equipment thereof. It is
specifically agreed that Tenant shall not be entitled to any setoff or reduction
of rent by reason of any failure of Owner to comply with the covenants of this
or any other Article of this Lease. Tenant agrees that Tenant's sole remedy at
law in such instance will be by way of an action for damages for breach of
contract. The provisions of this Article 4 shall not apply in the case of fire
or other casualty which are dealt within Article 9 hereof.

        5. WINDOW CLEANING. Tenant will not clean nor require, permit, suffer or
allow any window in the Demised Premises to be cleaned from the outside in
violation of Section 202 of the Labor Law or any other applicable law or of the
Rules of the Board of Standards and Appeals, or of any other Board or body
having or asserting jurisdiction.

        6. REQUIREMENTS OF LAW, FIRE INSURANCE, FLOOR LOADS. Prior to the
commencement of the Lease term, if Tenant is then in possession and at all times
thereafter, Tenant, at Tenant's sole cost and expense, shall promptly comply
with all present and future laws, orders and regulations of all state, federal,
municipal and local governments, departments, commissions and boards and any
direction of any public officer pursuant to law, and all orders, rules and
regulations of the New York Board of Fire Underwriters, Insurance Services
Office, or any similar body which shall impose any violation, order or duty upon
Owner or Tenant with respect to the Demised Premises, whether or not arising out
of Tenant's use or manner of use thereof, (including Tenant's permitted use) or,
with respect to the Building if arising out of Tenant's use or manner of use of
the premises or the Building (including the use permitted under the Lease).
Nothing herein shall require Tenant to make structural repairs or alteration
unless Tenant has, by its manner of use of the Demised Premises or method of
operation therein, violated any such laws, ordinances, orders, rules,
regulations or requirements with respect thereto. Tenant may, after securing
Owner to Owner's satisfaction against all damages, interest, penalties and
expenses, including, but not limited to, reasonable attorney's fees, by cash
deposit or by surety bond in an amount and in a company satisfactory to Owner,
contest and appeal any such laws, ordinances, orders rules, regulations or
requirements provided same is done with all reasonable promptness and provided
such appeal shall not subject Owner to prosecution for a criminal offense or
constitute a default under any Lease or mortgage under which Owner may be
obligated, or cause the Demised Premises or any part thereof to be condemned or
vacated. Tenant shall not do or permit any act or thing to be done in or to the
Demised Premises which is contrary to law, or which will invalidate or be in
conflict with public liability, fire or other policies of insurance at any time
carried by or for the benefit of Owner with respect to the

                                       3
<PAGE>   4

Demised Premises or the Building of which the Demised Premises form a part, or
which shall or might subject Owner to any liability or responsibility to any
person or for property damage. Tenant shall not keep anything in the Demised
Premises except as now or hereafter permitted by the Fire Department, Board of
Fire Underwriters, Fire Insurance Rating Organization or other authority having
jurisdiction, and then only in such manner and such quantity so as not to
increase the rate for fire insurance applicable to the Building, nor use the
premises in a manner which will increase the insurance rate for the Building or
any property located therein over that in effect prior to the commencement of
Tenant's occupancy. Tenant shall pay all costs, expenses, fines, penalties, or
damages, which may be imposed upon Owner by reason of Tenant's failure to comply
with the provisions of this Article and if by reason of such failure the fire
insurance rate shall, at the beginning of this Lease or at any time thereafter,
be higher than it otherwise would be, then Tenant shall reimburse Owner, as
additional rent hereunder, for that portion of all fire insurance premiums
thereafter paid by Owner which shall have been charged because of such failure
by Tenant. In any action or proceeding wherein Owner and Tenant are parties, a
schedule or "make-up" of rate for the Building or Demised Premises issued by the
New York Fire Insurance Exchange, or other body making fire insurance rates
applicable to said premises shall be conclusive evidence of the facts therein
stated and of the several items and charges in the fire insurance rates then
applicable to said premises. Tenant shall not place a load upon any floor of the
Demised Premises exceeding the floor load per square foot area which it was
designed to carry and which is allowed by law. Owner reserves the right to
prescribe the weight and position of all safes, business machines and mechanical
equipment. Such installations shall be placed and maintained by Tenant, at
Tenant's expense, in settings sufficient, in Owner's judgment, to absorb and
prevent vibration, noise and annoyance.

        7. SUBORDINATION. This Lease is subject and subordinate to all ground or
underlying leases and to all mortgages which may now or hereafter affect such
leases or the real property of which Demised Premises are a part and to all
renewals, modifications, consolidations. replacements and extensions of any such
underlying Leases and mortgages. This clause shall be self-operative and no
further instrument of subordination shall be required by any ground or
underlying lessor or by any mortgagee, affecting any Lease or the real property
of which the Demised Premises are a part. In confirmation of such subordination,
Tenant shall execute promptly any certificate that Owner may request.

        8. PROPERTY LOSS, DAMAGE, REIMBURSEMENT INDEMNITY. Owner or its agents
shall not be liable for any damage to property of Tenant or of others entrusted
to employees of the Building, nor for loss of or damage to any property of
Tenant by theft or otherwise, nor for any injury or damage to persons or
property resulting from any cause of whatsoever nature, unless caused by or due
to the negligence of Owner, its agents, servants or employees. Owner or its
agents will not be liable for any such damage caused by other tenants or persons
in, upon or about said Building or caused by operations in construction of any
private, public or quasi-public work.

        If at any time any windows of the Demised Premises are temporarily
closed, darkened or bricked up (or permanently closed, darkened or bricked up,
if required by law) for any reason whatsoever including, but not limited to
Owner's own acts, Owner shall not be liable for any damage Tenant may sustain
thereby and Tenant shall not be entitled to any compensation therefor nor
abatement or diminution of rent nor shall the same release Tenant from its

                                       4

<PAGE>   5
obligations hereunder nor constitute an eviction. Tenant shall indemnify and
save harmless Owner against and from all liabilities, obligations, damages,
penalties, claims, costs and expenses for which Owner shall not be reimbursed by
insurance, including reasonable attorney's fees, paid, suffered or incurred as a
result of any breach by Tenant, Tenant's agents, contractors, employees.
invitees, or licensees, of any covenant or condition of this Lease, or the
carelessness, negligence or improper conduct of the Tenant, Tenant's agents,
contractors, employees, invitees, or licensees. Tenant's liability under this
Lease extends to the acts and omissions of any subtenant, and any agent,
contractor, employee, invitee or licensee of any subtenant. In case any action
or proceeding is brought against Owner by reason of any such claim, Tenant. upon
written notice from Owner, will, at Tenant's expense, resist or defend such
action or proceeding by counsel approved by Owner in writing, such approval not
to be unreasonably withheld.

        9.     DESTRUCTION, FIRE AND OTHER CASUALTY.

               a. If the Demised Premises or any part thereof shall be damaged
by fire or other casualty, Tenant shall give immediate notice thereof to Owner
and this Lease shall continue in full force and effect except as hereinafter set
forth.

               b. If the Demised Premises are partially damaged or rendered
partially unusable by fire or other casualty, the damages thereto shall be
repaired by and at the expense of Owner and the rent, until such repair shall be
substantially completed, shall be apportioned from the day following the
casualty according to the part of the premises which is usable.

               c. If the Demised Premises are totally damaged or rendered wholly
unusable by fire or other casualty, then the rent shall be proportionately paid
up to the time of the casualty and thenceforth shall cease until the date when
the premises shall have been repaired and restored by Owner, subject to Owner's
right to elect not to restore the same as hereinafter provided.

               d. If the Demised Premises are rendered wholly unusable or
(whether or not the Demised Premises are damaged in whole or in part) if the
Building shall be so damaged that Owner shall decide to demolish it or to
rebuild it, then, in any of such events, Owner may elect to terminate this Lease
by written notice to Tenant, given within 90 days after such fire or casualty,
specifying a date for the expiration of the Lease, which date shall not be more
than 60 days after the giving of such notice, and upon the date specified in
such notice the term of this Lease shall expire as fully and completely as if
such date were the date set forth above for the termination of this Lease and
Tenant shall forthwith quit, surrender and vacate the premises without prejudice
however, to Owner's rights and remedies against Tenant under the Lease
provisions in effect prior to such termination, and any rent owing shall be paid
up to such date and any payments of rent made by Tenant which were on account of
any period subsequent to such date shall be returned to Tenant. Unless Owner
shall serve a termination notice as provided for herein, Owner shall make the
repairs and restorations under the conditions of (b) and (c) hereof, with all
reasonable expedition, subject to delays due to adjustment of insurance claims,
labor troubles and causes beyond Owner's control. After any such casualty,
Tenant shall cooperate with Owner's restoration by removing from the promises as
promptly as reasonably possible, all of Tenant's salvageable inventory and
movable equipment, furniture, and other property. Tenant's

                                       5
<PAGE>   6
liability for rent shall resume five (5) days after written notice from Owner
that the premises are substantially ready for Tenant's occupancy.

               e. Nothing contained hereinabove shall relieve Tenant from
liability that may exist as a result of damage from fire or other casualty.
Notwithstanding the foregoing, each party shall look first to any insurance in
its favor before making any claim against the other party for recovery for loss
or damage resulting from fire or other casualty, and to the extent that such
insurance is in force and collectible and to the extent permitted by law, Owner
and Tenant each hereby releases and waives all right of recovery against the
other of any one claiming through or under each of them by way of subrogation or
otherwise. The foregoing release and waiver shall be in force only if both
releasers' insurance policies contain a clause providing that such a release or
waiver shall not invalidate the insurance. If, and to the extent that, such
waiver can be obtained only by the payment of additional premiums. then the
party benefiting from the waiver shall pay such premium with ten (10) days after
written demand or shall be deemed to have agreed that the party obtaining
insurance coverage shall be free of any further obligation under the provisions
hereof with respect to waiver of subrogation. Tenant acknowledges that Owner
will not carry insurance on Tenant's furniture and/or furnishings or any
fixtures or equipment, improvements, or appurtenances removable by Tenant and
agrees that Owner will not be obligated to repair any damage thereto or replace
the same.

               f. Tenant hereby waives the provisions of Section 227 of the Real
Property Law and agrees that the provisions of this Article shall govern and
control in lieu thereof.

        10. EMINENT DOMAIN. If the whole or any part of the Demised Premises
shall be acquired or condemned by Eminent Domain for any public or quasi public
use or purpose. then and in that event, the term of this Lease shall cease and
terminate from the date of title vesting in such proceeding and Tenant shall
have no claim for the value of any unexpired term of said Lease and assigns to
Owner, Tenant's entire interest in any such award.

        11. ASSIGNMENT, MORTGAGE, ETC. Tenant, for itself, its heirs,
distributees, executors, administrators, legal representatives, successors and
assigns, expressly covenants that it shall not assign, mortgage or encumber this
Agreement, nor underlet or suffer or permit the Demised Premises or any part
thereof to be used by others, without the prior written consent of Owner in each
instance. If this Lease be assigned, or if the Demised Premises or any part
thereof be underlet or occupied by anybody other than Tenant, Owner may, after
default by Tenant, collect rent from the assignee, undertenant or occupant, and
apply the net amount collected to the rent herein reserved, but no such
assignment, underletting, occupant or collection shall be deemed a waiver of
this covenant, or the acceptance of the assignee, undertenant or occupant as
tenant or a release of Tenant from the further performance by Tenant of
covenants on the part of Tenant herein contained. The consent by Owner to an
assignment or underletting shall not in any wise be construed to relieve Tenant
from obtaining the express consent in writing of Owner to any further assignment
or underletting.

        12. ELECTRIC CURRENT. Rates and conditions in respect to submetering or
rent inclusion, as the case may be, to be added in RIDER attached hereto. Tenant
covenants and agrees that at all times its use of electric current shall not
exceed the capacity of existing feeders to the Building or the risers or wiring
installation and Tenant may not use any electrical

                                       6

<PAGE>   7

equipment which, in Owner's opinion, reasonably exercised, will overload such
installations or interfere with the use thereof by other tenants of the
Building. The change at any time of the character of electric service shall in
no wise make Owner liable or responsible to Tenant, for any loss, damages, or
expenses which Tenant may sustain.

        13. ACCESS TO PREMISES. Owner or Owner's agents shall have the right
(but shall not be obligated) to enter the Demised Premises in any emergency at
any time, and, at other reasonable times, to examine the same and to make such
repairs, replacements and improvements as Owner may deem necessary and
reasonably desirable to the Demised Premises or to any other portion of the
Building or which Owner may elect to perform. Tenant shall permit Owner to use
and maintain and replace pipes and conduits in and through the Demised Premises
and to erect new pipes and conduits therein provided they are concealed within
the walls, floor, or ceiling. Owner may, during the progress of any work in the
Demised Premises, take all necessary materials and equipment into said premises
without the same constituting an eviction nor shall the Tenant be entitled to
any abatement of rent while such work is in progress or to any damages by reason
of loss or interruption of business or otherwise. Throughout the term hereof
Owner shall have the right to enter the Demised Premises at reasonable hours for
the purpose of showing the same to prospective purchasers or mortgagees of the
Building, and during the last six months of the term for the purpose of showing
the same to prospective tenants. If Tenant is not present to open and permit an
entry into the premises, Owner or Owner's agents may enter the same whenever
such entry may be necessary or permissible by master key or forcibly and
provided reasonable care is exercised to safeguard Tenant's property. such entry
shall not render Owner or its agents liable therefor, nor in any event shall the
obligations of Tenant hereunder be affected. If during the last month of the
term Tenant shall have removed all or substantially all of Tenant's property
therefrom, Owner may immediately enter, alter, renovate or redecorate the
Demised Premises without limitation or abatement of rent, or incurring liability
to Tenant for any compensation and such act shall have no effect on this Lease
or Tenant's obligations hereunder.

        14. VAULT, VAULT SPACE, AREA. No vaults, vault space or area, whether or
not enclosed or covered, nor within the property line of the Building is leased
hereunder. anything contained in or indicated on any sketch, blue print or plan,
or anything contained elsewhere in this Lease to the contrary notwithstanding.
Owner makes no representation as to the location of the property line of the
Building. All vaults and vault space and all such areas not within the property
line of the Building, which Tenant may be permitted to use and/or occupy, is to
be used and/or occupied under a revocable license, and if any such license be
revoked, or if the amount of such space or area be diminished or required by any
federal, state or municipal authority or public utility, Owner shall not be
subject to any liability nor shall Tenant be entitled to any compensation or
diminution or abatement of rent, nor shall such revocation, diminution or
requisition be deemed constructive or actual eviction. Any tax, fee or charge of
municipal authorities for such vault or area shall be paid by tenant.

        15. OCCUPANCY. Tenant will not at any time use or occupy the Demised
Premises in violation of the certificate of occupancy issued for the Building of
which the Demised Premises is a part. Tenant has inspected the premises and
accepts them as is, subject to the riders annexed hereto with respect to Owner's
work, if any. In any event, Owner makes no representation as to

                                       7

<PAGE>   8

the condition of the premises and Tenant agrees to accept the same subject to
violations, whether or not of record.

        16.    BANKRUPTCY.

               a. Anything elsewhere in the Lease to the contrary
notwithstanding, this Lease may be canceled by Owner by the sending of a written
notice to Tenant within a reasonable time after the happening of any one or more
of the following events: (1) the commencement of a case in bankruptcy or under
the laws of any state naming Tenant as the debtor; or (2) the making by Tenant
of an assignment or any other arrangement for the benefit of creditors under any
state statute. Neither Tenant nor any person claiming through or under Tenant,
or by reason of any statute or order of court, shall thereafter be entitled to
possession of the premises demised but shall forthwith quit and surrender the
premises. If this Lease shall be assigned in accordance with its terms, the
provisions of this article 16 shall be applicable only to the party then owning
Tenant's Interest in this Lessee.

               b. It is stipulated and agreed that in the event of the
termination of this Lease pursuant to (a) hereof, Owner shall forthwith,
notwithstanding any other provisions of this Lease to the contrary, be entitled
to recover from Tenant as and for liquidated damages an amount equal to the
difference between the rent reserved hereunder for the unexpired portion of the
term demised and the fair and reasonable rental value of the Demised Premises
for the same period. In the computation of such damages the difference between
any installment of rent become due hereunder after the date of termination and
the fair and reasonable rental value of the Demised Premises for the period for
which such installment as payable shall be discounted to the date of termination
at the rate of four percent (4%) per annum. If such premises or any part thereof
be re-let by the Owner for the unexpired term of said Lease, or any part
thereof, before presentation of proof of such liquidated damages to court
commission or tribunal, the amount of rent reserved upon such re-letting shall
be deemed to be the fair and reasonable rental value for the part or the whole
of the premises so re-let during the term of the re-letting. Nothing herein
contained shall limit or prejudice the right of the Owner to prove for and
obtain as liquidated damages by reason of such termination, an amount equal to
the maximum allowed by any statute or rule of law in effect at the time when,
and governing the proceedings in which, such damages are to be proved, whether
or not such amount be greater, equal to, or less than the amount of the
difference referred to above.

       17.     DEFAULT.

               a. If Tenant defaults in fulfilling any of the covenants of this
Lease other than the covenants for the payment of rent or additional rent; or if
the Demised Premises becomes vacant or deserted; or if any execution or
attachment shall be issued against Tenant or any of Tenant's property whereupon
the Demised Premises shall be taken or occupied by someone other than Tenant; or
if this Lease be rejected under Section 235 of Title 11 of the U. S. Code
(bankruptcy code); or if Tenant shall fail to move into or take possession of
the premises within fifteen (15) days after the commencement of the term of this
Lease, then, in any one or more of such events, upon Owner serving a written
five (5) days notice upon Tenant specifying the nature of said default and upon
the expiration of said five (5) days, if Tenant shall have failed to comply with
or remedy such default, or if the said default or omission complained of shall
be of a nature

                                       8

<PAGE>   9

that the same cannot be completely cured or remedied within said five (5) day
period, and if Tenant shall not have diligently commenced during such default
within such five (5) day period, and shall not thereafter with reasonable
diligence and in good faith, proceed to remedy or cure such default, the Owner
may serve a written three (3) days' notice of cancellation of this Lease upon
Tenant, and upon the expiration of said three (3) days this Lease and the term
thereunder shall end and expire as fully and completely as if the expiration of
such three (3) day period were the day herein definitely fixed for the end and
expiration of this Lease and the term thereof and Tenant shall then quit and
surrender the Demised Premises to Owner but Tenant shall remain liable as
hereinafter provided.

               b. If the notice provided for in (1) hereof shall have been
given, and the term shall expire as aforesaid; or if Tenant shall make default
in the payment of the rent reserved herein or any item of additional rent herein
mentioned or any part of either or in making any other payment herein required;
then and in any of such events Owner may without notice, re-enter the Demised
Premises either by force or otherwise, and dispossess tenant by summary
proceedings or otherwise, and the legal representative of Tenant or other
occupant of Demised Premises and remove their effects and hold the premises as
if this Lease had not been made, and Tenant hereby waives the service of notice
of intention to reenter or to institute legal proceedings to that end. If Tenant
shall make default hereunder prior to the date fixed as the commencement of any
renewal or extension of this lease, Owner may cancel and terminate such renewal
or extension agreement by written notice.

        18. REMEDIES OF OWNER AND WAIVER OF REDEMPTION. In case of any default,
re-entry, and/or dispossess by summary waiver proceedings or otherwise, (A) the
rent shall become due thereupon and be paid up to the time of such re-entry,
dispossess and/or expiration, (B) Owner may re-let the premises or any part or
parts thereof, either in the name of Owner or otherwise, for a term or terms,
which may at Owner's option be less than or exceed the period which would
otherwise have constituted the balance of the term of this Lease and may grant
concessions or free rent or charge a higher rental than that in this Lease and
/or (C) Tenant or the legal representatives of Tenant shall also pay Owner as
liquidated damages for the failure of Tenant to observe and perform said
Tenant's covenants herein contained, any deficiency between the rent hereby
reserved and/or covenanted to be paid and the net amount, if any, of the rents
collected on account of the Lease or Leases of the Demised Premises for each
month of the period which would otherwise have constituted the balance of the
term of this Lease. The failure of Owner to re-let the premises or any part or
parts thereof shall not release or affect Tenant's liability for damages. In
computing such liquidated damages there shall be added to the said deficiency
such expenses as Owner may incur in connection with re-letting, such as legal
expenses, attorneys' fees, brokerage, advertising and for keeping the Demised
Premises in good order or for preparing the same for re-letting. Any such
liquidated damages shall be paid in monthly installments by Tenant on the rent
day specified in this Lease and any suit brought to collect the amount of the
deficiency for any month shall not prejudice in any way the rights of Owner to
collect the deficiency of any subsequent month by a similar proceeding. Owner,
in putting the Demised Premises in good order or preparing the same for
re-rental may, at Owner's option, make such alterations, repairs, replacements
and/or decorations in the Demised Premises as Owner, in Owner's sole judgment,
considers advisable and necessary for the purpose of re-letting the Demised
Premises, and the making of such alterations, repairs, replacement and/or
decorations shall not operate or be construed to release Tenant from liability
hereunder as

                                        9
<PAGE>   10

aforesaid. Owner shall in no event be liable in any way. Whatsoever for failure
to re-let the Demised Premises or in the event that the Demised Premises are
re-let, for failure to collect the rent thereof under such re-letting, and in no
event shall Tenant be entitled to receive any excess, if any, of such net rents
collected over the sums payable by Tenant to Owner hereunder. In the event of a
breach or threatened breach by Tenant of any of the covenants or provisions
hereof, Owner shall have the right of injunction and the right to invoke any
remedy allowed at law or in equity as if re-entry, summary proceedings and other
remedies were not herein provided for. Mention in this lease of any particular
remedy, shall not preclude Owner from any other remedy, in law or in equity.
Tenant hereby expressly waives any and all rights of redemption granted by or
under any present or future laws in the event of Tenant being evicted or
dispossessed for any cause, or in the event of Owner obtaining possession of
Demised Premises, by reason of the violation by Tenant of any of the covenants
and conditions of this Lease, or otherwise.

        19. FEES AND EXPENSES. If Tenant shall default in the observance or
performance of any term or covenant on Tenant's part to be observed or performed
under or by virtue of any of the terms or provisions in any Article of this
Lease, then, unless otherwise provided elsewhere in this Lease, Owner may
immediately or at any time thereafter and without notice perform the obligation
of Tenant thereunder. If Owner, in connection with the foregoing or in
connection with any default by Tenant in the covenant to pay rent hereunder,
makes any expenditures or incurs any obligations for the payment of money,
including but not limited to attorney's fees, in instituting, prosecuting or
defending any action or proceeding, then Tenant will reimburse Owner for such
sums so paid or obligations incurred with interest and costs. The foregoing
expenses incurred by reason of Tenant's default shall be deemed to be additional
rent hereunder and shall be paid by Tenant to Owner within five (5) days of
rendition of any bill or statement to Tenant therefor. If Tenant's Lease term
shall have expired at the time of making of such expenditures or incurring of
such obligations, such sums shall be recoverable by Owner as damages.

        20. BUILDING ALTERATIONS AND MANAGEMENT. Owner shall have the right at
any time without the same constituting an eviction and without incurring
liability to Tenant therefor to change the arrangement and/or location of public
entrances, passageways, doors, doorways, corridors, elevators, stairs, toilets
or other public parts of the Building and to change the name, number or
designation by which the Building may be known. There shall be no allowance to
Tenant for diminution of rental value and no liability on the part of Owner by
reason of inconvenience, annoyance or injury to business arising from Owner or
other Tenants making any repairs in the Building or any such alterations,
additions and improvements. Furthermore, Tenant shall not have any claim against
Owner by reason of Owner's imposition of such controls of the manner of access
to the Building of Tenant's social or business visitors as the Owner may deem
necessary for the security of the Building and its occupants.

        21. NO REPRESENTATIONS BY OWNER. Neither Owner nor Owner's agents have
made any representations or promises with respect to the physical condition of
the Building, the land upon which it is erected or the Demised Premises, the
rents, Leases, expenses of operation or any other matter or thing affecting or
related to the premises except as herein expressly set forth and no rights,
easements or licenses are acquired by Tenant by implication or otherwise except
as expressly set forth in the provisions of this Lease. Tenant has inspected the
Building and the Demised Premises and Tenant is thoroughly acquainted with their
condition and agrees to take the same `as is' and acknowledges that the taking
of possession of the Demised Premises by

                                       10
<PAGE>   11

Tenant shall be conclusive evidence that the said premises and the Building of
which the same form a part were in good and satisfactory condition at the time
such possession was so taken, except as to latent defects. All understandings
and agreements heretofore made between the parties hereto are merged in this
contract, which alone fully and completely expresses the agreement between Owner
and Tenant and any executory agreement hereafter made shall be ineffective to
change, modify, discharge or effect an abandonment of it in whole or in part,
unless such executory agreement is in writing and signed by the party against
whom enforcement of the change, modification, discharge or abandonment is
sought.

        22. END OF TERM. Upon the expiration or other termination of the term of
this Lease, Tenant shall quit and surrender to Owner this Demised Premises,
broom clean, in good order and condition, ordinary wear and damages which Tenant
is not required to repair as provided elsewhere in this Lease excepted, and
Tenant shall remove all its property. Tenant's obligation to observe or perform
this covenant shall survive the expiration or other termination of this Lease.
If the last day of the term of this Lease or any renewal thereof, falls on
Sunday, this Lease shall expire at noon on the preceding Saturday unless it be a
legal holiday in which case it shall expire at noon on the preceding business
day.

        23. QUIET ENJOYMENT. Owner covenants and agrees with Tenant that upon
Tenant paying the rent and additional rent and observing and performing all the
terms, covenants and conditions, on Tenant's part to be observed and performed,
Tenant may peaceably and quietly enjoy the premises hereby demised, subject,
nevertheless, to the terms and conditions of this Lease including, but not
limited to, Article 30 hereof and to the ground leases, underlying leases and
mortgages hereinbefore mentioned.

        24. FAILURE TO GIVE POSSESSION. If Owner is unable to give possession of
the Demised Premises on the date of the commencement of the term hereof, because
of the holding over or retention of possession of any tenant, undertenant or
occupants or if the Demised Promises are located in a Building being
constructed, because such Building has not been sufficiently completed to make
the premises ready for occupancy or because of the fact that a certificate of
occupancy has not been procured or for any other reason, Owner shall not be
subject to any liability for failure to give possession on said date and the
validity of the Lease shall not be impaired under such circumstances, nor shall
the same be construed in any wise to extend the term of this Lease, but the rent
payable hereunder shall be abated (provided Tenant is not responsible for
Owner's inability to obtain possession) until after Owner shall have given
Tenant written notice that the premises are substantially ready for Tenant's
occupancy. If permission is given to Tenant to enter into the possession of the
Demised Premises or to occupy premises other than the Demised Premises other
than the date specified as the commencement of the term of this Lease, Tenant
covenants and agrees that such occupancy shall be deemed to be under all the
terms, covenants, conditions and provisions of this Lease, except as to the
covenant to pay rent. The provisions of this Article are intended to constitute
"an express provision to the contrary" within the meaning of Section 223-a of
the New York Real Property Law.

        25. NO WAIVER. The failure of Owner to seek redress for violation of, or
to insist upon the strict performance of any covenant or condition of this Lease
or of any of the Rules or Regulations, set forth or hereafter adopted by Owner,
shall not prevent a subsequent act which would have originally constituted a
violation from having all the force and effect of an original

                                       11

<PAGE>   12
violation. The receipt by Owner of rent with knowledge of the breach of any
covenant of this Lease shall not be deemed a waiver of such breach and no
provision of this Lease shall be deemed to have been waived by Owner unless such
waiver be in writing signed by Owner. No payment by Tenant or receipt by Owner
of a lesser amount than the monthly rent herein stipulated shall be deemed to be
other than on account of the earliest stipulated rent, nor shall any endorsement
or statement of any check or any letter accompanying any check or payment as
rent be deemed an accord and satisfaction, and Owner may accept such check or
payment without prejudice to Owner's right to recover the balance of such rent
or pursue any other remedy in this Lease provided. No act or thing done by Owner
or Owner's agents during the term hereby demised shall be deemed an acceptance
of a surrender of said premises, and no agreement to accept such surrender shall
be valid unless in writing signed by Owner. No employee of Owner or Owner's
agent shall have any power to accept the keys of said premises prior to the
termination of the Lease and the delivery of keys to any such agent or employee
shall not operate as a termination of the Lease or a surrender of the premises.

        26. WAIVER OF TRIAL BY JURY. It is mutually agreed by and between Owner
and Tenant that the respective parties hereto shall and they hereby do waive
trial by jury in any action, proceeding or counterclaim brought by either of the
parties hereto against the other (except for personal injury or property damage)
on any matters whatsoever arising out of or in any way connected with this
Lease, the relationship of Owner and Tenant, Tenant's use of or occupancy of
said premises, and any emergency statutory or any other statutory remedy. It is
further mutually agreed that in the event Owner commences any summary proceeding
for possession of the promises, Tenant will not interpose any counterclaim of
whatever nature or description in any such proceeding including a counterclaim
under Article 4.

        27. INABILITY TO PERFORM. This Lease and the obligation of Tenant to pay
rent hereunder and perform all of the other covenants and agreements hereunder
on part of Tenant to be performed shall in no wise be affected, impaired or
excused because Owner is unable to fulfill any of its obligations under this
Lease or to supply or is delayed in supplying any service expressly or impliedly
to be supplied or is unable to make, or is delayed in making any repair,
additions, alterations or decorations or is unable to supply or is delayed in
supplying any equipment or fixtures if Owner is prevented or delayed from so
doing by reason of strike or labor troubles or any cause whatsoever including,
but not limited to, government preemption in connection with a National
Emergency or by reason of any rule, order or regulation of any department or
subdivision thereof of any government agency or by reason of the conditions of
supply and demand which have been or are affected by war or other emergency.

        28. BILLS AND NOTICES. Except as otherwise in this Lease provided, a
bill, statement, notice or communication which Owner may desire or be required
to give to Tenant, shall be deemed sufficiently given or rendered if, in
writing, delivered to Tenant personally or sent by registered or certified mail
addressed to Tenant at the Building of which the Demised Premises form a part or
at the last known residence address or business address of Tenant or left at any
of the aforesaid premises addressed to Tenant, and the time of the rendition of
such bill or statement and of the giving of such notice or communication shall
be deemed to be the time when the same is delivered to Tenant, mailed or left at
the premises as herein provided. Any notice by Tenant to Owner must be served by
registered or certified mail addressed to Owner at the address first hereinabove
given or at such other address as Owner shall designate by written notice.

                                       12

<PAGE>   13

        29. SERVICES PROVIDED BY OWNER. As long as Tenant is not in default
under any of the covenants of this Lease, Owner shall provide: (A) necessary
elevator facilities on business days from 8 A.M. to 6 P.M. and on Saturdays from
8 A.M. to 1 P.M. and have one elevator subject to call at all other times; (B)
heat to the Demised Premises when and as required by Law, on business days from
8 A.M. to 6 P.M. and on Saturdays from 8 A.M. to 1 P.M.; (C) water for ordinary
lavatory purposes, but if Tenant uses or consumes water for any other purposes
or in unusual quantities (of which fact Owner shall be the sole judge), Owner
may install a water meter at Tenant's expense which Tenant shall thereafter
maintain at Tenant's expense in good working order and repair to register such
water consumption and Tenant shall pay for water consumed as shown on said meter
as additional rent as and when bills are rendered: (D) cleaning service for the
Demised Premises on business days at Owner's expense provided that the same are
kept in order by Tenant. If, however, said premises are to be kept clean by
Tenant, it shall be done at Tenant's sole expense, in a manner satisfactory to
Owner and no one other than persons approved by Owner shall be permitted to
enter said premises or the Building of which they are a part for such purpose.
Tenant shall pay Owner the cost of removal of any Tenant's refuse and rubbish
from the Building; (E) if the Demised Premises is serviced by Owner's air
conditioning/cooling and ventilating system, air conditioning/cooling will be
furnished to Tenant from May 15th through September 30th on business days
(Mondays through Fridays, holidays excepted) from 8:00 A.M. to 6:00 P.M. and
ventilation will be furnished on business days during the aforesaid hours except
when air conditioning/cooling is being furnished as aforesaid. If Tenant
requires air conditioning/cooling or ventilation for more extended hours or on
Saturdays, Sundays or on holidays, as defined under Owner's contract with
Operating Engineers Local 94-94A, Owner will furnish the same at Tenant's
expense. RIDER to be added in respect to rates and conditions for such
additional service: (F) Owner reserves the right to stop services of the
heating, elevators, plumbing, air conditioning, power systems or cleaning or
other services, if any, when necessary by reason of accident or for repairs,
alterations, replacements or improvements necessary or desirable in the judgment
of Owner for as long as may be reasonably required by reason thereof. If the
Building of which the Demised Premises are a part supplies manually operated
elevator service, Owner at any time may substitute automatic control elevator
service and upon ten days' written notice to Tenant, proceed with alterations
necessary therefor without in any wise affecting this Lease or the obligation of
Tenant hereunder. The same shall be done with a minimum of inconvenience to
Tenant and Owner shall pursue the alteration with due diligence.

        30. CAPTIONS. The Captions are inserted only as a matter of convenience
and for reference and in no way define, limit or describe the scope of this
Lease nor the intent of any provisions thereof.

        31. DEFINITIONS. The term "office", or "offices", whenever used in this
Lease, shall not be construed to mean premises used as a store or stores, for
the sale or display, at any time, of goods, wares or merchandise, of any kind,
or as a restaurant, shop, booth, bootblack or other stand, barber shop, or for
other similar purposes or for manufacturing. The term "Owner" means a Owner or
lessor, and as used in this Lease means only the Owner, or the mortgagee in
possession for the time being of the land and Building (or the Owner of a lease
of the Building or of the land and Building) of which the Demised Premises form
a part, so that in the event of a lease of said Building, or of the land and
Building, the said Owner shall be and hereby is entirely freed and relieved of
all covenants and obligations of Owner hereunder, and it shall be deemed

                                       13

<PAGE>   14

and construed without further agreement between the parties or their successors,
in interest, or between the parties and the purchaser, at any such sale, or the
said lessee of the Building has agreed to carry out any and all covenants and
obligations of Tenant, hereunder. The words "re-enter" and "re-entry" as used in
this Lease are not restricted to their technical legal meaning. The term
`business days' as used in this Lease exclude 33. Tenant and Tenant's servants,
employees, agents, visitors, and licensees shall observe faithfully, and comply
strictly with, the Rules and Regulations and such other and further reasonable
Rules and Regulations as Owner or Owner's agents may from time to time adopt.
Notice of any additional Rules or Regulations shall be given in such manner as
Owner may elect. In case Tenant disputes the reasonableness of any additional
Rule or Regulation hereafter made or adopted by Owner or Owner's agents, the
parties hereto agree to submit the question of the reasonableness of such Rule
or Regulation for decision to the New York office of the American Arbitration
Association, whose determination shall be final and conclusive upon the parties
hereto. The right to dispute the reasonableness of any additional Rule or
Regulation upon Tenant's part shall be deemed waived unless the same shall be
asserted by service of a notice, in writing upon Owner within ten (10) days
after the giving of notice thereof. Nothing in this Lease contained shall be
construed to impose upon Owner any duty or obligation to enforce the Rules and
Regulations or terms, covenants or conditions in any other lease, as against any
other tenant and Owner shall not be liable to tenant for violation of the same
by any other tenant, its servants, employees, agents, visitors or licensees.

        32. SECURITY. Tenant has deposited with Owner the sum of Thirty Five
Thousand Three Hundred Seventeen Dollars ($35,317) as security for the faithful
performance and observance by Tenant of the terms, provisions and conditions of
this Lease; it is agreed that in the event Tenant defaults in respect of any of
the terms, provisions and conditions of this Lease, including, but not limited
to, the payment of rent and additional rent. Owner may use, apply or retain the
whole or any part of the security so deposited to the extent required for the
payment of any rent and additional rent or any other sum as to which Tenant is
in default or for any sum which Owner may expand or may be required to expend by
reason of Tenant's default in respect of any of the terms, covenants and
conditions of this Lease, including but not limited to, any damages or
deficiency in the reletting of the premises, whether such damages or deficiency
accrued before or after summary proceedings or other re-entry by Owner. In the
event that Tenant shall fully and faithfully comply with all of the terms,
provisions, covenants and conditions of this Lease, the security shall be
returned to Tenant after the date fixed as the end of the Lease and after
delivery of entire possession of the Demised Premises to Owner. In the event of
a safe of the land and Building or leasing of the Building, of which the Demised
Premises form a part, Owner shall have the right to transfer the security to
vendee or lessee and Owner shall thereupon be released by Tenant from all
liability for the return of such security; and Tenant agrees to look to the new
Owner solely for the return of said security, and it is agreed that the
provisions hereof shall apply to every transfer or assignment made of the
security to a new Owner. Tenant further covenants that it will not assign or
encumber or attempt to assign or encumber the monies deposited herein as
security and that neither Owner nor its successors or assigns shall be bound by
any such assignment, encumbrance, attempted assignment or attempted encumbrance.

        33. ESTOPPEL CERTIFICATE. Tenant, at any time, and from time to time,
upon at least 10 days' prior notice by Owner, shall execute, acknowledge and
deliver to Owner, and/or to any

                                       14
<PAGE>   15
other person, firm or corporation specified by Owner, a statement certifying
that this Lease is unmodified and in full force and effect (or, if there have
been modifications, that the same is in full force and effect as modified and
stating the modifications), stating the date to which the rent and additional
rent have been paid, and stating whether or not there exists any default by
Owner under this Lease and, if so, specifying each such default.

        34. SUCCESSORS AND ASSIGNS. The covenants, conditions and agreements
contained in this Lease shall bind and inure to the benefit of Owner and Tenant
and their respective heirs, distributees, executors, administrators, successors,
and except as otherwise provided in this Lease, their assigns.

        IN WITNESS WHEREOF, Owner and Tenant have respectively signed and sealed
this Lease as of the day and year first above written.

Witness for Owner:                           OWNER
                                             1995 CAM LP

/s/ Barry                                    /s/
----------------------------------           ----------------------------------
                                             General Partner

Witness for Tenant:                          TENANT:
                                             VIRAGE, INC.

/s/ Christen L. Stockdale                    /s/ Frank Pao
----------------------------------           ----------------------------------
                                             Mr. Frank Pao, V.P. of Business
                                             Affairs & General Manager

        35. DELETED.

        36. TENANT'S WORK. It is understood and agreed that the Demised Premises
are hereby ]eased to the Tenant and that Tenant accepts and will accept the same
in their `as is' condition In all respects. Tenant covenants and agrees that it
will, at its entire cost and expense, and without any cost or expense to Owner
in any amount, perform such work, make such alterations and furnish and install
such equipment as may be necessary to fix the Demised Premises for the use and
occupancy thereof provided and permitted under Article 2 of this Lease (all of
the aforedescribed work, alterations, installations, etc., to be performed by
Tenant herein shall be referred to as "Tenant's Work"). To the foregoing end,
Tenant will be permitted to perform Tenant's Work subject, however, to the
following terms and conditions:

               a. That all such Tenant's Work shall comply with all applicable
provisions of this Lease, including, but not limited to, Articles 3 and 6
hereof, and all applicable governmental rules and regulations and the rules and
regulations of any Board of Fire Underwriters or similar agency having
jurisdiction.

                                       15

<PAGE>   16
               b. That Tenant shall first submit to Owner for its approval plans
and specifications covering said Tenant's Work. Owner agrees not to unreasonably
withhold or delay its consent to such plans and specifications and to any
subsequent changes therein.

               c. That Tenant and its contractors shall employ only labor in the
performance of such Tenant's Work, which shall be compatible with the other
labor in the Building; Tenant agrees to employ only first class workmanlike
contractors and labor as approved by Owner.

               d. That Tenant and any contractor or contractors employed by the
Tenant to render services and furnish labor to the Demised Promises, shall be
covered by Worker's Compensation Insurance and a certificate thereof shall be
furnished to the Owner before commencement of any work by any contractor,
subcontractor, their agents, servants or employees.

               e. That promptly following the completion of all of said Tenant's
Work, and as soon as reasonably feasible, the Tenant shall obtain and furnish to
Owner all appropriate certifications from all authorities having jurisdiction to
the effect that all such Tenant's Work has been performed and completed in
accordance with the filed plans, if any, and with all laws, rules. regulations
and orders of said authorities having jurisdiction.

               f. That Tenant, at its expense, shall procure each and every
permit, license, franchise, or other authorization required for the performance
of such Tenant's Work.

               g. That Tenant shall furnish to Owner a list of all Tenant's
contractors, subcontractors, material suppliers and laborers (collectively
referred to as "Tenant's Personnel"). Tenant shall be responsible for Tenant's
Personnel furnishing to Owner: (1) a partial release of lien simultaneously with
each payment by Tenant to Tenant's Personnel for any labor performed or
materials furnished; and (2) a final release of lien immediately upon a final
payment by Tenant to Tenant's Personnel for any labor performed or materials
furnished.

               h. In the event a proposed alteration or improvement is estimated
to cost in excess of Five Thousand Dollars ($5,000), Tenant agrees that Tenant
shall either: (1) provide Owner with a completion and/or surety bond covering
such work which runs in favor of Owner (2) issue to Owner a hold harmless and
indemnification agreement relative to such proposed work, or (3) issue the
personal guaranty of Tenant hereunder, which guaranty shall place the entire
burden of payment for such alteration on himself, as well as hold Owner harmless
from and against any and all claims directly arising out of the work to be done
in the Demised Premises.

        37. SECURITY. The security deposited pursuant to Article 34 of the Lease
shall be placed in an interest bearing account in the Jamaica Savings Bank, 1995
Broadway, New York, New York, subject to Owner's sole right to change the
depository at any time to any banking organization having a place of business in
the State of New York, interest earned to become additional security. It is also
understood and agreed that 1.0% per annum of the security funds shall be
retained by Owner as an administrative fee.

        38.    ELECTRICITY.

                                       16

<PAGE>   17

               a. Owner agrees to supply Tenant with such electric current as
Tenant shall reasonably require (consistent with the existing electrical
capacity contained in the Demised Premises) for Tenant's wiring facilities and
equipment within the Demised Premises as of the commencement of occupancy
thereof by Tenant, and in consideration thereof Tenant agrees that the basic
annual rent reserved in the within Lease shall be increased by the agreed upon
sum of Fourteen Thousand Three Hundred Dollars ($14,300) (the "Base Charge"),
retroactive to the date of possession which Base Charge increase to basic annual
rent shall in no event be subject to reduction but shall be subject to being
increased as hereinafter provided. Owner shall not be liable in any way to
Tenant for any failure or defect in the supply or character of electric energy
furnished to the Demised Premises by reason of any requirement, act or omission
of the public utility serving the Building with electricity or for any other
reason not attributable to Owner. Tenant shall furnish and install all lighting
tubes, lamps, bulbs and ballasts required in Demised Premises, at Tenant's
expense, or shall pay Owner's reasonable charges therefor on demand except with
respect to air conditioning supplied to tenants of this Building through a
centrally located air conditioning system which Owner may have agreed to supply
to Tenant at Owner's sole costs and expense as shall be specified, if
applicable, in a separate Article of this Lease. Tenant shall pay for the cost
of electricity consumed, including central air conditioning by any air
conditioning equipment located in the Demised Premises as well as any other air
conditioning equipment furnishing, in conjunction with the operation of,
conditioned air to the Demised Premises irrespective of whether any such
equipment is located in the Demised Premises or in any other portion of the
Building. The term "equipment" as used herein shall be deemed to include,
without limitation, all components and auxiliary equipment used in connection
with air conditioning equipment servicing the Demised Premises including
Tenant's pro rata share of the cost of the electrical operation of the cooling
tower(s) used in connection therewith if the air conditioning equipment is water
cooled.

               b. After Tenant shall have entered into possession of the Demised
Premises, or any portion thereof, Owner, at anytime and from time to time during
the term of this Lease, shall have the right to have surveys made by Owner's
electrical consultant of the electrical consumption within the Demised Premises
and the determination of said electrical consultant shall determine whether the
Base Charge for electricity (as same may have been increased by previous surveys
and determinations made by Owner's electrical consultant) is less than the then
electrical consumption charge determined by Owner's electric consultant to be
properly payable by Tenant as a result of the then current survey determination
made by said electrical consultant and if the Base Charge shall be less than the
electrical consumption charge so determined by Owner's consultant to be
applicable to Tenant's consumption of electricity then, effective as of the date
of occupancy in the case of the first survey and effective as of the date of the
making of the second and subsequent surveys the Base Charge increase to basic
annual rent (as same may have been previously increased pursuant to the
provisions hereof) shall be further increased by an amount equal to the
difference between: (1) the Base Charge increase (plus any previous increases to
the Base Charge increase in accordance with the provisions hereof); and (2) the
then electrical consumption charge determined to be applicable by Owner's
consultant.

        Survey made by Owner's electrical consultant shall be based upon the use
of such electric current between the hours of 8 A.M. to 6 P.M. on Mondays
through Fridays, and 8 A-M, to 1 P.M. on Saturdays and such other days and hours
when Tenant uses electricity for lighting and for the operations of the
machinery, appliances and equipment used by Tenant in the Demised

                                       17

<PAGE>   18
Premises. In addition, if cleaning services are provided by Owner, such survey
shall include Owner's normal cleaning hours of up to five hours per day for
lighting within the Demised Premises and for electrical equipment normally used
in such cleaning.

        The cost of the first survey made by Owner's electrical consultant shall
be borne by Owner. With respect to subsequent surveys, if Owner's consultant
shall determine that there has been an increase in Tenant's use of electrical
current then, in addition to the other requirements and obligations imposed on
Tenant in this Article, Tenant shall pay the fees of the electrical consultant
making such survey. The findings of such electrical consultant shall be binding
and conclusive on Owner and Tenant.

               c. Tenant's use of electric energy in the Demised Premises shall
not at any time exceed the capacity of any of the electrical conductors,
machinery and equipment in or otherwise serving the Demised Premises. In order
to insure that such capacity is not exceeded and to avert possible adverse
effect upon the Building electric service, Tenant shall not, without Owner's
prior written consent in each instance, connect any additional fixtures,
machinery, appliances or equipment to the Building electric distribution system
or make any alteration or addition to Tenant's machinery, appliances or
equipment or the electric system of the Demised Premises existing on the
commencement date of the term hereof. Should Owner grant such consent all
additional risers or other equipment required therefor shall be provided by
Owner and the cost thereof shall be paid by Tenant upon Owner's demand. As a
condition to granting such consent, Owner may require Tenant to agree to an
increase in the basic annual rent by an amount which will reflect the value of
the additional service to be furnished by Owner, that is, the potential
additional electrical current to be made available to Tenant based upon the
estimated additional capacity of such additional risers to other equipment. If
Owner and Tenant cannot agree thereon, such amount shall be determined by an
electrical engineer or consultant to be selected by Owner and paid by Tenant.
When the amount of such increase is so determined, the parties shall execute an
agreement supplementary hereto to reflect such increase in the amount of basic
annual rent stated in this Lease effective from the date such additional service
is made available to Tenant; but such increase shall be effective from such date
even if such supplementary agreement is not executed.

               d. If the public utility rate schedule for the supply of electric
current to the Building or the utility company fuel adjustment charge or demand
charge shall be increased or decreased at any time after the date hereof, or if
there shall be a change in taxes or if additional taxes shall be imposed on the
sale or furnishing of such electric current, or if there shall be a change in
the space constituting the Demised Premises, or if Tenant's failure to maintain
its machinery and equipment in good order and repair causes greater consumption
of electrical current, or if Tenant uses electricity on days or hours other than
those specified in subparagraph (b) hereof, or if Tenant adds any machinery,
appliances or equipment, the basic annual rent herein reserved shall be
equitably adjusted to reflect any or all of the foregoing as may be applicable.
If Owner and Tenant cannot agree thereon, the amounts of such adjustment(s)
shall be determined, based on standard practices, by any electrical engineer or
consultant, to be selected by Owner and paid by Tenant and the findings of said
electrical engineer or consultant shall be binding and conclusive upon the
parties. When the amounts of such adjustment are so determined, the parties
shall execute an agreement supplementary hereto to reflect such adjustment in
the amount of the of the basic annual rent stated in this Lease effective from
the

                                       18
<PAGE>   19

date of the increase or decrease of such usage as determined by such electrical
engineer, or consultant, or as the case may be, from the effective date of such
increase or decrease in the public utility rate schedule; but such adjustment
shall be effective from such date whether or not such a supplementary agreement
is executed.

               e. Owner reserves the right to discontinue furnishing electric
current to Tenant in the Demised Premises at any time upon not less than thirty
(30) days' notice to Tenant. If Owner exercises such right of termination, this
Lease shall continue in full force and effect and shall be unaffected thereby,
except only that, from and after the effective date of such termination, Owner
shall not be obligated to furnish electric energy to Tenant and the basic annual
rent payable under this Lease shall be reduced by the amount of any previous
increases thereto an on account of electricity supplied pursuant to the
provisions of this Article. Owner, upon the expiration of the aforesaid notice
to Tenant, may discontinue furnishing the electric current; but, if, for any
reason, the supply of electric current by Owner to the Tenant shall thereafter
continue for any period of time, this shall be without waiver of the right of
Owner thereafter to terminate the same without further notice, and the Tenant
shall continue to pay the basic annual rent as increased pursuant to this
Article as herein provided until such time as the supply of current shall in
fact be discontinued. If Owner so discontinues furnishing electric energy to
Tenant, Tenant shall arrange to obtain electric energy directly from the public
utility company furnishing electric service to the Building. Such electric
energy may be furnished to Tenant by means of the then existing Building system
feeders, risers and writing to the extent that the same are, in Owner's sole
judgment, available, suitable and safe for such purposes. All meters and
additional panel boards, feeders, risers, wiring and other conductors and
equipment which may be required to obtain electric energy directly from such
public utility company shall be installed and maintained by Tenant at its
expense. In addition and notwithstanding anything to the contrary contained in
this Article, Owner at anytime during the term of this Lease on not less than
thirty (30) days' prior written notice to Tenant may require Tenant to purchase
electricity from Owner or from a meter company designated by Owner upon the
terms of such submetering clause that may then be currently used by Owner in the
Building of which the Demised Premises form a part. If Owner shall elect to have
Tenant purchase electricity directly from Owner or Owner's designated meter
company as aforesaid, then Owner at Owner's sole cost and expense (but with
Tenant's reasonable cooperation) shall perform all wiring as may be necessary to
have Tenant's electrical consumption measured by submeters provided by Owner at
Owner's sole cost and expense.

               f. If any tax is imposed upon Owner with respect to electrical
energy furnished as a service to Tenant by any federal, state, municipal or
other authority, Tenant covenants and agrees that where permitted by law or
applicable regulations, Tenant's pro rata share of such taxes, shall be
reimbursed by Tenant to Owner within ten (10) days after being billed therefor.

        39.    OPERATING EXPENSE ESCALATION INDEX.  Intentionally omitted.

        40.    REAL ESTATE TAX ESCALATION. In addition to the basic annual rent
hereinbefore reserved, Tenant covenants and agrees to pay to Owner as additional
rent, sums computed in accordance with the following provisions:

                                       19

<PAGE>   20
               a. "Taxes" shall mean all real estate taxes, assessments,
government levies, county taxes or any other governmental charge, general or
special, ordinary or extraordinary, unforeseen as well as foreseen of any kind
of nature whatsoever which are or may be assessed or imposed upon the Building
in which the Demised Premises are located, the land underlying same and the
sidewalks, plazas, streets and alleys in front of or adjacent thereto including
any tax, excise or fee measured by or payable with respect to any rent or
mortgage and levied against Owner and/or the land and or Building and/or against
the holder of any mortgage affecting said land or Building under the laws of the
United States, the State of New York, or any political subdivision thereof or by
the City of New York, as a substitute or addition in whole or in part for taxes
presently or hereafter imposed on the land and Building or resulting from or due
to any change in the method of taxation provided that any such substitute tax on
rent shall be considered as if the rent were the only income of Owner but
excluding any income, franchise, corporate, estate, inheritance, succession,
capital stock or transfer tax levied on Owner or the holder of any such
mortgage.

               b. "Tax Year" shall mean every twelve month consecutive period
commencing each July 1 during the term of this Lease.

               c. "Tenant's Proportionate Share" shall be deemed to be 5.97%.

               d. "Basic Tax" shall mean the real estate taxes imposed on the
Building containing the Demised Promises and on the land on which the Building
is located for the fiscal year July 1, 2000 to June 30, 2001. If the Basic Tax
shall subsequently be adjusted, corrected or reduced, whether as the result of
protest, by means of agreement or as the result of legal proceedings, the Basic
Tax for the purpose of computing any additional rent payable pursuant to this
Article shall be the Basic Tax as so adjusted, corrected or reduced. Until the
Basic Tax is so adjusted, corrected, or reduced, if ever, Tenant shall pay
additional rent hereunder based upon unadjusted, uncorrected or unreduced Basic
Tax and upon such adjustment, correction or reduction occurring, and additional
rent paid by Tenant prior to the date of such occurrence shall be recomputed and
Tenant shall pay to Owner any additional rent found due by such recomputation
within ten (10) days after being billed thereof (which bill shall set forth in
reasonable detail the pertinent data causing and comprising such recomputation).

               e. If the Taxes for any Tax Year shall be greater than the Basic
Tax, then Tenant shall pay to Owner as additional rent an amount equal to
Tenant's Proportionate Share of the increase over the Basic Tax if the
commencement date of this Lease shall occur during any Tax Year, or if the term
of this Lease shall expire or be terminated during any Tax Year, such amount
shall be prorated. Owner shall bill Tenant for any additional rent payable by
Tenant pursuant to this Article, such bill to be set forth in reasonable detail
the computation of additional rent hereunder which shall be payable by the
Tenant to the Owner in installments in the same manner that such Taxes are
payable by the Owner to the City of New York pursuant to law, commencing with
July 1, 2000.

               f. If the Taxes for any Tax Year for which Tenant shall have paid
additional rent pursuant to this Article shall be adjusted, corrected or
reduced, whether as the result of protest of any tentative assessment, or by
means of agreement, or as the result of legal proceedings, the additional rent
becoming due in said Tax Year pursuant to this Article shall be

                                       20
<PAGE>   21

determined on the basis of said corrected, adjusted or reduced Taxes. If Tenant
shall have paid any additional rent pursuant to this Article for such Tax Year
prior to any said adjustment, Owner shall credit or refund to Tenant any excess
amount thus paid as reflected by said adjusted Taxes less Tenant's pro rata
share of any cost, expense or fees (including experts' and attorneys' fees)
incurred by Owner in obtaining said tax adjustment. If said tax adjustment shall
occur prior to Tenant's payment of any said Taxes due hereunder additional rent,
Tenant shall pay, as further additional rent, a proportionate share of any cost,
expenses or fees (including experts' and attorneys' fees) incurred by Owner in
obtaining said tax adjustment, in an amount equal to the percentage of the
savings to Tenant that the total expenses shall bear percentage wise to the
total savings in Taxes thereby effected. Any payments, credits or refunds due
hereunder for any period of less than a full Tax Year at the commencement or end
of the term of this Lease, or because of any change in the area of the Demised
Premises shall be equitably prorated to reflect such event.

               g. If the fiscal tax year or the method of tax payment shall
hereafter be changed, appropriate adjustment of the foregoing provisions shall
be made accordingly to reflect any such changes.

               h. Tenant shall pay to Owner any occupancy tax, rent tax and any
other tax of similar nature or intent now in effect or hereafter enacted, if the
taxing authority shall enact law making same payable by Owner in the first
instance. Such tax shall be paid to Owner as additional rent upon demand.

        41.    ASSIGNMENT, SUBLETTING, MORTGAGING.

               a. Tenant will not by operation of law or otherwise assign,
mortgage or encumber this Lease, nor sublet or permit the Demised Premises or
any part thereof to be used by others, without Owner's prior express written
consent in each instance. The consent by Owner to any assignment or subletting
shall not in any manner be construed to relieve Tenant from obtaining Owner's
express written consent to any other or further assignment or subletting nor
shall any such consent by Owner serve to relieve or release Tenant from its
obligations to fully and faithfully observe and perform all of the terms,
covenants and conditions of this Lease on Tenant's part to be observed and
performed.

               b. If Tenant shall desire to assign or to sublet all or any
portion of the Demised Premises, Tenant shall give notice thereof to Owner and
in said notice shall set forth all pertinent business terms of the proposed
assignment or subletting as well as the name and address of the proposed
assignee or sublessee, information as to financial condition of such assignee or
Sublessee and proposed use which assignee or Sublessee desires to make of the
Demised Premises. Said notice shall bear the signature of the proposed sublessee
or assignee attesting to its accuracy. Tenant shall in addition, at Owner's
request, furnish such other further information as Owner may request concerning
such proposed assignment or subletting. After receipt of such notice from
Tenant, Owner shall have the following options to be exercised within sixty (60)
days from the later to occur of: the receipt of Tenant's notice, or if Owner
shall request additional information from Tenant, the receipt of such additional
information when furnished by Tenant:

                                       21
<PAGE>   22

                      (1) In the event Tenant's notice is of Tenant's desire to
make an assignment or a subletting of all or substantially all of the Demised
Premises Owner shall have the option to cancel and terminate this Lease as of
the date proposed by Tenant for such assignment or subletting, which option
shall be exercised within the aforesaid sixty (60) day period and on which date
the term of this Lease shall cease and expire with the same force and effect as
if such date were originally provided herein as the expiration of the term
hereof.

                      (2) In the event Tenant's notice is of Tenant's desire to
make a subletting for less than all or substantially all of the Demised
Premises, Owner shall have the option, to be exercised within said sixty (60)
day period, of canceling and terminating this Lease only as to such portion of
the Demised Premises to take effect as of the proposed effective date thereof as
stated in Tenant's notice. In the event Owner exercises its option under this
subparagraph (2) the rent and all other charges payable hereunder shall be
equitably adjusted and apportioned.

               c. If Owner does not exercise its right of cancellation under
either of the foregoing two options granted under subparagraph (b) hereof within
the time set forth therein, Tenant agrees to then use Glen Equities LTD. as its
exclusive rental agent, having the sole and exclusive right to lease, at agent's
then prevailing commission rates, and to promptly notify such renting agent of
its desire to assign or sublet its Lease, (notwithstanding the foregoing, Tenant
shall have the right to attempt to assign Tenant's interest in this Lease or
sublease all or portions of the Demised Premises to third parties procured by
Tenant or by outside brokers whom Tenant may wish to utilize provided, however
that such assignment shall be subject to the provisions of Article 11; the above
paragraph (b) Owner's options, as well as the following provisions of this
Article and further that in the event of such an assignment or subleasing Tenant
shall obtaining a proposed assignee or subleases, upon terms satisfactory to
Tenant, Tenant shall submit to Owner in writing: (i) the name of the proposed
assignee or subtenant; (ii) the terms and conditions of the proposed assignment
or subletting; (iii) the nature and character of the business and credit of the
proposed assignee or subtenant, and any other information reasonably requested
by the Owner.

        Owner shall have the further option, to be exercised within thirty (30)
business days from submission of Tenant's request, to require Tenant to execute
an assignment or sublease to Owner or Owner's designee on the same terms and
conditions in Owner's own name, or the name of Owner's designee, with a right to
sublease to others without Tenant's consent being required for such or any
further sublettings. If Owner shall not exercise its foregoing further option
within the time set forth, its consent to any such proposed assignment or
subletting shall not be unreasonably withheld or unduly delayed, provided,
however, that Owner may withhold consent thereto if in the exercise of its sole
judgment it determines that:

                      (1) The financial condition and general reputation of the
proposed assignee or subtenant are not consistent with the extent of the
obligation undertaken by the proposed assignment or sublease.

                      (2) The proposed use of the Demised Premises is not
appropriate for the Building or in keeping with the character of the existing
tenancies or permitted by the Tenant's Lease (but the foregoing shall not be
deemed to enlarge the purposes for which the Demised Premises are permitted to
be used as set forth in this Lease).

                                       22

<PAGE>   23
                      (3) The nature of the occupancy of the proposed assignee
or subtenant will cause an excessive density of employees or traffic or make
excessive demands on the Building's services or facilities or in any other way
will lesson the character of the Building.

                      (4) The Tenant proposes to assign or sublet to one who at
the time is a tenant or occupant of the premises in the Building of which the
Demised Premises are a part (or to a subsidiary or related entity of such a
tenant or occupant) or to one who at the time is a tenant or occupant of
promises in any other Building then managed by Glen Equities LTD.

                      (5) The Tenant proposes to assign or sublet all or a
portion of the Demised Premises at a rental rate less than the rental rate Owner
is then asking for other space in the Building. In the event Owner should
withhold or delay its consent to any proposed assignment or sublease, the sole
remedy of Tenant shall be to institute action for specific performance if Tenant
believes that such withholding or delaying of consent was unreasonable and
Tenant hereby expressly waives any claim for monetary damages by reason of such
withholding or delaying of consent by Owner.

               d. Further, and as a condition of Owner's consent to any
assignment or subletting:

                      (1) That Tenant at the time of requesting Owner's consent
shall not be in default in the payment of any rent, additional rent, or other
sums or charges provided to be paid by tenant hereunder and further that Tenant
is not then in material default otherwise under this Lease;

                      (2) That each assignee of this Lease shall assume in
writing all of the terms, covenants and conditions of this Lease on the part of
the Tenant hereunder to be performed and observed.

                      (3) That an original or duplicate original of the
instrument of assignment and assumption or of the sublease agreement shall be
delivered to Owner within five (5) days following the making thereof: and

                      (4) That any instrument of sublease shall specifically
state that each sublease is subject to all of the terms, covenants and
conditions of this Lease. If Tenant shall duly comply with all of the foregoing
then, as aforesaid, Owner shall not unreasonably withhold or unduly delay its
consent to such assignment or subletting, provided further, however, and on
condition that at the time of requesting Owner's consent Tenant shall pay to
Glen Equities LTD). the sum of $250 as a processing fee for each assignment
and/or subletting.

               e. It is agreed that if Owner shall not exercise any of its
foregoing options and shall consent to such assignment or subletting, and Tenant
shall thereupon assign this Lease or sublet all or any portion of the Demised
Premises, then and in that event Tenant shall pay to Owner, as additional rent,
(1) in the event of an assignment, the amount of all monies, if any, which the
assignee has agreed to and does pay to Tenant in consideration of the making of
such assignment less however all out-of-pocket costs actually incurred by Tenant
in connection with the making of such assignment, including but not limited to
any brokerage fees, advertising and alteration costs; and (2) in the event of a
subletting the amount, if any, by which the fixed basic

                                       23
<PAGE>   24

rent and additional rent payable by the sublessee to Tenant shall exceed the
fixed basic rent plus additional rent allowable to that part of the Demised
Premises affected by such sublease, pursuant to any side agreement as
consideration (partial or otherwise) for Tenant making such subletting. Such
additional rent payments shall be made monthly within five (5) days after
receipt of the same by Tenant or within five (5) days after Tenant is credited
with the same by the assignee or subleasee. At the time of submitting the
proposed assignment or sublease to Owner, Tenant shall certify to Owner in
writing whether or not the assignee or sublessee has agreed to pay any monies to
Tenant in consideration of the making of the assignment or sublease other than
as specified and set forth in such instruments, and if so Tenant shall certify
the amounts and time of payment thereof in reasonable detail.

               f. If this Lease shall be assigned, or if the Demised Premises or
any part thereof be sublet or occupied by any person or persons other than
Tenant, Owner may, after default by Tenant, collect rent from the assignee,
subtenant or occupant and apply the net amount collected (which may be treated
by Owner as rent or as use and occupancy) to the rent herein reserved but no
such assignment, subletting, occupancy or collection of rent shall be deemed a
waiver of the covenants in this Article, nor shall it be deemed acceptance of
the assignee, subtenant or occupant as a tenant, or a release of Tenant from the
full performance by Tenant of all the terms, conditions and covenants of this
Lease.

               g. Each permitted assignee or transferee shall assume and be
deemed to have assumed this Lease and shall be and remain liable jointly and
covenants, conditions and agreements herein contained on Tenant's part to be
performed for the term of this Lease and any renewals and severally with Tenant
for the payment of the rent, additional rent and adjustment of rent, and for the
due performance of all the terms, modifications hereof. No assignment shall be
binding on Owner unless, as hereinbefore provided, such assignee or Tenant shall
deliver to Owner a duplicate original of the instrument of assignment which
contains a covenant of assumption by the assignee of all the obligations
aforesaid and shall obtain from Owner the aforesaid written consent prior
thereto. Any assignment, sublease or agreement permitting the use and occupancy
of the premises to which Owner shall not have expressly consented in writing
shall be deemed null and void and of no force and effect.

               h. DELETED.

               i. Notwithstanding anything to the contrary contained in this
Article, Tenant, without being subject to the options afforded Owner herein,
shall have the right to assign this Lease to any parent company, subsidiary,
affiliate or any resulting company into or with which Tenant is merged or
consolidated and to enter into a sublease of all or part of the Demised Premises
to any such parent company, subsidiary or affiliate, subject however to Tenant's
compliance with all of the provisions of subparagraph (d) hereof, upon which
occurring Owner shall give its consent to such assignment or subletting and
provided further that any such assignee or sublessee shall continue to use the
Demised Premises for the purposes set forth in Article 2 only, for the remainder
of the term of this Lease.

               j. Notwithstanding anything to the contrary contained in this
Article, Tenant's right to assign this Lease or sublet all or a portion of the
Demised Premises, and the enforceability against Owner of Owner's consent to any
such assignment or subletting, shall be

                                       24

<PAGE>   25
subject to Tenant's delivering to Owner, simultaneously with the execution of
any such assignment or sublease, a general release of liens against the Building
executed by any broker(s):

                      (1) with whom Tenant shall have worked in connection with
any such assignment or sublease or

                      (2) who are or who claim to be, in whole or in part,
responsible for any such assignment or sublease. Tenant further agrees to
promptly effect and timely pay for all costs of the removal of any broker's
liens which are placed on the Building at any time in connection with any such
assignment or subletting (or promptly make reimbursement to Owner in the event
Owner chooses to directly effect such removal). Tenant's failure to comply with
the provisions contained in this subparagraph (j) shall be deemed to be a
material default under this Lease entitling Owner to all of the remedies
provided for under this Lease for default, including but not limited to Owner's
right to terminate this Lease in this event thereof.

        42. INSURANCE. Tenant, throughout the term hereof, shall maintain in
full force and effect for the benefit of and naming Owner, Owner's agents and
Tenant as parties insured therein, comprehensive general public liability
insurance, including without limitation, umbrella liability coverage against
claims for personal injury, death, or damage to property occurring in, on, or
about the Demised Premises, with limits of not less than $1,000,000 for personal
injury or death of one person and $2,000,000 arising out of one occurrence, and
$100,000 for property damage.

        The insurance required hereunder shall be issued by an insurance company
licensed to do business in the State of New York prior to any entry by Tenant
into the Demised Premises, and thereafter, not less than ten (10) days prior to
the expiration of any expiring policy. Tenant shall furnish renewals thereof,
together with proof of payment of the premium therefor. If such insurance is
carried under a blanket policy, Tenant may deliver a certificate in lieu of the
original policy. Each policy or renewal shall contain a provision for notice to
Owner at least ten (10) days prior to the cancellation thereof.

        Tenant shall indemnify Owner against and save Owner harmless to the
extent of $2,000,000 which may be provided by umbrella policy for any one
occurrence from any liability or claim by or on behalf of any person, firm or
governmental authority for injury, death, or damage arising from the use by
Tenant of the Demised Premises, the plazas, sidewalks, curbs, or vaults adjacent
thereto, the common areas of the Building, or from any work or thing whatsoever
done or omitted to be done by Tenant, its agents, contractors, servants,
employees, licensees, invitees, or customers, and from any breach or default by
Tenant under any of the terms or provisions of this Lease. If any action or
proceeding shall be brought against Owner in connection with any such claims
Tenant shall defend such action or proceeding, at Tenant's expense, by counsel
reasonably satisfactory to Owner. Tenant's insurance carrier's counsel shall be
deemed satisfactory.

        43. ADDITIONAL RENT. All costs, charges and expenses which Tenant
assumes, agrees or is obligated to pay pursuant to this Lease shall be deemed
additional rent, and in the event of nonpayment, Owner shall have all of the
rights and remedies with respect thereto as is herein provided for In the case
of nonpayment of rent.

                                       25

<PAGE>   26

        44. MERCHANDISE, REFUSE, ETC. Tenant shall at no time leave any
merchandise, supplies, materials or refuse in the hallways or other common
portions of the Building or in any other area of the Building other than the
Demised Premises. Tenant covenants that all garbage and refuse shall be kept in
proper containers, securely covered, until removed from the Building so as to
prevent the escape of objectionable fumes and odors and the spread of vermin,
and Tenant further covenants that no refuse and/or garbage shall be permitted to
remain an the sidewalks adjacent to the Building.

        45. ATTORNMENT. At the option of the Owner or any successor Owner or the
holder of any mortgage affecting the Demised Premises, Tenant agrees that
neither the cancellation nor termination of any ground or underlying lease to
which this Lease is now or may hereafter become subject or subordinate, nor any
foreclosure of a mortgage affecting said premises, nor the institution of any
suit, action, summary or other proceeding against the Owner herein or any
successor Owner, or any foreclosure proceedings brought by the holder of any
such mortgage, Tenant covenants and agrees to attorn to the Owner or to any
successor to the Owner's interest in the Demised Premises, or to such holder of
such mortgage or to the purchaser of the mortgaged premises in foreclosure.

        46. WAIVER OF SUBROGATION. Owner and Tenant, respectively, hereby waive
the right of recovering from each other for any damage or loss occasioned by any
hazards compensated by insurance (excluding liability insurance), regardless of
whether said damage or loss resulted from the negligence of either party, their
employees, or otherwise and said parties do hereby waive the right to subrogate
any insurance carrier or other party to their respective rights of recovery
against each other in any event.

        47. MECHANIC'S LIENS. Notwithstanding anything to the contrary contained
in this Lease, Tenant hereunder, its successor and assigns, warrants and
guarantees to the Owner named in the within Lease, its successor and assigns,
that if any mechanic's lien shall be filed against the Building of which Demised
Premises forms a part for work claimed to have been done for, or materials
furnished to Tenant, the same shall be discharged by Tenant, by either payment
or by bond at the sole cost of Tenant within twenty (20) days following the
filing of such mechanic's lien.

        48. AIR CONDITIONING PERMITS. Anything contained herein to the contrary
notwithstanding it is expressly agreed that Tenant shall pay the cost of any and
all permits required by any branch or department of the Borough, County, City,
State or Federal Government in connection with any air conditioning presently or
hereinafter installed in the Demised Premises by either Owner or Tenant.

        49. LIMITATION OF OWNER'S LIABILITY. If Owner or any successor in
interest of Owner be an individual, joint venture, tenancy in common,
co-partnership, unincorporated association, or other unincorporated aggregate of
individuals, then, anything elsewhere in this Lease to the contrary
notwithstanding, Tenant shall look solely to the estate and property of such
unincorporated Owner in the land and Building and, where expressly so provided
in this Lease to offset against the rents payable under this Lease, for the
satisfaction of Tenant's remedies for the collection of a judgment (or other
judicial process) requiring the payment of money by Owner in the event of any
default by Owner hereunder, and no other property or assets of such

                                       26

<PAGE>   27
unincorporated Owner shall be subject to levy, execution or other enforcement
procedure for the satisfaction of Tenant's remedies.

        50. ESTOPPEL CERTIFICATE. Tenant agrees, at any time, and from time to
time. upon not less than seven (7) days prior written notice from Owner to
execute, acknowledge and deliver to Owner, a statement in writing addressed to
Owner certifying that this Lease is unmodified and in full force and effect (or,
if there have been modifications, that the same is in full force and effect as
modified, that the same is in full force and effect as modified and stating the
modifications), stating the dates to which rent, additional rent and other
charges have been paid, and stating whether or not to the best knowledge of the
signer of such certificate, there exists any default in the performance of any
covenant, agreement, term, provision or condition contained in this Lease and,
if so, specifying each such default of which the signer may have knowledge, it
being intended that any such statement delivered pursuant hereto may be relied
upon by Owner and by any mortgages or prospective mortgagee of any mortgage
affecting the Building or the Building and the land, and by any Owner under a
ground or underlying Lease affecting the land or Building, or both.

        51. LATE PAYMENTS. If Tenant shall fail to pay any installment of rent
or additional rent when first due hereunder (irrespective of any grace period as
may be applicable thereto) and such failure to pay shall continue for more than
ten (10) days after such payment was first due, then interest at the rate of
five (5) cents for each dollar overdue will be charged to the Tenant and shall
accrue from and after the date on which any such sum was first due and payable
hereunder, and such interest shall be deemed to accrue as additional rent
hereunder and shall be paid to Owner upon demand made from time to time, but in
any event no later than the time of payment of the delinquent sum.

        52. HOLDOVER. If Tenant shall hold possession of the Demised Premises
after the expiration of the term of this Lease or the prior termination of this
Lease, and the Lease is not renewed or a new Lease is not entered into between
the parties, the parties hereby agree that Tenant's occupancy of the Demised
Premises after the expiration of the term or prior termination of this Lease
shall be under a month-to-month tenancy commencing on the first day after the
expiration of the term or prior termination of this Lease and continuing until
such tenancy shall be terminated by Owner or Tenant and such possession shall
cease, which tenancy shall be upon all of the terms set forth in this Lease
except Tenant shall pay on the first day of each month of the holdover as basic
monthly rent, an amount equal to the higher of (a) an amount equal to three
times the sum of (1) the monthly installment of basic annual rent payable by
Tenant during the last year of the original term of this Lease (i.e., the year
immediately prior to the holdover period) and (2) all monthly installments of
additional rent payable by Tenant pursuant to the term of this Lease that would
have been billable monthly by Owner had the term of the Lease not expired; or
(b) an amount equal to the then market rental value for the Demised Premises as
shall be established by Owner giving notice to Tenant of Owner's good faith
estimate of such market rental value.

        Tenant shall occupy the Demised Premises during the holdover period in
its "as is" condition as of the expiration of the term or prior termination of
this Lease and Owner shall not be required to perform any work, furnish any
materials or make any repairs within the Demised Promises during the holdover
period. Nothing contained in this Lease shall be construed as a

                                       27

<PAGE>   28
consent by Owner to the possession by Tenant of the Demised Premises beyond the
expiration of the term or prior termination of this Lease, and Owner, upon said
expiration of the term or prior termination of this Lease shall be entitled to
the benefit of all legal remedies that may now be in force or may hereafter be
enacted relating to speedy repossession of the Demised Premises by Owner.

        53. NO RESIDENTIAL USE OF DEMISED PREMISES. It is an express condition
of this Lease that the Demised Premises be used for commercial purposes only. In
no event may the Demised Premises be used for residential purposes and Tenant
covenants and agrees to use the Demised Premises only for the commercial
purposes specified in Article 2 hereof.

        54. WAIVER OF COUNTERCLAIM. Tenant shall and hereby does waive its right
and agrees not to interpose any counterclaim or offset of whatever nature or
description in any proceeding or action which may be instituted by Owner against
Tenant to recover possession of the Demised Premises, for the collection of
rent, additional rent, other charges, or for damages, or in connection with any
matters or claims whatsoever arising out of or in any or in any way connected
with this Lease, the relationship of Owner and Tenant, or Tenant's use or
occupancy of said premises. This clause, as well as the `waiver of jury trial'
provisions of this Lease, shall survive the termination or any cancellation of
this Lease or the term hereof (nothing, however, contained in this clause shall
preclude Tenant from instituting a separate action against Owner with respect to
any claim that Tenant may have against Owner or from moving to consolidate such
action with any action or proceeding which may have been instituted by Owner, it
being understood. however, that Owner may impose any motion of consolidation).

        55. ATTORNEY'S FEES. In case it shall be necessary for Owner to
institute any action or proceeding against Tenant for the nonpayment of rent or
for the violation of any of the covenants or provisions of this lease or for the
recovery of possession of the Demised Premises or should Owner be compelled to
intervene in any action or proceeding wherein Tenant is a party in order to
enforce or protect Owner's interest or rights hereunder, then and in any of such
events, if Owner shall be successful in such action or proceeding, Tenant shall
be obligated to pay to Owner reasonable attorney's fees, costs and disbursements
incurred for the institution and prosecution of any such action, proceeding or
intervention.

        56. TENANT'S FAILURE TO TIMELY PAY RENT & ADDITIONAL RENT CONSTITUTES
MATERIAL BREACH OF LEASE OBLIGATIONS. Notwithstanding anything to the contrary
contained in this Lease, Tenant acknowledges and agrees that Tenant has agreed
to pay for the entire stated term of the Lease an aggregate amount equal to the
sum of (A) the annual rental rate herein elsewhere agreed to be paid by Tenant
for each year of the term of the Lease (plus a prorated amount for any period of
less than a full year) - (the "total aggregate basic rent'" plus (B) all
additional rent provided to be paid by Tenant hereunder for the full term of the
Lease.

        Tenant further acknowledges and agrees that Tenant's obligations to pay
rent and additional rent under this Lease as and when provided to be paid
hereunder and before the expiration of any applicable grace period provided with
respect thereto is a material obligation. Tenant further acknowledges and agrees
that if Tenant shall fail to pay rent or additional rent as and when due
hereunder and before the expiration of any applicable grace period with respect
thereto so that Owner shall have instituted nonpayment dispossess proceedings
against Tenant on

                                       28
<PAGE>   29

account thereof twice at any time during the term of this Lease but a warrant of
eviction was not issued in said proceedings by any reason of the payment by
Tenant of past due rent or additional rent subsequent to the institution of such
proceedings and prior to the issuance of the warrant of eviction therein that on
any subsequent default by Tenant in the payment of rent and/or additional rent
when provided to be paid hereunder and before the expiration of any applicable
grace period with respect thereto, the total aggregate basic rent (less any
payments on account thereof made by Tenant prior to such default continuing
uncured beyond the expiration of any applicable grace period) shall immediately
become due and payable. Upon any such default continuing uncured beyond the
expiration of any applicable grace period occurring subsequent to the
institution by Owner of summary proceedings, Owner may render to Tenant a
statement of the balance of the total aggregate basic rent due and owing as well
as any additional rent due and owing to the date of such statement and if same
shall not be paid promptly by Tenant, i.e., within two (2) days after the
rendering of such statement, Owner in addition to all other rights granted to
Owner hereunder and without limitations may institute a dispossess summary
proceeding based upon such nonpayment by Tenant.

        57. SUPERVISION OF TENANT'S INVITEES, EMPLOYEES, ETC. Tenant
acknowledges and agrees that the Building of which the Demised Premises form a
part is a first-class office building. Tenant further acknowledges that as an
inducement to Owner to enter into this Lease with Tenant, Tenant has and does
represent, covenant and agree that Tenant will take all necessary measures and
institute all procedures as may be found necessary to insure that Tenant's
clients, invitees, and personnel do not loiter or congregate in the public areas
of the Building (including but not limited to the corridors. elevators, lobbies,
lavatories, etc.) and that such clients, invitees and personnel will at all
times conduct themselves in a proper business-like manner when passing through
such public areas of the Building for purposes of access and egress to and from
the Demised Premises. Tenant further acknowledges and agrees that the use of the
Demised Premises by Tenant shall be limited to business days only (i.e., Mondays
through Fridays, Federal, State, City and Building Union holidays excepted) from
8 A.M. to 6 P.M. and on Saturdays from 8 A.M. to 1 P.M. and that Owner in
Owner's sole discretion may grant Tenant, upon not less than three (3) business
days prior written request by Tenant, a license to use the Demised Premises on
such days and hours other than as provided for above, agrees that any breach by
Tenant of its foregoing agreements and representations will materially injure
Owner who has intentions to rent space in the Building to major Tenants and who
does not wish to have other present tenants of the Building disturbed, annoyed
or inconvenienced. Accordingly, it is expressly agreed that any violation by
Tenant of its agreements, representations and obligations pursuant to this
article shall constitute a material default by Tenant under the terms of this
Lease entitling Owner to exercise any and all rights granted Owner pursuant to
Articles 17 and 18 of this Lease including without limitation the right to
terminate this Lease and recover possession of the Demised Premises by reason of
Tenant's default.

        58. DEMISED PREMISES - "AS IS". It is understood and agreed that the
Demised Premises have been leased to Tenant and Tenant accepts the same in their
`As Is' condition in all respects as of the date Owner delivers possession of
the Demised Premises to Tenant.

        59. COMPLIANCE WITH LOCAL LAW NOS. 573,10/80,10/81,16/84 AND 76/85.
Tenant acknowledges and agrees that it shall be Tenant's responsibility and
obligation to comply with

                                       29
<PAGE>   30

all requirements and controls imposed by Local Laws, 573, 10/80, 10/81, 16/84
and 76/85 of the City of New York, as well as with any and all other now or
hereafter existing laws. rules and regulations, as the same now or hereafter
exit or hereafter may be amended, of the City of New York, or of any
governmental or quasi governmental agency or department having jurisdiction over
the Building, with respect to the Demised Premises or any portion of the
Building including but not limited to the partitioning, layout, exit signs,
telephone communications, fire conduits, emergency lighting, all systems
mechanical or otherwise, elevators, exterior of the Building, toilets and all
public areas. Tenant further acknowledges and agrees that if Owner shall perform
Tenant's installation or alteration work for Tenant pursuant to any work letter
agreement or pursuant to Tenant's request, Owner's sole responsibility with
respect thereto shall be limited to the workmanlike manner of such installation
or alteration and Tenant shall be responsible for the legality of any such
installation or alteration, i.e., the drawing of plans in compliance with law
and the obtaining of all permits relating thereto, including but not limited to
all necessary approvals and signoffs, and compliance, by work or otherwise, with
all laws, requirements and controls in accordance with this Article. Any
modification(s) of any such installation or alteration made within the Demised
Premises or alteration of the Building required as a result of such installation
or alteration of the Building required as a result of such Installation or
alteration shall be solely the responsibility of Tenant, at Tenant's sole cost
and expense, and Owner shall have no obligation or duty with respect thereto.
The performance of any work, installations and alterations required under the
foregoing Local Laws , 5/73, 10180, 10/81, 16/84 and 76/85 and all other above
described now or hereafter existing laws, rules, regulations. etc., shall be
performed by Tenant in accordance with and subject to all applicable provisions
of this Lease (including but not limited to Articles 3 and 6 hereof) and of law.

        With respect to any work to be performed under this article, Owner shall
have the option to perform such work on Tenant's behalf at Tenant's sole cost
and expense subject to Article 63 hereof, and with respect to work to be
performed to any portion of the Building other than the Demised Premises the
actual expenditure on Tenant's behalf shall be deemed to be total cost expended
to complete said work multiplied by Tenant's Proportionate Share defined in the
Real Estate Tax Escalation provision of this Lease (in the event this Lease does
not provide for a Tenant's Proportionate share, in lieu thereof and multiplier
shall be the percentage of the rentable square feet in the Building which are
located in the Demised Premises) subject to Article 63 hereof.

        60. CESSATION OF SERVICES AFTER TERMINATION OF LEASE. Tenant expressly
covenants and agrees that if Tenant shall default in the payment of rent or
additional rent hereunder or otherwise materially defaults under this Lease and
Owner shall in accordance with the applicable provisions of this Lease elect to
terminate this Lease on account of any such default, whether such termination be
effected by notices given to Tenant pursuant to Article 17 hereof or whether
Owner elects, in its sole discretion, to terminate the Lease by instituting
appropriate legal action against Tenant (or if Tenant shall vacate the Demised
Premises), that Owner from and after the date of termination of this Lease (or
the date of vacating the Demised Premises by Tenant) shall have the right to
cease furnishing any services, including without limitation, the cessation of
the furnishing of electric current to the Demised Premises, if Owner is required
to furnish electricity pursuant to another provision of this Lease, without
cessation or the furnishing of any such services constituting a partial eviction
and Owner shall be entitled to recover from Tenant reasonable use and occupancy
for any period that Tenant shall holdover in

                                       30
<PAGE>   31

the Demised Premises subsequent to the termination of this Lease in an
amount equal to the full basic annual rent and additional rent payable by Tenant
hereunder pursuant to Article 54 hereof, or in the case of Tenant's having
vacated the Demised Premises, Tenant shall be required to pay full rent and
additional rent hereunder as provided in this Lease, irrespective of the fact
that Owner may have ceased furnishing any services to the Demised Premises
vacated by Tenant.

        61. OWNER'S OVERHEAD, SUPERVISION & APPROVAL CHARGES. Whenever Owner or
its agent shall install a water meter pursuant to Article 29 thereof, or shall
perform work or furnish services at Tenant's request or on behalf of Tenant
which are not otherwise specifically billable to Tenant as additional rent
pursuant to any other provision or separate agreement or shall perform work
which Tenant should have performed but failed to perform prior to the expiration
of any applicable grace period with respect thereto, or any contractor or vendor
performs construction or furnishes labor, material or services or alteration
work on behalf of Tenant, in addition to all other charges as may be required to
be paid by Tenant as elsewhere provided in this Lease, Tenant shall pay to 1995
CAM LP upon rendition of 1995 CAM LP's bill therefor, an amount equal to
twenty-one (21) percent of the amounts actually expended by Owner and/or Tenant
in connection with the performance of such work or installation of such meter
(representing a charge of ten (10) percent of such cost for 1995 CAM LP's
overhead plus ten (10) percent for supervision).

        In addition, if pursuant to this Lease or any work letter or other
agreement entered into between Owner and Tenant, Tenant shall submit to Owner's
agent, 1995 CAM LP. plans or specifications for approval, Tenant shall pay to
1995 CAM LP upon being billed therefor the sum of $500. Said sum shall be
payable irrespective of whether or not approval of such plans and specifications
is granted or such plans and specifications are returned to Tenant with
objections thereto.

        If any plan or specification submitted to 1995 CAM LP shall in 1995 CAM
LP's sole opinion, require the expert opinion of an architect, engineer or other
professional service in order for 1995 CAM LP to determine whether or not to
approve or withhold consent thereto, 1995 CAM LP may retain an architect
engineer or other professional service for such purpose and Tenant agrees to pay
to 1995 CAM LP an amount equal to the reasonable fee of such architect, engineer
or other professional service actually paid by 1995 CAM LP for reviewing such
plan or specification.

        62. APPLICATION OF SECURITY. If. at any time during the term of this
Lease, Owner (in accordance with the applicable provisions of the Security
Deposit Article of this Lease) shall have applied all or a portion of the
security deposit by Tenant hereunder toward the curing of a default by Tenant
continuing uncured beyond the expiration of any applicable grace period then, it
shall be Tenant's obligation upon the notification by Owner of the application
of all or a portion of the security deposited by Tenant as the case may be, to
promptly deposit with Owner such sum of money as may be necessary to restore the
security deposit to the amount held by Owner prior to such application. Tenant's
failure to restore such security by payment of such sum to Owner within ten (10)
days after receipt of such notice of application by Owner, shall constitute a
material default under this Lease.

                                       31

<PAGE>   32

        63. BROKER. Tenant covenants and represents that it has dealt with no
broker in connection with the within Lease transaction or the Demised Premises
other than Glen Equities Ltd. and Tenant agrees to hold Owner harmless from any
claims for commission or other fees made by any other broker claiming to have
dealt with Tenant in connection with this Lease transaction or the Demised
Premises. Tenant shall have no obligation to make payment to aforesaid broker(s)
on account of such commission or fees unless Tenant by separate agreement has
undertaken to do so.

        64. RIDER PORTIONS PREVAIL. The rider portions of this Lease shall be
read in conjunction with the printed standard form of Lease annexed hereto. If
there should be any inconsistency or ambiguity between the terms of the rider
portions of this Lease and the standard form of Lease, then the rider portions
of this Lease shall prevail.

        65. NO OTHER REPRESENTATIONS, CONSTRUCTION, GOVERNING LAW. Tenant
expressly acknowledges and agrees that Owner and its agents have not made and
are not making, and Tenant, in executing and delivering this Lease, is not
relying upon, any warranties, representations, promises or statements, except to
the extent that the same are expressly set forth in this Lease or in any other
written agreement which may be made between the parties concurrently with the
execution and delivery of this Lease and expressly refers to this Lease.

        This Lease shall be governed in all respects by the laws of the State of
New York.

        66. ACCORD AND SATISFACTION. No payment by Tenant or receipt by Owner of
a lesser amount than any installment or payment of rent due shall be deemed to
be other than on account of the amount due, and no endorsement or statement on
any check or payment of rent shall be deemed an accord and satisfaction. Owner
may accept such check or payment without prejudice to Owner's right to recover
the balance of such installment or payment of rent, or pursue any other remedies
available to Owner.

        67. PROVISIONS SEVERABLE. If any term or provision of this Lease or the
application thereof to any person or circumstance shall, to any extent be
invalid or unenforceable, the remainder of this Lease, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby and each term
and provision of this Lease shall be valid and be enforced to the fullest extent
permitted by law.

        68. EXECUTION & DELIVERY OF LEASE. Submission by Owner of the within
Lease for review and execution by Tenant shall confer no rights nor impose any
obligations on either party unless and until both Owner and Tenant shall have
executed this Lease and duplicated originals thereof shall have been delivered
to the respective parties hereto.

        69. TENANT REIMBURSEMENT. The Tenant agrees to accept the Space in its
"As Is" condition. Any work to be performed shall be at Tenant's sole cost and
expense. All such work shall be done in a first class workmanlike manner and in
compliance with all applicable laws, rules and regulations. In order to assist
the Tenant in effecting certain improvements in conjunction with the Tenant
letting the Space, the Owner within thirty (30) days after its receipt from
Tenant of paid bills for permanent buildings improvements, will reimburse the
Tenant in an

                                       32
<PAGE>   33

amount not to exceed Eighteen Thousand Two Hundred dollars ($18,200) in the
aggregate. Cost of improvements, as used herein shall mean Tenant's actual
out-of-pocket expenses for materials and labor.

        70. UNCOLLECTIBLE CHECKS. It is hereby understood and agreed by Tenant
that in the event Owner receives a check from Tenant for the payment of basic
annual rent, additional rent and/or any other charge(s) due under this Lease,
and such check is uncollectible by Owner due to insufficient funds in Tenant's
account or for any other reason, Tenant shall pay to 1995 CAM LP a service
charge in the sum of $100, for Owner's expense in processing such uncollectible
check, as additional rent under this Lease together with Tenant's next monthly
rent installment due under this Lease. The provisions of this Article shall not
be deemed to limit Owner from enforcing any other rights Owner may have under
this Lease in the event of Owner's receipt of any such collectible check and
1995 CAM LP's right herein to collect a service charge, as provided above, shall
be in addition to all other rights of Owner contained in this Lease.

        IN WITNESS WHEREOF, Owner and Tenant have respectively signed and sealed
this Lease as of the day and year first above written.

Witness for Owner:                           OWNER
                                             1995 CAM LP

/s/ Barry                                    /s/
----------------------------------           ----------------------------------
                                             General Partner

Witness for Tenant:                          TENANT:
                                             VIRAGE, INC.

/s/ Christen L. Stockdale                    /s/ Frank Pao
----------------------------------           ----------------------------------
                                             Mr. Frank Pao, V.P. of Business
                                             Affairs & General Manager

                                       33

<PAGE>   34

                                    GUARANTY

FOR VALUE RECEIVED. and in consideration for, and as an inducement to Owner
making the within Lease with Tenant, the undersigned guarantees to Owner,
Owner's successors and assigns, the full performance and observance of all the
covenants, conditions and agreements, therein provided to be performed and
observed by Tenant, including the "Rules and Regulations" as therein provided,
without requiring any notice of nonpayment, nonperformance or nonobservance, or
proof, or notice, or demand, whereby to charge the undersigned therefor, all of
which the undersigned hereby expressly waives and expressly agrees that the
validity of this agreement and the obligations of the guarantor hereunder shall
in no wise be terminated, affected or impaired by reason of the assertion by
Owner against Tenant of any of the rights or remedies reserved to Owner pursuant
to the provisions of the within Lease. The undersigned further covenants and
agrees that this guaranty shall remain and continue in full force and effect as
to any renewal, modification or extension of this Lease and during any period
when Tenant is occupying the premises as a "statutory tenant". As a further
inducement to Owner to make this Lease and in consideration thereof, Owner and
the undersigned covenant and agree that in any action or proceeding brought by
either Owner or the undersigned against the other on any matters whatsoever
arising out of, under, or by virtue of the terms of this Lease or of this
guaranty that Owner and the undersigned shall and do hereby waive trial by jury.

DATED ______________, 199 ,

                                              ----------------------------------
                                              GUARANTOR

                                              ----------------------------------
                                              WITNESS

                                              ----------------------------------
                                              GUARANTOR'S RESIDENCE

                                              ----------------------------------
                                              BUSINESS ADDRESS

                                              ----------------------------------
                                              FIRM NAME

                                       34
<PAGE>   35

STATE OF NEW YORK,  ) ss:
COUNTY OF           )

        On this ____day of ________, 19__ before me personally came
________________to me known to be the individual described in, and who executed
the foregoing Guaranty and acknowledge to me that he executed the same,

                                          --------------------------------------
                                          NOTARY

                                       35

<PAGE>   36
                                    ADDENDUM

        This document will act as an addendum to that certain Standard Form of
Office Lease dated November 22, 1999, by and between 1995 CAM LP, a New York
Partnership, c/o GLEN EQUITIES LTD, 551 Madison Avenue, New York, New York,
10022, party on the first part, hereinafter referred to as OWNER, and Virage,
Inc., a California corporation, having an office at 1120 6th Avenue, New York,
New York, party of the second part, hereinafter referred to as TENANT. This
addendum shall be read in conjunction with the Standard Form of Lease and rider
attached hereto. If there should be any inconsistency or ambiguity between the
terms of this addendum and the rider portions of this Lease and/or the Standard
Form of Lease, then the addendum shall control.

        The parties hereby covenant and agree as follows:

        1. Notwithstanding anything contained herein to the contrary, Owner
shall not unreasonably withhold its consent to any alterations, installations,
additions or improvements which are non-structural and which do not affect
utility services, plumbing or electrical systems in the Building.

        2. Notwithstanding anything contained herein to the contrary, if due to
Owner's repairs necessitated by Owner's actions, Tenant is unable to use the
Demised Premises for the operation of Tenant's business therein for a period in
excess of twelve (12) consecutive business days, Tenant shall, in addition to
any rights Tenant may have, be entitled to the abatement of the basic annual
rent and additional rent from and after the expiration of said twelve (12)
consecutive business day period until the time that Tenant shall be able to
resume the conduct of its business in the Demised Premises.

        3. The failure of Tenant to seek redress for a violation of, or to
insist upon the strict performance of any covenant or condition of this Lease
shall not prevent a subsequent act which would have originally constituted a
violation from having all the force and effect of any original violation. The
continuing compliance of Tenant with the terms of this Lease with knowledge of
breach of any covenant of this Lease shall not be deemed a waiver of such breach
and no provision of this Lease shall be deemed to have been waived by Tenant
unless such waiver is signed in writing by Tenant.

        4. Tenant shall not pay a separate fee for the removal of Tenant's
refuse and rubbish from the building which rubbish and refuse is of the nature
and kind disposed of in the ordinary course of business provided the same is
non-toxic and non-hazardous. Tenant recognizes and acknowledges that it may be
charged a fee and will promptly pay to Owner any such fee for the disposal of
bulky or excessive rubbish and refuse of the nature and kind disposed of outside
of the ordinary course of business.

        5. Notwithstanding anything contained herein to the contrary, after
receipt of notice from Tenant of its intention to lease or sublease all or part
of the Demised Premises, Owner shall have thirty (30) days within which to
exercise its options set forth in Clause 43 of said Lease to provide its consent
or denial to Tenant's proposal to sublet part or all of the Demised Premises.
Through this Addendum, Owner specifically consents to Tenant's subletting of no
more than

<PAGE>   37
        Thirty Percent (30%) of the Demised Premises to British Broadcasting
Corporation, pursuant to Clause 43 of the Standard Form of Office Lease.

        6. In case it shall be necessary for Tenant to institute any action or
proceeding against Owner for the violation of any of the covenants and
provisions of this lease or for the recovery of possession of the Demised
Premises or should Tenant be compelled to intervene in any action or proceeding
wherein Owner is a party in order to enforce or protect Tenant's rights or
interests hereunder, then and in any of such events, if Tenant shall be
successful in such action or proceeding, Owner shall be obligated to pay
Tenant's reasonable attorney's fees, costs and disbursements incurred for the
institution and prosecution of any such action, proceeding or intervention.

        7. Owner and Tenant hereby agree and covenant to act in good faith and
use their best efforts, without Owner incurring monetary expense, to work
jointly to obtain an agreement from British Broadcasting Corporation to
contribute monies to reimburse Tenant for expenses Tenant incurs in undertaking
improvements to the Demised Premises.

Witness for Owner:                           OWNER
                                             1995 CAM LP

/s/ Barry                                    /s/
----------------------------------           ----------------------------------
                                             General Partner

Witness for Tenant:                          TENANT:
                                             VIRAGE, INC.

/s/ Christen L. Stockdale                    /s/ Frank Pao
----------------------------------           ----------------------------------
                                             Mr. Frank Pao, V.P. of Business
                                             Affairs & General Manager

                                       37

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