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California-San Mateo-177 Bovet Road Lease - Casiopea Venture Corp. and Virage Inc.

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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:



                   Section Where                              Section Where
   Term               Defined                Term                Defined
   ----           ----------------     ------------------    ----------------
                                                    
ALTERATIONS       Subsection 9.1       OPERATING EXPENSES    Subsection 5.3.1

ASSESSMENTS       Subsection 5.2.2     OPTION                Subsection 36.1



<PAGE>   3


                                                                       
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


        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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<PAGE>   4

                             (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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<PAGE>   5

        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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<PAGE>   6

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.


                                       10
<PAGE>   11

                      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


                                       20
<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.


                                       29
<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.


                                       30
<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.



     Reference                           Date Due                   Responsible Party
     ---------                           --------                   -----------------
                                                              
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


        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:



From                      Through                 Monthly                 Rent
-------------             ------------            ----------              -------------
                                                                 
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


        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:



From                      Through                 Monthly                 Rent
-------------             ------------            ----------              -------------
                                                                 
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


                                        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:



From                      Through                 Monthly                 Rent
-------------             ------------            ----------              -------------
                                                                 
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


        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.



Reference                                     Date Due                               Responsible Party
---------                                     --------                               -----------------

                                                                               
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


        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:



From                      Through                 Monthly                 Rent
----------------          ------------            ----------              -------------
                                                                
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


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:



PERIOD                                             RATE PSF/MO           MONTHLY RENT
-------------------------------------------------------------------------------------
                                                                   
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


        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:



PERIOD                                          RATE PSF/MO            MONTHLY RENT
-----------------------------------------------------------------------------------
                                                                
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


        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:



PERIOD                            RATE PSF/MO                     MONTHLY RENT
------------------------------------------------------------------------------
                                                           
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


        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