OFFICE LEASE AGREEMENT

<PAGE>
 
                                                                   Exhibit 10.42


                                  THE CONCOURSE

                                THE CONCOURSE II

                               224 AIRPORT PARKWAY
                               SAN JOSE, CALIFORNIA

                             OFFICE LEASE AGREEMENT

                                     BETWEEN

                      CA-THE CONCOURSE LIMITED PARTNERSHIP
                                  ("LANDLORD")

                                        AND

                     PIXELWORKS, INC., AN OREGON CORPORATION
                                   ("TENANT")

<PAGE>

                             OFFICE LEASE AGREEMENT

     THIS OFFICE LEASE AGREEMENT (the "LEASE") is made and entered into as of
the 05 day of December 28 2005, by and between CA-THE CONCOURSE LIMITED
PARTNERSHIP, A DELAWARE LIMITED PARTNERSHIP ("LANDLORD"), and PIXELWORKS, INC.,
AN OREGON CORPORATION ("TENANT"). The following exhibits and attachments are
incorporated into and made a part of the Lease: EXHIBIT A (Outline and Location
of Premises), EXHIBIT A-1 (Outline and Location of Refusal Space), EXHIBIT B
(Expenses and Taxes), EXHIBIT C (Work Letter), EXHIBIT C-1 (Space Plans),
EXHIBIT C-2 (Lobby Work Letter), EXHIBIT D (Commencement Letter), EXHIBIT E
(Building Rules and Regulations), EXHIBIT F (Additional Provisions), EXHIBIT F-1
(Hazardous Materials Questionnaire), EXHIBIT G (Parking Agreement) and EXHIBIT H
(Asbestos Notification).

1.    BASIC LEASE INFORMATION.

     1.01 "BUILDING" shall mean the building located at 224 Airport Parkway, San
          Jose, California, commonly known as The Concourse II, in the project
          commonly known as The Concourse. "RENTABLE SQUARE FOOTAGE OF THE
          BUILDING" is deemed to be 114,211 square feet.

     1.02 "PREMISES" shall mean the area shown on EXHIBIT A to this Lease. The
          Premises is located on the 3rd and 4th floors and known as Suite Nos.
          300 and 400. If the Premises include one or more floors in their
          entirety, all corridors and restroom facilities located on such full
          floors shall be considered part of the Premises. The "RENTABLE SQUARE
          FOOTAGE OF THE PREMISES" is deemed to be 37,346 square feet. Landlord
          and Tenant stipulate and agree that the Rentable Square Footage of the
          Building and the Rentable Square Footage of the Premises are correct.

     1.03 "BASE RENT":

<TABLE>
<CAPTION>
                 ANNUAL RATE PER      MONTHLY
    PERIOD          SQUARE FOOT       BASE RENT
--------------    ---------------    ----------
<S>               <C>                <C>
Months   1 - 12         $21.60        $67,222.80
Months 13 - 24         $22.20        $69,090.10
Months 25 - 36         $22.80         $70,957.40
Months 37 - 48         $23.40        $72,824.70
Months 49 - 60         $24.00        $74,692.00
Months 61 - 72         $24.60        $76,559.30
Months 73 - 84         $25.20        $78,426.60
</TABLE>

          Notwithstanding anything in this Section of the Lease to the contrary,
          so long as Tenant is not in default under this Lease, Tenant shall be
          entitled to an abatement of Base Rent in the amount of $67,222.80 per
          month for 6 consecutive full calendar months of the Term, beginning
          with the 1st full calendar month of the Term (the "BASE RENT ABATEMENT
          PERIOD"). The total amount of Base Rent abated during the Base Rent
          Abatement Period shall equal $403,336.80 (the "ABATED BASE RENT"). If
           Tenant defaults at any time during the Term and fails to cure such
          default within any applicable cure period under the Lease, all
          unamortized Abated Base Rent shall immediately become due and payable.
          The payment by Tenant of the Abated Base Rent in the event of a
          default shall not limit or affect any of Landlord's other rights,
          pursuant to this Lease or at law or in equity. During the Base Rent
          Abatement Period, only Base Rent shall be abated, and all Additional
          Rent and other costs and charges specified in this Lease shall remain
          as due and payable pursuant to the provisions of this Lease.

     1.04 "TENANT'S PRO RATA SHARE": 32.6991%.

     1.05 "BASE YEAR" for Taxes (defined in EXHIBIT B): 2006; "BASE YEAR" for
          Expenses (defined in EXHIBIT B): 2006.

     1.06 "TERM": A period of 84 months and 0 days. Subject to Section 3, the
          Term shall commence on March 1, 2006 (the "COMMENCEMENT DATE") and,
           unless


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          terminated early in accordance with this Lease, end on February 28,
          2013 (the "TERMINATION DATE").

     1.07 "ALLOWANCE": $933,650.00, as more particularly described as the
          Maximum Amount on Exhibit C hereto.

     1.08 "SECURITY DEPOSIT": $156,853.20, as more fully described in Section 6.

     1.09 "GUARANTOR(S)": None

     1.10 "BROKER(S)": Integrated Corporate Property Services and CPS Commercial
          Property Services, a$ co-brokers.

     1.11 "PERMITTED Use": General office use, including, without limitation,
          (a) software related engineering, design, and product testing, (b)
          semiconductor related engineering and design, and (c) building,
          assembling, and physically constructing products related thereto;
          provided, however, that no more than 10% of the Premises (measured
          against the total Rentable Square Footage of the Premises) shall be
          used for building, assembling, and/or physically constructing any
          products.

     1.12 "NOTICE ADDRESS(ES)":

<TABLE>
<S>                                                <C>
          Landlord:                                Tenant;
          CA-The Concourse Limited Partnership     Prior to the Commencement Date:
          c/o Equity Office
          1740 Technology Drive, Suite 150         Pixelworks, Inc.
          San Jose, California 95110               Attn: Chief Operating Officer
          Attention: Concourse Property Manager    8100 SW Nyberg Road
                                                  Tualatin, OR 97062

                                                  With a copy to Corporate Counsel at the same address.

                                                   From and after the Commencement Date:

                                                  Pixelworks, Inc.
                                                  Attn: Chief Operating Officer
                                                  8100 SW Nyberg Road
                                                  Tualatin, OR 97062

                                                  With a copy to Corporate Counsel at the same address.
</TABLE>

          A copy of any notices to Landlord shall be sent to Equity Office, One
          Market Street, Spear Tower, Suite 600, San Francisco, CA 94105, Attn:
          Regional Counsel.

     1.13 "BUSINESS DAY(S)" are Monday through Friday of each week, exclusive of
          New Year's Day, Presidents Day, Memorial Day, Independence Day, Labor
          Day, Thanksgiving Day and Christmas Day ("HOLIDAYS"). Landlord may
          designate additional Holidays that are commonly recognized by other
          office buildings in the area where the Building is located. "BUILDING
          SERVICE HOURS" are 8:00 a.m. to 6:00 p.m. on Business Days.

     1.14 "LANDLORD WORK" means the work, if any, that Landlord is obligated to
          perform in the Premises pursuant to a separate agreement (the "WORK
          LETTER", if any, attached to this Lease as EXHIBIT C.

     1.15 "PROPERTY" means the Building and the parcel(s) of land on which it is
          located and, at Landlord's discretion, the parking facilities and
          other improvements, if any, serving the Building and the parcel(s) of
          land on which they are located. '


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<PAGE>

2.    LEASE GRANT.

     The Premises are hereby leased to Tenant from Landlord, together with the
right to use any portions of the Property that are designated by Landlord for
the common use of tenants and others (the "COMMON AREAS").

3.    ADJUSTMENT OF COMMENCEMENT DATE; POSSESSION.

     3.01 If Landlord is required to perform Landlord Work prior to the
Commencement Date: (a) the date set forth in Section 1.06 as the Commencement
Date shall instead be defined as the "TARGET COMMENCEMENT DATE"; (b) the actual
Commencement Date shall be the date on which the Landlord Work is Substantially
Complete (defined below); and (c) the Termination Date will be the last day of
the Term as determined based upon the actual Commencement Date. Landlord's
failure to Substantially Complete the Landlord Work by the Target Commencement
Date shall not be a default by Landlord or otherwise render Landlord liable for
damages. Promptly after the determination of the Commencement Date, Landlord and
Tenant shall enter into a commencement letter agreement in the form attached as
EXHIBIT D. Tenant's failure to execute and return the commencement letter, or to
provide written objection to the statements contained in the letter, within 30
days after the date of the letter shall be deemed an approval by Tenant of the
statements contained therein. If the Termination Date does not fall on the last
day of a calendar month, Landlord and Tenant may elect to adjust the Termination
Date to the last day of the calendar month in which the Termination Date occurs
by the mutual execution of a commencement letter agreement setting forth such
adjusted date. The Landlord Work shall be deemed to be "SUBSTANTIALLY COMPLETE"
on the date that all Landlord Work has been performed, other than any details of
construction, mechanical adjustment or any other similar matter, the
non-completion of which does not materially interfere with Tenant's use of the
Premises. If Landlord is delayed in the performance of the Landlord Work as a
result of the acts or omissions of Tenant, the Tenant Related Parties (defined
in Section 13) or their respective contractors or vendors, including, without
limitation, changes requested by Tenant to approved plans, Tenant's failure to
comply with any of its obligations under this Lease, or the specification of any
materials or equipment with long lead times (a "TENANT DELAY"), the Landlord
Work shall be deemed to be Substantially Complete on the date that Landlord
could reasonably have been expected to Substantially Complete the Landlord Work
absent any Tenant Delay.

If the Commencement Date has not occurred on or before the Outside Completion
Date (defined below), Tenant shall be entitled to a rent abatement following the
Commencement Date of $2,240.76 for every day in the period beginning on the
Outside Completion Date and ending on the Commencement Date. The "OUTSIDE
COMPLETION DATE" shall mean the later of (x) March 1, 2006 and (y) the date
which is 60 days after the later of the date this Lease is properly executed and
delivered by Tenant, the date all prepaid rental, Security Deposits and
Guaranties required under this Lease are delivered to Landlord, the date the
building permit for the Landlord Work has been obtained, and, if applicable, the
date all contingencies, if any, specified in this Lease have been satisfied or
waived in writing by Landlord. Landlord and Tenant acknowledge and agree that:
(i) the determination of the Commencement Date shall take into consideration the
effect of any Tenant Delays by Tenant; and (ii) the Outside Completion Date
shall be postponed by the number of days the Commencement Date is delayed due to
events of Force Majeure.

     3.02 Subject to Landlord's obligation, if any, to perform Landlord Work,
the Premises are accepted by Tenant in "as is" condition and configuration
without any representations or warranties by Landlord (except as otherwise
explicitly set forth herein). By taking possession of the Premises, Tenant
agrees that the Premises are in good order and satisfactory condition. Tenant's
acceptance of the Premises shall be subject to Landlord's obligation to correct
portions of the Landlord Work as set forth on a construction punch list prepared
by Landlord and Tenant in accordance with the terms hereof. Within 15 days after
Substantial Completion of the Landlord Work, Landlord and Tenant shall together
conduct an inspection of the Premises and prepare a "punch list" setting forth
any portions of the Landlord Work that are not in conformity with the Landlord
Work as required by the terms of this Lease. Notwithstanding the foregoing, at
the request of Landlord, such construction punch list shall be mutually prepared
by Landlord and Tenant prior to the date on which Tenant first begins to move
its furniture, equipment or other personal property into the Premises. Landlord,
as part of the Landlord Work, shall use good faith efforts to correct all such
items within a reasonable time following the completion of the punch list.
Landlord shall not be liable for a failure to deliver possession of the Premises
or any other space due to the holdover or unlawful possession of such space by
another party, however Landlord shall use reasonable efforts to obtain
possession of the space. The commencement date for the space, in such event,
shall be


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postponed until the date Landlord delivers possession of the Premises to Tenant
free from occupancy by any party. If Tenant takes possession of the Premises
before the Commencement Date, such possession shall be subject to the terms and
conditions of this Lease and Tenant shall pay Rent (defined in Section 4.01) to
Landlord for each day of possession before the Commencement Date. However,
except for the cost of services requested by Tenant (e.g. freight elevator
usage), Tenant shall not be required to pay Rent for any days of possession
before the Commencement Date during which Tenant, with the approval of Landlord,
is in possession of the Premises for the sole purpose of performing improvements
or installing furniture, equipment or other personal property. Subject to the
terms of this Section 3, Landlord grants Tenant the right to enter the Premises
no earlier than 30 days prior to the Commencement Date, at Tenant's sole risk,
(i) following installation of the ceiling grid in the Premises, solely for the
purpose of installing telecommunications and data cabling in the Premises, and
(ii) following installation of the carpeting in the Premises, solely for the
purpose of installing equipment, furnishings and other personalty. Landlord may
withdraw such permission to enter the Premises prior to the Commencement Date at
any time that Landlord reasonably determines that such entry by Tenant is
causing a dangerous situation for Landlord, Tenant or their respective
contractors or employees, or if Landlord reasonably determines that such entry
by Tenant is hampering or otherwise preventing Landlord from proceeding with the
completion of Landlord's Work at the earliest possible date.

4.    RENT.

     4.01 Tenant shall pay Landlord, without any setoff or deduction, unless
expressly set forth in this Lease, all Base Rent and Additional Rent due for the
Term (collectively referred to as "RENT"). "ADDITIONAL RENT" means all sums
(exclusive of Base Rent) that Tenant is required to pay Landlord under this
Lease. Tenant shall pay and be liable for all rental, sales and use taxes (but
excluding income taxes), if any, imposed upon or measured by Rent. Base Rent and
recurring monthly charges of Additional Rent shall be due and payable in advance
on the first day of each calendar month without notice or demand, provided that
the installment of Base Rent for the seventh full calendar month of the Term,
and the first monthly installment of Additional Rent for Expenses and Taxes,
shall be payable upon the execution of this Lease by Tenant. All other items of
Rent shall be due and payable by Tenant on or before 30 days after billing by
Landlord. Rent shall be made payable to the entity, and sent to the address,
Landlord designates and shall be made by good and sufficient check or by other
means acceptable to Landlord. Tenant shall pay Landlord an administration fee
equal to 5% of all past due Rent, provided that Tenant shall be entitled to a
grace period of 5 days for the first 2 late payments of Rent in a calendar year.
In addition, past due Rent shall accrue interest at 12% per annum. Landlord's
acceptance of less than the correct amount of Rent shall be considered a payment
on account of the earliest Rent due. Rent for any partial month during the Term
shall be prorated. No endorsement or statement on a check or letter accompanying
payment shall be considered an accord and satisfaction. Tenant's covenant to pay
Rent is independent of every other covenant in this Lease.

     4.02 Tenant shall pay Tenant's Pro Rata Share of Taxes and Expenses in
accordance with EXHIBIT B of this Lease.

5.    COMPLIANCE WITH LAWS; USE.

      The Premises shall be used for the Permitted Use and for no other use
whatsoever. Tenant shall comply with all statutes, codes, ordinances, orders,
rules and regulations of any municipal or governmental entity whether in effect
now or later, including the Americans with Disabilities Act ("LAW(S)"),
regarding the operation of Tenant's business and the use, condition,
configuration and occupancy of the Premises. In addition, Tenant shall, at its
sole cost and expense, promptly comply with any Laws that relate to the "Base
Building" (defined below), but only to the extent such obligations are triggered
by Tenant's use of the Premises, other than for general office use, or
Alterations or improvements in the Premises performed or requested by Tenant.
"BASE BUILDING" shall include the structural portions of the Building, the
public restrooms and the Building mechanical, electrical and plumbing systems
and equipment located in the internal core of the Building on the floor or
floors on which the Premises are located. Tenant shall promptly provide Landlord
with copies of any notices it receives regarding an alleged violation of Law.
Tenant shall comply with the rules and regulations of the Building attached as
EXHIBIT E and such other reasonable rules and regulations adopted by Landlord
from time to time, including rules and regulations for the performance of
Alterations (defined in Section 9).

     As of the date hereof, Landlord has not received notice from any
governmental agencies that the Building is in violation of either applicable
fire/life/safety Laws or Title III of the Americans with


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<PAGE>

Disabilities Act. Landlord represents, to its knowledge based solely upon that
certain Phase I Environmental Site Assessment by Golder Associates dated
December 10, 1997, that the Premises are free of Hazardous Materials (as defined
below) in amounts and conditions which are in violation of applicable
environmental laws. As used in this Lease, "HAZARDOUS MATERIALS" shall mean any
material or substance that is now or hereafter defined or regulated by any
statute, regulation, ordinance, or governmental authority thereunder, as
radioactive, toxic, hazardous, or waste, or a chemical known to the state of
California to cause cancer or reproductive toxicity, including but not limited
to (i) petroleum and any of its constituents or byproducts, (ii) radioactive
materials, (iii) asbestos in any form or condition, and (iv) substances or
materials regulated by any of the following, as amended from time to time, and
any rules promulgated thereunder: the Comprehensive Environmental Response
Compensation and Liability Act of 1980, 42 U.S.C. Sections 9601 et seq.; the
Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901, et seq.; the
Toxic Substances Control Act, 15 U.S.C. Sections 2601, et seq.; the Clean Water
Act, 33 U.S.C. Sections 1251 et seq; the Clean Air Act, 42 U.S.C. Sections 7401
et seq.; The California Health and Safety Code; The California Water Code; The
California Labor Code; The California Public Resources Code; The California Fish
and Game Code.

6.    SECURITY DEPOSIT.

     The Security Deposit shall be delivered to Landlord upon the execution of
this Lease by Tenant and held by Landlord without liability for interest (unless
required by Law) as security for the performance of Tenant's obligations. The
Security Deposit is not an advance payment of Rent or a measure of damages.
Landlord may use all or a portion of the Security Deposit to satisfy past due
Rent or to cure any Default (defined in Section 18) by Tenant, or to satisfy any
other loss or damage resulting from Tenant's Default as provided in Section 19.
If Landlord uses any portion of the Security Deposit, Tenant shall, within 5
days after demand, restore the Security Deposit to its original amount. Landlord
shall return any unapplied portion of the Security Deposit to Tenant within 45
days after the later to occur of: (a) determination of the final Rent due from
Tenant; or (b) the later to occur of the Termination Date or the date Tenant
surrenders the Premises to Landlord in compliance with Section 25. Landlord may
assign the Security Deposit to a successor or transferee and, following the
assignment, Landlord shall have no further liability for the return of the
Security Deposit. Landlord shall not be required to keep the Security Deposit
separate from its other accounts. Tenant hereby waives the provisions of Section
1950.7 of the California Civil Code, or any similar or successor Laws now or
hereinafter in effect.

7.    BUILDING SERVICES.

     7.01 Landlord shall furnish Tenant with the following services: (a) water
for use in the Base Building lavatories; (b) customary heat and air conditioning
in season during Building Service Hours, although Tenant shall have the right to
receive HVAC service during hours other than Building Service Hours by paying
Landlord's then standard charge for additional HVAC service and providing such
prior notice as is reasonably specified by Landlord; (c) standard janitorial
service on Business Days; (d) elevator service; (e) electricity in accordance
with the terms and conditions in Section 7.02; (f) access to the Building for
Tenant and its employees 24 hours per day/7 days per week, subject to the terms
of this Lease and such protective services or monitoring systems, if any, as
Landlord may reasonably impose, including, without limitation, sign-in
procedures and/or presentation of identification cards; and (g) such other
services as Landlord reasonably determines are necessary or appropriate for the
Property.

     7.02 Electricity used by Tenant in the Premises shall, at Landlord's
option, be paid for by Tenant either: (a) through inclusion in Expenses (except
as provided for excess usage); (b) by a separate charge payable by Tenant to
Landlord; or (c) by separate charge billed by the applicable utility company and
payable directly by Tenant. Without the consent of Landlord, Tenant's use of
electrical service shall not exceed, either in voltage, rated capacity, use
beyond Building Service Hours or overall load, that which Landlord reasonably
deems to be standard for the Building. Landlord shall have the right to measure
electrical usage by commonly accepted methods, including the installation of
measuring devices such as submeters and check meters. If it is determined that
Tenant is using excess electricity, Tenant shall pay Landlord Additional Rent
for the cost of such excess electrical usage and for the cost of purchasing and
installing the measuring device(s).

     7.03 Landlord's failure to furnish, or any interruption, diminishment or
termination of services due to the application of Laws, the failure of any
equipment, the performance of repairs, improvements or alterations, utility
interruptions or the occurrence of an event of Force Majeure (defined in Section
26.03) (collectively a "SERVICE FAILURE") shall not render Landlord liable to
Tenant, constitute a constructive eviction of Tenant, give rise to an abatement
of Rent,


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nor relieve Tenant from the obligation to fulfill any covenant or agreement.
However, if the Premises, or a material portion of the Premises, are made
untenantable for a period in excess of 2 consecutive Business Days as a result
of a Service Failure that is reasonably within the control of Landlord to
correct, then Tenant, as its sole remedy, shall be entitled to receive an
abatement of Rent payable hereunder during the period beginning on the 4th
consecutive Business Day of the Service Failure and ending on the day the
service has been restored. If the entire Premises have not been rendered
untenantable by the Service Failure, the amount of abatement shall be equitably
prorated.

8.    LEASEHOLD IMPROVEMENTS.

     All improvements in and to the Premises, including any Alterations (defined
in Section 9.03) (collectively, "LEASEHOLD IMPROVEMENTS") shall remain upon the
Premises at the end of the Term without compensation to Tenant, provided that
Tenant, at its expense, in compliance with the National Electric Code or other
applicable Law, shall remove any Cable (defined in Section 9.01 below). In
addition, Landlord, by written notice to Tenant within 30 days prior to the
Termination Date, may require Tenant, at its expense, to remove any Landlord
Work or Alterations that, in Landlord's reasonable judgment, are of a nature
that would require removal and repair costs that are materially in excess of the
removal and repair costs associated with standard office improvements (the Cable
and such other items collectively are referred to as "REQUIRED REMOVABLES").
Required Removables shall include, without limitation, internal stairways,
raised floors, personal baths and showers, vaults, rolling file systems and
structural alterations and modifications. The Required Removables shall be
removed by Tenant before the Termination Date. Tenant shall repair damage caused
by the installation or removal of Required Removables. If Tenant fails to
perform its obligations in a timely manner, Landlord may perform such work at
Tenant's expense. Tenant, at the time it requests approval for a proposed
Alteration, including any Initial Alterations or Landlord Work, as such terms
may be defined in the Work Letter attached as EXHIBIT C, may request in writing
that Landlord advise Tenant whether the Alteration, including any Initial
Alterations or Landlord Work, or any portion thereof, is a Required Removable.
Within 10 days after receipt of Tenant's request, Landlord shall advise Tenant
in writing as to which portions of the alteration or other improvements are
Required Removables. Notwithstanding the foregoing (except for Cable (if any)
and/or any electrical panels/transformers and any above Building standard
electrical outlets and hook-ups), no portion of the Landlord Work (which
Landlord Work shall be mutually agreed upon and depicted in the Plans (as
hereinafter defined)) shall be deemed a Required Removable.

9.    REPAIRS AND ALTERATIONS.

     9.01 Tenant shall periodically inspect the Premises to identify any
conditions that are dangerous or in need of maintenance or repair. Tenant shall
promptly provide Landlord with notice of any such conditions. Tenant shall, at
its sole cost and expense, perform all maintenance and repairs to the Premises
that are not Landlord's express responsibility under this Lease, and keep the
Premises in good condition and repair, reasonable wear and tear excepted.
Tenant's repair and maintenance obligations include, without limitation, repairs
to: (a) floor covering; (b) interior partitions; (c) doors; (d) the interior
side of demising walls; (e) electronic, fiber, phone and data cabling and
related equipment that is installed by or for the exclusive benefit of Tenant
(collectively, "CABLE"); (f) supplemental air conditioning units, kitchens,
including hot water heaters, plumbing, and similar facilities exclusively
serving Tenant; and (g) Alterations. Subject to the terms of Section 15 below,
to the extent Landlord is not reimbursed by insurance proceeds, Tenant shall
reimburse Landlord for the cost of repairing damage to the Building caused by
the acts of Tenant, Tenant Related Parties and their respective contractors and
vendors. If Tenant fails to make any repairs to the Premises for more than 15
days after notice from Landlord (although notice shall not be required in an
emergency), Landlord may make the repairs, and Tenant shall pay the reasonable
cost of the repairs, together with an administrative charge in an amount equal
to 7% of the cost of the repairs.

     9.02 Landlord shall keep and maintain in good repair and working order and
perform maintenance upon the: (a) structural elements of the Building; (b)
mechanical (including HVAC), electrical, plumbing and fire/life safety systems
serving the Building in general; (c) Common Areas; (d) roof of the Building; (e)
exterior windows of the Building; and (f) elevators serving the Building.
Landlord shall promptly make repairs for which Landlord is responsible. Tenant
hereby waives any and all rights under and benefits of subsection 1 of Section
1932, and Sections 1941 and 1942 of the California Civil Code, or any similar or
successor Laws now or hereinafter in effect.


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<PAGE>

     9.03 Tenant shall not make alterations, repairs, additions or improvements
or install any Cable (collectively referred to as "ALTERATIONS") without first
obtaining the written consent of Landlord in each instance, which consent shall
not be unreasonably withheld or delayed, However, Landlord's consent shall not
be required for any Alteration that satisfies all of the following criteria (a
"COSMETIC ALTERATION"): (a) is of a cosmetic nature such as painting,
wallpapering, hanging pictures and installing carpeting; (b) is not visible from
the exterior of the Premises or Building; (c) will not affect the Base Building;
(d) does not require work to be performed inside the walls or above the ceiling
of the Premises, and (e) costs no more than $20,000.00 to perform. Cosmetic
Alterations shall be subject to all the other provisions of this Section 9.03.
Prior to starting work, Tenant shall furnish Landlord with plans and
specifications; names of contractors reasonably acceptable to Landlord (provided
that Landlord may designate specific contractors with respect to Base Building);
required permits and approvals; evidence of contractor's and subcontractor's
insurance in amounts reasonably required by Landlord and naming Landlord as an
additional insured; and any security for performance in amounts reasonably
required by Landlord. Changes to the plans and specifications must also be
submitted to Landlord for its approval. Alterations shall be constructed in a
good and workmanlike manner using materials of a quality reasonably approved by
Landlord. Tenant shall reimburse Landlord for any sums paid by Landlord for
third party examination of Tenant's plans for non-Cosmetic Alterations. In
addition, Tenant shall pay Landlord A fee for Landlord's oversight and
coordination of any non-Cosmetic Alterations equal to 5% of the cost of the
non-Cosmetic Alterations. Upon completion, Tenant shall furnish "as-built" plans
for non-Cosmetic Alterations, completion affidavits and full and final waivers
of lien, Landlord's approval of an Alteration shall not be deemed a
representation by Landlord that the Alteration complies with Law.

10.   ENTRY BY LANDLORD.

     Landlord may enter the Premises to inspect, show or clean the Premises or
to perform or facilitate the performance of repairs, alterations or additions to
the Premises or any portion of the Building. Except in emergencies or to provide
Building services, Landlord shall p