<PAGE>

                                                                   Exhibit 10.25

                                LEASE AGREEMENT

This LEASE AGREEMENT (this "Lease") is made this 27 day of July, 1999 (the
"Effective Date"), between ARE-104 ALEXANDER ROAD, LLC, a Delaware limited
liability company ("Landlord"), and PARADIGM GENETICS, INC., a North Carolina
corporation ("Tenant").

                                   RECITALS

     A.  Landlord has entered into or is entering into a Ground Lease Agreement
(the "Ground Lease") with Triangle Service Center, Inc., a North Carolina
corporation ("Ground Lessor"), pursuant to which Landlord has ground leased or
is ground leasing approximately 6.084 acres of land more fully described in
Exhibit A-1 (the "Site").  The Site is part of the Triangle Park Research Center
-----------
located within Research Triangle Park ("RTP"), Durham County, North Carolina.

     B.  In Section 2.d.  of the Ground Lease, Ground Lessor grants Landlord an
option (the "Expansion Option") to ground lease approximately 4.916 additional
acres of land adjacent to the Site, as more fully described in Exhibit A-2 (the
                                                               -----------
"Additional Site").  Landlord may exercise the Expansion Option by delivering
written notice to Ground Lessor at any time prior to the 3/rd/ anniversary of
the "Rent Commencement Date" (as defined in the Ground Lease; hereafter, the
"Ground Lease Rent Commencement Date").

     C.  Landlord desires to lease to Tenant, and Tenant desires to lease from
Landlord, certain improvements that Landlord is hereby agreeing to cause to be
constructed, or to permit to be constructed, on the Site, including, but not
limited to, a first-class scientific research and development building (the
"Building") and a commercial greenhouse, headhouse, and growth room facility
(the "Greenhouse").

                            BASIC LEASE PROVISIONS

Address:            Fronting on T.W. Alexander Avenue, RTP, North Carolina
                    (numbered address to be obtained later)

Premises:           The Building, containing approximately 53,750 rentable
                    square feet, and the Greenhouse, containing approximately
                    5,000 rentable square feet, as more fully described in
                    Exhibit B.

Base Rent:          Equal monthly installments of base rent, such base rent to
                    be calculated using the formula set forth in Section 3(a)
                                                                 ------------
                    below, which formula is based on the incremental levels of
                    "Building Allowance" (as defined below) disbursed to Tenant
                    for use by Landlord in the construction of all portions of
                    the "Project" (as defined below) other than the Greenhouse

Rent Adjustment     5.00%
Percentage:
<PAGE>

Tenant's Share:     100.00%

Rentable Area of
Premises:           Building: approximately 53,750 sq. ft.
                    Greenhouse: approximately 5,000 sq. ft.

Rentable Area of
Project:            Building: approximately 53,750 sq. ft.
                    Greenhouse: approximately 5,000 sq. ft.

Target
Commencement Date:  June 1, 2000

Security Deposit:   An amount equal to the sum of 6 monthly payments of Base
                    Rent (estimated as of the date hereof as approximately
                    $560,000.00)

Term:               120 months from the 1/st/ day of the 1/st/ full month
                    following the month in which the Commencement Date occurs

Term Extensions:    2 options to extend the Term for 5 years each

Permitted Use:      Scientific research and development facility, including
                    laboratory, commercial greenhouse, and related
                    administrative space

Landlord's Broker:  None

Tenant's Broker:    Goodman Segar

Address for Rent Payment:                   Landlord's Notice Address:

135 N. Los Robles Avenue, Suite 250         135 N. Los Robles Avenue, Suite 250
Pasadena, California 91101                  Pasadena, California 91101
Attention:  Accounts Receivable             Attention:  General Counsel

Tenant's Notice Address:

104 Alexander Dr., Building 2
RTP, North Carolina 27709
Attention:  Mr. Ian Howes
            Chief Financial Officer

                                       2
<PAGE>

The following Exhibits are or will be attached hereto and are incorporated
herein by this reference:

<TABLE>
<CAPTION>
<S>                                          <C>
-------------------------------------------------------------------------------------------------------------------
[X] EXHIBIT A-I - DESCRIPTION OF SITE        [X] EXHIBIT H - RULES AND REGULATIONS
[X] EXHIBIT A-2 - DESCRIPTION OF ADDL SITE   [X] EXHIBIT I - TENANT'S PERSONAL PROPERTY
[X] EXHIBIT B - DESCRIPTION OF PREMISES      [X] EXHIBIT J - ESTOPPEL CERTIFICATE
[X] EXHIBIT C - WORK LETTER                  [X] EXHIBIT K - LOAN SUBORDINATION AGMT
[ ] EXHIBIT D - COMMENCEMENT DATE; TERM      [X] EXHIBIT L - LEASE SUBORDINATION AGMT
[ ] EXHIBIT E - BASE CONSTR COSTS; BLDG      [X] EXHIBIT M - WARRANT AGREEMENT
                ALLOWANCE; BASE RENT         [X] EXHIBIT N - GREENHOUSE LOAN
                                                             DOCUMENTS
[ ] EXHIBIT F - GROUND LEASE RENT            [X] EXHIBIT O - ENVIRONMENTAL INFORMATION
[ ] EXHIBIT G - ORIGINAL SECURITY AMOUNT
------------------------------------------------------------------------------------------------------------------
</TABLE>

                                   AGREEMENT

     NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Lease, the receipt and legal sufficiency of which are hereby
acknowledged by the parties hereto, Landlord and Tenant hereby agree as follows:

     1.  Lease of Premises. Landlord hereby leases the Premises to Tenant and
Tenant hereby leases the Premises from Landlord, effective as of the
"Commencement Date" (as defined below) for the Term set forth in the Basic Lease
Provisions, upon and subject to Landlord entering into the Ground Lease on or
before July 30, 1999, and to all of the terms and conditions hereof. The Site
and all improvements thereon and appurtenances thereto are collectively referred
to herein as the "Project", and the portions of the Project that are for the
non-exclusive use of Tenant and the guests, invitees, licensees, and other
authorized users of the Project (including, without limitation, the Ground
Lessor and any approved subtenants) are collectively referred to herein as the
"Common Areas" (all as more fully described in Exhibit B). Landlord reserves the
right to modify the Common Areas, provided that such modifications do not
materially adversely affect Tenant's use of the Premises for the Permitted Use.

     2.  Delivery; Commencement Date; Acceptance of Premises.

         (a) Landlord shall use commercially reasonable efforts to deliver the
Premises to Tenant ("Deliver" or "Delivery") on or before the Target
Commencement Date, with "Landlord's Work" (as defined in the Work Letter
attached as Exhibit C (the "Work Letter")) "Substantially Completed" (as defined
            ---------
in the Work Letter).  If Landlord Delivers the Premises Substantially Completed
before the Target Commencement Date, Tenant shall pay to Landlord, in addition
to any "Rent" (as defined in Section 3(c) below) then due under this Lease, a
                             ------------
sum equal to 1/2 day of Rent for each day that such Delivery precedes the Target
Commencement Date.  If Landlord fails to timely Deliver the Premises
Substantially Completed, Landlord shall not be liable to Tenant for any loss or
damage resulting therefrom, and this Lease shall not be void or voidable, except
as may be expressly provided otherwise herein.

                                       3
<PAGE>

          (i)  Notwithstanding the foregoing, if Landlord does not Deliver the
Premises Substantially Completed by the Target Commencement Date and the
aggregate delay that is due solely to "Landlord Caused Delays" (as defined
below) exceeds 120 days, this Lease shall be voidable by Tenant by giving
Landlord "Notice" (as defined in Section 44(a) below) of Tenant's election to
                                 -------------
void this Lease within 5 business days after such 120/th/ day, and if voided:
(A) the Security Deposit (if paid) shall be returned to Tenant, and (B) neither
Landlord nor Tenant shall have any further rights, duties, or obligations under
this Lease, except with respect to provisions that expressly survive termination
of this Lease (as provided in Section 28 below).  Except as may be expressly
                              ----------
provided otherwise herein, Tenant's right to void this Lease shall be Tenant's
sole and exclusive remedy at law, in equity, or otherwise for Landlord's failure
to timely Deliver the Premises Substantially Completed.  If Tenant does not give
Landlord Notice of Tenant's election within the required 5 business days,
Tenant's right to void this Lease shall terminate and this Lease shall continue
in full force and effect.  If Landlord Delivers the Premises Substantially
Completed after the Target Commencement Date but the aggregate delay that is due
solely to Landlord Caused Delays does not exceed 120 days, or the aggregate
delay that is due solely to Landlord Caused Delays exceeds 120 days but Tenant
does not timely elect to void this Lease, Tenant shall be entitled to an
abatement of Rent equal to 1 day of Rent for each day of the delay that is due
solely to Landlord Caused Delays.  As used herein, the term "Landlord Caused
Delay" shall mean any delay for a reason other than a "Tenant Caused Delay" (as
defined in the Work Letter) or a "Force Majeure Delay" (as defined in the Work
Letter).

          (ii) Notwithstanding the foregoing, (A) if Landlord Delivers the
Premises Substantially Completed after the Target Commencement Date and the
aggregate delay that is due solely to Force Majeure Delays does not exceed 120
days, Tenant shall not be entitled to any abatement of Rent for the delay that
is due solely to Force Majeure Delays, (B) if Landlord Delivers the Premises
Substantially Completed after the Target Commencement Date and the aggregate
delay that is due solely to Force Majeure Delays exceeds 120 days but does not
exceed 240 days, Tenant shall be entitled to an abatement of Rent equal to 1/2
day of Rent for each day of Force Majeure Delays in excess of 120 days, and (C)
if Landlord Delivers the Premises Substantially Completed after the Target
Commencement Date and the aggregate delay that is due solely to Force Majeure
Delays exceeds 240 days, Tenant shall be entitled to an abatement of Rent equal
to 1 day of Rent for each day of Force Majeure Delays in excess of 240 days;
provided, however, that, for purposes of this Section 2(a)(ii), Force Majeure
--------  -------                             ----------------
Delays shall not include any delays resulting from a "Force Majeure" (as defined
in Section 34 below) that is solely attributable to "Pre-Existing Contamination"
   ----------
(as defined in Section 19.a.xii. of the Ground Lease).

      (b) The "Commencement Date" shall be earliest of: (i) the date Landlord
Delivers the Premises Substantially Completed; (ii) the date Landlord could have
Delivered the Premises Substantially Completed but for Tenant Caused Delays or
Force Majeure Delays; and (iii) the date Tenant conducts any business in any
part of the Premises; provided, however, that, for purposes of this Section2(b),
                      --------  -------                             -----------
Force Majeure Delays shall not include any delays resulting from a Force
Majeure that is solely attributable to Pre-Existing Contamination. Upon either
party's request, the other party shall execute and deliver a written
acknowledgment of the Commencement Date and the expiration date of the Term,
when the same have been established, and shall attach the acknowledgment to this
Lease as Exhibit D; provided, however, either
         ---------

                                       4
<PAGE>

party's failure to execute and deliver such acknowledgment shall not affect the
other party's rights hereunder.

          (c) Except as may be expressly provided otherwise in the Work Letter,
Tenant shall accept the Premises in their condition as of the Commencement Date,
subject to all applicable laws, ordinances, regulations, covenants, and
restrictions.  Neither Landlord nor any agent of Landlord has made or will make
any representation or warranty with respect to the condition of any or all of
the Premises or the Project and/or the suitability of the Premises for the
conduct of Tenant's business, and Tenant waives any implied warranty that the
Premises are suitable for Tenant's intended purposes.  Except as may be
expressly provided otherwise in the Work Letter: (i) Landlord has no obligation
for any defects in the Premises; and (ii) Tenant's taking possession of the
Premises shall be conclusive evidence that Tenant accepts the Premises and that
the Premises were in good condition at the time possession was taken.  Any
occupancy of the Premises by Tenant before the Commencement Date shall be
subject to all of the terms and conditions of this Lease, including the
obligation to pay Rent

     3.  Rent.

         (a) Base Rent.  As more fully described in the Work Letter, Landlord
is making available to Tenant an allowance (the "Building Allowance") to be used
by Tenant solely for the costs of designing and constructing all portions of the
Project other than the Greenhouse, which costs shall include, but not be limited
to, payments to surveyors, engineers, architects, consultants, contractors, sub-
contractors, and all other persons and laborers of every class providing
services, performing labor, or furnishing skill or other necessary services used
in or contributing to such construction, the cost of materials or equipment used
or consumed in such construction, the cost (including legal and engineering fees
and disbursements) of obtaining, maintaining, renewing, or revising permits,
licenses, approvals, certificates, or other entitlements, utility connection
fees, premiums and fees for all insurance maintained by Landlord in connection
with the construction, initial financing and debt service (including principal),
"land acquisition" costs (which shall include up to $20,000.00 of all
environmental, site evaluation, engineering, and title fees, premiums, and
disbursements, plus 50.00% of all legal fees and disbursements incurred by
Landlord in negotiating the Ground Lease and in performing due diligence in
connection therewith), all real estate brokerage commissions or fees, all
"Administrative Rent" (as defined in Section 7.1 of the Work Letter), and all
                                     -----------
"Taxes" (as defined in Section 9 below) that become due and payable while
                       ---------
construction is being performed (collectively, the "Base Construction Costs").
The maximum amount of the Building Allowance shall be $155.00 per rentable
square foot of the Building, provided that under no circumstances (including an
increase in the rentable square footage of the Building) shall the aggregate
amount of the Building Allowance exceed $8,331,250.00.  For each incremental
level of Building Allowance disbursed to Tenant (adjusted for any amounts
                                                 --------
actually received by Landlord as reimbursement under Sections 19.b.  or 19.d.
of the Ground Lease and retained by Landlord pursuant to the terms and condition
of a certain Cost Sharing Agreement of substantially even date herewith between
Landlord and Tenant (the "Cost Sharing Agreement")), Tenant shall pay to
Landlord the amount ("Base Rent") set forth for such increment on the following
schedule:

                                       5
<PAGE>

--------------------------------------------------------------------------------
         Building Allowance                      Incremental Base Rent
       (Per Rentable Square Foot)         (Per Rentable Square Foot Per Month)
--------------------------------------------------------------------------------
               $0.00 to $ 55.00                          $0.5500
--------------------------------------------------------------------------------
              $55.01 to $ 95.00                       add $0.4334
--------------------------------------------------------------------------------
             $ 95.01 to $115.00                       add $0.2334
--------------------------------------------------------------------------------
             $115.01 to $135.00                       add $0.2500
--------------------------------------------------------------------------------
             $135.01 to $155.00                       add $0.2667
--------------------------------------------------------------------------------


For illustration purposes only, the aggregate monthly Base Rent will be $1.7335
per rentable square foot if the entire $155.00 per rentable square foot Building
Allowance is disbursed to Tenant.  Upon either party's request, the other party
shall execute and deliver a written acknowledgment of the aggregate Base
Construction Costs, the aggregate Building Allowance actually disbursed to or
for the benefit of Tenant (adjusted for any amounts actually received by
                           --------
Landlord as reimbursement under Sections 19.b.  or 19.d.  of the Ground Lease
and retained by Landlord pursuant to the terms and condition of the Cost Sharing
Agreement), and the initial monthly Base Rent computed on such aggregate
Building Allowance (as adjusted), when the same have been established, and shall
attach the acknowledgment to this Lease as Exhibit E; provided, however, either
                                           ---------  --------  -------
party's failure to execute and deliver such acknowledgment shall not affect the
other party's rights hereunder.  Tenant hereby acknowledges and agrees that the
aggregate Base Construction Costs may exceed the aggregate Building Allowance
and that Tenant may be responsible for any such excess, as provided in the Work
Letter (including, but not limited to, Section 7.2 thereof).
                                       -----------

          (b) Additional Rent.  In addition to Base Rent, Tenant shall pay to
Landlord all of the following as additional rent ("Additional Rent"):

          (i)  Tenant's Share of "Operating Expenses" (as defined in Section 5
                                                                     ---------
below).

          (ii) "Ground Lease Rent" (as defined below).  Subject to the terms and
conditions of Section 38(b) below, Tenant shall pay to Landlord, in equal
              -------------
monthly installments, an annual amount ("Ground Lease Rent") equal to the annual
rent payable by Landlord under the Ground Lease, as the same may be adjusted
from time to time pursuant to the terms and conditions of the Ground Lease, with
any such adjustment to be effective hereunder at the same time that such
adjustment is effective under the Ground Lease.  Upon either party's request,
the other party shall execute and deliver a written acknowledgment of the Ground
Lease Rent payable hereunder, when the same has been established and whenever
such is adjusted, and shall attach the acknowledgment to this Lease as Exhibit
                                                                       -------
F; provided, however, either party's failure to execute and deliver such
-  --------  -------
acknowledgment shall not affect the other party's rights hereunder.  Ground
Lease Rent shall be payable commencing on the later of the Commencement Date or
the Ground Lease Rent Commencement Date, and all monthly installments of Ground
Lease Rent shall be paid in advance on or before the 3/rd/ business day prior to
the 1/st/ day of each calendar month during the Term and during any Term
Extension.

                                       6
<PAGE>

               (iii) Any and all other amounts Tenant assumes or agrees to pay
under the provisions of this Lease, including, without limitation, any and all
other sums that may become due by reason of any "Default" (as defined in Section
                                                                         -------
20 below) or other failure to comply with the agreements, terms, covenants and
--
conditions of this Lease to be performed by Tenant, after any applicable notice
and cure period.

          (c)  Rent. Base Rent and Additional Rent shall together be denominated
"Rent". All monthly installments of Rent other than Ground Lease Rent shall be
paid in advance on or before the 1/st/ day of each calendar month during the
Term and during any Term Extension. Payments of Rent for any fractional calendar
month shall be prorated and paid on the basis of a 30-day month. Tenant's
obligation to pay Rent and other sums to Landlord under this Lease and
Landlord's obligations under this Lease shall be separate and independent
obligations. Except to the extent, and only to the extent, expressly provided
otherwise in Sections 2(a)(i) and (ii) above, all Rent shall be paid to Landlord
             ----------------
without demand, abatement, reduction, deduction, or set-off, in lawful money of
the United States of America at the office of Landlord for payment of Rent set
forth in the Basic Lease Provisions, or to such other person or at such other
place as Landlord may from time to time designate in writing.

     4.  Rent Adjustments.  Base Rent shall be increased on the 3rd annual
anniversary of the 1/st/ day of the 1/st/ full month during the Term, and on
each annual anniversary of such date thereafter during the remainder of the
Term, by multiplying the Base Rent payable immediately before such adjustment by
the Rent Adjustment Percentage and adding the resulting amounts to the Base Rent
payable immediately before such adjustment. Base Rent, as so adjusted, shall
thereafter be due as provided herein. Rent adjustments for any fractional
calendar month shall be prorated.

     5.  Operating Expense Payments.  No later than 10 business days prior to
the 1/st/ day of the 1/st/ full month during the Term and no later than 30 days
prior to the 1/st/ day of each calendar year during the Term and any Term
Extension, Landlord shall deliver to Tenant a written estimate of Operating
Expenses for the remainder of the calendar year or for the following calendar
year, as the case may be (the "Annual Estimate"), which may be revised by
Landlord from time to time during the relevant calendar year.  During each month
of the Term and any Term Extension, Tenant shall pay Landlord an amount equal to
1/12th of the annual cost, as reasonably estimated by Landlord from time to
time, of Tenant's Share (as set forth in the Basic Lease Provisions) of
Operating Expenses for the Project.  The term "Operating Expenses" means all
reasonable costs and expenses of any kind or description whatsoever incurred or
accrued by Landlord with respect to the Project (including, without limitation,
maintenance and repair costs, insurance premiums (for the insurance described in
Section 17 below), Taxes, "Utilities" (as defined in Section 11 below), costs of
----------                                           ----------
capital repairs and improvements (amortized over the useful life of the
improvement, not to exceed 7 years), reasonable reserves consistent with good
business practice for future repairs and replacements, and administrative rent
for management services in the amount of 2.50% of the then applicable Base
Rent), excluding only:

          (a)  Base Construction Costs;

                                       7
<PAGE>

          (b) capital expenditures for expansion of the Project or for the
remodeling or refurbishment of the Project to a materially higher standard than
existed on the Commencement Date;

          (c) costs directly and solely attributable to correcting a
"Construction Defect" (as defined in the Work Letter);

          (d) interest and amortization of funds borrowed by Landlord, whether
secured or unsecured;

          (e) depreciation of the Project (except for capital improvements the
cost of which are specifically includable in Operating Expenses);

          (f) salaries, wages, or other compensation paid to officers and
employees of Landlord who are not assigned to the operation, management,
maintenance, or repair of the Project;

          (g) any expenses otherwise includable within Operating Expenses to the
extent actually reimbursed by persons other than Tenant;

          (h) legal expenses incurred in the negotiation of this Lease;

          (i) costs relating to maintaining Landlord's existence, either as a
corporation, partnership, or other entity;

          (j) costs (including "Legal Fees" (as defined in Section 44(k) below))
                                                           -------------
arising from the enforcement of this Lease or claims, disputes, or potential
disputes pertaining to Landlord and/or the Project;

          (k) costs incurred by Landlord due to the violation by Landlord of the
terms and conditions of this Lease;

          (l) costs incurred by Landlord due to the violation by Landlord of any
"Legal Requirements" (as defined in Section 7 below);
                                    ---------

          (m) tax penalties incurred as a result of Landlord's negligence,
inability, or unwillingness to make payment and/or to file any tax or
informational returns when due;

          (n) overhead or profit increment paid to Landlord or to subsidiaries
or affiliates of Landlord for the provision of goods and/or services in or to
the Project, but only to the extent the same exceeds the overhead or profit
increment that would be paid to unaffiliated third parties on a competitive
basis for providing the same goods and/or services;

          (o) costs arising from Landlord's charitable or political
contributions;

          (p) costs incurred in the sale or refinancing of the Project;

          (q) net income, franchise, capital stock, estate, or inheritance
taxes; and

                                       8
<PAGE>

          (r) any costs of constructing, repairing, or maintaining any new
improvement within the Project, or of providing any new and recurring service,
where the new improvement or the new service is not requested or approved by
Tenant, and (i) there is or will be no material benefit to Tenant from the new
        ---
improvement or the new service, or (ii) regardless of the benefit to Tenant,
                                --
construction of the new improvement commences or the new service is first
provided in the final 12 months of the Term or the first Term Extension and
Tenant has elected not to exercise its then applicable Extension Right.

     Within 120 days after the end of each calendar year, Landlord shall furnish
to Tenant a statement (an "Annual Statement") showing in reasonable detail: (i)
the total and Tenant's Share of actual Operating Expenses for the previous
calendar year, and (ii) the total of Tenant's payments in respect of Operating
Expenses for such year.  If Tenant's Share of actual Operating Expenses for such
year exceeds Tenant's payments of Operating Expenses for such year, the excess
shall be immediately due and payable by Tenant as Rent.  If Tenant's payments of
Operating Expenses for such year exceed Tenant's Share of actual Operating
Expenses for such year, Landlord shall, in its sole and absolute discretion,
either: (x) credit the excess amount to the next succeeding installments of
estimated Operating Expenses due hereunder, or (y) pay the excess to Tenant
within 30 days after delivery of such Annual Statement.

     The Annual Statement shall be final and binding upon Tenant unless Tenant,
within 30 days after Tenant's receipt thereof, shall contest any item therein by
giving Notice to Landlord, specifying each item contested and the reason
therefor.  If, during such 30-day period, Tenant reasonably and in good faith
questions or contests the correctness of Landlord's statement of Tenant's Share
of Operating Expenses, Landlord will provide Tenant access to Landlord's books
and records and such information as Landlord reasonably determines to be
responsive to Tenant's questions.  If, after Tenant's review of such
information, Landlord and Tenant cannot agree upon the amount of Tenant's Share
of Operating Expenses, then Tenant shall have the right to have an independent
public accounting firm selected from among the 6 largest in the United States,
hired by Tenant (at Tenant's sole cost and expense) and approved by Landlord
(which approval shall not be unreasonably withheld or delayed), audit and/or
review such Landlord's books and records for the year in question (the
"Independent Review").  The results of any such Independent Review shall be
binding on Landlord and Tenant.  If the Independent Review shows that Tenant's
pro rata share of the Operating Expenses actually paid by Tenant for the
calendar year in question exceeded Tenant's obligations for such calendar year,
Landlord shall at Landlord's option either (i) credit the excess amount to the
next succeeding installments of estimated Operating Expenses due hereunder, or
(ii) pay the excess to Tenant within 30 days after delivery of the results of
such Independent Review, except that after expiration or termination of the Term
or any Term Extension, Landlord shall pay the excess to Tenant after deducting
all other amounts due Landlord.  If the Independent Review shows that Tenant's
payments of Tenant's Share of Operating Expenses for such calendar year were
less than Tenant's obligation for the calendar year, Tenant shall pay the
deficiency to Landlord within 30 days after delivery of the results of such
Independent Review.  If the Independent Review shows that Tenant has overpaid
Tenant's pro rata share of Operating Expenses by more than 5.00%, then Landlord
shall reimburse Tenant for all costs incurred by Tenant for the Independent
Review.  Operating Expenses for the calendar years in which Tenant's obligation
to share therein begins and ends shall be prorated.

                                       9
<PAGE>

     6.  Security Deposit.

          (a) Tenant shall deposit with Landlord on the Commencement Date
security for the performance of all of Tenant's obligations hereunder (the
"Security Deposit") in an amount equal to 6 monthly payments of Base Rent (the
"Original Security Amount").  Upon either party's request, the other party shall
execute and deliver a written acknowledgment of the Original Security Amount,
when the same has been established, and shall attach the acknowledgment to this
Lease as Exhibit G; provided, however, either party's failure to execute and
         ---------  --------  -------
deliver such acknowledgment shall not affect the other party's rights hereunder.
At least one-sixth of the Security Deposit shall be in cash and up to five-
sixths of the Security Deposit may be in the form of an unconditional and
irrevocable letter of credit (a "Letter of Credit"); provided, however, that the
                                                     --------  -------
entire Security Deposit may be in the form of a Letter of Credit at any time
after Tenant completes an initial public offering of Tenant's capital shares.
Landlord shall hold the cash portion of the Security Deposit in an interest
bearing account (which may contain Landlord's own funds), with any interest
accruing on such cash portion being for Tenant's benefit Any Letter of Credit
that constitutes a portion of the Security Deposit: (i) shall be in form and
substance satisfactory to Landlord, in Landlord's sole and absolute discretion;
(ii) shall name Landlord as sole beneficiary; (iii) shall not refer to this
Lease, the Project, or the Premises or any circumstances, factors, or rights
that might be related thereto, but shall expressly allow Landlord to draw upon
the Letter of Credit in any amount, and at any time and from time to time,
simply by delivering to the issuer a clean sight draft on the Letter of Credit,
without any other demand, statement, or other representation regarding
Landlord's rights under this Lease or with respect to the Letter of Credit; (iv)
shall be drawable on an FDIC-insured financial institution satisfactory to
Landlord, in Landlord's reasonable discretion, with any draws to be payable from
such financial institution's own immediately available funds; (v) shall be
drawable at the branch or office of the issuer that Landlord may choose, in
Landlord's sole and absolute discretion; and (vi) shall expressly allow Landlord
to draw the full amount of the Letter of Credit if Tenant does not provide
Landlord with a substitute Letter of Credit complying with all of the
requirements hereof at least 10 days before the stated expiration date of such
Letter of Credit.

          (b) If, at any time during the Term or any Term Extension, Tenant
satisfies both the "Net Worth Test" (as defined below) and the "Profitability
Test" (as defined below) (each, a "Reduction Requirement" and collectively, the
"Reduction Requirements"), then the Original Security Amount shall be reduced to
an amount equal to 3 monthly payments of Base Rent (the "Reduced Security
Amount").  For purposes of this provision, the "Net Worth Test" shall be deemed
satisfied at any time that: (i) Tenant's stock is listed on either the New York
Stock Exchange or the NASDAQ stock market, and (ii) Tenant has maintained a net
                                           ---
worth of at least $100,000,000.00, using a market capitalization analysis based
on the daily closing trading price of Tenant's common stock, for the immediately
preceding consecutive 90 business days.  For purposes of this provision, the
"Profitability Test" shall be deemed satisfied at any time that: (x) Tenant's
net revenues after taxes for the immediately preceding fiscal year exceed
$1,000,000.00, and (y) the aggregate amount of Tenant's "Liquid Assets" (as
               ---
defined below), as certified by a nationally recognized, independent public
accounting firm or as demonstrated in annual audited financial statements,
equals or exceeds Tenant's anticipated expenses for the shorter of (1) 30 months
and (2) the remainder of the Term.  For purposes of the Profitability Test, (A)
"Liquid Assets" shall mean all cash, cash equivalents, liquid short term
investments, and short term accounts receivables from unrelated third parties,
and (B) the phrase "remainder

                                       10
<PAGE>

of the Term" shall include any period for which Tenant has an "Extension Right"
(as defined in Section 41(a) below), regardless of whether any such Extension
                                               -------------
Right has been exercised, unless such Extension Right has been waived or
otherwise is no longer exercisable (provided, however, that under no
                                    --------  -------
circumstances shall the "remainder of the Term" be fewer than 12 months, unless
there are fewer than 3 months actually remaining in the Term and any Term
Extension that may be available to Tenant, in which case the "remainder of the
Term" shall be deemed to be 6 months). Within 60 days after Tenant provides
Landlord with written evidence reasonably satisfactory to Landlord demonstrating
that Tenant then satisfies both of the Reduction Requirements, Landlord shall
pay to Tenant (or, at Landlord's option, to the last assignee of Tenant's
interest hereunder) any balance of the Security Deposit then held by Landlord
(including accrued interest, if any), less an amount equal to the Reduced
Security Amount (provided, however, that if any portion of the Security
                 --------  -------
Deposit is then in the form of a Letter of Credit, Landlord will return such
Letter of Credit to Tenant upon Tenant's delivery to Landlord of cash (if then
required hereunder) plus a substitute Letter of Credit complying with all of the
requirements hereof in an aggregate amount equal to the Reduced Security
Amount).  The Reduced Security Amount shall be deemed to be the amount of the
"Security Deposit" for all purposes related to this Lease from and after the
date that Landlord returns to Tenant any portion of the Original Security Amount
in accordance with this provision.  Notwithstanding the foregoing, the Security
Deposit shall be increased to the Original Security Amount if there is a Default
or if Tenant fails to continue to satisfy both of the Reduction Requirements.
Landlord shall have the right (not to be exercised more than twice each calendar
year) to request written evidence from Tenant demonstrating that Tenant
continues to meet both of the Reduction Requirements.  Tenant shall pay to
Landlord the amount of the difference between the Reduced Security Amount and
the Original Security Amount within 15 days after Landlord gives Tenant written
demand to do so (provided, however, that if any portion of the Reduced Security
                 --------  -------
Amount is then in the form of a Letter of Credit, Landlord will return such
Letter of Credit to Tenant upon Tenant's delivery to Landlord of cash (if then
required hereunder) plus a substitute Letter of Credit complying with all of the
requirements hereof in an aggregate amount equal to the Original Security
Amount).  The Original Security Amount shall be deemed to be the amount of the
"Security Deposit" for all purposes related to this Lease from and after the
date that Landlord gives Tenant written demand to increase the Reduced Security
Amount in accordance with this provision.

          (c) Landlord shall hold the Security Deposit as security for the
performance of Tenant's obligations under this Lease.  The Security Deposit is
not an advance rental deposit or a measure of Landlord's damages in case of a
Default.  At any time that Landlord reasonably believes that a Default has
occurred and remains uncured, Landlord may use all or any part of the Security
Deposit to pay or perform any obligation of Tenant under this Lease or to
compensate Landlord for any loss or damage resulting from any Default, without
prejudice to any other remedy provided herein or provided by law.  Upon any such
use of all or any portion of the Security Deposit, Tenant shall deposit with
Landlord, within 5 days after Landlord gives Tenant a written demand therefor,
cash (or, if appropriate, a substitute Letter of Credit complying with all of
the requirements hereof) in the amount that will restore the Security Deposit to
its required amount.  Upon bankruptcy or other debtor-creditor proceedings
against Tenant, the Security Deposit shall be deemed to be applied first to the
payment of Rent and other charges due Landlord for periods prior to the filing
of such proceedings.  Tenant hereby waives the provisions of any law, now or
hereafter in force, that provide that Landlord may claim from a

                                       11
<PAGE>

security deposit only those sums reasonably necessary to remedy defaults in the
payment of rent, to repair damage caused by Tenant, or to clean the leased
premises, it being agreed that Landlord may claim, in addition, those sums
reasonably necessary to compensate Landlord for any other loss or damage,
foreseeable or unforeseeable, caused by the act or omission of Tenant or any
officer, employee, agent or invitee of Tenant.

          (d) If Landlord transfers its interest in the Project or this Lease,
Landlord shall either (i) transfer any balance of the Security Deposit then held
by Landlord (including accrued interest, if any) to a person or entity assuming
Landlord's obligations under this Section, or (ii) pay to Tenant any balance of
the Security Deposit then held by Landlord (including accrued interest, if any).
Upon the transfer to such transferee or the payment to Tenant, Landlord shall
have no further obligation with respect to the Security Deposit, and Tenant's
right to the Security Deposit shall apply solely against Landlord's transferee.

          (e) Landlord's obligation with respect to the Security Deposit is that
of a debtor, not a trustee.  The Security Deposit shall be the property of
Landlord, but shall be paid to Tenant when Tenant's obligations under this Lease
have been completely fulfilled.  If Tenant and all assignees of Tenant's
interest hereunder fully perform every provision of this Lease to be performed
by Tenant and return the Premises to Landlord upon the expiration or earlier
termination of this Lease, Landlord shall pay to Tenant (or, at Landlord's
option, to the last assignee of Tenant's interest hereunder) any balance of the
Security Deposit then held by Landlord (including accrued interest, if any)
within 60 days after the expiration or earlier termination of this Lease.

     7.   Use.  The Premises shall be used solely for the Permitted Use set
forth in the Basic Lease Provisions and for lawful purposes incidental thereto,
all in compliance with all laws, orders, judgments, ordinances, regulations,
codes, directives, permits, licenses, covenants and restrictions now or
hereafter applicable to the Premises, and the use and occupancy thereof
(collectively, "Legal Requirements"). Tenant, within 5 days' after Notice from
Landlord, shall cause to be discontinued any use of the Premises that is
declared by any governmental authority having jurisdiction to be a violation of
any Legal Requirement. Provided that Tenant has prior knowledge of the then
current terms of Landlord's insurance coverage with respect to the Project, (i)
Tenant will not use or permit the Premises to be used for any purpose or in any
manner that would void Tenant's or Landlord's insurance, increase the insurance
risk, or cause the disallowance of any sprinkler or other credits, and Tenant,
within 5 days' after Notice from Landlord, shall cause to be discontinued any
such use, and (ii) Tenant shall reimburse Landlord promptly upon demand for any
additional premium charged for any insurance policy maintained by Landlord as a
result of Tenant's failure to comply with the provisions of this Section. Tenant
will use the Premises in a careful, safe and proper manner and will not commit
waste, overload the floor or structure of the Premises, subject the Premises to
uses that would damage the Premises or obstruct or interfere with the rights of
Landlord or other guests, invitees, licensees, or other authorized users of the
Project, including conducting or giving notice of any auction, liquidation, or
going out of business sale on the Premises, or using or allowing the Premises to
be used for any unlawful purpose. Tenant shall cause any office equipment or
machinery to be installed in the Premises so as to reasonably prevent sounds or
vibrations therefrom from extending into Common Areas or other space in the
Project. Tenant shall not place any equipment weighing 500 pounds or more in or
upon the Premises or transport or move such

                                       12
<PAGE>

items through the Common Areas of the Project or in the Project elevators
without the prior written consent of Landlord. Except as may be provided under
the Work Letter, Tenant, without the prior written consent of Landlord, shall
not use the Premises in any manner that will require ventilation, air exchange,
heating, gas, steam, electricity or water beyond the existing capacity of the
Project as proportionately allocated to the Premises and as usually furnished
for the Permitted Use.

     Tenant, at its sole expense, shall make any alterations or modifications,
to the interior or the exterior of the Premises or the Project, that are
required by Legal Requirements (including, without limitation, compliance of the
Premises with the Americans With Disabilities Act, 42 U.S.C. (S) 12101 et seq.
(together with regulations promulgated pursuant thereto, "ADA")) related to
Tenant's use or occupancy of the Premises, provided that the foregoing
obligation shall not apply to the extent any non-compliance with Legal
Requirements is due to a Construction Defect.  Notwithstanding any other
provision herein to the contrary, Tenant shall be responsible for any and all
demands, claims, liabilities, losses, costs, expenses, actions, causes of
action, damages or judgments, and all reasonable expenses incurred in
investigating or resisting the same (including, without limitation, Legal Fees)
(collectively, "Claims") arising out of or in connection with Legal Requirements
and Tenant shall indemnify, defend, hold and save Landlord harmless from and
against any and all Claims arising out of or in connection with any failure of
the Premises to comply with any Legal Requirement, except to the extent, and
only to the extent, a Claim is attributable to a Construction Defect or to the
gross negligence or willful misconduct of Landlord.

     8.  Holding Over.  If, with Landlord's express written consent, Tenant
retains possession of the Premises after the expiration or earlier termination
of this Lease, such possession, unless otherwise agreed in writing, shall be
subject to immediate termination by Landlord at any time, and all of the other
terms and provisions of this Lease (including, without limitation, the
adjustment of Rent pursuant to Section 4 hereof but excluding any expansion or
                               ---------
renewal option or other similar right or option) shall remain in full force and
effect during such holdover period, and in such case Tenant shall continue to
pay Rent in the amount payable upon the date of the expiration or earlier
termination of this Lease or such other amount as Landlord may indicate, in
Landlord's sole and absolute discretion, in such written consent.  All other
payments shall continue under the terms of this Lease.  If Tenant remains in
possession of the Premises after the expiration or earlier termination of this
Lease without the express written consent of Landlord, Tenant shall become a
tenant at sufferance upon the terms of this Lease except that the monthly rental
shall be equal to 150.00% of the Rent in effect during the last 30 days prior to
the expiration or earlier termination of this Lease.  In addition, Tenant shall
be responsible for all damages suffered by Landlord resulting from or occasioned
by Tenant's holding over.  No holding over by Tenant, whether with or without
consent of Landlord, shall operate to extend this Lease except as otherwise
expressly provided, and this Section shall not be construed as consent for
Tenant to retain possession of the Premises.  Acceptance by Landlord of Rent
after the expiration or earlier termination of this Lease shall not result in a
renewal or reinstatement of this Lease.

     9.  Taxes.  Tenant shall pay all taxes, levies, assessments and
governmental charges of any kind (collectively referred to as "Taxes") imposed
by any federal, state, regional, municipal, local, or other governmental
authority or agency, including, without limitation, quasi-

                                       13
<PAGE>

public agencies (collectively, "Governmental Authority") in connection with the
Project and accruing during the Term and any Term Extension, including, without
limitation, all Taxes: (i) imposed on or measured by or based, in whole or in
part, on rent payable to Landlord under this Lease and/or from the rental by
Landlord of the Project, (ii) based on the square footage, assessed value or
other measure or evaluation of any kind of the Premises or the Project, (iii)
assessed or imposed by or on the operation or maintenance of the Premises or the
Project (including parking), (iv) assessed or imposed by, or at the direction
of, or resulting from statutes or regulations, or interpretations thereof,
promulgated by, any Governmental Authority, (v) assessed or imposed by reason of
the occurrence of certain specified events (including, but not limited to, the
construction of the Greenhouse), or (vi) imposed as a license or other fee on
Landlord's business of leasing space in the Project. Landlord shall cause all
Taxes to be billed directly to Tenant by the Governmental Authority, and
Landlord shall promptly forward to Tenant any bills for Taxes that Landlord
nevertheless may receive. All payments of Taxes shall be made at least 10
business days prior to delinquency, and Tenant shall promptly furnish Landlord
with satisfactory evidence that all Taxes have been so paid; provided, however,
                                                             --------  -------
that Tenant shall not be responsible for evidence of timely payment or for any
penalties, surcharges, or similar charges imposed upon delinquency if the
delinquency is due solely to any failure by Landlord to forward promptly to
Tenant any bills for Taxes that Landlord may receive. If any Taxes cover any
period of time beginning before the Commencement Date or ending after the
expiration or earlier termination of this Lease, Tenant's responsibility for
such Taxes shall be prorated to cover only that portion of such Taxes applicable
to the period that the Lease is in effect, and Landlord shall promptly reimburse
Tenant for any overpayment (provided that all Taxes that become due and payable
while construction is being performed shall still be included in and a part of
Base Construction Costs). Tenant may contest by appropriate legal proceedings
the amount, validity, or application of any Taxes or liens securing Taxes. Taxes
shall not include any of the following (except to the extent any of the
following are in substitution for any Taxes payable hereunder): (x) any net
income taxes that may be imposed on Landlord, or (y) any revenue taxes that may
be imposed on any sale of Landlord's interest in the Project. Tenant also shall
pay, prior to delinquency, any and all Taxes levied or assessed against any
personal property or trade fixtures placed by Tenant in the Premises, whether
levied or assessed against Landlord or Tenant. If Tenant fails to pay any Taxes,
Landlord shall have the right (but not the obligation) to pay the same, and any
amount actually so paid by Landlord shall be payable to Landlord on demand as
Additional Rent or includable by Landlord as an Operating Expense.

     10.  Parking.  At no additional cost to Tenant, Tenant shall have a license
to use at least 140 parking spaces at the Site.  Such license shall be effective
during the Term and any Term Extension, shall be revocable by Landlord upon the
expiration or earlier termination of this Lease, and shall be limited by and
subject to any changes mandated by Legal Requirements (including zoning
restrictions) that may be enacted or first effective after the Effective Date
and to any changes in the design of the Building requested or approved by Tenant
and made after the Effective Date.

     11.  Utilities; Services.  Subject to the terms of this Section, Landlord
shall cause to be provided to the Project and the Premises, water, electricity,
gas, light, power, telephone, sewer, and other utilities (including fire
sprinklers) (collectively, "Utilities").  Tenant shall arrange for refuse and
trash collection and janitorial services provided to the Premises.  Landlord
shall cause all Utilities to be charged directly to Tenant by the provider.
Tenant shall pay

                                       14
<PAGE>

directly to the Utility provider, prior to delinquency, all charges for
Utilities used on the Premises during the Term and any Term Extension, all
maintenance charges for Utilities, and any storm sewer charges or other similar
charges for Utilities imposed by any Governmental Authority or Utility provider,
and any taxes, penalties, surcharges, or similar charges thereon. If Tenant
fails to pay any Utilities in the manner required hereunder, Landlord shall have
the right (but not the obligation) to pay the same, and the amount thereof shall
be payable to Landlord on demand as Additional Rent or includable by Landlord as
an Operating Expense. No interruption or failure of Utilities, from any cause
whatsoever other than Landlord's willful misconduct, shall result in eviction or
constructive eviction of Tenant, termination of this Lease or the abatement of
Rent.

     12.  Alterations and Trade Fixtures.  Any alterations, additions, or
improvements made to the Premises ("Alterations") by or on behalf of Tenant,
including additional locks or bolts of any kind or nature upon any doors or
windows in the Premises, but excluding installation, removal, or realignment of
furniture systems (other than removal of furniture systems owned or paid for by
Landlord) not involving any modifications to the structure or connections (other
then by ordinary plugs or jacks) to "Building Systems" (as defined in Section 13
                                                                      ----------
below) shall be subject to Landlord's prior written consent, which consent (i)
will not be unreasonably withheld or delayed with respect to non-structural
Alterations to the interior of the Premises that do not involve any Building
Systems or puncturing, relocating, or removing the roof or any existing load-
bearing walls (`Non-Structural Alterations"), and (ii) may be withheld, in
Landlord's sole and absolute discretion, with respect to all other Alterations.
Notwithstanding the foregoing, Landlord's prior consent will not be required
with respect to Non-Structural Alterations if the cost of each such Non-
                                                          ----
Structural Alteration does not exceed $5,000.00 ("Permitted Non-Structural
Alterations"), the aggregate cost of all such Permitted Non-Structural
                                     ---
Alterations does not exceed $25,000.00 in any consecutive 12 month period, and
Tenant provides Landlord with Notice of each such Permitted Non-Structural
                                        ----
Alteration, accompanied by any plans, specifications, bid proposals, work
contracts, or other information concerning the nature and cost of each such
                                                                  ----
Permitted Non-Structural Alteration that Tenant may have in its possession or
control, including the identities and mailing addresses of all persons
performing work or supplying materials (collectively, "Alterations
Information").  If Landlord approves any Alterations, Landlord may impose such
conditions on Tenant in connection with the commencement, performance, and
completion of such Alterations as Landlord may deem appropriate (in Landlord's
reasonable discretion, with respect to Non-Structural Alterations, and in
Landlord's sole and absolute discretion, with respect to all other Alterations).
Any request for approval shall be in writing, delivered not less than 15
business days in advance of any proposed construction, and accompanied by such
Alterations Information as may be reasonably requested by Landlord.  Landlord's
right to review plans and specifications and to monitor construction shall be
solely for its own benefit, and Landlord shall have no duty to see that such
plans and specifications or construction comply with applicable Legal
Requirements.  Tenant, at its sole cost and expense, shall cause all Alterations
to comply with insurance requirements known to Tenant and Legal Requirements and
shall implement any alteration or modification required by Legal Requirements as
a result of any Alterations.  Except as to Permitted Non-Structural Alterations,
Tenant shall pay to Landlord, on demand as Additional Rent, an amount equal to
5.00% of all charges incurred by Tenant or its contractors or agents in
connection with any Alterations to cover Landlord's overhead and expenses for
plan review, coordination, scheduling, and supervision.  Tenant will give
Landlord Notice at least 5 days (or any longer

                                       15
<PAGE>

period that may be required under the Ground Lease) before beginning any
Alterations so that Landlord may post on and about the Premises notices of non-
responsibility pursuant to applicable law. Tenant, at its sole cost and expense,
shall correct any faulty work or inadequate cleanup done by Tenant or its
contractors within 5 business days after Notice of the same from Landlord.
Tenant shall reimburse Landlord for, and indemnify and hold Landlord harmless
from, any reasonable and necessary expenses incurred by Landlord by reason of
such faulty work or inadequate cleanup or by reason of delays caused by the
same.

     Tenant shall furnish security or make other arrangements satisfactory to
Landlord to assure payment for the completion of all work free and clear of
"Liens" (as defined in Section 15 below), and shall provide certificates of
                       ----------
insurance for workers compensation and other coverage in amounts and from an
insurance company satisfactory to Landlord protecting Landlord against liability
for personal injury or property damage during construction (copies of such
certificates will suffice, so long as the original certificates are forwarded to
Landlord within 2 business days thereafter).  Upon completion of any
Alterations, Tenant shall deliver to Landlord: (i) sworn statements setting
forth the names of all contractors and subcontractors who did the work and final
lien waivers from all such contractors and subcontractors; and (ii) as-built
plans for any such Alteration.

     Other than the items, if any, listed on Exhibit 1 and any items agreed by
                                             ---------
Landlord in writing to be included on Exhibit 1 in the future ("Tenant's
                                      ---------
Property"), all Alterations and all equipment, fixtures, trade fixtures,
machinery, built-in furniture and cabinets, and other additions and improvements
attached to or built into the Premises, including, without limitation, fume
hoods that penetrate the roof or plenum area, built-in cold rooms, built-in warm
rooms, walk-in cold rooms, walk-in warm rooms, deionized water systems, glass
washing equipment, autoclaves, chillers, built-in plumbing, electrical and
mechanical equipment and systems, and any power generator and transfer switch
(collectively, "Installations"), shall be and shall remain the property of
Landlord during the Term and any Term Extension and following the expiration or
earlier termination of this Lease, shall not be removed by Tenant at any time
during the Term or any Term Extension, and shall remain upon and be surrendered
with the Premises as a part thereof following the expiration or earlier
termination of this Lease; provided, however, that Landlord, at the time its
                           --------  -------
approval of any Installation is requested, may elect to cause Tenant to remove
such Installation upon the expiration or earlier termination of this Lease.  If
Landlord so elects, Tenant shall remove such Installation upon the expiration or
earlier termination of this Lease and restore any damage caused by or occasioned
as a result of such removal.  During any such restoration period, Tenant shall
pay Rent to Landlord as provided herein as if Tenant otherwise occupied said
space.

     13.  Tenant's Repairs.  During the Term and any Term Extension, Tenant
shall keep all components of the Premises and the Project in good order,
condition, and repair (to the extent the need for such repairs occurs as a
result of Tenant's use of the portion of the Premises or Project requiring
repairs), reasonable wear and tear and Construction Defects excluded, including,
but not limited to, all equipment or facilities, such as plumbing, heating,
ventilation, and air-conditioning ("HVAC"), electrical and lighting facilities,
boilers, pressure vessels, fire protection systems, fixtures, exterior and
interior walls, foundations, ceilings, roofs, floors, windows, doors, plate
glass, landscaping and irrigation systems, driveways and parking areas, fences,
retaining walls, signs, and sidewalks ("Building Systems").  Tenant's
obligations shall

                                       16
<PAGE>

include restorations, replacements, or renewals when necessary. During the Term
and any Term Extension, Tenant also shall keep the exterior appearance of the
Building and the Greenhouse in a condition consistent with the exterior
appearance of other substantially similar facilities of comparable age and size
("Similar Facilities") located within the area commonly known as the "I-40/RTP
sub-market' (the "Sub-Market"), including, when necessary, the exterior sealing,
resealing, or repainting of the Building and/or the Greenhouse. Tenant, in
keeping the Premises and the Project in good order, condition, and repair, shall
exercise and perform good maintenance practices, specifically including the
procurement and maintenance of service contracts, with copies to Landlord, in
customary form and substance for, and with contractors specializing and
experienced in the maintenance of, the following Building Systems (the "Service
Contracts"): (i) HVAC, (ii) boilers and pressure vessels, (iii) fire protection
systems, (iv) landscaping and irrigation systems, (v) roof covering and drains,
(vi) driveways and parking areas, (vii) basic Utilities feeds to the perimeter
of the Building and the Greenhouse, and (viii) any other Building Systems
reasonably required by Landlord. Tenant's obligations under this Section shall
be at Tenant's sole cost and expense. If Tenant fails to repair or maintain any
portion of the Premises or the Project as required under this Section within 15
days after Landlord gives Tenant written demand to so repair or maintain,
Landlord may perform such work and the reasonable and necessary cost thereof
shall be payable to Landlord on demand as Additional Rent or includable by
Landlord as an Operating Expense.

     Notwithstanding the foregoing, if any "Major Repair" (as hereinafter
defined) is required, Landlord shall be responsible for completing a
"Restoration" (as hereinafter defined).  As used herein, the term "Major Repair"
shall mean the following: (a) during the final 12 months of the Term or any Term
Extension (provided that Tenant has elected not to exercise any then available
Extension Right or no Extension Right is then available) (the "Final 12
Months"), any repair to any Building System other than a "Tenant Specific
Building System" (as hereinafter defined) that will cost more than 60.00% of the
cost of replacing such Building System; and (b) at all other times, any repair
to any Building System that will cost more than 50.00% of the cost of replacing
such Building System.  As used herein, the term "Tenant Specific Building
System" shall mean any Building System that is necessary only because of
Tenant's specific use of the Premises or the conduct of Tenant's specific
business operations on the Premises.  As used herein, the term "Restoration"
shall mean the following: (x) during the Final 12 Months, repairing or replacing
                                                                    --
the Building System in question, at Landlord's sole option; and (y) at all other
times, replacing the Building System in question.  The cost of any Restoration
shall be includable by Landlord as an Operating Expense, provided that the cost
of any Restoration that involves replacing the Building System in question shall
be deemed a capital improvement and amortized over the useful life of the
improvement (not to exceed 7 years).  Under all circumstances, Landlord shall
have no obligation with respect to any Building System to the extent any repair
of such Building System becomes necessary because of Tenant's failure to
exercise and perform adequate maintenance as required hereunder.

     Notwithstanding the foregoing, substantial repairs to the Premises or the
Project required as the result of fire, earthquake, flood, vandalism, war, or
similar cause of damage or destruction shall be controlled by Section 18.
                                                              ----------

     14.  Landlord's Repairs.  It is intended by Landlord and Tenant that
Landlord shall have no obligation, in any manner whatsoever, to repair or
maintain the Premises or the Project

                                       17
<PAGE>

(including, without limitation, the Building Systems), except to the extent, and
only to the extent, of any repairs that are necessary solely because of
Construction Defects, Landlord's gross negligence or willful misconduct, the
elements, or the age of the Premises or the Project. It is also intended by
Landlord and Tenant that the terms of this Lease shall govern their respective
obligations regarding repair and maintenance of the Premises and the Project,
and Tenant expressly waives the benefit of any state or local law now or
hereafter in effect to the extent any such law is inconsistent with the terms of
this Lease. Notwithstanding the foregoing, Landlord shall not be in default in
its obligations under this Section if:

          (a) with respect to Construction Defects that Landlord reasonably
determines, in good faith, involve or may involve structural components of the
Premises or pose or may pose a significant risk of personal injury or
substantial property damage ("Serious Construction Defects"), the applicable
contractor, despite Landlord's reasonable efforts, fails to remedy such
Construction Defect within 30 days after Tenant gives Landlord Notice of such
Construction Defect, but Landlord, within 30 days thereafter, commences and
diligently and continuously prosecutes such remedial action to completion, at
Landlord's sole cost and expense;

          (b) with respect to Construction Defects that Landlord reasonably
determines, in good faith, are not Serious Construction Defects or involve
Tenant's Property, the applicable contractor, despite Landlord's reasonable
efforts, fails to remedy such Construction Defect within 30 days after Tenant
gives Landlord Notice of such Construction Defect, in which case Landlord shall
have no further obligation with respect to such Construction Defect other than
to cooperate, at no cost to Landlord, with Tenant should Tenant elect to pursue
a claim against such contractor, provided that Tenant indemnifies and holds
Landlord harmless from and against any liability, loss, cost, damage, or expense
that may arise because Tenant's claim is denied or is determined to be baseless,
erroneous, faulty, groundless, improper, inappropriate, unfounded, or otherwise
unjustified or unwarranted; or

          (c) with respect to any part of the Premises or the Project, any
action by Tenant has directly resulted in the invalidation of any otherwise
enforceable warranty or bond that would cover the cost of remedying such
Construction Defect.

Any determination made by Landlord pursuant to paragraph (a) or (b) above shall
be deemed reasonable and in good faith if based on advice received by Landlord
from an independent and duly licensed design or construction consultant (a
"Defect Consultant").  Tenant may ask a Defect Consultant to provide written
confirmation of the advice given Landlord in connection with a determination by
Landlord that a specific Construction Defect is not a Serious Construction
Defect if, and only if, (i) Tenant gives Landlord Notice of such desire within 3
business days after receiving Notice of Landlord's determination, and (ii)
Tenant is solely responsible for any fee, cost, charge, or other assessment
imposed by the Defect Consultant for providing such written confirmation;
provided, however, that Tenant understands and agrees that Landlord's waiver of
--------  -------
the potential conflict of interest facing the Defect Consultant shall be
strictly limited to the advice, and only the advice, given Landlord in the
specific instance in question and shall not apply, under any circumstances, to
any other advice or matters that may be the subject of the services provided to
Landlord by the Defect Consultant.

                                       18
<PAGE>

     15.  Liens.  Tenant, at Tenant's sole cost and expense, shall pay for all
work performed for, materials furnished to, or obligations incurred by Tenant in
connection with the Premises or the Project, and shall keep the Premises and the
Project free from, and shall discharge, by bond or otherwise, any mechanic's or
materialmen's lien or claim of lien filed against the Premises or the Project
for work claimed to have been done for, materials claimed to have been furnished
to, or obligations claimed to have been incurred by, Tenant in connection with
the Premises or the Project (generally, "Liens").  Tenant shall discharge any
such Lien within 10 days after Tenant receives notice of such Lien.  With
respect to any Alterations for which the estimated cost exceeds $15,000.00,
Landlord may require Tenant, at Tenant's sole cost and expense, to provide a
lien and completion bond in an amount equal to 150.00% of such estimated cost,
insuring Landlord against any liability for any Liens that may arise from such
Alterations.  Should Tenant fail to discharge any Lien in the manner and at the
time provided herein, Landlord shall have the right, but not the obligation, to
pay such claim or post a bond or otherwise provide security to eliminate the
Lien as a claim against title to the Project and the cost thereof shall be
immediately due from Tenant as Additional Rent.  If Tenant shall lease or
finance the acquisition of office equipment, furnishings, or other personal
property of a removable nature used by Tenant in the operation of Tenant's
business, Tenant warrants that any Uniform Commercial Code Financing Statement
executed by Tenant will on its face or by exhibit thereto indicate that such
Financing Statement is applicable only to removable personal property of Tenant
located within the Premises.  In no event shall the address of the Project be
furnished on the statement without qualifying language as to applicability of
the lien only to removable personal property, located in an identified suite
held by Tenant.

     16.  Indemnification.

          (a) Tenant hereby indemnifies and agrees to defend, save, and hold
Landlord harmless from and against any and all Claims for injury or death to
persons or damage to property occurring within or about the Premises or the
Project, arising directly or indirectly out of Tenant's use or occupancy of the
Premises or the Project or a breach or default by Tenant in the performance of
any of its obligations hereunder, except to the extent caused by the gross
negligence or willful misconduct of Landlord.

          (b) Landlord hereby indemnifies and agrees to defend, save, and hold
Tenant harmless from and against any and all Claims for injury or death to
persons or damage to property occurring within or about the Premises or the
Project, to the extent, and only to the extent, caused by the gross negligence
or willful misconduct of Landlord.  Under no circumstances, however, shall
Landlord be liable to Tenant for, and Tenant assumes all risk of, damage to
personal property (including, without limitation, loss of records kept within
the Premises).  Further, Tenant waives any and all Claims for injury to Tenant's
business or loss of income relating to any such damage or destruction of
personal property (including, without limitation, any loss of records).
Finally, Landlord shall not be liable for any damages arising from any act,
omission, or neglect of any guests, invitees, licensees, and other authorized
users of the Project or of any other third party.

     17.  Insurance.  Landlord shall maintain all insurance against any peril
generally included within the classification "Fire and Extended Coverage",
sprinkler damage (if applicable), vandalism and malicious mischief covering the
full replacement cost of the Project,

                                       19
<PAGE>

as the same shall exist from time to time, or the amount required by the Ground
Lessor or any lender of Landlord holding a security interest in Landlord's
interest in the Project, but in no event more than the commercially reasonable
and available insurable value thereof. Landlord also may maintain, but is not
obligated to maintain, such other insurance and additional coverages as Landlord
may deem necessary, including, but not limited to, comprehensive public
liability, flood, environmental hazard, earthquake, loss or failure of building
equipment, and rental loss during periods of repair or rebuilding. The Project
may be included in a blanket policy (in which case the cost of such insurance
allocable to the Project will be determined by Landlord based upon the insurer's
cost calculations). Tenant hereby acknowledges that Tenant has been provided
with a written summary of the insurance coverage that Landlord will be
maintaining with respect to the Project as of the Commencement Date; Landlord
will be responsible for notifying Tenant of any material changes in such
insurance coverage made after the Commencement Date.

     Tenant, at its sole expense, shall maintain during the Term and any Term
Extension: all risk property insurance covering the full replacement cost of all
property and improvements installed or placed in the Premises by Tenant;
worker's compensation insurance with no less than the minimum limits required by
law; employees liability insurance with such limits as required by law; and
comprehensive public liability insurance, with a minimum limit of not less than
$2,000,000 per occurrence for death or bodily injury and not less than
$1,000,000 for property damage with respect to the Premises.  Landlord may from
time to time require reasonable increases in any such limits.  The comprehensive
public liability insurance policies shall name Landlord, its officers,
directors, employees, managers, agents, invitees and contractors (collectively,
"Related Parties"), as additional insureds; insure on an occurrence and not a
claims-made basis; be issued by insurance companies that have a rating of not
less than policyholder rating of A and financial category rating of at least
Class XII in "Best's Insurance Guide"; shall not be cancelable unless 30 days
prior written notice shall have been given to Landlord from the insurer; contain
a hostile fire endorsement and a contractual liability endorsement; and provide
primary coverage to Landlord (any policy issued to Landlord providing duplicate
or similar coverage shall be deemed excess over Tenant's policies).  Such
policies or certificates thereof shall be delivered to Landlord by Tenant upon
commencement of the Term and upon each renewal of said insurance (upon renewal,
copies of such policies or certificates will suffice, so long as the original
policies or certificates are forwarded to Landlord within 2 business days
thereafter).  Tenant's policy may be a "blanket policy" which specifically
provides that the amount of insurance shall not be prejudiced by other losses
covered by the policy.  Tenant shall, at least 20 days prior to the expiration
of such policies, furnish Landlord with renewals or binders.  Tenant agrees that
if Tenant does not maintain such insurance, Landlord shall have the right (but
not the obligation) to procure said insurance on Tenant's behalf.

     In each instance where insurance is to name Landlord as an additional
insured, Tenant, upon Landlord's written request, shall furnish certificates so
evidencing Landlord as additional insured to: (i) the Ground Lessor, (ii) any
lender of Landlord holding a security interest in any portion of the Project,
and/or (iii) any management company retained by Landlord to manage the Project.
Further, Tenant agrees that Landlord may require insurance policy limits to be
raised to conform to the requirements of the Ground Lessor and/or Landlord's
lender.

                                       20
<PAGE>

     The property insurance obtained by Landlord and Tenant shall include a
waiver of subrogation by the insurers and all rights based upon an assignment
from its insured, against Landlord or Tenant, and their respective Related
Parties, in connection with any loss or damage thereby insured against.  Neither
party nor its respective Related Parties shall be liable to the other for loss
or damage caused by any risk insured against under property insurance required
to be maintained hereunder, and each party waives any claims against the other
party, and its respective Related Parties for such loss or damage.  The failure
of a party to insure its property shall not void this waiver.  Landlord and its
respective Related Parties shall not be liable for, and Tenant hereby waives all
claims against such parties for, business interruption and losses occasioned
thereby sustained by Tenant or any person claiming through Tenant resulting from
any accident or occurrence in or upon the Premises or the Project from any cause
whatsoever.  If the foregoing waivers shall contravene any law with respect to
exculpatory agreements, the liability of Landlord or Tenant shall be deemed not
released but shall be secondary to the others Insurer.

     The cost of any insurance procured and/or maintained by Landlord pursuant
to this Section shall be included as an Operating Expense.

     Notwithstanding any provision of this Section, Landlord shall insure, and
shall bear all risk of loss with respect to, the Premises and the Project at all
times prior to the Commencement Date, with the exception of any acts or
omissions by Tenant or its agents or contractors.

     18.  Restoration.  If at any time during the Term or any Term Extension the
Project or the Premises are damaged by a fire or other insured casualty,
Landlord shall notify Tenant within 45 days after discovery of such damage as to
the amount of time Landlord reasonably estimates it will take to restore the
Project or the Premises, as applicable.  If the restoration time is estimated to
exceed 6 months, either party, by giving Notice to the other party, may elect to
terminate this Lease as of the date that is 75 days after the date of discovery
of such damage.  Unless either party elects to terminate this Lease, Landlord,
subject to receipt of sufficient insurance proceeds, shall promptly restore the
Premises (excluding any Alterations installed by Tenant and any other
improvements installed by Landlord and paid for by Tenant after Substantial
Completion of the original Premises), subject to delays arising from the
collection of insurance proceeds, from Force Majeure events, or as needed to
obtain any license, clearance, or other authorization of any kind required to
enter into and restore the Premises issued by any Governmental Authority having
jurisdiction over the use, storage, release or removal of Hazardous Materials
in, on, or about the Premises (collectively referred to herein as "Hazardous
Materials Clearances"); provided, however, that if such repair or restoration of
                        --------  -------
the Premises is not Substantially Complete within 9 months after the date of
discovery of the damage (to be extended by I day for each day that the
restoration time is estimated to exceed 6 months, provided that neither party
elected to terminate this Lease based on such estimate), either party, by giving
Notice to the other party, may elect not to proceed with such repair and
restoration, in which event Landlord shall be relieved of its obligations to
make such repairs or restoration and this Lease shall terminate effective as of
the date of such election.

     Tenant, at its expense, shall promptly perform, subject to delays arising
from the collection of insurance proceeds, from Force Majeure events or to
obtain Hazardous Material Clearances, all repairs or restoration not required to
be done by Landlord and, as soon as

                                       21
<PAGE>

reasonably practicable, shall re-enter the Premises and commence doing business
in accordance with this Lease. Notwithstanding the foregoing, Landlord may
terminate this Lease if the Premises are damaged during the last 18 months of
the Term or of any Term Extension and Landlord reasonably estimates that it will
take more than 60 days to repair such damage, or if insurance proceeds are not
available for such restoration. Rent shall be abated from the date all required
Hazardous Material Clearances are obtained until the Premises are repaired and
restored, in the proportion that the area of the Premises that is not usable by
Tenant, if any, bears to the total area of the Premises, unless Landlord
provides Tenant with other space during the period of repair that is suitable,
in Tenant's reasonable discretion, for the temporary conduct of Tenant's
business. Such abatement shall be Tenant's sole and exclusive remedy at law, in
equity, or otherwise, and except as provided herein, Tenant waives any right to
terminate the Lease by reason of damage or casualty loss.

     The provisions of this Lease, including this Section, constitute an express
agreement between Landlord and Tenant with respect to any and all damage to, or
destruction of, all or any part of the Premises, or any other portion of the
Project, and any statute or regulation that is now or may hereafter be in
effect, shall have no application to this Lease or any damage or destruction to
all or any part of the Premises or any other portion of the Project, the parties
hereto expressly agreeing this Section sets forth their entire understanding and
agreement with respect to such matters.

     19.  Condemnation.  If any part of the Premises or the Project is taken for
any public or quasi-public use under any governmental law, ordinance, or
regulation, or by right of eminent domain, or by private purchase in lieu
thereof (a "Taking" or "Taken"), and the Taking would, in Tenant's judgment,
prevent or materially interfere with Tenant's use of the Premises for the
Permitted Use or, in Landlord's judgment, materially interfere with or impair
Landlord's ownership or operation of the Project, then upon Notice by either
party to the other party this Lease shall terminate and Rent shall be
apportioned as of said date.  If part of the Premises shall be Taken, and this
Lease is not terminated as provided above, Landlord shall promptly restore the
Premises and the Project as nearly as is commercially reasonable under the
circumstances to their condition prior to such partial taking and the Rent
payable hereunder during the unexpired portion of the Term or any Term Extension
shall be reduced to such extent as may be fair and reasonable under the
circumstances.  Upon any such Taking, Landlord shall be entitled to receive the
entire price or award from any such Taking without any payment to Tenant, and
Tenant hereby assigns to Landlord Tenant's interest, if any, in such award.
Tenant shall have the right, to the extent that same shall not diminish
Landlord's award, to make a separate claim against the condemning authority (but
not Landlord) for such compensation as may be separately awarded or recoverable
by Tenant for moving expenses and damage to Tenant's Trade Fixtures, if a
separate award for such items is made to Tenant.  Tenant hereby waives any and
all rights it might otherwise have pursuant to any provision of state law to
terminate this Lease upon a partial Taking of the Premises or the Project

     20.  Events of Default.  Each of the following events shall be a default
("Default") by Tenant under this Lease:

          (a) Payment Defaults.  Tenant shall fail to pay any installment of
Rent or any other payment hereunder when due; provided, however, that Landlord
                                              --------  -------
will give Tenant Notice

                                       22
<PAGE>

and an opportunity to cure any failure to pay Rent within 3 days of any such
Notice not more than once in any 12 month period and Tenant agrees that such
Notice shall be in lieu of and not in addition to any notice required by law.

          (b) Insurance.  (i) Any insurance required to be maintained by Tenant
pursuant to this Lease shall be canceled or terminated or shall expire or shall
be reduced or materially changed, or Landlord shall receive a notice of
nonrenewal of any such insurance and (ii) Tenant shall fail to obtain
replacement insurance at least 20 days before the expiration of the current
coverage.

          (c) Abandonment.  Tenant shall abandon the Premises.

          (d) Improper Transfer.  Tenant shall assign, sublease or otherwise
transfer or attempt to transfer all or any portion of Tenant's interest in this
Lease or the Premises except as expressly permitted herein, or Tenant's interest
in this Lease shall be attached, executed upon, or otherwise judicially seized
and such action is not released within 90 days of the action.

          (e) Liens.  Tenant shall fail to satisfy its obligations under Section
                                                                         -------
15.
--

          (f) Insolvency Events.  Tenant or any guarantor or surety of Tenant's
obligations hereunder shall: (i) make a general assignment for the benefit of
creditors; (ii) commence any case, proceeding or other action seeking to have an
order for relief entered on its behalf as a debtor or to adjudicate it bankrupt
or insolvent, or seeking reorganization, arrangement, adjustment, liquidation,
dissolution or composition of it or its debts or seeking appointment of a
receiver, trustee, custodian or other similar official for it or for all or of
any substantial part of its property (collectively a "Proceeding for Relief');
(iii) become the subject of any Proceeding for Relief that is not dismissed
within 90 days of its filing or entry; or (iv) die or suffer a legal disability
(if Tenant, guarantor, or surety is an individual) or be dissolved or otherwise
fail to maintain its legal existence (if Tenant, guarantor or surety is a
corporation, partnership or other entity).

          (g) Estoppel Certificate or Subordination Agreement.  Tenant fails to
execute any document required from Tenant under Sections 23, 27, or 38 within 10
                                                -----------  --     --
days after a second Notice requesting such document

          (h) Greenhouse Loan.  Tenant is in breach of, in default under, or
otherwise has failed to comply with the agreements, terms, covenants and
conditions to be performed by Tenant in connection with the "Greenhouse Loan" or
pursuant to any of the "Greenhouse Loan Documents" (as such terms are defined in

Section 42 below), after any applicable notice and cure periods.
----------

          (i) Warrant Agreement.  Tenant is in breach of, in default under, or
otherwise has failed to comply with the agreements, terms, covenants and
conditions to be performed by Tenant in connection with the `Warrant Agreement"
(as defined in Section 43 below), after any applicable notice and cure periods.
               ----------

          (j) Other Defaults.  Tenant shall fail to comply with any provision of
this Lease other than those specifically referred to in this Section, and except
as otherwise expressly

                                       23
<PAGE>

provided herein, such failure shall continue for a period of 30 days after
Notice thereof from Landlord to Tenant.

     Any Notice given under Section 20(g) or (j) hereof, shall: (i) specify the
                            -------------    ---
alleged default, (ii) demand that Tenant cure such default, (iii) be in lieu of,
and not in addition to, or be deemed to be, any notice required under any
provision of applicable law, and (iv) not be deemed a forfeiture or a
termination of this Lease unless Landlord elects otherwise in such Notice;
provided, however, that if the nature of Tenant's default is such that it cannot
--------  -------
be cured by the payment of money and reasonably requires more than 30 days to
cure, then Tenant shall not be deemed to be in default if Tenant commences such
cure within said 30-day period and thereafter diligently prosecutes the same to
completion; provided further, however, that such cure shall be completed no
            ----------------  -------
later than 60 days from the date of Landlord's Notice.

     21.  Landlord's Remedies.

          (a) Payment By Landlord; Interest.  Upon a Default by Tenant
hereunder, Landlord, without waiving or releasing any obligation of Tenant
hereunder, may make such payment or perform such act.  All sums so paid or
incurred by Landlord, together with interest thereon, from the date such sums
were paid or incurred, at the annual rate equal to 12.00% per annum or the
highest rate permitted by law, whichever is less (the "Default Rate"), shall be
payable to Landlord on demand as Additional Rent.  Nothing herein shall be
construed to create or impose a duty on Landlord to mitigate any damages
resulting from Tenant's Default hereunder.

          (b) Late Payment Rent.  Late payment by Tenant to Landlord of Rent and
other sums due under this Lease will cause Landlord to incur costs not
contemplated by this Lease, the exact amount of which will be extremely
difficult and impracticable to ascertain.  Such costs include, but are not
limited to, processing and accounting charges and late charges that may be
imposed on Landlord under any "Mortgage" (as defined in Section 27 below)
                                                        ----------
covering the Premises.  Therefore, if Landlord does not receive any installment
of Rent due from Tenant within 5 days after the date such payment is due, Tenant
shall pay to Landlord an additional sum of 6.00% of the overdue Rent as a late
charge.  In addition to the late charge, Rent not paid when due shall bear
interest at the Default Rate from the 5th day after the date due until paid.
Provided there is no other Default by Tenant hereunder, the foregoing late
charge and interest at the Default Rate will not be payable until the 2nd late
payment of Rent in any 12 month period.  Tenant agrees that the foregoing late
charge and interest at the Default Rate represent a fair and reasonable estimate
of the costs Landlord will incur by reason of late payment by Tenant.  Tenant
also acknowledges that Landlord is entitled to use reasonable methods to deter
delinquent payments by Tenant and agrees that, under the circumstances in
existence as of the date of this Lease, the foregoing late charge and interest
at the Default Rate are reasonable, as evidenced by the fact that, among other
things, (i) Landlord and Tenant have comparatively equal bargaining power, (ii)
this Lease is not a pre-printed form document, and (iii) Tenant's principals are
well experienced in leasing properties, were represented by counsel in the
negotiation and documentation of this Lease, and bargained at arms length and
without duress for all of the terms and conditions of this Lease, including this
provision.

                                       24
<PAGE>

     (c)  Remedies. Upon the occurrence of a Default, Landlord, at its option,
without further Notice to or demand on Tenant, shall have the option, in
addition to all other rights and remedies provided in this Lease, at law or in
equity, to pursue any one or more of the following remedies, each and all of
which shall be cumulative and nonexclusive, without any Notice or demand
whatsoever.

          (i)    Terminate this Lease, or at Landlord's option, Tenant's right
to possession only, in which event Tenant shall immediately surrender the
Premises to Landlord, and if Tenant fails to do so, Landlord may, in accordance
with applicable law and without prejudice to any other remedy that it may have
for possession or arrearages in rent, enter upon and take possession of the
Premises and expel or remove Tenant and any other person who may be occupying
the Premises or any part thereof, without being liable for prosecution or any
claim or damages therefor;

          (ii)   Upon any termination of this Lease, whether pursuant to the
foregoing Section 21 (c)(i) or otherwise, Landlord may recover from Tenant the
          -----------------
following:

                 (A)     The worth at the time of award of any unpaid rent which
has been earned at the time of such termination; plus

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

                 (C)     The worth at the time of award of the amount by which
the unpaid rent for the balance of the Term or Term Extension (as the case may
be) after the time of award exceeds the amount of such rental loss that Tenant
proves could have been reasonably avoided; plus

                 (D)     Any other amount necessary to compensate Landlord for
all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, specifically including, but not limited to,
brokerage commissions and advertising expenses incurred and the expenses of
remodeling the Premises or any portion thereof for a new tenant, whether for the
same or a different use, and any special concessions made to obtain a new
tenant; and

                 (E)     At Landlord's election, such other amounts in addition
to or in lieu of the foregoing as may be permitted from time to time by
applicable law.

The term "rent" as used in this Section shall be deemed to be and to mean all
sums of every nature required to be paid by Tenant pursuant to the terms of this
Lease, whether to Landlord or to others.  As used in Sections 21 (c)(ii)(A) and
                                                     ----------------------
(B), above, the "worth at the time of award" shall be computed by allowing
---
interest at the Default Rate.  As used in Section 21(c)(ii)(C) above, the "worth
                                          --------------------
at the time of award" shall be computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of award
plus 1.00%.

          (iii)   Landlord may continue this Lease in effect after
Tenant's Default and recover rent as it becomes due. Accordingly, if Landlord
does not elect to terminate this

                                       25
<PAGE>

Lease following a Default by Tenant, Landlord may, from time to time, without
terminating this Lease, enforce all of its rights and remedies hereunder,
including the right to recover all Rent as it becomes due.

                 (iv)    Whether or not Landlord elects to terminate this Lease
following a Default by Tenant, Landlord shall have the right to terminate any
and all subleases, licenses, concessions or other consensual arrangements for
possession entered into by Tenant and affecting the Premises or may, in
Landlord's sole and absolute discretion, succeed to Tenant's interest in such
subleases, licenses, concessions or arrangements. Upon Landlord's election to
succeed to Tenant's interest in any such subleases, licenses, concessions or
arrangements, Tenant shall, as of the date of Notice by Landlord of such
election, have no further right to or interest in the rent or other
consideration receivable thereunder.

          (d)  Effect of Exercise. Exercise by Landlord of any remedies
hereunder or otherwise available shall not be deemed to be an acceptance of
surrender of the Premises and/or a termination of this Lease by Landlord, it
being understood that such surrender and/or termination can be effected only by
the express written agreement of Landlord and Tenant. Any law, usage, or custom
to the contrary notwithstanding, Landlord shall have the right at all times to
enforce the provisions of this Lease in strict accordance with the terms hereof;
and the failure of Landlord at any time to enforce its rights under this Lease
strictly in accordance with same shall not be construed as having created a
custom in any way or manner contrary to the specific terms, provisions, and
covenants of this Lease or as having modified the same and shall not be deemed a
waiver of Landlord's right to enforce one or more of its rights in connection
with any subsequent default. A receipt by Landlord of Rent or other payment with
knowledge of the breach of any covenant hereof shall not be deemed a waiver of
such breach, and no waiver by Landlord of any provision of this Lease shall be
deemed to have been made unless expressed in writing and signed by Landlord. To
the greatest extent permitted by law, Tenant waives the service of notice of
Landlord's intention to re-enter, re-take or otherwise obtain possession of the
premises as provided in any statute, or to institute legal proceedings to that
end, and also waives all right of redemption in case Tenant shall be
dispossessed by a judgment or by warrant of any court or judge. Any reletting of
the Premises or any portion thereof shall be on such terms and conditions as
Landlord in its sole and absolute discretion may determine. Landlord shall not
be liable, nor shall Tenant's obligations hereunder be diminished because of,
Landlord's failure to relet the Premises or collect rent due in respect of such
reletting or otherwise to mitigate any damages arising by reason of Tenant's
Default.

     22.  Assignment and Subletting.

          (a)  General Prohibition.  Without Landlord's prior written consent,
Tenant shall not, directly or indirectly, voluntarily or by operation of law,
assign this Lease or sublease the Premises or any part thereof or mortgage,
pledge, or hypothecate its leasehold interest or grant any concession or license
within the Premises and any attempt to do any of the foregoing shall be void and
of no effect.  For purposes of this Section, a transfer of ownership interests
controlling Tenant shall be deemed an assignment of this Lease unless such
ownership interests are publicly traded.

                                       26
<PAGE>

          (b)  Permitted Transfers. If Tenant desires to assign, sublease,
hypothecate or otherwise transfer this Lease or sublet the Premises (generally,
a "Transfer"), then at least 15 business days, but not more than 30 business
days, before the date Tenant desires the Transfer to be effective (the
"Assignment Date"), Tenant shall give Landlord a Notice (the "Assignment
Notice") containing such information about the proposed transferee, including
the proposed use of the Premises and any Hazardous Materials proposed to be used
or stored in the Premises, the Assignment Date, any relationship between Tenant
and the proposed transferee, and all material terms and conditions of the
proposed Transfer, and such other information as Landlord may deem reasonably
necessary or appropriate to its consideration whether to grant its consent.
Landlord may, by giving Notice to Tenant within 15 business days after receipt
of the Assignment Notice: (i) grant or refuse such consent, in its sole and
absolute discretion, with respect to any Transfer other than a straightforward
sublease of not more than 5,000 square feet of the Premises (a "Minor
Sublease"), or grant or refuse such consent, in its reasonable discretion, with
respect to such a Minor Sublease, or (ii) terminate this Lease with respect to
the space described in the Assignment Notice, as of the Assignment Date (an
"Assignment Termination"). If Landlord elects an Assignment Termination, Tenant
shall have the right to withdraw its Assignment Notice by Notice to Landlord of
such election within 5 days after Landlord's Notice electing to exercise the
Assignment Termination. If Tenant withdraws such Assignment Notice, this Lease
shall continue in full force and effect. If Tenant does not withdraw such
Assignment Notice, this Lease, and the term and estate herein granted, shall
terminate as of the Assignment Date with respect to the space described in such
Assignment Notice. No failure of Landlord to exercise any such option to
terminate this Lease shall be deemed to be Landlord's consent to the proposed
Transfer. Tenant shall reimburse Landlord for all reasonable out-of-pocket
expenses, up to a maximum of $1,000.00, incurred by Landlord in connection with
its consideration of any Assignment Notice.

          (c)  Additional Conditions. As a condition to any such Transfer,
Landlord may require:

               (i)  that any transferee agree, in writing at the time of such
Transfer, that if Landlord gives such third party notice that Tenant is in
default under this Lease, such third party shall thereafter make all payments
otherwise due Tenant directly to Landlord, which payments will be received by
Landlord without any liability except to credit such payment against those due
under this Lease, and any such third party shall agree to attorn to Landlord or
its successors and assigns should this Lease be terminated for any reason;
provided, however, in no event shall Landlord or its successors or assigns be
--------  -------
obligated to accept such attornment; and

               (ii) A list of Hazardous Materials, certified by the proposed
transferee to be true and correct, which the proposed transferee intends to use
or store in the Premises together with the "Documents" (as defined in Section
                                                                      -------
30(b) below) with respect to such proposed transferee.
-----

          (d)  No Release of Tenant. Notwithstanding any Transfer, Tenant and
any guarantor or surety of Tenant's obligations under this Lease shall at all
times remain fully and primarily responsible and liable for the payment of Rent
and for compliance with all of Tenant's other obligations under this Lease. If
the Rent due and payable by a transferee (or a combination of the rental payable
under such Transfer plus any bonus or other consideration therefor or

                                       27
<PAGE>

incident thereto) exceeds the rental payable under this Lease, then Tenant shall
be bound and obligated to pay Landlord as Additional Rent hereunder all such
excess rental and other excess consideration within 10 days following receipt
thereof by Tenant. If Tenant shall sublet the Premises or any part thereof,
Tenant hereby immediately and irrevocably assigns to Landlord, as security for
Tenant's obligations under this Lease, all rent from any such subletting and
Landlord, as assignee, or a receiver for Tenant appointed on Landlord's
application, may collect such rent and apply it toward Tenant's obligations
under this Lease; except that, until the occurrence of a Default, Tenant shall
have the right to collect such rent.

          (e)  No Waiver.  The consent by Landlord to a Transfer shall not
relieve Tenant or any transferee from obtaining the consent of Landlord to any
further Transfer nor shall it release Tenant or any transferee from full and
primary liability under the Lease.  The acceptance of Rent hereunder, or the
acceptance of performance of any other term, covenant, or condition thereof,
from any other person or entity shall not be deemed to be a waiver of any of the
provisions of this Lease or a consent to any Transfer.

     23.  Estoppel Certificate.  Tenant shall within 15 business days of Notice
from Landlord, execute, acknowledge and deliver a statement in writing
substantially in the form attached to this Lease as Exhibit J with the blanks
                                                    ---------
filled in, and on any other form reasonably requested by a proposed lender or
purchaser, (i) certifying that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification and certifying
that this Lease as so modified is in full force and effect) and the dates to
which the rental and other charges are paid in advance, if any, (ii)
acknowledging that there are not, to Tenant's knowledge, any uncured defaults on
the part of Landlord hereunder, or specifying such defaults if any are claimed,
and (iii) setting forth such further information with respect to the status of
this Lease or the Premises as may be reasonably requested thereon.  Any such
statement may be relied upon by any prospective purchaser or encumbrancer of all
or any portion of the real property of which the Premises are a part.  Tenant's
failure to deliver such statement within such time shall, at the option of
Landlord, constitute a Default under this Lease, and, in any event, shall be
conclusive upon Tenant that the Lease is in full force and effect and without
modification except as may be represented by Landlord in any certificate
prepared by Landlord and delivered to Tenant for execution.

     24.  Quiet Enjoyment.  If Tenant shall perform all of the covenants and
agreements herein required to be performed by Tenant, Tenant shall, at all times
during the Term and any Term Extension, have peaceful and quiet enjoyment of the
Premises and the Project against any person claiming by, through, or under
Landlord.

     25.  Prorations.  All prorations required or permitted to be made hereunder
shall be made on the basis of a 360-day year and 30-day months.

     26.  Rules and Regulations.  Tenant shall, at all times during the Term and
any Term Extension, comply with all reasonable rules and regulations at any time
or from time to time established by Landlord covering the use of the Premises
and the Project and delivered to Tenant at least 30 days prior to their
effective date.  The current rules and regulations are attached hereto as
Exhibit H.  If there is any conflict between said rules and regulations and
---------
other provisions of this Lease, the terms and provisions of this Lease shall
control.  Landlord shall not have any

                                       28
<PAGE>

obligation to enforce any rules or regulations against, and shall have no
liability for the breach of any rules or regulations by, other tenants in the
Project. If Landlord chooses to enforce any rules or regulations against other
tenants in the Project, Landlord shall do so in a non-discriminatory manner.

     27.  Subordination.  This Lease and Tenant's interest and rights hereunder
are and shall be subject and subordinate at all times to the lien of any first
mortgage, now existing or hereafter created on or against the Project or the
Premises, and all amendments, restatements, renewals, modifications,
consolidations, refinancings, assignments and extensions thereof (collectively,
a "Mortgage"), without the necessity of any further instrument or act on the
part of Tenant; provided, however, that so long as there is no Default
                --------  -------
hereunder, Tenant's receipt of a fully executed instrument containing
appropriate non-disturbance provisions assuring Tenant's quiet enjoyment of the
Premises as set forth in Section 24 hereof shall be a condition precedent to the
                         ----------
subordination of Tenant's interest and rights hereunder and Tenant's right to
possession of the Premises shall not be disturbed by the holder of any such
Mortgage (a "Holder").  Tenant agrees, at the election of any Holder, to attorn
to any such Holder.  Tenant agrees, upon demand, to execute, acknowledge and
deliver a Subordination, Non-Disturbance and Attornment Agreement substantially
in the form attached hereto as Exhibit K (the "Loan Subordination Agreement) or
                               ---------
such other instruments, confirming such subordination and such instruments of
attornment as shall be reasonably requested by any Holder, provided any such
instruments contain the appropriate non-disturbance provisions described above.
Notwithstanding the foregoing, any Holder may at any time subordinate its
Mortgage to this Lease, without Tenant's consent, by written notice to Tenant,
and thereupon this Lease shall be deemed prior to such Mortgage without regard
to their respective dates of execution, delivery, or recording and in that event
such Holder shall have the same rights with respect to this Lease as though this
Lease had been executed prior to the execution, delivery, and recording of such
Mortgage and had been assigned to such Holder.  Landlord shall use commercially
reasonable efforts to obtain an express agreement from the Holder of any
Mortgage that the lien of such Mortgage does not apply or attach to any property
that, by operation of the terms of this Lease, is deemed to be Tenant's separate
property, whether or not such property is, has been, or will become affixed to
the Premises.  The term "Mortgage" whenever used in this Lease shall be deemed
to include deeds of trust, security assignments and any other encumbrances given
for value, and any reference to the "Holder" of a mortgage shall be deemed to
include the beneficiary under a deed of trust.

     28.  Surrender.  Upon expiration or earlier termination of Tenant's right
of possession, Tenant may, subject to the exercise of any remedies by Landlord,
remove Tenant's Property and shall surrender the Premises to Landlord in
substantially the same condition as received, broom clean, ordinary wear and
tear, approved Alterations, and casualty loss and condemnation covered by
Sections 18 and 19 excepted, and shall return to Landlord all keys to offices
and restrooms furnished to, or otherwise procured by, Tenant.  If any such key
is lost, Tenant shall pay to Landlord, at Landlord's election, either the cost
of replacing such lost key or the cost of changing the lock or locks opened by
such lost key.  Any Trade Fixtures, Alterations, and property not so removed by
Tenant as permitted or required herein shall be deemed abandoned and may be
stored, removed, and disposed of by Landlord at Tenant's expense, and Tenant
waives all claims against Landlord for any damages resulting from Landlord's
retention and/or disposition of such property.  All obligations of either party
that have arisen and/or become binding hereunder but

                                       29
<PAGE>

have not been fully satisfied as of the expiration or earlier termination of
this Lease shall survive such expiration or earlier termination, including
without limitation, indemnity obligations, payment obligations (including Rent),
obligations concerning the condition and repair of the Premises, and the
obligation to obtain all required Hazardous Materials Clearances. Without
limiting the generality of the foregoing, the following provisions shall survive
the expiration or earlier termination of this Lease: (a) the indemnity
obligations contained in Sections 7, 12, 14(b), 16(a), 16(b), 30(a), 30(d), 35
                         ----------  --  -----  -----  -----  -----  -----  --
and 38(b); (b) the payment obligations contained in Sections 3, 5, 6, 8, 9, 11,
    -----                                           ----------  -  -  -  -  --
15, 21(a), 21(b) and 22(d); (c) the maintenance, repair, and/or restoration
--  -----  -----     -----
obligations contained in Sections 12, 13, and 18; (d) the obligation to obtain
                         -----------  --      --
Hazardous Materials Clearances contained in Section 18; and (e) the agreements
                                            ----------
contained in Sections 29, 36, and 44.
             -----------  --      --

     29.  WAIVER OF JURY TRIAL.  TENANT AND LANDLORD EACH AGREE NOT TO ELECT A
TRIAL BY JURY, AND WAIVE ANY RIGHT TO A TRIAL BY JURY OR TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE, BETWEEN LANDLORD AND TENANT ARISING OUT OF THIS LEASE OR ANY OTHER
INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH
OR THE TRANSACTIONS RELATED HERETO. THIS WAIVER IS GIVEN KNOWINGLY AND
VOLUNTARILY, AND IS INTENDED TO ENCOMPASS EACH INSTANCE AND EACH ISSUE AS TO
WHICH THE RIGHT TO TRIAL BY JURY OTHERWISE WOULD ACCRUE.  TENANT AND LANDLORD
EACH AGREE THAT THIS PROVISION CONSTITUTES A WRITTEN CONSENT TO WAIVER OF TRIAL
BY JURY, AND EACH PARTY AUTHORIZES THE OTHER PARTY TO FILE A COPY OF THIS
PROVISION, IN ANY PROCEEDING, AS CONCLUSIVE EVIDENCE OF THIS CONSENT TO WAIVER.

     30.  Environmental Requirements.

          (a) Prohibition Compliance.  Landlord has provided Tenant with copies
of all environmental tests, reports, inspections, surveys, samples, studies, and
other analyses of the Site and the Additional Site that are in Landlord's
possession or control or that Landlord, through the exercise of commercially
reasonable efforts, has been able to obtain from various Governmental
Authorities having jurisdiction over "Hazardous Materials" (as hereinafter
defined) that may be present at the Site or the Additional Site (collectively,
the "Environmental Information") A list of the documents containing the
Environmental Information is attached hereto as Exhibit O.  Tenant may request
                                                ---------
additional environmental testing of the Site at any time during the first 6
months after the Effective Date and, if permitted by the Ground Lessor and
actually performed, the information obtained from such additional testing shall
be deemed a part of the Environmental Information.  Except to the extent payable
by a third party (including, without limitation, the Ground Lessor or any
previous tenant of the Site), the cost of any additional environmental testing
of the Site shall be amortized over a period of 7 years and shall be includable
by Landlord as an Operating Expense.  Landlord shall not be responsible, and
Tenant hereby waives any right to assert any claim against Landlord, for any
Pre-Existing Contamination.  In addition to the forgoing, Tenant shall not cause
or permit any Hazardous Materials to be brought upon, kept, or used in or about
the Premises, the Project, or the Site in violation of applicable law.  If
Tenant breaches the obligation stated in the preceding sentence, if the presence
of Hazardous Materials permitted by Tenant results in contamination of the
Premises, the Project, the Site, or any adjacent property (including the
Additional Site), or if any contamination of the Premises,

                                       30
<PAGE>

Project, Site, or any adjacent property (including the Additional Site) that is
not expressly identified in the Environmental Information ("Previously Unknown
Contamination") is discovered during the Term or any Term Extension or renewal
hereof or holding over hereunder and Tenant cannot demonstrate that such
Previously Unknown Contamination was present at the Site before the Effective
Date or is attributable solely to the actions or omissions of a person or entity
other than Tenant, Tenant shall indemnify, defend, and hold Landlord, its
officers, directors, employees, agents and contractors harmless from any and all
claims, judgments, damages, penalties, fines, costs, liabilities, or losses
(including, without limitation, diminution in value of the Premises or any
portion of the Project, damages for the loss or restriction on use of rentable
or usable space or of any amenity of the Premises or the Project, damages
arising from any adverse impact on marketing of space in the Premises or the
Project, increase in the cost of designing, constructing, or permitting any
additional improvements within the Project, and sums paid in settlement of
claims and Legal Fees) that arise before or after the expiration or earlier
termination of this Lease as a result of such contamination. This
indemnification of Landlord by Tenant includes, without limitation, costs
incurred in connection with any investigation of site conditions or any cleanup,
remedial, removal, or restoration work required by any Governmental Authority
because of Hazardous Materials present in the air, soil, or ground water above,
on, or under the Premises, the Project, the Site, or any adjacent property
(including the Additional Site). Without limiting the foregoing, if the presence
of any Hazardous Materials within the Premises, the Project, the Site, or any
adjacent property (including the Additional Site) caused or permitted by Tenant
results in any contamination of the Premises, the Project, the Site, or any
adjacent property (including the Additional Site), Tenant shall promptly take
all actions at its sole expense as are necessary to return the Premises, the
Project, the Site, or any adjacent property (including the Additional Site) to
the condition existing prior to the time of such contamination, provided that
Landlord's approval of such action shall first be obtained, which approval shall
not unreasonably be withheld so long as such actions would not potentially have
any material adverse long-term or short-term effect on the Premises, the
Project, or the Site.

          (b)  Business. Landlord acknowledges that it is not the intent of this
Section to prohibit Tenant from operating its business as described in Section 7
                                                                       ---------
above.  Tenant may operate its business according to the custom of the industry
so long as the use or presence of Hazardous Materials is strictly and properly
monitored according to all applicable governmental requirements.  As a material
inducement to Landlord to allow Tenant to use Hazardous Materials in connection
with its business, Tenant agrees to deliver to Landlord prior to the
Commencement Date a list identifying each type of Hazardous Materials to be
present on the Premises, the Project, or the Site and setting forth any and all
governmental approvals or permits required in connection with the presence of
such Hazardous Materials on the Premises, the Project, or the Site ("Hazardous
Materials List").  Tenant shall deliver to Landlord an updated Hazardous
Materials List at least once a year and shall also deliver an updated list
before any new Hazardous Materials are brought onto the Premises, the Project,
or the Site.  Tenant shall deliver to Landlord true and correct copies of the
following documents (the "Documents") relating to the handling, storage,
disposal, and emission of Hazardous Materials prior to the Commencement Date, or
if unavailable at that time, concurrent with the receipt from or submission to a
Governmental Authority: permits; approvals; reports, and correspondence; storage
and management plans, notice of violations of any laws; plans relating to the
installation of any storage tanks to be installed in or under the Premises, the
Project, or the Site (provided said installation of tanks shall only be
permitted after Landlord has given Tenant its written

                                       31
<PAGE>

consent to do so, which consent may be withheld in Landlord's sole and absolute
discretion); and all closure plans or any other documents required by any and
all Governmental Authorities for any storage tanks installed in, on, or under
the Premises, the Project, or the Site for the closure of any such tanks. Tenant
is not required, however, to provide Landlord with any portion(s) of the
Documents containing information of a proprietary nature that, in and of
themselves, do not contain a reference to any Hazardous Materials or hazardous
activities, it being understood and agreed that it is not the intent of this
Section to provide Landlord with information that could be detrimental to
Tenant's business should such information become possessed by Tenant's
competitors. Accordingly, Landlord, except as may be provided otherwise herein
or required by law, shall (i) keep confidential the information contained in the
Documents, and (ii) disclose such information only to Landlord's officers,
directors, employees, or consultants with a need to know in connection with
Landlord's management of the Project, provided that Landlord shall inform all
non-affiliated recipients of such information of the confidentiality requirement
and (to the extent within Landlord's control) cause such confidence to be
maintained; provided, however, that disclosure of such information by Landlord
            --------  -------
shall not be prohibited if that disclosure is of information that is a matter of
public record or public knowledge or was obtained by Landlord from sources other
than Tenant. Tenant agrees that it shall, at its own expense, and upon the
written request of Landlord, establish and maintain a separate area of the
Premises classified under the North Carolina State Building Code (as adopted by
the City of Durham) as an "H" occupancy area (i.e., the classification denoting
                                              ----
a hazardous materials occupancy area) for the use and storage of Hazardous
Materials.

          (c)  Termination of Lease.  Notwithstanding the provisions of Section
                                                                        -------
30(a) above, if (i) Tenant or any proposed transferee of Tenant has been
-----
required by any prior landlord, lender, or Governmental Authority to take
remedial action in connection with Hazardous Materials contaminating a property
if the contamination resulted from such party's action or use of the property in
question, or (ii) Tenant or any proposed transferee of Tenant is adjudicated
guilty or responsible under an enforcement order issued by any Governmental
Authority in connection with the use, disposal, or storage of a Hazardous
Materials, Landlord shall have the right to terminate this Lease in Landlord's
sole and absolute discretion (with respect to any such matter involving Tenant)
and it shall not be unreasonable for Landlord to withhold its consent to any
proposed Transfer (with respect to any such matter involving a proposed
transferee).

          (d)  Testing. Landlord shall have the right to conduct annual tests of
the Premises (each, an "Annual Test" and collectively, "Annual Tests") to
determine whether any contamination has occurred as a result of Tenant's use.
Tenant shall be required to pay up to $2,000.00 of the cost of each such Annual
Test; provided, however, if Tenant conducts its own tests of the Premises using
      --------  -------
third party contractors and test procedures acceptable to Landlord, which tests
are certified to Landlord, Landlord shall accept such tests in lieu of the
Annual Tests to be paid for by Tenant.  In addition, at any time, and from time
to time, prior to the expiration or earlier termination of this Lease, Landlord
shall have the right to conduct additional appropriate tests of the Premises,
the Project, and the Site to determine whether contamination has occurred as a
result of Tenant's use of the Premises, the Project, or the Site.  If
contamination has occurred for which Tenant is liable under this Section, Tenant
shall pay all costs to conduct such tests.  If no such contamination is found,
Landlord shall pay the costs of such tests (which shall not constitute an
Operating Expense).  Landlord shall provide Tenant with a copy of all reports
and tests of the Premises made by or on behalf of Landlord.  Tenant shall be
solely

                                       32
<PAGE>

responsible for and shall defend, indemnify, and hold Landlord and its agents
and contractors harmless from and against any and all claims, costs and
liabilities (including actual Legal Fees) arising out of or in connection with
any removal, clean up, restoration and materials required hereunder to return
the Premises, the Project, the Site, and any other property of whatever nature
to their condition existing prior to the time of any such contamination.
Landlord's receipt of or satisfaction with any environmental assessment in no
way waives any rights that Landlord holds against Tenant.

          (e)  Underground Tanks. If underground or other storage tanks storing
Hazardous Materials are located on the Premises, the Project, or the Site or are
hereafter placed on the Premises, the Project, or the Site by any party at
Tenant's request, Tenant shall monitor the storage tanks, maintain appropriate
records, implement reporting procedures, properly close any underground storage
tanks, and take or cause to be taken all other steps necessary or required under
applicable state and federal law, as such now exists or may hereafter be adopted
or amended.

          (f)  Tenant's Obligations. Each party's obligations under this Section
shall survive the expiration or earlier termination of the Lease. During any
period of time after the expiration or earlier termination of this Lease
required by Tenant or Landlord to complete the removal from the Premises of any
Hazardous Materials and the release and termination of any licenses or permits
restricting the use of the Premises, Tenant shall continue to pay the full Rent
in accordance with this Lease, which Rent shall be prorated daily.

          (g)  Definition of "Hazardous Materials".  As used herein, the term
"Hazardous Materials" means any hazardous or toxic substance, material or waste
that is or becomes regulated by any Governmental Authority and includes, without
limitation, any material or substance that is (i) petroleum, (ii) asbestos,
(iii) designated as a "hazardous substance" pursuant to Section 311 of the
Federal Water Pollution Control Act (33 U.S.C.  Section 1317), (iv) defined as a
"hazardous waste" pursuant to Section 1004 of the Federal Resource Conservation
and Recovery Act, 42 U.S.C.  Section 6901 et seq.  (42 U.S.C.  Section 6903),
                                          -- ---
(v) defined as a "hazardous substance" pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
Section 9601 et seq.  (42 U.S.C.  Section 9601), (vi) defined as "hazardous
             -- ---
waste, "extremely hazardous waste" or "restricted hazardous waste" under any
applicable state law, or (vii) defined as a "hazardous material" or "hazardous
substance" under any applicable state law.

     31.  Tenant's Remedies/Limitation of Liability.  Landlord shall not be in
default hereunder unless Landlord fails to perform any of its obligations
hereunder within 30 days after Notice from Tenant specifying such failure
(unless such performance will, due to the nature of the obligation, reasonably
require a period of time in excess of 30 days, then after such period of time as
is reasonably necessary).  Upon any default by Landlord, Tenant shall give
notice by registered or certified mail to the Ground Lessor and to any Holder of
a Mortgage covering the Premises or the Project and Tenant shall offer all such
persons a reasonable opportunity to cure the default, including time to obtain
possession of the Premises or the Project by power of sale or a judicial action
if such should prove necessary to effect a cure; provided Landlord shall have
                                                 --------
furnished to Tenant in writing the names and addresses of all such persons who
are to receive such notices.  All obligations of Landlord hereunder shall be
construed as covenants, not

                                       33
<PAGE>

conditions; and, except as may be otherwise expressly provided in this Lease,
Tenant may not terminate this Lease for breach of Landlord's obligations
hereunder. All obligations of Landlord under this Lease will be binding upon
Landlord only during the period of its ownership of the ground lessee's interest
under the Ground Lease and not thereafter. The term "Landlord" in this Lease
shall mean only the owner, for the time being, of the ground lessee's interest
under the Ground Lease, and upon the transfer by such owner of such ground
lessee's interest under the Ground Lease, such owner shall thereupon be released
and discharged from all obligations of Landlord thereafter accruing, but such
obligations shall be binding during the Term and any Term Extension upon each
new owner for the duration of such owner's ownership. Any liability of Landlord
under this Lease shall be limited solely to its interest in the Project, and in
no event shall any personal liability be asserted against Landlord in connection
with this Lease nor shall any recourse be had to any other property or assets of
Landlord or any of Landlord's officers, employees, agents, or contractors. Under
no circumstances shall Landlord or any of Landlord's officers, employees, agents
or contractors be liable for injury to Tenant's business or for any loss of
income or profit therefrom.

     32.  Inspection and Access.  During business hours on not less than 48
hours advance Notice (except in the case of emergencies in which case no such
Notice shall be required and such entry may be at any time), Landlord and its
agents, representatives, and contractors may enter the Premises at any
reasonable time to inspect the Premises and to make such repairs as may be
required or permitted pursuant to this Lease and for any other business purpose,
including, without limitation, for the purpose of showing the Premises to
prospective purchasers and, during the last year of the Term or any Term
Extension (as the case may be), to prospective tenants, and Landlord may erect a
suitable sign on the Premises stating the Premises are available to let or that
the Project is available for sale.  Landlord shall use commercially reasonable
efforts to minimize any loss, injury, inconvenience to or interference with
Tenant's business, or loss of occupancy or quiet enjoyment of the Premises
occasioned by Landlord entering the Premises pursuant to this Section.  Landlord
also may grant easements, make public dedications, designate common areas and
create restrictions on or about the Premises, provided, however, that no sign or
                                              --------  -------
easement, dedication, designation, or restriction materially adversely
interferes with Tenant's use or occupancy of the Premises.  At Landlord's
request, Tenant shall execute such instruments as may be necessary for such
easements, dedications, or restrictions.

     33.  Security.  Tenant acknowledges and agrees that security devices and
services, if any, while intended to deter crime may not in given instances
prevent theft or other criminal acts and that Landlord is not providing any
security services with respect to the Premises.  Tenant agrees that Landlord
shall not be liable to Tenant for, and Tenant waives any claim against Landlord
with respect to, any loss by theft or any other damage suffered or incurred by
Tenant in connection with any unauthorized entry into the Premises or any other
breach of security with respect to the Premises.  Tenant shall be solely
responsible for the personal safety of Tenant's officers, employees, agents,
contractors, guests and invitees while any such person is in, on or about the
Premises and/or the Project.  Tenant shall at Tenant's cost obtain insurance
coverage to the extent Tenant desires protection against such criminal acts.

     34.  Force Majeure.  Except for the payment of Rent, neither party shall be
held responsible for delays in the performance of its obligations hereunder when
caused by strikes, lockouts, labor disputes, acts of God, inability to obtain
labor or materials or reasonable

                                       34
<PAGE>

substitutes therefor, governmental restrictions, governmental regulations,
governmental controls, delay in issuance of permits, enemy or hostile
governmental action, civil commotion, fire or other casualty, and other causes
beyond the reasonable control of Landlord ("Force Majeure").

     35.  Brokers; Entire Agreement; Amendment.  Landlord shall pay Tenant's
Broker the commission agreed upon by Tenant and Tenant's Broker pursuant to
their separate agreement, as reviewed and approved by Landlord.  Landlord and
Tenant each represent and warrant that it has not dealt with any broker, agent
or other person (collectively, "Broker") in connection with this transaction and
that no Broker brought about this transaction, other than Tenant's Broker.
Landlord and Tenant each hereby agree to indemnify and hold the other harmless
from and against any claims by any other Broker claiming a commission or other
form of compensation by virtue of having dealt with Tenant or Landlord, as
applicable, with regard to this leasing transaction.  This Lease constitutes the
complete agreement of Landlord and Tenant with respect to the subject matter
hereof.  No representations, inducements, promises or agreements, oral or
written, have been made by Landlord or Tenant, or anyone acting on behalf of
Landlord or Tenant, including any Brokers representing either Landlord or
Tenant, that are not contained herein, and any prior agreements, promises,
negotiations, or representations are superseded by this Lease.  Tenant
represents and warrants that no broker or agent has made any representation or
warranty relied upon by Tenant in Tenant's decision to enter into this Lease.
Landlord in executing this Lease does so in reliance upon Tenant's
representations and warranties contained herein.  This Lease may not be amended
except by an instrument in writing signed by both parties hereto.

     36.  Limitation On Landlord's Liability.  NOTWITHSTANDING ANYTHING SET
FORTH HEREIN OR IN ANY OTHER AGREEMENT BETWEEN LANDLORD AND TENANT TO THE
CONTRARY: (A) LANDLORD SHALL NOT BE LIABLE TO TENANT OR ANY OTHER PERSON FOR
(AND TENANT AND EACH SUCH OTHER PERSON ASSUME ALL RISK OF) LOSS, DAMAGE OR
INJURY, WHETHER ACTUAL OR CONSEQUENTIAL TO: TENANT'S PERSONAL PROPERTY OF EVERY
KIND AND DESCRIPTION, INCLUDING, WITHOUT LIMITATION TRADE FIXTURES, EQUIPMENT,
INVENTORY, SCIENTIFIC RESEARCH, SCIENTIFIC EXPERIMENTS, LABORATORY ANIMALS,
PRODUCT, SPECIMENS, SAMPLES, AND/OR SCIENTIFIC, BUSINESS, ACCOUNTING AND OTHER
RECORDS OF EVERY KIND AND DESCRIPTION KEPT AT THE PREMISES AND ANY AND ALL
INCOME DERIVED OR DERIVABLE THEREFROM; (B) THERE SHALL BE NO PERSONAL RECOURSE
TO LANDLORD FOR ANY ACT OR OCCURRENCE IN, ON OR ABOUT THE PREMISES OR ARISING IN
ANY WAY UNDER THIS LEASE OR ANY OTHER AGREEMENT BETWEEN LANDLORD AND TENANT WITH
RESPECT TO THE SUBJECT MATTER HEREOF AND ANY LIABILITY OF LANDLORD HEREUNDER
SHALL BE STRICTLY LIMITED TO LANDLORD'S INTEREST IN THE PROPERTY OF WHICH THE
PREMISES ARE A PART.

     37.  Severability.  If any clause or provision of this Lease is illegal,
invalid or unenforceable under present or future laws, then and in that event,
it is the intention of the parties hereto that the remainder of this Lease shall
not be affected thereby.  It is also the intention of the parties to this Lease
that in lieu of each clause or provision of this Lease that is illegal, invalid
or unenforceable, there be added, as a part of this Lease, a clause or provision
as similar in terms to

                                       35
<PAGE>

such illegal, invalid or unenforceable clause or provision as may be possible
and be legal, valid and enforceable.

     38.  Ground Lease.

          (a) Tenant acknowledges that the Premises, the Project, and this Lease
are and shall remain subject and subordinate to the Ground Lease and the rights
of the Ground Lessor thereunder, and to all amendments, restatements, renewals,
modifications, assignments, and extensions thereof, without the necessity of any
further instrument or act on the part of Tenant; provided, however, that so long
                                                 --------  -------
as there is no Default hereunder, Tenant's receipt from the Ground Lessor (or
any successor or assignee thereof, as appropriate) of a fully executed
instrument containing appropriate non-disturbance provisions assuring Tenant's
quiet enjoyment of the Premises as set forth in Section 24 hereof shall be a
                                                ----------
condition precedent to the subordination of Tenant's interest and rights
hereunder and Tenant's interest and rights hereunder shall not be disturbed by
the Ground Lessor.  Tenant agrees, at the election of the Ground Lessor, to
attorn to the Ground Lessor.  Tenant agrees, upon demand, to execute,
acknowledge and deliver a Subordination, Non-Disturbance and Attornment
Agreement substantially in the form attached hereto as Exhibit L (the "Lease
                                                       ---------
Subordination Agreement") or such other instruments, confirming such
subordination and instruments of attornment as shall be reasonably requested by
the Ground Lessor, provided any such instruments contain the appropriate non-
disturbance provisions described above.  Tenant acknowledges that, among other
things, notwithstanding the terms of this Lease, (i) the final design and
aesthetic of the Premises and the Project, (ii) any Transfer, (iii) any
financing to be secured by Tenant's interest in this Lease, and (iv) the
"Expansion Right" (as defined in Section 40(a) below), may be subject to the
                                 -------------
requirements of the Ground Lease and/or the approval of the Ground Lessor.

          (b) Tenant shall be responsible for, and hereby covenants to satisfy
in a timely fashion, any and all obligations, covenants, responsibilities,
and/or indemnities binding on Landlord as holder of the ground lessee's interest
under the Ground Lease (collectively, the "Ground Lease Obligations"),
including, without limitation, the payment of the annual rent provided for in
the Ground Lease (at the times and in the manner specified in Section 3(b)(ii)
                                                              ----------------
above) and the payment or reimbursement of all expenses to be paid or reimbursed
by Landlord under the Ground Lease; provided, however, that the terms and
                                    --------  -------
conditions of this Lease shall control to the extent the responsibility for
satisfying any Ground Lease Obligation is expressly conferred on Landlord and/or
allocated between Landlord and Tenant herein.  For illustration purposes only,
Sections 13 and 14 hereof allocate between Landlord and Tenant all maintenance
-----------     --
and repair obligations with respect to the Premises and the Project and,
therefore, such provisions control.  If Tenant fails to satisfy, in a timely
fashion, any of the Ground Lease Obligations in the manner required hereunder,
Landlord shall have the right (but not the obligation) to satisfy the same, and
any cost incurred by Landlord in doing so shall be payable to Landlord on demand
as Additional Rent or includable by Landlord as an Operating Expense.  Further,
Tenant shall indemnify, defend, hold, and save Landlord harmless from and
against any and all Claims arising out of or in connection with any such failure
by Tenant.  Conversely, if Tenant gives Landlord Notice requesting Landlord to
take affirmative action to enforce any of Landlord's rights as ground lessee
under the Ground Lease or to enforce any obligation, covenant, responsibility,
and/or indemnity of the Ground Lessor under the Ground Lease (collectively, the
"Ground Lease Rights") and Landlord elects not to do so, Tenant shall have the
right, at Tenant's sole

                                       36
<PAGE>

cost and expense, to take affirmative action to enforce any such Ground Lease
Rights, and for such purpose Landlord, effective as of Landlord's election not
to take affirmative action, appoints Tenant attorney-in-fact for Landlord (such
power of attorney being coupled with an interest); provided, however, that,
                                                   --------  -------
notwithstanding the foregoing, the exercise of any Ground Lease Rights that
relate to Hazardous Materials (as provided in Section 30(a) hereof) shall be
                                              -------------
subject to compliance with Section 3 of the Cost Sharing Agreement. Tenant shall
indemnify, defend, hold, and save Landlord harmless from and against any and all
Claims arising out of or in connection with any affirmative action taken by
Tenant to enforce any Ground Lease Rights. Tenant's rights and obligations under
this Section shall terminate and be of no further force or effect as of the
expiration or earlier termination of this Lease, provided that all obligations
that have arisen and/or become binding hereunder but have not been fully
satisfied as of the expiration or earlier termination of this Lease shall
survive such expiration or earlier termination.

     39.  Signs; Exterior Appearance.  Tenant shall not, without the prior
written consent of Landlord, which shall not be unreasonably withheld or
delayed: (i) attach any awnings, exterior lights, decorations, balloons, flags,
pennants, banners, painting, or other projection to any outside wall of any part
of the Premises or the Project, (ii) store any equipment, furniture, or other
items of personal property on any exterior balcony, or (iii) paint, affix, or
exhibit on any part of the Premises or the Project any signs, notices, window or
door lettering, placards, decorations, or advertising media of any type that can
be viewed from the exterior of the Premises.  Interior signs on doors shall be
inscribed, painted or affixed for Tenant by Landlord at the sole cost and
expense of Tenant, and shall be of a size, color and type acceptable to
Landlord.  Nothing may be placed on the exterior of corridor walls or corridor
doors other than Landlord's standard lettering.  Notwithstanding the foregoing,
Landlord hereby reserves the right to install a sign or placard (of up to 2 feet
by 2 feet) that can be viewed from the exterior of the Premises and that
identifies the Project as an asset of Alexander Real Estate Equities, Inc.

     40.  Right to Expand.

          (a)  Generally. Subject to any necessary permits, licenses, approvals,
certificates, or other entitlements required by any Governmental Authority
exercising or having jurisdiction, Landlord and Tenant reasonably believe that
approximately 50,000 square feet of additional office/research and development
space (the "Additional Building") can be constructed on the Additional Site.
Tenant shall have the right (the "Expansion Right"), but not the obligation, at
any time between the Commencement Date and 20 business days prior to the 3rd
anniversary of the Ground Lease Rent Commencement Date (the "Expansion Right
Expiration Date"), to give Landlord Notice (the "Expansion Notice") requesting
that Landlord exercise the Expansion Option (if not previously exercised) and
design, permit, and construct the Additional Building on the Additional Site
(generally, the "Expansion"). Tenant shall reimburse Landlord for all reasonable
out-of-pocket expenses, up to a maximum of $1,000.00, incurred by Landlord in
connection with its consideration of any Expansion Notice. Notwithstanding the
foregoing, Landlord may exercise the Expansion Option at any time before the
3/rd/ anniversary of the Ground Lease Rent Commencement Date (the "Expansion
Option Expiration Date"), regardless of whether Tenant ever gives Landlord an
Expansion Notice, provided that Landlord may not construct any improvements on
the Additional Site for lease to other tenants unless and until the Expansion
Right expires or is terminated in accordance with the terms and conditions of
this Section.

                                       37
<PAGE>

     (b)  Before July 1, 2001. Landlord shall exercise the Expansion Option (if
not previously exercised) and proceed with the Expansion if Tenant gives
Landlord the Expansion Notice at any time before July 1, 2001 and all of the
                                                              ---
requirements described below are satisfied (each, an "Expansion Requirement" and
collectively, the "Expansion Requirements"):

          (i)  Tenant has entered into binding, third-party contracts that
provide, in the aggregate, at least the following guaranteed minimum economic
benefits to Tenant, subject only to contractual targets, requirements, goals,
milestones, and/or deliverables that Tenant is reasonably capable of meeting (as
reasonably determined by Landlord, in good faith):

               A.   net revenues to Tenant (before taxes) of $30,000,000.00 over
a 3-year period beginning not more than 3 months after the date Landlord
receives Tenant's Expansion Notice; and
                                    ---

               B.   net revenues to Tenant (before taxes) of $75,000,000.00 over
a 5-year period beginning not more than 6 months after the date Landlord
receives Tenant's Expansion Notice; and

          (ii) Landlord reasonably determines, in good faith, that there has
been no material, adverse change since the Effective Date in Tenant's financial
position (including, without limitation, Tenant's net worth, profitability, or
liquidity).

If Tenant does not satisfy all of the Expansion Requirements, Landlord may elect
                           ---
to exercise the Expansion Option (if not previously exercised) and to proceed
with the Expansion or may elect not to exercise the Expansion Option (if not
previously exercised) or to proceed with the Expansion by giving Notice to
Tenant of such election within 30 days after receipt of the Expansion Notice.
If Landlord elects not to exercise the Expansion Option (if not previously
exercised) or to proceed with the Expansion, this Lease shall continue in full
force and effect without any changes in the rights and obligations of the
parties.

     (c)  From July 1, 2001, through Expansion Right Expiration Date. If Tenant
gives Landlord the Expansion Notice at any time from July 1, 2001, through the
Expansion Right Expiration Date, Landlord may elect to exercise the Expansion
Option (if not previously exercised) and to proceed with the Expansion or may
elect not to exercise the Expansion Option (if not previously exercised) or to
proceed with the Expansion by giving Notice to Tenant of such election within 10
business days after receipt of the Expansion Notice. If Landlord elects not to
exercise the Expansion Option (if not previously exercised) or to proceed with
the Expansion, Landlord and Tenant shall negotiate regarding the Expansion in
good faith for a reasonable period of time not to exceed 10 business days
(provided that such negotiations must conclude at least 5 business days prior to
the Expansion Option Expiration Date). Only if Landlord and Tenant cannot reach
an agreement regarding the Expansion after such good faith negotiations and
Tenant gives Landlord Notice that Tenant still elects to proceed with the
Expansion, (i) Landlord shall assign to Tenant all of Landlord's rights in
connection with the Expansion Option, (ii) Tenant, at Tenant's sole cost and
expense, may exercise the Expansion Option and design, permit, and construct the
Expansion (provided that all rights in connection with the Expansion Option
shall automatically revert to Landlord if Tenant does not exercise the Expansion
Option within 3 business days after its assignment to Tenant), and (iii)

                                       38
<PAGE>

Landlord shall reasonably cooperate with Tenant's efforts to design, permit, and
construct the Expansion. If Landlord and Tenant cannot reach an agreement
regarding the Expansion after good faith negotiations and Tenant elects not to
proceed with the Expansion, this Lease shall continue in full force and effect
without any changes in the rights and obligations of the parties except that the
Expansion Right shall terminate.

          (d)  Expansion Lease.  If the parties jointly proceed with the
Expansion as a result of the operation of the foregoing provisions, Landlord and
Tenant shall enter into a separate lease agreement covering the Expansion (the
"Expansion Lease").  Under all circumstances, the term of the Expansion Lease
shall be at least 10 years and shall be adjusted as necessary to make the
Expansion Lease expire at the same time as this Lease expires, provided that
Tenant shall be deemed to have exercised any Extension Rights that may be
necessary in order for this Lease to expire no less than 10 years after the
commencement date of the Expansion Lease.  If the Expansion occurs as a result
of the operation of paragraph (b) above, the Expansion Lease shall be on the
same legal and economic terms as this Lease (including the Work Letter but
excluding the Greenhouse).  If the Expansion occurs as a result of the operation
of paragraph (c) above, the Expansion Lease shall be on the same legal terms as
this Lease (including the Work Letter but excluding the Greenhouse) and on such
economic terms as shall be mutually determined by the parties after negotiating
in good faith for a reasonable period of time, provided, however, that if
                                               --------  -------
Landlord and Tenant cannot reach an agreement regarding the economic terms of
the Expansion Lease after negotiating in good faith for a reasonable period of
time, Tenant may elect, at Tenant's sole cost and expense, to unilaterally
design, build, and pay for the Additional Building.  If Tenant elects to do so,
Tenant shall provide to Landlord, for Landlord's written approval (which
approval may not be unreasonably withheld or delayed), copies of any plans,
specifications, bid proposals, work contracts, or other information concerning
the nature and cost of the Additional Building that Tenant may have in its
possession or control, including the identities and mailing addresses of all
persons performing work or supplying materials (collectively, "Additional
Building Information").  If Landlord approves the Additional Building
Information, Landlord may impose such conditions on Tenant in connection with
the commencement, performance, and completion of the Additional Building as
Landlord may deem appropriate (in Landlord's reasonable discretion).  Any
request for approval of the Additional Building Information shall be in writing
and delivered to Landlord not less than 15 business days before construction is
scheduled to begin.  Landlord's right to review the Additional Building
Information and to monitor construction shall be solely for its own benefit, and
Landlord shall have no duty to see that either the Additional Building
Information or the construction complies with applicable Legal Requirements.
Tenant, at its sole cost and expense, shall cause the Additional Building to
comply with insurance requirements known to Tenant and with applicable Legal
Requirements.  Tenant will give Landlord Notice at least 5 days (or any longer
period that may be required under the Ground Lease) before beginning
construction on the Additional Building so that Landlord may post on and about
the Premises and the Additional Site notices of non-responsibility pursuant to
applicable law.  Tenant, at its sole cost and expense, shall correct any faulty
work or inadequate cleanup done by Tenant or its contractors within 5 business
days after Notice of the same from Landlord, and Tenant shall reimburse Landlord
for, and indemnify and hold Landlord harmless from, any reasonable and necessary
expenses incurred by Landlord by reason of such faulty work or inadequate
cleanup or by reason of delays caused by the same.

                                       39
<PAGE>

          (e)  Exceptions.  Notwithstanding the above, the Expansion Right shall
not be in effect and may not be exercised by Tenant:

               (i)  during any period of time that Tenant is in Default under
any provision of this Lease; or

               (ii) if Tenant has been in Default under any provision of this
Lease 3 or more times, whether or not the Defaults are cured, during the 12
consecutive month period prior to the date on which Tenant seeks to exercise the
Expansion Right.

          (f)  Termination. Landlord, in Landlord's sole and absolute
discretion, may terminate the Expansion Right, even after Tenant's due and
timely exercise of the Expansion Right, if, after such exercise, but prior to
the commencement date of the Expansion Lease, (i) Tenant fails to timely cure
any Default by Tenant under this Lease; or (ii) Tenant has Defaulted 3 or more
times during the period from the date of the exercise of the Expansion Right to
the date of the commencement of the Expansion Lease, whether or not such
Defaults are cured.

          (g)  Rights Personal. The Expansion Right is personal to Tenant and is
not assignable separate and apart from this Lease, except that it may be
assigned in connection with any Approved Transfer, as defined in Section 22.
                                                                 ----------

     41.  Right to Extend Term.  Tenant shall have the right to extend the Term
upon the following terms and conditions:

          (a)  Extension Rights.  Tenant shall have 2 consecutive rights (each,
an "Extension Right"} to extend the term of this Lease for 5 years each (each, a
"Term Extension") on the same terms and conditions as this Lease by giving
Notice to Landlord of Tenant's election to exercise each Extension Right at
least 12 months prior to the expiration of the Term or the expiration of any
prior Term Extension.  During any Term Extension, Base Rent shall be payable at
the "Market Rate" (as defined below), but in no event less than the Base Rent
payable as of the date immediately preceding the commencement of such Term
Extension.  Base Rent shall be adjusted on the commencement of each Term
Extension and on each annual anniversary of the commencement of such Term
Extension shall be increased by a percentage determined by Landlord and Tenant
at the time the Market Rate is determined (the "Extension Rent Adjustment
Percentage").  As used herein, "Market Rate" shall mean the then market rental
rate as determined by Landlord and Tenant, taking into account the base rent
then payable at Similar Facilities.  If, on or before the date that is 180 days
prior to the expiration of the Term or the expiration of any prior Term
Extension, Tenant has not agreed with Landlord's determination of the Market
Rate and the Extension Rent Adjustment Percentage during such subsequent Term
Extension after negotiating in good faith, Tenant may elect arbitration as
described in Section 41(b) below.  If Tenant does not elect such arbitration,
             -------------
Tenant shall be deemed to have waived any right to extend, or further extend,
the Term and all of the remaining Extension Rights shall terminate.

          (b)  Arbitration.

               (i)  Within 10 business days of Tenant's election to arbitrate
the Market Rate and the Extension Rent Percentage Adjustment, each party shall
deliver to the other

                                       40
<PAGE>

a proposal containing the Market Rate and the Extension Rent Percentage
Adjustment that the submitting party believes to be correct ("Extension
Proposal"). If either party fails to timely submit an Extension Proposal, the
other party's Extension Proposal shall determine the Base Rent and the Extension
Rent Percentage Adjustment for the Term Extension. If both parties submit
Extension Proposals, then Landlord and Tenant shall meet within 7 business days
after delivery of the last Extension Proposal and make a good faith attempt to
mutually appoint a single "Arbitrator" (as defined below) to determine the
Market Rate and the Extension Rent Percentage Adjustment. If Landlord and Tenant
are unable to agree upon a single Arbitrator, then each shall, by Notice
delivered to the other within 10 business days after the meeting, select an
Arbitrator. If either party fails to timely give Notice of its selection for an
Arbitrator, the other party's Extension Proposal shall determine the Base Rent
and the Extension Rent Percentage Adjustment for the Term Extension. The 2
Arbitrators so appointed shall, within 5 business days after their appointment,
appoint a 3rd Arbitrator. If the 2 Arbitrators so selected cannot agree on the
selection of the 3rd Arbitrator within the time above specified, then either
party, on behalf of both parties, may request such appointment of such 3rd
Arbitrator by application to any Judge of the trial level court in the
jurisdiction in which the Project is located, upon 10 days prior Notice to the
other party of such intent.

          (ii)   The authority of the Arbitrator(s) shall be limited strictly to
a selection of either Landlord's Extension Proposal in its entirety or Tenant's
Extension Proposal in its entirety as the Extension Proposal that most closely
approximates the Market Rate and the Extension Rent Percentage Adjustment. The
Arbitrator(s) shall have no authority to create an independent structure of the
Market Rate and the Extension Rent Percentage Adjustment, combine elements of
both Extension Proposals to create a third, or compromise or alter in any way
any of the components of the Extension Proposals submitted by the parties. The
sole decision to be made shall be which of the parties' Extension Proposals in
its entirety shall determine the Market Rate and the Extension Rent Percentage
Adjustment for the Term Extension.

          (iii)  The decision of the Arbitrator(s) shall be made within 30 days
after the appointment of a single Arbitrator or the 3rd Arbitrator, as
applicable.  The decision of the single Arbitrator or majority of the 3
Arbitrators shall be final and binding upon the parties.  Each party shall pay
the fees and expenses of the Arbitrator appointed by or on behalf of such party
and the fees and expenses of the 3rd Arbitrator shall be borne equally by both
parties.  If the Market Rate and the Extension Rent Percentage Adjustment are
not determined by the first day of the Term Extension, then Tenant shall pay
Landlord Base Rent in an amount equal to the Base Rent in effect immediately
prior to the Term Extension until such determination is made.  After the
determination of the Market Rate and the Extension Rent Percentage Adjustment,
the parties shall make any necessary adjustments to such payments made by
Tenant.  Landlord and Tenant shall then execute an amendment recognizing the
Market Rate and the Extension Rent Percentage Adjustment for the Term Extension.

          (iv)   An "Arbitrator" shall be any person appointed by or on behalf
of either party or appointed pursuant to the provisions hereof and: (i) shall be
(A) a member of the American Institute of Real Estate Appraisers with not less
than 10 years of experience in the appraisal of improved office and high tech
industrial real estate in the Sub-Market, or (B) a licensed commercial real
estate broker with not less than 15 years experience representing

                                       41
<PAGE>

landlords and/or tenants in the leasing of high tech or life sciences space in
the Sub-Market, (ii) devoting substantially all of their time to professional
appraisal or brokerage work, as applicable, at the time of appointment and (iii)
be in all respects impartial and disinterested.

          (c)  Rights Personal.  The Extension Rights are personal to Tenant and
are not assignable separate and apart from this Lease, except that they may be
assigned in connection with any Approved Transfer, as defined in Section 22 of
                                                                 ----------
this Lease.

          (d)  Exceptions.  Notwithstanding anything set forth above to the
contrary, Extension Rights shall not be in effect and Tenant may not exercise
any of the Extension Rights:

               (i)  during any period of time that Tenant is in Default under
any provision of this Lease; or

               (ii) if Tenant has been in Default under any provision of this
Lease 3 or more times, whether or not the Defaults are cured, during the 12
consecutive month period immediately prior to the date that Tenant intends to
exercise an Extension Right, whether or not the Defaults are cured.

          (e)  No Extensions.  The period of time within which any Extension
Rights may be exercised shall not be extended or enlarged by reason of the
Tenant's inability to exercise the Expansion Rights.

          (f)  Termination.  Landlord, in Landlord's sole and absolute
discretion, may terminate the Extension Rights, even after Tenant's due and
timely exercise of an Extension Right, if, after such exercise, but prior to the
commencement date of a Term Extension, (i) Tenant fails to timely cure any
Default by Tenant under this Lease; or (ii) Tenant has Defaulted 3 or more times
during the period from the date of the exercise of an Extension Right to the
date of the commencement of the Term Extension, whether or not such Defaults are
cured.

     42.  Greenhouse.  Landlord shall make available to Tenant a loan in the
maximum amount of $1,200,000.00 to be used by Tenant solely for the construction
of the Greenhouse (the "Greenhouse Loan").  Tenant shall be solely responsible
for (x) any amount that the cost of constructing the Greenhouse exceeds the
amount of the Greenhouse Loan, and (y) all maintenance, repairs, and other costs
and expenses related to the Greenhouse.  Landlord shall make the Greenhouse Loan
to Tenant by the date that is 30 days after Landlord's approval of the designs
and plans for the Greenhouse submitted by Tenant, on the terms and conditions
set forth in the various loan documents evidencing, securing, and pertaining to
the Greenhouse Loan, which loan documents shall be substantially in the forms
attached to this Lease as Exhibit N, with the blanks filled in, together with
                          ---------
any other forms reasonably requested by Landlord and agreed to by Tenant (the
"Greenhouse Loan Documents").  The terms and conditions of the Greenhouse Loan
shall include, without limitation: (i) an interest rate of 11.50% per annum;
(ii) full amortization of principal and interest over 10 years, with monthly
payments of principal and interest ("Greenhouse Loan Payments") due on the first
day of each month; (iii) a lien in favor of Landlord on all structural
components of the Greenhouse; (iv) additional security in favor of Landlord in
the form of a cash deposit given to Landlord by Tenant in an amount
approximately equal to the sum of 6 Greenhouse Loan Payments (Landlord shall
hold such cash in an interest

                                       42
<PAGE>

bearing account (which may contain Landlord's own funds), with any interest
accruing on such cash being for Tenant's benefit), and (v) a provision
permitting Landlord to declare a default under the Greenhouse Loan upon the
occurrence of a Default by Tenant under this Lease. The Greenhouse Loan
Documents shall include all documents deemed reasonably necessary by, and
otherwise shall be in form and substance reasonably required by, Landlord and
Landlord's legal counsel, and shall contain representations and warranties,
affirmative and negative covenants, rights and remedies upon default, and other
standard provisions customary for loans of similar type and amount.

     Subject to any necessary permits, licenses, approvals, certificates, or
other entitlements required by any Governmental Authority exercising or having
jurisdiction, Landlord and Tenant reasonably believe that an additional
approximately 5,300 square feet of commercial greenhouse space (the "Additional
Greenhouse") can be constructed on the Site.  Tenant, at Tenant's sole cost and
expense, may design, permit, and construct the Additional Greenhouse, which
Additional Greenhouse shall comply with the terms and conditions of Section 12
                                                                    ----------
above that are applicable to Alterations other than Non-Structural Alterations.

     During the Term and any Term Extension, Tenant shall retain fee title to
the Greenhouse and, if constructed, the Additional Greenhouse (collectively, the
"Greenhouses").  Upon the expiration or earlier termination of this Lease,
Tenant, at Landlord's election, shall (a) transfer to Landlord all of Tenant's
right, title, and interest in either or both of the Greenhouses and the
Greenhouses so transferred shall remain at the Project, or (b) remove either or
both of the Greenhouses and restore the Site substantially to the condition that
existed prior to the construction of the Greenhouses being removed.  Landlord
shall notify Tenant of Landlord's election within 30 days of the expiration or
earlier termination of this Lease or, in the event Tenant elects not to exercise
any Extension Right, within 3 months after Tenant's notification to Landlord of
such election by Tenant.  If Landlord elects to have Tenant transfer to Landlord
all of Tenant's right, title, and interest in either or both of the Greenhouses,
Landlord shall give Tenant Notice before soliciting or accepting from any person
or entity other than an existing or new tenant of the Project any offers to
purchase or otherwise acquire the Greenhouses so transferred and Tenant shall
have the right to make the first offer to purchase any such Greenhouses by
giving Landlord Notice of the terms of such offer within 10 business days after
receiving Landlord's Notice.

     43.  Warrant Agreement.  Concurrently with the execution of this Lease,
Landlord and Tenant shall execute and deliver the Warrant Agreement attached
hereto as Exhibit M.
          ---------

     44.  Miscellaneous.

          (a) Notices.  Any communication, notice, or demand of any kind
whatsoever that either party may be required or may desire to give to or serve
on the other party (a "Notice") shall be in writing and shall be deemed duly
given if delivered in person or sent by reputable overnight guaranty courier,
addressed to the parties at their addresses set forth in the Basic Lease
Provisions.  Either party may designate from time to time a new address for
receipt of future Notices by giving the other party Notice of such new address
at least 5 days prior to the effective date of such new address.

                                       43
<PAGE>

          (b)  Joint and Several Liability. If and when included within the term
"Tenant," as used in this instrument, there is more than one person, firm or
corporation, each shall be jointly and severally liable for the obligations of
Tenant.

          (c)  Landlord Consents. Except as otherwise expressly provided in this
Lease or as otherwise required by law, Landlord retains the absolute right to
withhold any consent or approval. Further, regardless of any standard that may
be applicable to any consent or approval rights given to Landlord hereunder,
Landlord shall be justified in withholding, and shall not incur any liability
for so withholding, any consent or approval to any action, document, or matter
that Landlord determines, in its sole and absolute discretion, will or might
adversely affect Landlord's status as a "real estate investment trust".

          (d)  Financial Information. During the Term and any Term Extension,
Tenant shall provide Landlord with the following financial information or
business related reports:

               (i)    Unaudited quarterly financial statements within 30 days
after the end of each of Tenant's fiscal quarters;

               (ii)   Audited annual financial statements within 90 days after
the end of each of Tenant's fiscal years; and

               (iii)  Updates to Tenant's business plan no less than once every
12 months and otherwise within 30 days after the completion and/or submittal of
any such update to Tenant's board of directors.

          (e)  Recordation.  This Lease shall not be recorded or filed by or on
behalf of Tenant in any public record.  Notwithstanding the foregoing, upon
Tenant's request and at Tenant's sole cost and expense, Landlord shall prepare,
execute, and cause to be recorded or filed a memorandum of this Lease, which
memorandum shall contain only the following information and any other additional
information that may be required by applicable law: (i) the names of the parties
to this Lease, (ii) a description of the Site and the Premises, (iii) the
Commencement Date, (iv) the Term, and (v) the Extension Rights.

          (f)  Interpretation.  The normal rule of construction to the effect
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Lease or any exhibits or amendments
hereto.  Words of any gender used in this Lease shall be held and construed to
include any other gender, and words in the singular number shall be held to
include the plural, unless the context otherwise requires.  The captions
inserted in this Lease are for convenience only and in no way define, limit or
otherwise describe the scope or intent of this Lease, or any provision hereof,
or in any way affect the interpretation of this Lease.

          (g)  Not Binding Until Executed.  The submission by Landlord to Tenant
of this Lease shall have no binding force or effect, shall not constitute an
option for the leasing of the Premises, nor confer any right or impose any
obligations upon either party until execution of this Lease by both parties.

                                       44
<PAGE>

          (h)  Limitations on Interest.  It is expressly the intent of Landlord
and Tenant at all times to comply with applicable law governing the maximum rate
or amount of any interest payable on or in connection with this Lease.  If
applicable law is ever judicially interpreted so as to render usurious any
interest called for under this Lease, or contracted for, charged, taken,
reserved, or received with respect to this Lease, then it is Landlord's and
Tenant's express intent that all excess amounts theretofore collected by
Landlord be credited on the applicable obligation (or, if the obligation has
been or would thereby be paid in full, refunded to Tenant), and the provisions
of this Lease immediately shall be deemed reformed and the amounts thereafter
collectible hereunder reduced, without the necessity of the execution of any new
document, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder.

          (i)  Choice of Law.  Construction and interpretation of this Lease
shall be governed by and construed and enforced in accordance with the internal
laws of the state in which the Premises are located, without regard to choice of
law principles of such state.

          (j)  Time.  Time is of the essence as to the performance of each
party's obligations under this Lease.

          (k)  Attorneys Fees.  If either Landlord or Tenant reasonably seeks
legal services with respect to' the proper interpretation or enforcement of this
Lease, the party receiving substantially the result it sought or defended (the
"Prevailing Party"), whether by award, judgment, stipulation, settlement,
workout, default, or otherwise and whether or not any legal action may have been
instituted or instituted and then voluntarily dismissed, shall be entitled to
recover from the adverse party all reasonable fees and costs incurred by the
Prevailing Party in connection with such legal services ("Legal Fees").  Legal
Fees include, without limitation, (i) fees, costs, and expenses of any
engineers, accountants, appraisers, consultants, brokers, and other
professionals or experts retained or consulted by the Prevailing Party, and
other costs and expenses of investigation or analysis incurred by the Prevailing
Party in support of its position, and (ii) all such fees, costs, and expenses
incurred in any aspect of the legal process, whether out-of-court negotiations,
mediation, arbitration, commencement of suit, discovery, law and motion, trial,
appellate proceedings, or any action or participation in, or in connection with,
any case or proceeding under Chapter 7, 11, or 13 of the Bankruptcy Code, 11
U.S.C.  Section 101 et seq., or any successor statutes.
                    -- ---

          (l)  No Third Party Benefits. Landlord and Tenant do not intend by any
provision of this Lease to confer any right, remedy, or benefit upon any third
party, and no third party shall be entitled to enforce, or otherwise shall
acquire any right, remedy, or benefit by reason of, any provision of this Lease.

          (m)  Counterparts.  This Lease may be executed in any number of
counterparts, each of which shall be deemed an original and all of which, taken
together, shall constitute a single agreement with the same effect as if all
parties had signed the same signature page.  Any signature page from any
counterpart of this Lease, signed only by one party, may be detached from such
counterpart and re-attached to any other counterpart of this Lease that has a
signature page signed only by the other party.

                                       45
<PAGE>

          (n)  Integration.  This Lease and all exhibits and addenda attached
hereto constitute the entire understanding of the parties with respect to the
subject matter hereof and supersede all prior and contemporaneous oral or
written representations, statements, documents, understandings, and agreements
with respect thereto.

          (o) Successors and Assigns.  without limiting in any way the
provisions of Section 22, this Lease shall be binding upon, and inure to the
benefit of, the parties hereto and their respective permitted successors and
assigns.

          (p)  No Waiver; Remedies Cumulative.  No purported waiver of any
provision of this Lease shall be binding unless such waiver is in writing and
signed by the party to be bound.  In addition, no waiver of any provision of
this Lease shall be deemed, or shall constitute, a waiver of any other provision
of this Lease, whether or not similar, nor shall any waiver constitute a
continuing waiver.  Further, no failure to exercise and no delay in exercising
any power, right, remedy, or privilege under this Lease shall impair such power,
right, remedy, or privilege or shall be deemed, or shall constitute, a waiver of
any default under this Lease or acquiescence therein, nor shall any single or
partial exercise of any such power, right, remedy, or privilege preclude any
other or further exercise thereof or of any other power, right, remedy, or
privilege.  Finally, all powers, rights, remedies, and privileges existing under
this Lease are cumulative, in addition to, and not exclusive of any other
powers, rights, remedies, or privileges otherwise available to the parties to
this Lease.

          (q)  Incorporation by Reference.  All exhibits and addenda attached
hereto are hereby incorporated into this Lease and made a part hereof.  Except
to the extent expressly provided otherwise herein, if there is any conflict
between such exhibits or addenda and the terms of this Lease, such exhibits or
addenda shall control.

                           [Signatures on Next Page]

                                       46
<PAGE>

     IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease Agreement
as of the day and year first above written.

                         TENANT:

                         PARADIGM GENETICS, INC., (SEAL)
                         a North Carolina corporation

                         By:_____________________________
                         Its:____________________________


ATTEST: ___________________
Its:______________Secretary


[CORPORATE SEAL]

                         LANDLORD:

                         ARE-104 ALEXANDER ROAD, LLC,
                             (SEAL)
                         a Delaware limited liability company

                         By:  ALEXANDRIA REAL ESTATE EQUITIES, L.P.,
                              (SEAL)

                         a Delaware limited partnership, managing member

                              By:  ARE-QRS CORP., (SEAL)
                                   a Maryland corporation, general partner


                         By:  __________________________________

                         Its: __________________________________

ATTEST: ___________________
Its ___________________ Secretary


[CORPORATE SEAL]

                                       47
<PAGE>

     IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease Agreement
as of the day and year first above written.

                         TENANT:

                         PARADIGM GENETICS, INC., (SEAL)
                         a North Carolina corporation

                         By    __________________________________________

                         Its:  __________________________________________


ATTEST: __________________
Its __________________ Secretary


[CORPORATE SEAL]

                         LANDLORD:

                         ARE-104 ALEXANDER ROAD, LLC, (SEAL)
                         a Delaware limited liability company

                         By:  ALEXANDRIA REAL ESTATE EQUITIES, L.P.,
                              (SEAL)
                              a Delaware limited partnership, managing member

                              By:  ARE - QRS CORP., (SEAL)
                                   a Maryland corporation, general partner

                                   By:______________________________________
                                   Its:_____________________________________

ATTEST:_________________________
Its __________________ Secretary


[CORPORATE SEAL]

                                       48
<PAGE>

                                  EXHIBIT A-I

                              DESCRIPTION OF SITE

Being a particular tract or tracts of land located in Durham County, Triangle
Township, Research Triangle Park, North Carolina and being further described
below:

BEGINNING at a point, said point being located the following courses from NC
Geodetic Monument "Triad", said NC Geodetic Monument bearing NC Grid Coordinates
NAD 83 of N:238,772.801 Meters, E:620,488.448 Meters; Thence from said monument,
South 0103412611 West a ground distance of 3,011.37 feet to an existing R/W
Monument set in the westerly right-of-way of T.W.  Alexander Drive; Thence with
said right-of-way along a curve to the right having a radius of 2846.41 feet, an
arc length of 153.75 feet and being subtended by a chord bearing and distance of
South 0204311511 West, 153.73 feet to an existing concrete R/W Monument set in
the westerly right-of-way of T.W.  Alexander Drive; Thence leaving said right-
of-way, North 8702014411 West a distance of 142.69 feet to a point, said point
being the POINT AND PLACE OF BEGINNING.

Thence, from the POINT AND PLACE OF BEGINNING South 02(degree)44'10l" West a
distance of 100.85 feet to a point; Thence, North 8904912511 West a distance of
85.25 feet to a point; Thence, South 0203310111 West a distance of 80.34 feet to
a point; Thence, North 8904912511 West a distance of 157.55 feet to a point;
Thence, South 0202612411 West a distance of 88.04 feet to a point; Thence, North
8904912511 West a distance of 52.18 feet to a point; Thence, South 0202612411
West a distance of 336.73 feet to a point; Thence, North 8804312911 West a
distance of 276.76 feet to an existing concrete monument; Thence, North
0101612411 East a distance of 330.28 feet to an existing concrete monument;
Thence, North 8800312911 West a distance of 22.85 feet to a new iron pipe;
Thence, North 8405113311 West a distance of 150.08 feet to an existing concrete
monument; Thence, North 05010l14 East a distance of 235.37 feet to a new iron
pipe; Thence, South 8703611411 East a distance of 150.23 feet to a new iron
pipe; Thence, North 0500914611 East a distance of 16.45 feet to a new iron pipe;
Thence, South 8703611411 East a distance of 105.32 feet to a new iron pipe;
Thence, North 0203911611 East a distance of 36.22 feet to a new iron pipe;
Thence, South 8702014411 East a distance of 483.95 feet to the POINT AND PLACE
OF BEGINNING and containing 265,020.77 sq.  ft.  (6.084 acres), and being shown
on a particular survey or plat entitled "ALTAIACSM Property Survey - 104 T.W.
Alexander Drive", project number 98321.01, prepared by Barbara H.  Mulkey
Engineering, Inc., dated 04/30/99 and revised 07/21/99.

                                       49
<PAGE>

                                  EXHIBIT A-2

                         DESCRIPTION OF ADDITIONAL SITE

Being a particular tract or tracts of land located in Durham County, Triangle
Township, Research Triangle Park, North Carolina and being further described
below:

BEGINNING at a point, said point being located the following courses from NC
Geodetic Monument "Triad", said NC Geodetic Monument bearing NC Grid Coordinates
NAD 83 of N:238,772.801 Meters, E:620,488.448 Meters; Thence from said monument,
South 01(degree)34'26" West a ground distance of 3,011.37 feet to an existing
RJW Monument set in the westerly right-of-way of T.W. Alexander Drive; Thence
with said right-of-way along a curve to the right having a radius of 2846.41
feet, an arc length of 153.75 feet and being subtended by a chord bearing and
distance of South 02o43I159l West, 153.73 feet to an existing concrete R/W
Monument set in the westerly right-of-way of T.W. Alexander Drive, said monument
being the

POINT AND PLACE OF BEGINNING.

Thence, from the POINT AND PLACE OF BEGINNING along the right-of-way of T.W.
Alexander Drive with a curve to the right having a radius of 2846.41 feet, an
arc length of 610.47 feet and being subtended by a chord bearing and distance of
South 04o58l14I West, 609.30 feet to an existing concrete monument; Thence,
North 88o4329" West a distance of 411.30 feet to a point; Thence, North
020262411 East a distance of 336.73 feet to a point; Thence, South 89o4925 East
a distance of 52.18 feet to a point; Thence North 02o26l24I East a distance of
88.04 feet to a point; Thence, South 89o4925I East a distance of 157.55 feet to
a point; Thence, North 02033l01" East a distance of 80.34 feet to a point;
Thence, South 89049 25lI East a distance of 85.25 feet to a point; Thence North
0204411011 East a distance of 100.85 feet to a point; Thence, South 87o20I44 I
East a distance of 142.69 feet to the POINT AND PLACE OF BEGINNING and
containing 214,139.28 sq. ft. (4.916 acres), and being shown on a particular
survey or plat entitled "ALTA/ACSM Property Survey -104 T.W. Alexander Drive",
prepared by Barbara H. Mulkey Engineering, Inc., dated 04/30/99 and revised
07/21/99.

                                       50
<PAGE>

                                   EXHIBIT B

                            DESCRIPTION OF PREMISES

                                       51
<PAGE>

                                   EXHIBIT A

                            Description of Property

Being a particular tract or tracts of land located in Durham County, Triangle
Township, Research Triangle Park, North Carolina and being further described
below:

BEGINNING at a point, said point being located the following courses from NC
Geodetic Monument "Triad", said NC Geodetic Monument bearing NC Grid Coordinates
NAD 83 of N:238,772.801 Meters, E:620,488.448 Meters; Thence from said monument,
South 01(degree)34'26" West a ground distance of 3,011.37 feet to an existing
RIVV Monument set in the westerly right-of-way of T.W. Alexander Drive; Thence
with said right-of-way along a curve to the right having a radius of 2846.41
feet, an arc length of 153.75 feet and being subtended by a chord bearing and
distance of South 020431591 West, 153.73 feet to an existing concrete RN'!
Monument set in the westerly right-of-way of T.W. Alexander Drive; Thence
leaving said right-of-way, North 870209441 West a distance of 142.69 feet to a
point, said point being the POINT AND PLACE OF BEGINNING.

Thence, from the POINT AND PLACE OF BEGINNING South 02(degree)44'10" West a
distance of 100.85 feet to a point; Thence, North 89(degree)49'25" West a
distance of 85.25 feet to a point; Thence, South 02(degree)33'01" West a
distance of 80.34 feet to a point; Thence, North 89(degree)49'25" West a
distance of 157.55 feet to a point; Thence, South 02(degree)26'24" West a
distance of 88.04 feet to a point; Thence, North 89(degree)49'25" West a
distance of 52.18 feet to a point; Thence, South 02(degree)26'24" West a
distance of 336.73 feet to a point; Thence, North 88(degree)43'29" West a
distance of 276.76 feet to an existing concrete monument; Thence, North
01(degree)16'24" East a distance of 330.28 feet to an existing concrete
monument; Thence, North 88(degree)03'29" West a distance of 22.85 feet to a new
iron pipe; Thence, North 84(degree)51'33" West a distance of 150.08 feet to an
existing concrete monument; Thence, North 05(degree)10'14" East a distance of
235.37 feet to a new iron pipe; Thence, South 8703691499 East a distance of
150.23 feet to a new iron pipe; Thence, North 05(degree)09'46" East a distance
of 16.45 feet to a new iron pipe; Thence, South 87(degree)36'14" East a distance
of 105.32 feet to a new iron pipe; Thence, North 02(degree)39'16" East a
distance of 36.22 feet to a new iron pipe; Thence, South 87(degree)20'44" East a
distance of 483.95 feet to the POINT AND PLACE OF BEGINNING and containing
265,020.77 sq. ft. (6.084 acres), and being shown on a particular survey or plat
entitled "ALTA/ACSM Property Survey - 104 T.W. Alexander Drive", project number
98321.01, prepared by Barbara H. Mulkey Engineering, Inc., dated 04/30/99 and
revised 07/21/99.

                                       52
<PAGE>

Greenhouse; (ii) other Greenhouse Costs; and (iii) costs and expenses incurred
in connection with the Loan and Borrower's undertaking hereunder and under the
Loan Documents, which proceeds shall be disbursed in accordance with the
following terms and conditions:

          (i) Notice of Advance.  Lender shall furnish to Borrower, with respect
              -----------------
to each proposed Construction Holdback Advance, a notice of advance ("Notice of
Advance"), on forms approved by Lender and Borrower, with all blanks
appropriately filled in, setting forth such details concerning construction of
the Greenhouse as Lender may deem necessary or appropriate, including, without
limitation, (a) a certificate or statement completed and duly executed by the
Contractor and the Architect with respect to the status of construction of the
Greenhouse and the amount of the Construction Holdback Advance in the form of
the Application and Certificate for Payment (AIA documents G702 and G703), which
certificate or statement shall include a detailed breakdown of the applicable
percentages of completion and costs of the various phases of construction of the
Greenhouse, showing the amounts expended to date for such construction, the
amounts then due and unpaid, and an itemized estimate of the amount necessary to
complete construction of the Greenhouse in its entirety; and (b) if not
previously provided by Borrower, receipted invoices, bills of sale, or other
written evidence of payment by Borrower of any costs or expenses that Borrower
has agreed to pay separately from funds other than the proceeds of the Loan
(e.g, payments of amounts due to the Architect).  The foregoing requirements for
 ---
each Notice of Advance are based on the guaranty of lien-free completion plus
the bonding requirements contained in the Construction Contract.  Lender hereby
reserves the right to require, in Lender's reasonable discretion, receipted
invoices or bills of sale and conditional partial releases of lien (on forms
approved by Lender and Borrower (e.g., the forms set forth on Exhibit C attached
                                                              ---------
hereto and made a part hereof)) from each materials dealer, laborer, and
subcontractor who has done work or furnished materials for construction of the
portion of the Greenhouse covered by each prior Notice of Advance theretofore
funded by Lender, it being understood and agreed that the failure to obtain such
unconditional releases as to any Construction Holdback Advance as of the next
succeeding Construction Holdback Advance shall entitle Lender, in its reasonable
discretion, to withhold all further Construction Holdback Advances until such
time as unconditional releases of lien have been received from each materials
dealer, laborer, and subcontractor who has theretofore done work or furnished
materials for construction of the Greenhouse.

          (ii) Additional Disbursement Conditions Applicable To All Advances.
               -------------------------------------------------------------
Subject to the provisions of this Note, Lender shall disburse Construction
Holdback Advances directly to Contractor or to any subcontractor within 10
business days after (1) Lender has received all required supporting
documentation for the Notice of Advance, completed to Lender's reasonable
satisfaction, and (2) all of the following conditions have been satisfied with
respect to such Construction Holdback Advance:

          (a) Loan Balancing.  As agreed in Section 7.8 of the Work Letter,
              --------------                -----------
Lender is under no obligation to bear any portion of the Greenhouse Costs and
has only the obligation to disburse proceeds of the Loan in accordance with the
terms and conditions of the Loan Documents.  Lender shall not be obligated to
disburse any Construction Holdback Advance if Lender reasonably determines at
that time that the Loan is not "in balance" i.e, the remaining Greenhouse Costs
                                            ----
exceed the remaining undisbursed proceeds of the Loan.  The Loan shall be "in
balance" only at such times as Borrower has invested sufficient funds into the
payment of

                                       53
<PAGE>

Greenhouse Costs so that, in Lender's reasonable judgment, the undisbursed
portion of the Holdback for Construction (including any previously unallocated
contingency funds, if any) shall be sufficient to complete construction of and
maintain the Greenhouse and pay all Greenhouse Costs until repayment in full of
the Loan. The determination as to whether the Loan is "in balance" may be made
by Lender at any time, including with each Notice of Advance. Upon at least five
Business Days' written notice from Lender that the Loan is not "in balance",
Borrower shall either (x) deposit with Lender, in cash or cash equivalents, the
amount that Lender, in its reasonable opinion, deems necessary to put the Loan
"in balance" or (y) furnish Lender with paid invoices, bills, and receipts
indicating that Borrower has paid, from Borrower's own funds, for the Greenhouse
Costs in a sufficient amount to put the Loan "in balance". Any amounts that are
deposited with Lender to put the Loan "in balance" shall be the next funds
disbursed by Lender, subject to the terms and conditions of this Note. Lender
shall pay no interest on such deposited funds. Any failure or refusal by
Borrower to comply with the provisions of this subparagraph shall be deemed a
material default under this Note and an Event of Default under the Loan
Documents. If upon substantial completion of the Greenhouse and the payment of
all sums due in connection therewith there remain any undisbursed proceeds of
the Loan, Borrower shall be entitled to such undisbursed proceeds solely to the
extent of any deposits that Borrower actually made with Lender in order to put
the Loan "in balance".

          (b) Supporting Documentation.  Borrower shall provide or cause to be
              ------------------------
provided all of the following supporting documentation within five Business Days
after receiving each Notice of Advance: (i) a certification by Borrower that no
Potential Default or Event of Default has occurred and is continuing, and that
all representations made by Borrower in any of the Loan Documents are correct in
all material respects as of the date of the Notice of Advance (ii) if not
previously furnished to Lender, evidence of all insurance required by the Loan
Documents and construction bonding required hereunder; and (iii) such other
documents and information relating to the construction of the Greenhouse as
Lender may reasonably request.

          (c) Completion of Greenhouse.  The progress of construction shall be,
              ------------------------
in Lender's reasonable estimation, sufficient so that the Greenhouse shall be
completed on or prior to the Completion Date.  Subject to the terms and
conditions of the Loan Documents, any damage to the Greenhouse shall have been
promptly repaired or restored to its condition prior to such damage, reasonable
wear and tear excepted, in accordance with the Loan Documents.

          (d) Eminent Domain.  There shall have been no action taken against the
              --------------
Greenhouse or Borrower's interest in the Project with regard to the powers of
eminent domain.

          (e) Bankruptcy.  There shall have been no filing by or against
              ----------
Borrower of any petition for bankruptcy, for reorganization, for the appointment
of a receiver or trustee, or for the making of an assignment for the benefit of
creditor, which petition is not withdrawn or dismissed, or which appointment or
assignment is not canceled and terminated prior to the funding of such
Construction Holdback Advance.  The parties acknowledge and agree that this Note
is a contract to make a loan (extend debt financing or finance accommodations)
within the meaning of the Bankruptcy Code, 11 U.S.C.  Section 365(c)(2) and
Section 365(e)(2)(B).

                                       54
<PAGE>

          (f) Modifications To Sources and Uses Schedule.  Lender shall have
              ------------------------------------------
received and approved any modifications to the Sources and Uses Schedule.

          (g) Payment of Greenhouse Costs.  Lender shall have received evidence
              ---------------------------
that either (i) all Greenhouse Costs have been paid in full (including, but not
limited to, copies of paid invoices and unconditional lien releases), or (ii)
unpaid Greenhouse Costs shall be paid from the proceeds of the requested
Construction Holdback Advance (including, but not limited to, copies of invoices
and conditional lien releases).

          (h) Lender's Inspector.  Throughout the course of construction of the
              ------------------
Greenhouse, Lender shall have the right to employ, at Lender's sole cost and
expense, a third-party construction consultant ("Lender's Inspector") to review
as agent for Lender all construction activities undertaken in regard to the
Greenhouse, which inspector shall certify or otherwise indicate to Lender the
progress of the construction of the Greenhouse to the date of each Notice of
Advance and that such construction complies with the Plans and the Sources and
Uses Schedule, with such certificate and indication from Lender's Inspector to
be a further condition precedent to Lender's disbursement of each Advance.

          (i)  Construction Schedule.  A schedule for completion of the
               ---------------------
Greenhouse, updated monthly with each Notice of Advance, initialed by Architect
and Contractor.

          (iii)  Change Orders.  Neither Borrower nor Contractor shall permit
                 -------------
any amendments or modifications of the Plans, the Construction Contract, or any
Major Subcontracts, or the performance of any work pursuant to such amendments
or modifications, except in accordance with the terms and conditions of the Work
Letter (including, but not limited to, Sections 6, 6.1 and 6.2).

          (iv) Interest on Construction Holdback Advance.  Each Construction
               -----------------------------------------
Holdback Advance shall include specific requested amounts for interest payable
hereunder for the remaining portion of the calendar month in which the Advance
is made, plus any fees, costs, expenses, and other amounts payable to Lender
pursuant to this Note or the Loan Agreement in connection with such Advance;
provided, however, that with respect to any Notice of Advance that complies with
--------  -------
the requirements hereof but does not include such additional amounts, Lender may
determine, but shall not be obligated to determine, the amount of such interest,
fees, costs, expenses, and other amounts due or payable to Lender and increase
the amount of the Construction Holdback Advance, and upon Lender's delivery of
written notice of such determination to Borrower, the subject Notice of Advance
shall be deemed to have been amended to increase its amount by the amount of
such additional items and amounts.

          (v) Final Construction Holdback Advances.  Subject to the provisions
              ------------------------------------
of the Loan Documents, and so long as there is no Potential Default or Event of
Default, a disbursement of the Loan proceeds totaling 10.00% of the amount of
the Construction Contract, comprising the Contractor's final draw request
thereunder, will be disbursed upon the satisfaction of the following: (a) the
Greenhouse shall have been completed substantially in accordance with the terms
of the Work Letter, and (b) Lender shall have received or waived the receipt of
(i) unconditional lien releases covering all previously disbursed Construction
Holdback Advances together with conditional lien releases covering the final
Construction Holdback Advance, (ii) a

                                       55
<PAGE>

certificate of occupancy acceptable to Lender covering the Greenhouse, and (iii)
the Architect's written certification that the Greenhouse has been completed
substantially in accordance with the Plans therefor, that all utility
connections for the Greenhouse have been completed, and that the Greenhouse is
otherwise fully operational and fully ready for the occupancy and use
contemplated in the Lease.

                                  EXHIBIT A-1

                              DESCRIPTION OF SITE
                              -------------------

Being a particular tract or tracts of land located in Durham County, Triangle
Township, Research Triangle Park, North Carolina and being further described
below:

BEGINNING at a point, said point being located the following courses from NC
Geodetic Monument "Triad", said NC Geodetic Monument bearing NC Grid Coordinates
NAD 83 of N:238,772.801 Meters, E:620,488.448 Meters; Thence from said monument,
South 01(degree)34'26" West a ground distance of 3,011.37 feet to an existing
R/W Monument set in the westerly right-of-way of T.W. Alexander Drive; Thence
with said right-of-way along a curve to the right having a radius of 2846.41
feet, an arc length of 153.75 feet and being subtended by a chord bearing and
distance of South 02(degree)43'15" West, 153.73 feet to an existing concrete R/W
Monument set in the westerly right-of-way of T.W. Alexander Drive; Thence
leaving said right-of-way, North 87(degree)20'44" West a distance of 142.69 feet
to a point, said point being the POINT AND PLACE OF BEGINNING.

Thence, from the POINT AND PLACE OF BEGINNING South 02(degree)44'10" West a
distance of 100.85 feet to a point; Thence, North 89(degree)49'25" West a
distance of 85.25 feet to a point; Thence, South 02(degree)33'01" West a
distance of 80.34 feet to a point; Thence, North 89(degree)49'25" West a
distance of 157.55 feet to a point; Thence, South 02(degree)26'24" West a
distance of 88.04 feet to a point; Thence, North 89(degree)49'25" West a
distance of 52.18 feet to a point; Thence, South 02(degree)26'24" West a
distance of 336.73 feet to a point; Thence, North 88(degree)43'29" West a
distance of 276.76 feet to an existing concrete monument; Thence, North
01(degree)16'24" East a distance of 330.28 feet to an existing concrete
monument; Thence, North 88(degree)03'29" West a distance of 22.85 feet to a new
iron pipe; Thence, North 84(degree)51'33" West a distance of 150.08 feet to an
existing concrete monument; Thence, North 05(degree)10'14" East a distance of
235.37 feet to a new iron pipe; Thence, South 87(degree)36'14" East a distance
of 150.23 feet to a new iron pipe; Thence, North 05(degree)09'46" East a
distance of 16.45 feet to a new iron pipe; Thence, South 87(degree)36'14" East a
distance of 105.32 feet to a new iron pipe; Thence, North 02(degree)39'16" East
a distance of 36.22 feet to a new iron pipe; Thence, South 87(degree)20'44" East
a distance of 483.95 feet to the POINT AND PLACE OF BEGINNING and containing
265,020.77 sq. ft. (6.084 acres), and being shown on a particular survey or plat
entitled "ALTA/ACSM Property Survey - 104 T.W. Alexander Drive", project number
98321.01, prepared by Barbara H. Mulkey Engineering, Inc., dated 04/30/99 and
revised 07/21/99.

                                       56
<PAGE>

                                  EXHIBIT A-2

                        DESCRIPTION OF ADDITIONAL SITE
                        ------------------------------

Being a particular tract or tracts of land located in Durham County, Triangle
Township, Research Triangle Park, North Carolina and being further described
below:

BEGINNING at a point, said point being located the following courses from NC
Geodetic Monument "Triad", said NC Geodetic Monument bearing NC Grid Coordinates
NAD 83 of N:238,772.801 Meters, E:620,488.448 Meters; Thence from said monument,
South 01 (degrees) 34'26" West a ground distance of 3,011.37 feet to an existing
R/W Monument set in the westerly right-of-way of T.W. Alexander Drive; Thence
with said right-of-way along a curve to the right having a radius of 2846.41
feet, an arc length of 153.75 feet and being subtended by a chord bearing and
distance of South 02 (degrees) 43'15" West, 153.73 feet to an existing concrete
R/W Monument set in the westerly right-of-way of T.W. Alexander Drive, said
monument being the POINT AND PLACE OF BEGINNING.

Thence, from the POINT AND PLACE OF BEGINNING along the right-of-way of T.W.
Alexander Drive with a curve to the right having a radius of 2846.41 feet, an
arc length of 610.47 feet and being subtended by a chord bearing and distance of
South 04 (degrees) 58'14" West, 609.30 feet to an existing concrete monument;
Thence, North 88 (degrees) 43'29" West a distance of 411.30 feet to a point;
Thence, North 02 (degrees) 26'24" East a distance of 336.73 feet to a point;
Thence, South 89 (degrees) 49'25" East a distance of 52.18 feet to a point;
Thence North 02 (degrees) 26'24" East a distance of 88.04 feet to a point;
Thence, South 89 (degrees) 49'25" East a distance of 157.55 feet to a point;
Thence, North 02 (degrees) 33'01" East a distance of 80.34 feet to a point;
Thence, South 89 (degrees) 49'25" East a distance of 85.25 feet to a point;
Thence North 02 (degrees) 44'10" East a distance of 100.85 feet to a point;
Thence, South 87 (degrees) 20'44" East a distance of 142.69 feet to the POINT
AND PLACE OF BEGINNING and containing 214,139.28 sq. ft. (4.916 acres), and
being shown on a particular survey or plat entitled "ALTA/ACSM Property Survey -
104 T.W. Alexander Drive", prepared by Barbara H. Mulkey Engineering, Inc.,
dated 04/30/99 and revised 07/21/99.

                                       57
<PAGE>

                                   EXHIBIT B

                            DESCRIPTION OF PREMISES
                            -----------------------

                                       58
<PAGE>

                                   EXHIBIT C

                                  WORK LETTER
                                  -----------

     This WORK LETTER, dated July _____,1999 (this "Work Letter"), is made and
entered into by and between ARE-104 ALEXANDER ROAD, LLC, a Delaware limited
liability company ("Landlord"), and PARADIGM GENETICS, INC., a North Carolina
corporation ("Tenant"), and is attached to and made a part of the Lease
Agreement dated July _____, 1999 (the "Lease"), by and between Landlord and
Tenant. Any initially capitalized terms used but not defined herein shall have
the meanings given them in the Lease.

                                    RECITALS

     A.  Landlord has entered into or is entering into a Ground Lease Agreement
(the "Ground Lease") with Triangle Service Center, Inc., a North Carolina
corporation ("Ground Lessor'), pursuant to which Landlord has leased or is
leasing approximately 6.084 acres of land more fully described in Exhibit A-1
                                                                  -----------
attached to the Lease (the "Site"). Pursuant to the Ground Lease, the Site will
be cleared and graded prior to the commencement of the term of the Ground Lease.

     B.  Subject to the terms and conditions of the Lease, Landlord has agreed
to cause to be constructed on the Site, or to permit to be constructed on the
Site, certain improvements including, but not limited to, a first-class
scientific research and development building containing approximately 53,750
rentable square feet (the "Building") and a commercial greenhouse, headhouse,
and growth room facility containing approximately 5,000 rentable square feet
(the "Greenhouse").

     C.  This Work Letter contains the agreements of the parties with respect to
the design and construction of the shell and core of the Building, the site
improvements appurtenant to the Building, all fixed and permanent improvements
to the Building (commonly referred to as the "tenant improvements"), and all
components of the Greenhouse.

                                   AGREEMENT

     1.   General Requirements.
          --------------------

          1.1.  Tenant's Authorized Representative.  Tenant designates Larry
                ----------------------------------
Daquioag and Stanford White & Associates (collectively, "Tenant's
Representative") as the only persons authorized to initial or approve plans,
drawings, or change orders or otherwise to act for Tenant pursuant to this Work
Letter. Stanford White & Associates shall act for Tenant during any period that
Mr. Daquioag is not available. Landlord shall not be obligated to respond to or
act upon any request, approval, inquiry, or other communication
("Communication") from or on behalf of Tenant in connection with this Work
Letter unless such Communication is in writing and has been initialed or
approved in writing by Tenant's Representative. Tenant may change Tenant's
Representative at any time upon not less than 5 business days advance Notice to
Landlord. No period set forth herein for any approval of any matter by Tenant
shall be extended by reason of any change in Tenant's Representative. Neither
Tenant nor Tenant's Representative

                                       59
<PAGE>

shall be authorized to direct Landlord's contractors in the performance of
"Landlord's Work" (as hereinafter defined) except as may be expressly provided
otherwise herein.

     1.2.  Development Schedule. The schedule for design and development of the
           --------------------
"Base Building Work" (as defined below), the "Tenant Improvements" (as defined
below), and the Greenhouse, including, without limitation, the time periods for
preparation, delivery, review, and approval of construction documents and
performance pursuant to such documents, shall be in accordance with the
Development Schedule attached hereto as Schedule A, subject to adjustment as
                                        ----------
mutually agreed by the parties in writing or as provided in this Work Letter
(the "Development Schedule").

     1.3.  Architects, Consultants and Contractors.  The architect (the "Project
           ---------------------------------------
Architect"), engineers, designers, and general contractor (the "Project
Contractor") responsible for the design, development, and construction of the
Base Building Work and other components of the Project as a whole (collectively,
the "Project Work"), the architect (the "TI Architect"), engineers, designers,
and general contractor (the "TI Contractor") responsible for the design,
development, and construction of the Tenant Improvements, and the general
contractor (the "Greenhouse Contractor") responsible for the construction of the
Greenhouse, shall be selected by Landlord, subject to Tenant's approval, which
approval shall not be unreasonably withheld, conditioned, or delayed. The
architect (the "Greenhouse Architect"), engineers, and designers responsible for
the design and development of the Greenhouse shall be selected by Tenant,
subject to Landlord's approval, which approval shall not be unreasonably
withheld, conditioned, or delayed. The Project Contractor shall select all
subcontractors to be used for the Project Work, the TI Contractor shall select
all subcontractors to be used for the Tenant Improvements, and the Greenhouse
Contractor shall select all subcontractors to be used for the Greenhouse,
provided that any subcontractors ("Major Subcontractors") under subcontracts in
excess of $100,000.00 ("Major Subcontracts") shall be subject to the mutual
approval of Landlord and Tenant. The TI Architect, the TI Contractor, the
Greenhouse Architect, and the Greenhouse Contractor shall coordinate with the
Project Architect in a manner reasonably satisfactory to Landlord. Landlord and
Tenant hereby acknowledge and agree that: (i) O'Brien Atkins & Associates has
been pre-approved as the Project Architect and the TI Architect; (ii) Miller
Building Corporation has been pre-approved as the Project Contractor, the TI
Contractor, and the Greenhouse Contractor; and (iii) Bartholomew Associates,
Inc. has been pre-approved as the Greenhouse Architect. For purposes of this
Work Letter, the Project Architect and the TI Architect may be referred to
collectively as the "Primary Architects", the Project Architect, the TI
Architect, and the Greenhouse Architect may be referred to collectively as the
"Architects", the Project Contractor, the TI Contractor, and the Greenhouse
Contractor may be referred to collectively as the "Contractors", and the
Architects and the Contractors may be referred to generally as "Developers".

     2.    Building Work.
           -------------

           2.1.  Base Building Work Defined.  As used herein, "Base Building
                 --------------------------
Work" shall mean all of the work required to design and construct, in their
entirety, the improvements described on Schedule B attached hereto, and shall
                                        ----------
include on-site surface parking of not less than 140 spaces (as may be limited
by, and subject to, any changes mandated by Legal Requirements (including zoning
restrictions) that may be enacted or first effective after the

                                       60
<PAGE>

Effective Date and to any changes in the design of the Building requested or
approved by Tenant and made after the Effective Date).

           2.2.  Tenant Improvements Defined.  As used herein, "Tenant
                 ---------------------------
Improvements" shall mean all improvements to the Building desired by Tenant of a
fixed and permanent nature, exclusive of the Base Building Work.  Other than the
Base Building Work and the Tenant Improvements (collectively, the "Building
Work") and the Greenhouse, Landlord shall have no obligation whatsoever with
respect to the finishing, outfitting, equipping, or furnishing of the Premises
for Tenant's use and occupancy.

           2.3.  Building Design Program.  Within 5 business days after the
                 -----------------------
mutual execution of this Work Letter, Tenant shall prepare and deliver to
Landlord and the Primary Architects outline specifications detailing Tenant's
requirements for the Building Work (the "Building Design Program"). Within 5
business days after Landlord's and the Primary Architects' receipt of the
Building Design Program, Landlord shall deliver to Tenant any written
objections, questions, and/or comments (generally, "Comments") that Landlord
and/or the Primary Architects may have regarding such Building Design Program.
Within 5 business days after Tenant's receipt of any such Comments, Tenant shall
cause the Building Design Program to be revised to address such Comments and to
be resubmitted to Landlord and the Primary Architects for approval. Any disputes
in connection with such Comments shall be resolved in accordance with Section 4.
                                                                      ---------

           2.4.  Building Schematic Plans.  Within 15 business days after the
                 ------------------------
Building Design Program has been approved, Landlord shall cause the Primary
Architects to prepare and submit to Tenant for Tenant's review and comment
schematic drawings for the development of the Building Work (the "Building
Schematic Plans").  Tenant shall be solely responsible for ensuring that the
Building Schematic Plans reflect Tenant's requirements for the Building Work.
Within 5 business days after Tenant's receipt of the Building Schematic Plans,
Tenant shall deliver to Landlord and the Primary Architects any Comments that
Tenant may have regarding the Building Schematic Plans; provided, however, that
                                                        --------  -------
Tenant may not disapprove any matter that is substantially consistent with the
Building Design Program without submitting a "Change Request" (as defined in
Section 6.1).  Within 10 business days after Landlord's and the Primary
-----------
Architects' receipt of any such Comments, Landlord and the Primary Architects
shall consider all such Comments in good faith and shall notify Tenant how
Landlord proposes to respond to such Comments.  Any disputes in connection with
such Comments shall be resolved in accordance with Section 4.
                                                   ---------

           2.5.  Building Design Development Plans.  Within 15 business days
                 ---------------------------------
after the Building Schematic Plans have been approved, Landlord shall cause the
Primary Architects to prepare and submit to Tenant for Tenant's review and
comment design development plans and specifications for the development of the
Building Work (the "Building Design Development Plans"). Tenant shall be solely
responsible for ensuring that the Building Design Development Plans reflect
Tenant's requirements for the Building Work. Within 5 business days after
Tenant's receipt of the Building Design Development Plans, Tenant shall deliver
to Landlord and the Primary Architects any Comments that Tenant may have
regarding the Building Design Development Plans; provided, however, that Tenant
                                                 --------  -------
may not disapprove any matter that is substantially consistent with the Building
Schematic Plans without submitting a Change Request.

                                       61
<PAGE>

Within 10 business days after Landlord's and the Primary Architects' receipt of
any such Comments, Landlord and the Primary Architects shall consider all such
Comments in good faith and shall notify Tenant how Landlord proposes to respond
to such Comments. Any disputes in connection with such Comments shall be
resolved in accordance with Section 4.
                            ---------

           2.6.  Building Construction Drawings.  Within 45 business days after
                 ------------------------------
the Building Design Development Plans have been approved, Landlord shall cause
the Primary Architects to prepare and deliver to Tenant for Tenant's review and
comment construction plans, specifications, and drawings for the Building Work
("Building Construction Drawings"), which Building Construction Drawings shall
be prepared substantially in accordance with the Building Design Development
Plans. Tenant shall be solely responsible for ensuring that the Building
Construction Drawings reflect Tenant's requirements for the Building Work.
Within 5 business days after Tenant's receipt of the Building Construction
Drawings, Tenant shall deliver to Landlord and the Primary Architects any
Comments that Tenant may have regarding the Building Construction Drawings;
provided, however, that Tenant may not disapprove any matter that is
--------  -------
substantially consistent with the Building Design Development Plans without
submitting a Change Request.  Within 10 business days after Landlord's and the
Primary Architects' receipt of any such Comments, Landlord and the Primary
Architects shall consider all such Comments in good faith and shall notify
Tenant how Landlord proposes to respond to such Comments.  Any disputes in
connection with such Comments shall be resolved in accordance with Section 4.
                                                                   ---------
Once approved by Tenant, Landlord shall not materially modify the Building
Construction Drawings except as may be reasonably required in connection with
the issuance of any of the "Permits" (as defined in Section 5.2).  Landlord will
                                                    -----------
give Tenant prompt Notice of any such material modifications.

     3.    Greenhouse.
           ----------

           3.1.  Greenhouse Design Program.  Within 5 business days after the
                 -------------------------
mutual execution of this Work Letter, Tenant shall prepare and deliver to
Landlord and the Greenhouse Architect outline specifications detailing Tenant's
requirements for the Greenhouse (the "Greenhouse Design Program").  Within 5
business days after Landlord's and the Greenhouse Architect's receipt of the
Greenhouse Design Program, Landlord shall deliver to Tenant any Comments that
Landlord may have regarding such Greenhouse Design Program.  Within 5 business
days after Tenant's receipt of any such Comments, Tenant shall cause the
Greenhouse Design Program to be revised to address such Comments and to be
resubmitted to Landlord and the Greenhouse Architect for approval. Any disputes
in connection with such Comments shall be resolved in accordance with Section 4.
                                                                      ---------

           3.2.  Greenhouse Schematic Plans.  Within 15 business days after the
                 --------------------------
Greenhouse Design Program has been approved, Tenant shall cause the Greenhouse
Architect to prepare and submit to Landlord for Landlord's review and comment
schematic drawings for the development of the Greenhouse (the "Greenhouse
Schematic Plans").  Tenant shall be solely responsible for ensuring that the
Greenhouse Schematic Plans reflect Tenant's requirements for the Greenhouse.
Within 5 business days after Landlord's receipt of the Greenhouse Schematic
Plans, Landlord shall deliver to Tenant and the Greenhouse Architect any
Comments that Landlord may have regarding the Greenhouse Schematic Plans;
provided, however, that Landlord may not disapprove any matter that is
--------  -------
substantially consistent with the Greenhouse

                                       62
<PAGE>

Design Program. Within 10 business days after Tenant's and the Greenhouse
Architect's receipt of any such Comments, Tenant and the Greenhouse Architect
shall consider all such Comments in good faith and shall notify Landlord how
Tenant proposes to respond to such Comments. Any disputes in connection with
such Comments shall be resolved in accordance with Section 4. The cost of any
changes to the Building Construction Drawings that become necessary because of
any changes to the Greenhouse Schematic Plans requested by Landlord shall be
payable by Landlord.

           3.3.  Greenhouse Design Development Plans.  Within 15 business days
                 -----------------------------------
after the Greenhouse Schematic Plans have been approved, Tenant shall cause the
Greenhouse Architect to prepare and submit to Landlord for Landlord's review and
comment design development plans and specifications for the development of the
Greenhouse (the "Greenhouse Design Development Plans"). Tenant shall be solely
responsible for ensuring that the Greenhouse Design Development Plans reflect
Tenant's requirements for the Greenhouse. Within 5 business days after
Landlord's receipt of the Greenhouse Design Development Plans, Landlord shall
deliver to Tenant and the Greenhouse Architect any Comments that Landlord may
have regarding the Greenhouse Design Development Plans; provided, however, that
                                                        --------  -------
Landlord may not disapprove any matter that is substantially consistent with the
Greenhouse Schematic Plans. Within 10 business days after Tenant's and the
Greenhouse Architect's receipt of any such Comments, Tenant and the Greenhouse
Architect shall consider all such Comments in good faith and shall notify
Landlord how Tenant proposes to respond to such Comments. Any disputes in
connection with such Comments shall be resolved in accordance with Section 4.
                                                                   ---------
The cost of any changes to the Building Construction Drawings that become
necessary because of any changes to the Greenhouse Design Development Plans
requested by Landlord shall be payable by Landlord.

           3.4.  Greenhouse Construction Drawings. Within 45 business days after
                 --------------------------------
the Greenhouse Design Development Plans have been approved, Tenant shall cause
the Greenhouse Architect to prepare and deliver to Landlord for Landlord's
review and comment construction plans, specifications, and drawings for the
Greenhouse ("Greenhouse Construction Drawings"), which Greenhouse Construction
Drawings shall be prepared substantially in accordance with the Greenhouse
Design Development Plans. Tenant shall be solely responsible for ensuring that
the Greenhouse Construction Drawings reflect Tenant's requirements for the
Greenhouse. Within 10 business days after Landlord's receipt of the Greenhouse
Construction Drawings, Landlord shall deliver to Tenant and the Greenhouse
Architect any Comments that Landlord may have regarding the Greenhouse
Construction Drawings; provided, however, that Landlord may not disapprove any
                       --------  -------
matter that is substantially consistent with the Greenhouse Design Development
Plans.  Within 10 business days after Tenant's and the Greenhouse Architect's
receipt of any such Comments, Tenant and the Greenhouse Architect shall consider
all such Comments in good faith and shall notify Landlord how Tenant proposes to
respond to such Comments.  Any disputes in connection with such Comments shall
be resolved in accordance with Section 4.  The cost of any changes to the
                               ---------
Building Construction Drawings that become necessary because of any changes to
the Greenhouse Construction Drawings requested by Landlord shall be payable by
Landlord. Once approved by Landlord, Tenant shall not materially modify the
Greenhouse Construction Drawings except as may be reasonably required in
connection with the issuance of any of the Permits. Tenant will give Landlord
prompt Notice of any such material modifications.

                                       63
<PAGE>

           4.  Approval and Completion.  Landlord and Tenant hereby acknowledge
               -----------------------
that (i) the Building Construction Drawings must be completed and approved not
later than December 31, 1999, in order for the Building Work to be
"Substantially Complete" (as defined in Section 5.3) by the Target Commencement
                                        -----------
Date, and (ii) the Greenhouse Construction Drawings must be completed and
approved not later than December 31, 1999, in order for the Greenhouse to be
Substantially Complete by the Target Commencement Date (the Building
Construction Drawings and the Greenhouse Construction Drawings may be referred
to collectively as the "Construction Drawings").  If there is any dispute
regarding the design of the Building Work or the Greenhouse that is not settled
within 5 business days after Notice of such dispute is delivered by one party to
the other, (x) Landlord shall have the right to make the final decision if the
dispute concerns the design of the Base Building Work, provided Landlord acts
reasonably and such final decision is either consistent with or a reasonable
compromise between Landlord's and Tenant's positions with respect to such
dispute, and (y) Tenant shall have the right to make the final decision if the
dispute concerns the design of the Tenant Improvements or the Greenhouse,
provided Tenant acts reasonably and such final decision is either consistent
with or a reasonable compromise between Landlord's and Tenant's positions with
respect to such dispute.  All costs and expenses resulting from any final
decision with respect to the Building Work shall be payable out of the "Building
Fund" (as defined in Section 7.5) and resulting from any final decision with
                     -----------
respect to the Greenhouse shall be payable out of the "Greenhouse Fund" (as
defined in Section 7.8).  Any changes to the Construction Drawings requested by
           -----------
Tenant following Landlord's and Tenant's approval of same shall be processed as
provided in Section 6 hereof.
            ---------

     5.    Performance of Landlord's Work.
           -------------------------------

           5.1.  Definition of Landlord's Work.  As used herein, "Landlord's
                 -----------------------------
Work" shall mean the work of constructing the Building Work and the Greenhouse.

           5.2.  Permitting and Commencement of Landlord's Work.  Once the
                 ----------------------------------------------
Building Construction Drawings have been approved, Landlord shall commence
construction of the Base Building Work upon obtaining a building permit
authorizing the construction of the Base Building Work as contemplated in this
Work Letter (the "Base Building Permit"). Tenant shall cooperate and assist
Landlord in obtaining the Base Building Permit, the cost of which shall be
payable from the Building Fund. Thereafter, Landlord shall commence construction
of the Tenant Improvements upon the later of (a) the date that Landlord obtains
a building permit authorizing the construction of the Tenant Improvements as
contemplated in this Work Letter (the "TI Permit"), and (b) the date that the
Base Building Work has been sufficiently completed such that the work of
constructing the Tenant Improvements can be efficiently performed. Tenant shall
cooperate and assist Landlord in obtaining the TI Permit, the cost of which
shall be payable from the Building Fund. Once the Greenhouse Construction
Drawings have been approved, Landlord shall commence construction of the
Greenhouse upon the later of (x) the date that Landlord obtains a building
permit authorizing the construction of the Greenhouse as contemplated in this
Work Letter (the "Greenhouse Permit"), and (y) the date that the Base Building
Work has been sufficiently completed such that the work of constructing the
Greenhouse can be efficiently performed. Tenant shall cooperate and assist
Landlord in obtaining the Greenhouse Permit, the cost of which shall be payable
from the Greenhouse Fund. If any governmental or quasi-governmental authorities
having jurisdiction over the performance of any portion of Landlord's Work (a
"Governmental Authority") or any permit license, or

                                       64
<PAGE>

approval required in connection therewith shall impose terms or conditions on
the Base Building Permit, the TI Permit, or the Greenhouse Permit (which may be
referred to collectively as the "Permits") that: (i) are inconsistent with
Landlord's obligations under this Work Letter; (ii) are substantially
inconsistent with any of the Construction Drawings; (iii) materially increase
the cost of performing Landlord's Work; or (iv) will materially delay the
performance of Landlord's Work, Landlord and Tenant shall reasonably and in good
faith seek means by which to mitigate or eliminate any such adverse terms or
conditions.

           5.3.  Completion of Landlord's Work. In recognition and consideration
                 -----------------------------
of the fact that the Building, the Tenant Improvements, and the Greenhouse are
yet to be designed and/or constructed, the parties to this Work Letter hereby
agree that Landlord may make "Minor Variations" (as defined below) in the size,
design, engineering, configuration, and placement of any portion of Landlord's
Work, and such Minor Variations shall not render the Lease void or voidable nor
give Tenant the right to any reduction or abatement in Rent, notwithstanding
anything contained in this Work Letter or any rule of law or equity to the
contrary. On or before the Commencement Date (subject only to "Tenant Caused
Delays" (as defined in Section 5.6) and delays cause by Force Majeure ("Force
                       -----------
Majeure Delays")), Landlord shall substantially complete or cause to be
substantially completed Landlord's Work in accordance with the Permits, and
shall obtain at least a temporary certificate of occupancy for the Building and
the Greenhouse that will allow Tenant to use and occupy such Building and
Greenhouse for substantially the purposes contemplated in the Permitted Use
(collectively, the "Temporary Certificate"), subject to Minor Variations and
customary "punch list" items of a non-material nature that do not adversely
affect Tenant's use or occupancy of the Building and the Greenhouse for
substantially the purposes contemplated in the Permitted Use or the validity of
the Temporary Certificate ("Substantially Complete" or "Substantial
Completion"); provided, however, that Landlord shall have no obligation to
              --------  -------
obtain or maintain, and shall not obtain or maintain, any permits, licenses,
approvals, certificates, or other entitlements necessary or appropriate to
Tenant's specific use of the Premises or the conduct of Tenant's specific
business operations on the Premises.  Upon the Substantial Completion of
Landlord's Work, each Architect shall be required to execute and deliver, for
the benefit of Tenant and Landlord, a Certificate of Substantial Completion in
the form of the American Institute of Architects document G704.  For purposes of
this Work Letter, "Minor Variations" shall mean any modifications reasonably
required: (i) to comply with all applicable Legal Requirements (including the
North Carolina State Building Code, as adopted by the City of Durham (the
"Code")) and/or to obtain or to comply with any required permit (including the
Permits); (ii) to comply with any request by the Tenant for modifications to
Landlord's Work; (iii) to make reasonable, but minor, adjustments in order to
comport with good design, engineering, and construction practices; or (iv) to
make reasonable adjustments for field deviations or conditions encountered
during the performance of Landlord's Work.

           5.4.  Selection of Materials, Etc.  Where more than one type of
                 ---------------------------
material or structure is indicated on any of the Construction Drawings approved
by Landlord and Tenant, the option will be within Landlord's reasonable
discretion as to the Building Work and the option will be within Tenant's
reasonable discretion as to the Greenhouse. As to all building materials and
equipment that Landlord is obligated to supply under this Work Letter, Landlord
shall select the manufacturer thereof in Landlord's reasonable discretion.

                                       65
<PAGE>

           55.  Delivery of the Premises.  When Landlord's Work is Substantially
                ------------------------
Complete, subject to the remaining terms and provisions of this Section, Tenant
shall accept the Premises in their then existing condition.  Tenant's taking
possession and acceptance of the Premises shall not constitute a waiver of: (i)
any warranty, including those with respect to workmanship (including
installation of equipment) or material (exclusive of equipment provided directly
to Tenant by manufacturers), (ii) any non-compliance of Landlord's Work with
Legal Requirements (including the Code), or (iii) any claim that Landlord's Work
was not completed substantially in accordance with any of the Construction
Drawings (subject to Minor Variations and such other changes as are permitted
hereunder) (collectively, a "Construction Defect").  Tenant shall have 1 year
after Substantial Completion within which to notify Landlord of any such
Construction Defect discovered by Tenant, and Landlord shall use reasonable
efforts to remedy or cause the responsible contractor to remedy any such
Construction Defect within 30 days thereafter.  Notwithstanding the foregoing,
Landlord shall not be in default under the Lease if:

           (a)  with respect to Construction Defects that Landlord reasonably
determines, in good faith involve or may involve structural components of the
Premises or pose or may pose a significant risk of personal injury or
substantial property damage ("Serious Construction Defects"), the applicable
contractor, despite Landlord's reasonable efforts, fails to remedy such
Construction Defect within such 30-day period, but Landlord, within 30 days
thereafter, commences and diligently and continuously pursues such remedial
action to completion, at Landlord's sole cost and expense;

           (b)  with respect to Construction Defects that Landlord reasonably
determines, in good faith, are not Serious Construction Defects or involve
Tenant's Property, the applicable contractor, despite Landlord's reasonable
efforts, fails to remedy such Construction Defect within such 30-day period, in
which case Landlord shall have no further obligation with respect to such
Construction Defect other than to cooperate, at no cost to Landlord, with Tenant
should Tenant elect to pursue a claim against such contractor, provided that
Tenant indemnifies and holds Landlord harmless from and against any liability,
loss, cost, damage or expense in connection with any such claim; or

           (c)  with respect to any part of Landlord's Work, any action by
Tenant to the extent such action results in the invalidation of any otherwise
enforceable warranty or bond that would cover the cost of remedying such
Construction Defect.

Any determination made by Landlord pursuant to paragraph (a) or (b) above shall
be deemed reasonable and in good faith if based on advice received by Landlord
from an independent and duly licensed design or construction consultant (a
"Defect Consultant").  Tenant may ask a Defect Consultant to provide written
confirmation of the advice given Landlord in connection with a determination by
Landlord that a specific Construction Defect is not a Serious Construction
Defect if, and only if, (i) Tenant gives Landlord Notice of such desire within 3
business days after receiving Notice of Landlord's determination, and (ii)
Tenant is solely responsible for any fee, cost, charge, or other assessment
imposed by the Defect Consultant for providing such written confirmation;
provided, however, that Tenant understands and agrees that Landlord's waiver of
--------  -------
the potential conflict of interest facing the Defect Consultant shall be
strictly limited to the advice, and only the advice, given Landlord in the
specific instance in

                                       66
<PAGE>

question and shall not apply, under any circumstances, to any other advice or
matters that may be the subject of the services provided to Landlord by the
Defect Consultant.

Landlord shall use commercially reasonable efforts to cause the following to be
included in the agreements ("Development Agreements") entered into with each
Developer other than the Greenhouse Architect, and Tenant shall use commercially
reasonable efforts to cause the following to be included in the Development
Agreement entered into with the Greenhouse Architect: (i) an express statement
or agreement by each such Developer that Tenant (if Landlord is the contracting
party) or Landlord (if Tenant is the contracting party) is an "intended third
party beneficiary" with respect to all express representations and warranties
contained in such Developer's Development Agreement and with respect to all
warranties implied, at law or in equity, from the relationship created by such
Developer's Development Agreement or from the work performed by or on behalf of
such Developer pursuant to such Developer's Development Agreement; (ii) express
representations and warranties from each Developer that are "industry standard"
for such professionals when providing services to Similar Facilities in the Sub-
Market, which representations and warranties also shall be expressly assignable
to Tenant (if Landlord is the contracting party) or Landlord (if Tenant is the
contracting party) and, as to each Architect, shall include, but not be limited
to, a representation or warranty that the Construction Drawings prepared by or
on behalf of such Architect comply with all applicable Legal Requirements
(including the Code), subject to Minor Variations and such other changes as are
permitted hereunder; (iii) as to the Project Architect, an express requirement
that the Project Architect obtain and/or maintain errors and omissions insurance
with a minimum limit of not less than $2,000,000.00; (iv) as to each Developer,
an express requirement that Tenant (if Landlord is the contracting party) or
Landlord (if Tenant is the contracting party) be added as an additional insured
under any insurance for which the contracting party is to be named an additional
insured; and (v) as to each Contractor, an express requirement that such
Contractor direct all manufacturers supplying equipment to be installed in the
Building or the Greenhouse to name both Landlord and Tenant as the parties
entitled to the benefits of the manufacturers' equipment warranties. In all
events, Tenant shall be entitled to receive the benefit of all design and
construction warranties and all manufacturers' equipment warranties for
equipment installed in the Building or the Greenhouse, and Landlord, if
requested by Tenant, will cooperate with Tenant in obtaining the benefit of all
such warranties (subject to the limitations described in paragraphs (a), (b),
and (c) above). If requested by Tenant, Landlord shall use commercially
reasonable efforts to obtain extended warranties from the manufacturers and
suppliers of any equipment to be installed in the Building or the Greenhouse,
provided that the cost of any such extended warranties shall be subject to
Tenant's approval and, unless paid directly by Tenant, at Tenant's option, shall
be paid solely out of the Building Fund for equipment installed in the Building
and shall be paid solely out of the Greenhouse Fund for equipment installed in
the Greenhouse. Within 5 days after receiving Notice from Tenant identifying
punch list items, Landlord shall undertake the correction of such punch list
items and shall complete, or cause to be completed, the correction of all punch
list items within 20 days thereafter; provided, however, if the nature of the
                                      -------- -------
punch list items are such that they reasonably require more than 20 days to
correct, then Landlord shall not be deemed to be in default hereunder if
Landlord commences such correction within said 20-day period and thereafter
diligently pursues the same to completion; provided further, however, that such
                                           -------- -------  -------
correction shall be completed no later than 45 days from the date of Tenant's
Notice regarding punch list items (subject to Force Majeure Delays).

                                       67
<PAGE>

          5.6. Commencement Date Delay. The Commencement Date shall occur when
               -----------------------
Landlord's Work has been Substantially Completed (the "Completion Date"), except
to the extent that completion of Landlord's Work shall have been actually
delayed by any one or more of the following causes (a "Tenant Caused Delay"):

               (a)  Tenant's Representative was not available to give or receive
     any Communication (in the manner required under the notice provisions
     contained in Section 44(a) of the Lease) or to take any other action
                  ------- -----
     required to be taken by Tenant hereunder;

               (b)  Any Change Request, whether or not the Change that is the
     subject of the Change Request is actually performed;

               (c)  Construction of any Change;

               (d)  Tenant's request for materials, finishes, or installations
     requiring unusually long lead times

               (e)  Tenant's delay in reviewing, revising, providing Comments,
     or approving specifications, plans, drawings, or other materials beyond the
     periods set forth herein;

               (f)  Tenant's delay in providing information critical to the
     normal progression of Landlord's Work (Tenant shall provide such
     information as soon as reasonably possible, but in no event longer than 1
     week after receipt of any request for such information from Landlord that
     is transmitted in the manner required under the notice provisions contained
     in Section 44(a) of the Lease);
        -------------

               (g)  Tenant's delay in making payments to Landlord for "Excess
     Building Costs" (as defined in Section 7.5) or "Excess Greenhouse Costs"
                                    -----------
     (as defined in Section 7.8) or
                    -----------

               (h)  Any other act or omission by Tenant or its agents,
     contractors, or persons employed by any of such persons.

If the Commencement Date is delayed for any of the foregoing reasons, then
Landlord shall cause the Project Architect (with respect to the Base Building
Work), the TI Architect (with respect to the Tenant Improvements), and the
Greenhouse Architect (with respect to the Greenhouse) to certify the date on
which Landlord's Work would have been Substantially Completed but for such
Tenant Caused Delay and such certified date shall be the Commencement Date under
the Lease.

     6.   Changes.  Any changes requested by Tenant to Landlord's Work
          -------
("Changes") after the mutual approval of any of the Construction Drawings shall
be requested and instituted in accordance with the provisions of this Section
and shall be subject to the written approval of Landlord and the appropriate
Architect, such approval not to be unreasonably withheld, conditioned, or
delayed.

                                       68
<PAGE>

          6.1.  Tenant's Right to Request Changes. Tenant shall request Changes,
                ---------------------------------
if any, by giving Notice to Landlord in substantially the same form as the AIA
standard change order form (a "Change Request"), which Change Request shall
detail the nature and extent of any such Change. Tenant's Representative must
sign such Change Request. Landlord, before proceeding with any Change, shall use
commercially reasonable efforts to respond to Tenant as soon as reasonably
possible with an estimate of: (i) the period of time, if any, that the Change
will extend the date on which Landlord's Work will be Substantially Complete;
and (ii) the architectural and engineering fees and costs that will be incurred
to analyze such Change Request. Within 10 business days after Landlord's receipt
of the Change Request (or such longer period of time as is reasonably required
depending on the extent of the Change Request), Landlord shall submit to Tenant
a written analysis of the additional cost or savings involved, including,
without limitation, architectural and engineering costs and the period of time,
if any, that the Change will extend the date on which Landlord's Work will be
Substantially Complete. Any such delay in the completion of Landlord's Work
caused by a Change, including any suspension of Landlord's Work while any such
Change is being evaluated and/or designed, shall be a Tenant Caused Delay.
Notwithstanding the foregoing, Landlord's Work may not be suspended as a result
of any Change Request unless specifically approved by Tenant.

          6.2.  Implementation of Changes.  If Tenant: (i) approves in writing
                -------------------------
the cost or savings and the estimated extension in the time for completion of
Landlord's Work, if any, and (ii) deposits with Landlord any Excess Building
Costs required in connection with any Change of the Building Work or any Excess
Greenhouse Costs required in connection with any Change of the Greenhouse,
Landlord shall cause the approved Change to be instituted. Notwithstanding any
approval or disapproval by Tenant of any estimate of the delay caused by such
proposed Change, the appropriate Architect's determination of the amount of
Tenant Caused Delay in connection with such Change shall be final and binding on
Landlord and Tenant.

     7.   Costs.
          -----

          7.1.  Budget for Landlord's Work.  Before commencing Landlord's Work,
                --------------------------
Landlord shall obtain a detailed budget (the "Budget"), by trade, of the costs
incurred or that will be incurred in connection with the design, permitting, and
construction of the Building Work (the "Building Costs"), and the design,
permitting, and construction of the Greenhouse (the "Greenhouse Costs").  The
Budget shall be based upon the Construction Drawings and shall include a payment
to Landlord of administrative rent ("Administrative Rent") equal to 2.50% of the
Building Costs and the Greenhouse Costs (collectively, "Project Costs") for
administering, monitoring, and inspecting Landlord's Work, which sum shall be
payable from the Building Fund and/or the Greenhouse Fund.  Such Administrative
Rent shall include, without limitation, all out-of-pocket costs, expenses, and
fees incurred by or on behalf of Landlord arising from, out of, or in connection
with, such administration, monitoring, and inspection of Landlord's Work.
Landlord shall have the right (but not the obligation) to engage a project or
development manager to assist in performing such administration, monitoring, and
inspection of Landlord's Work and any payments to any such manager (excluding
payments for any services performed by such manager at Tenant's direct request
or direction) shall be payable from Administrative Rent.

                                       69
<PAGE>

          7.2.  Excess Line Item Costs.  If at any time and from time-to-time
                ----------------------
Landlord reasonably determines that the actual cost of certain services or
materials required for the Building Work will exceed the line item in the Budget
for such services or materials, Landlord shall give Notice to Tenant of same and
Tenant thereafter either shall approve or disapprove the excess line item cost
within 5 business days after Landlord's Notice.  If Tenant approves the excess
line item cost, Landlord shall proceed with the Building Work and the excess
line item cost will be included in "Base Construction Costs" (as defined in
Section 3(a) of the Lease).  If Tenant disapproves the excess line item cost,
------------
Landlord and Tenant shall reasonably and in good faith seek means by which to
mitigate or eliminate such excess line item cost.  Any excess line item cost not
approved by Tenant shall not be included in Base Construction Costs.

          7.3.  Building Allowance.  Landlord shall provide to Tenant a building
                ------------------
allowance ("Building Allowance") of not more than $155.00 (in increments of
$10.00) per rentable square foot of the Building, provided that under no
circumstances (including an increase in the rentable square footage of the
Building) shall the aggregate amount of the Building Allowance exceed
$8,331,250.00.  Within 10 business days after Tenant's receipt of the Budget
from Landlord, Tenant shall give Landlord Notice of how much of the Building
Allowance Tenant has elected to receive from Landlord.  Such election shall be
final and binding on Tenant, and may not thereafter be modified without
Landlord's consent, which may be granted or withheld in Landlord's sole and
absolute discretion.  If the Budget for the Building Work is greater than the
Building Allowance, Tenant shall deposit with Landlord the difference, in cash,
prior to the commencement of Landlord's Work, for disbursement by Landlord to
pay Building Costs.

          7.4.  Costs Includable in Building Allowance.  The Building Allowance
                --------------------------------------
shall be used solely for the payment of design, permitting, and construction
costs in connection with the construction of the Building Work, including,
without limitation, the cost of preparing the Building Design Program, the
Building Schematic Plans, the Building Design Development Plans, and the
Building Construction Drawings, all costs set forth in the Budget, including
Administrative Rent and Landlord's out-of-pocket expenses and other costs
resulting from Tenant Caused Delays and the cost of Changes, to the extent of
the Building Allowance.  The items that may be paid for using the Building
Allowance include, without limitation, the shell and core of the Building, the
site improvements appurtenant to the Building, HVAC systems, utility
distribution systems, laboratory benches and casework, and hazardous waste
containment equipment.  Notwithstanding anything to the contrary contained
herein, the Building Allowance shall not be used to pay for trade fixtures,
emergency generators or related emergency power equipment, furniture, personal
property, or other non-building system materials or equipment, including, but
not be limited to, biological safety cabinets and other scientific equipment not
incorporated into the Building.

          7.5.  Excess Building Costs.  It is understood and agreed that
                ---------------------
Landlord is under no obligation to bear any portion of the cost of any of the
Building Work except to the extent of the Building Allowance.  If at any time
and from time-to-time Landlord reasonably determines that the remaining Building
Costs under the Budget exceed the remaining unexpended Building Allowance,
Landlord shall give Notice to Tenant of same and Tenant thereafter shall deposit
with Landlord, as a condition precedent to Landlord's obligation to complete the
Building Work, 100% of the then current Building Costs in excess of the
remaining Building Allowance

                                       70
<PAGE>

("Excess Building Costs"). If Tenant fails to deposit with Landlord, or deposits
with Landlord after the date demanded in Landlord's Notice (which shall not be
less than 5 business days after Landlord's Notice), the amount of any Excess
Building Costs, Landlord may suspend Landlord's Work until the required deposit
has been made and shall have all of the rights and remedies set forth in the
Lease for nonpayment of Rent (including, but not limited to, the right to
interest at the Default Rate and the right to assess a late charge), and for
purposes of any litigation instituted with regard to such amounts the same will
be considered Rent. Such deposits of Excess Building Costs, together with the
proceeds of the Building Allowance, are herein referred to as the "Building
Fund". Funds so deposited by Tenant shall be the first thereafter disbursed to
pay Building Costs. Notwithstanding anything to the contrary set forth in this
Section, Tenant shall be fully and solely liable for Building Costs and the cost
of Minor Variations in excess of the Building Allowance (except as may be
provided otherwise in Section 7.2 above). If upon Substantial Completion of the
                      -----------
Building Work and the payment of all sums due in connection therewith there
remains any undisbursed Building Allowance, Tenant shall be entitled to such
undisbursed Building Allowance solely to the extent of any deposits of Excess
Building Costs that Tenant has actually made with Landlord.

          7.6.  Greenhouse Loan.  Pursuant to Section 42 of the Lease and in
                ---------------               ----------
accordance with the Greenhouse Loan Documents, Landlord is making a loan to
Tenant in the maximum amount of $1,200,000.00 to be used by Tenant solely for
the construction of the Greenhouse (the "Greenhouse Loan").

          7.7.  Costs Includable in Greenhouse Loan.  The Greenhouse Loan shall
                -----------------------------------
be used solely for the payment of design, permitting, and construction costs in
connection with the construction of the Greenhouse, including, without
limitation, the cost of preparing the Greenhouse Design Program, the Greenhouse
Schematic Plans, the Greenhouse Design Development Plans, and the Greenhouse
Construction Drawings, all other costs set forth in the Budget, including
Administrative Rent and Landlord's out-of-pocket expenses and other costs
resulting from Tenant Caused Delays and the cost of Changes.  Notwithstanding
anything to the contrary contained herein, the Greenhouse Loan shall not be used
to pay for trade fixtures, emergency generators or related emergency power
equipment, furniture, personal property, or other non-building system materials
or equipment, including, but not be limited to, biological safety cabinets and
other scientific equipment not incorporated into the Greenhouse.

          7.8.  Excess Greenhouse Costs.  It is understood and agreed that
                -----------------------
Landlord is under no obligation to bear any portion of the cost of the
Greenhouse, and has only the obligation to disburse proceeds of the Greenhouse
Loan in accordance with the terms and conditions of the Greenhouse Loan
Documents.  If at any time and from time-to-time Landlord reasonably determines
that the remaining Greenhouse Costs under the Budget exceed the remaining
undisbursed proceeds of the Greenhouse Loan, Landlord shall give Notice to
Tenant of same and Tenant thereafter shall deposit with Landlord, as a condition
precedent to Landlord's obligation to complete the Greenhouse, 100% of the then
current Greenhouse Costs in excess of the remaining undisbursed proceeds of the
Greenhouse Loan ("Excess Greenhouse Costs").  If Tenant fails to deposit with
Landlord, or deposits with Landlord after the date demanded in Landlord's Notice
(which shall not be less than 5 business days after Landlord's Notice), the
amount of any Excess Greenhouse Costs, Landlord may suspend Landlord's Work
until the required deposit has been made and shall have all of the rights and
remedies set forth in the

                                       71
<PAGE>

Greenhouse Loan Documents for nonpayment of principal, interest, and other
monies due in connection with the Greenhouse Loan (including, but not limited
to, the right to interest at the "Default Interest Rate" (as defined in the
Greenhouse Loan Documents) and the right to assess a late charge). Such deposit
of Excess Greenhouse Costs, together with the proceeds of the Greenhouse Loan,
are herein referred to as the "Greenhouse Fund". Funds so deposited by Tenant
shall be the first thereafter disbursed to pay Greenhouse Costs. Notwithstanding
anything to the contrary set forth in this Section, Tenant shall be fully and
solely liable for Greenhouse Costs and the cost of Minor Variations in excess of
the amount of the Greenhouse Loan. If upon Substantial Completion of the
Greenhouse and the payment of all sums due in connection therewith there remains
any undisbursed proceeds of the Greenhouse Loan, Tenant shall be entitled to
such undisbursed proceeds solely to the extent of any deposits of Excess
Greenhouse Costs that Tenant has actually made with Landlord.

     8.   Tenant Access.
          -------------

          8.1.  Tenant's Access Rights.  Landlord hereby agrees to permit Tenant
                ----------------------
access to the Building at Tenant's sole risk and expense, (i) 30 days prior to
the Commencement Date to perform any work ("Tenant's Work") required by Tenant
other than Landlord's Work (including, as examples only, installation of
telephones, cables, and, to the extent reasonably practical, trade fixtures and
furniture), provided that such Tenant's Work is coordinated with the TI
Architect and the TI Contractor and complies with the Lease and all other
reasonable restrictions and conditions Landlord may impose, and (ii) prior to
the completion of Landlord's Work, to inspect and observe work in process; all
such access shall be during normal business hours or at such other times as are
reasonably designated by Landlord.  Notwithstanding the foregoing, Tenant shall
have no right to enter onto the Premises or the Building unless and until Tenant
shall deliver to Landlord evidence reasonably satisfactory to Landlord
demonstrating that any insurance reasonably required by Landlord in connection
with such pre-commencement access (including, but not limited to, any insurance
that Landlord may require pursuant to the Lease) is in full force and effect.

          8.2.  No Interference.  Neither Tenant nor its employees, consultants,
                ---------------
agents, contractors, and suppliers shall interfere with the performance of
Landlord's Work, nor with any inspections or issuance of final approvals by
Durham County, North Carolina, or the City of Durham, and upon any such
interference, Landlord shall have the right to exclude Tenant and Tenant's
employees, consultants, agents, contractors, and suppliers from the Premises and
the Building until Substantial Completion of Landlord's Work.

          8.3.  No Acceptance of Premises.  So long as Tenant engages only in
                -------------------------
the activities enumerated in Section 8.1, the fact that Tenant, with Landlord's
                             -----------
consent, may enter the Building prior to the date Landlord's Work is
Substantially Complete shall not be deemed an acceptance by Tenant of possession
of the Premises, but in such event Tenant shall indemnify and hold Landlord
harmless from any loss of or damage to Tenant property, completed work,
fixtures, equipment, materials or merchandise, and from liability for death of,
or injury to, any person, caused by the willful misconduct or negligence of
Tenant or its agents.

     9.   Notification of Delays.  Not less than once each calendar month from
          ----------------------
the date of this Work Letter through the Commencement Date, Landlord shall
deliver to Tenant written

                                       72
<PAGE>

notification of the number of days during the immediately preceding calendar
month Landlord's performance under this Work Letter or the Lease was delayed as
a result of Tenant Caused Delays or Force Majeure Delays, which written
notification shall also include a description of the nature of such Tenant
Caused Delay or Force Majeure Delay.

     10.  Miscellaneous
          -------------

          10.1.  Consents.  Whenever consent or approval of either party is
                 --------
required under this Work Letter, that party shall not unreasonably withhold,
condition, or delay such consent or approval, except as may be expressly set
forth herein to the contrary.  Notwithstanding the foregoing, and regardless of
any standard that may be applicable to any consent or approval rights given to
Landlord hereunder, Landlord shall be justified in withholding, and shall not
incur any liability for so withholding, any consent or approval to any action,
document, or matter that Landlord determines, in its sole and absolute
discretion, will or might adversely affect Landlord's status as a "real estate
investment trust".

          10.2.  Modification.  No modification, waiver, or amendment of this
                 ------------
Work Letter or of any of its conditions or provisions shall be binding upon
Landlord or Tenant unless in writing signed by Landlord and Tenant.

          10.3.  Counterparts.  This Work Letter may be executed in any number
                 ------------
of counterparts, each of which shall be deemed an original and all of which,
taken together, shall constitute a single agreement with the same effect as if
all parties had signed the same signature page.  Any signature page from any
counterpart of this Work Letter, signed only by one party, may be detached from
such counterpart and re-attached to any other counterpart of this Work Letter
that has a signature page signed only by the other party.

          10.4.  Governing Law.  This Work Letter shall be governed by,
                 -------------
construed and enforced in accordance with the internal laws of the state in
which the Premises are located, without regard to choice of law principles of
such State.

          10.5.  Time of the Essence.  Time is of the essence of this Work
                 -------------------
Letter and of each and all provisions thereof.

          10.6.  Severability.  If any term or provision of this Work Letter is
                 ------------
declared invalid or unenforceable, the remainder of this Work Letter shall not
be affected by such determination and shall continue to be valid and
enforceable.

          10.7.  Merger.  All understandings and agreements, oral or written,
                 ------
heretofore made between the parties hereto and relating to Landlord's Work are
merged in this Work Letter, which alone (but inclusive of provisions of the
Lease incorporated herein and the final approved constructions drawings and
specifications prepared pursuant hereto) fully and completely expresses the
agreement between Landlord and Tenant with regard to the matters set forth in
this Work Letter.

          10.8.  Interpretation.  The normal rule of construction to the effect
                 --------------
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Work Letter or any schedules or
amendments hereto.  Words of any gender

                                       73
<PAGE>

used in this Lease shall be held and construed to include any other gender, and
words in the singular number shall be held to include the plural, unless the
context otherwise requires. The captions inserted in this Work Letter are for
convenience only and in no way define, limit or otherwise describe the scope or
intent of this Work Letter, or any provision hereof, or in any way affect the
interpretation of this Work Letter.

          10.9.  Attorneys Fees.  If either Landlord or Tenant reasonably seeks
                 --------------
legal services with respect to the proper interpretation or enforcement of this
Work Letter, the party receiving substantially the result it sought or defended
(the "Prevailing Party"), whether by award, judgment, stipulation, settlement,
workout, default, or otherwise and whether or not any legal action may have been
instituted or instituted and then voluntarily dismissed, shall be entitled to
recover from the adverse party all reasonable fees and costs incurred by the
Prevailing Party in connection with such legal services ("Legal Fees").  Legal
Fees include, without limitation, (i) fees, costs, and expenses of any
engineers, accountants, appraisers, consultants, brokers, and other
professionals or experts retained or consulted by the Prevailing Party, and
other costs and expenses of investigation or analysis incurred by the Prevailing
Party in support of its position, and (ii) all such fees, costs, and expenses
incurred in any aspect of the legal process, whether out-of-court negotiations,
mediation, arbitration, commencement of suit, discovery, law and motion, trial,
appellate proceedings, or any action or participation in, or in connection with,
any case or proceeding under Chapter 7, 11, or 13 of the Bankruptcy Code, 11
U.S.C.  Section 101 et seq., or any successor statutes.
                    -- ---

          10.10. No Third Party Benefits.  Landlord and Tenant do not intend by
                 -----------------------
any provision of this Work Letter to confer any right, remedy, or benefit upon
any third party, and no third party shall be entitled to enforce, or otherwise
shall acquire any right, remedy, or benefit by reason of, any provision of this
Work Letter.

          10.11. No Waiver: Remedies Cumulative.  No purported waiver of any
                 ------------------------------
provision of this Work Letter shall be binding unless such waiver is in writing
and signed by the party to be bound.  In addition, no waiver of any provision of
this Work Letter shall be deemed, or shall constitute, a waiver of any other
provision of this Work Letter, whether or not similar, nor shall any waiver
constitute a continuing waiver.  Further, no failure to exercise and no delay in
exercising any power, right, remedy, or privilege under this Work Letter shall
impair such power, right, remedy, or privilege or shall be deemed, or shall
constitute, a waiver of any default under this Work Letter or acquiescence
therein, nor shall any single or partial exercise of any such power, right,
remedy, or privilege preclude any other or further exercise thereof or of any
other power, right, remedy, or privilege.  Finally, all powers, rights,
remedies, and privileges existing under this Work Letter are cumulative, in
addition to, and not exclusive of any other powers, rights, remedies, or
privileges otherwise available to the parties to this Work Letter.

          10.12. Incorporation by Reference.  All schedules attached hereto are
                 --------------------------
hereby incorporated into this Lease and made a part hereof.  If there is any
conflict between such schedules and the terms of this Work Letter, such
schedules shall control.

          10.13. Entire Agreement.  This Work Letter is made as a part of and
                 ----------------
pursuant to the Lease and, together with the Lease, constitutes the entire
agreement of the parties with respect to the subject matter hereof.  This Work
Letter is subject to all of the terms and limitation

                                       74
<PAGE>

set forth in the Lease, and neither party shall have any rights or remedies
under this Work Letter separate and apart from their respective remedies
pursuant to the Lease.

IN WITNESS WHEREOF, Landlord and Tenant have executed this Work Letter to be
effective on the date first above written.

                    TENANT:

                    PARADIGM GENETICS, INC.,      (SEAL)

                    a North Carolina corporation

                    By:______________________________________________

                    Its:_____________________________________________


ATTEST: __________________

Its ____________________ Secretary

[CORPORATE SEAL]

                    LANDLORD:

                    ARE-104 ALEXANDER ROAD, LLC,  (SEAL)

                    a Delaware limited liability company


                    By:  ALEXANDRIA REAL ESTATE EQUITIES, L.P.,  (SEAL)

                         a Delaware limited partnership, managing member


                         By:  ARE-QRS CORP., (SEAL)

                              a Maryland corporation, general partner


                              By:____________________________________

                              Its:___________________________________

ATTEST: __________________

Its ____________________ Secretary

[CORPORATE SEAL]

                                       75
<PAGE>

                           Schedule A to Work Letter

                             Development Schedule
                             --------------------

               Event                                                        Date
               -----------------------------------------------------------------

Execution of Ground Lease                                               07/__/99

Execution of Lease                                                      07/__/99

Naming of Tenant's Representative                                       07/__/99

Delivery of specifications for Building                                 07/__/99
Design Program pursuant to Section 2.3
                           -----------

Delivery of specifications for Greenhouse                               07/__/99
Design Program pursuant to Section 3.1
                           -----------

Delivery of final Building                                              12/15/99
Construction Drawings to Tenant

Final approval of Building Construction                                 12/31/99
Drawings pursuant to Section 4(i)
                     ------------

Final approval of Greenhouse Construction                               12/31/99
Drawings pursuant to Section 4(ii)
                     -------------
Issuance of Base Building Permit                                        01/01/00

Commencement of                                                         01/01/00
construction of Base Building Work

Issuance of TI Permit                                                   01/01/00

Issuance of Greenhouse Permit                                           01/01/00

Commencement of                                                         01/01/00
construction of Tenant Improvements

Commencement of                                                         01/01/00
construction of Greenhouse

Substantial Completion of Landlord's Work                               06/01/00

Issuance of Temporary Certificate of Occupancy                          06/01/00

                                       76
<PAGE>

                           Schedule B to Work Letter

                              Base Building Work
                              ------------------
________________________________________________________________________________

Description of Base Building Work - Shell and Core*

 .    Concrete Foundations and Floors
 .    Structural/Steel Frame
 .    Exterior Walls/Facade/Windows
 .    Exterior Doors
 .    Exterior Painting
 .    Roofing/Fireproofing/Caulking and Sealant
 .    Roof Hatch
 .    Shell and Core Mechanical/Plumbing
     (Includes roof drains, hose bibs, main service backflow
     preventer, garage exhaust (if req'd by Code))
 .    Shell and Core Electrical
     (Main electrical switch gear req'd by Code to service shell only, incl
     req'd life safety improvements)
 .    Shell and Core Fire Sprinklers
     (Fire riser to shell for Ordinary Group 2 fire system)
 .    Loading Area/Dock Bumpers
 .    Exit Stairs
     (As req'd by Code)
 .    Related Shell Architectural/Engineering Fees; Building
     Permit and Inspection Fees
 .    Builder's Risk Insurance Premiums

________________________________________________________________________________

Description of Base Building Work - Site Improvements *

 .    Finished Grading
 .    Finished Landscape and Hardscape Features
 .    Irrigation Systems
 .    Surface Parking and Striping
     (Parking provided at or near a ratio of 3 spaces per
     1,000 rentable sq.  ft., or as req'd by Code)
 .    Exterior Lighting
     (Parking and landscaped areas)
 .    Trash Enclosure
 .    Utilities Stubbed to the Building
     (Sewer, water, natural gas, and electricity)

                                       77
<PAGE>

 .    Fire Hydrants
 .    ADA Access and Other Improvements Required by Code
 .    Concrete Pad for Tenant's Emergency Generator
 .    Monument Signage
     (Tenant responsible for its lettering and graphics)

*  All materials and labor shall comply with Code and be "industry standard" for
the Sub-Market

                                       78
<PAGE>

                                   EXHIBIT D

                            COMMENCEMENT DATE; TERM
                            -----------------------

     This Acknowledgment, dated ________________, 2000, is given by ARE-104
ALEXANDER ROAD, LLC, a Delaware limited liability company ("Landlord"), and
PARADIGM GENETICS, INC., a North Carolina corporation ("Tenant"), and is
attached to and made a part of the Lease Agreement dated July ___, 1999 (the
"Lease"), between Landlord and Tenant.  Any initially capitalized terms used but
not defined herein shall have the meanings given them in the Lease.

     Tenant and Landlord hereby acknowledge and agree that, for all purposes
related to the Lease, the "Commencement Date" shall be ________________, 2000,
and the initial "Term" shall expire on _______________, 2010.

     IN WITNESS WHEREOF, Tenant and Landlord have executed this Acknowledgment
as of the date first above written.

         TENANT:

         PARADIGM GENETICS, INC.,      (SEAL)
         a North Carolina corporation

         By:______________________________

         Its:_____________________________


         LANDLORD:

         ARE-104 ALEXANDER ROAD, LLC,  (SEAL)
         a Delaware limited liability company

               By:  ALEXANDRIA REAL ESTATE EQUITIES, L.P.,  (SEAL) a
                Delaware limited partnership, managing member

                By: ARE-QRS CORP., (SEAL)
                    a Maryland corporation, general partner

                    By:___________________

                    Its:__________________

                                       79
<PAGE>

                                   EXHIBIT E

            BASE CONSTRUCTION COSTS; BUILDING ALLOWANCE; BASE RENT
            ------------------------------------------------------

     This Acknowledgment, dated ________________, 2000, is given by ARE-104
ALEXANDER ROAD, LLC, a Delaware limited liability company ("Landlord"), and
PARADIGM GENETICS, INC., a North Carolina corporation ("Tenant"), and is
attached to and made a part of the Lease Agreement dated July ___, 1999 (the
"Lease"), between Landlord and Tenant.  Any initially capitalized terms used but
not defined herein shall have the meanings given them in the Lease.

     Tenant and Landlord hereby acknowledge and agree that, for all purposes
related to the Lease, the aggregate "Base Construction Costs" shall be
$_________, the aggregate "Building Allowance" actually disbursed to or for the
benefit of Tenant shall be $__________, and the initial monthly "Base Rent"
shall be $___________.

     IN WITNESS WHEREOF, Tenant and Landlord have executed this Acknowledgment
as of the date first above written.

          TENANT:

          PARADIGM GENETICS, INC.,  (SEAL)
          a North Carolina corporation

          By:_____________________________
          Its:____________________________


          LANDLORD:

          ARE-104 ALEXANDER ROAD, LLC,  (SEAL)
          a Delaware limited liability company

             By:  ALEXANDRIA REAL ESTATE EQUITIES, L.P.,  (SEAL)
             a Delaware limited partnership, managing member

             By:  ARE-QRS CORP., (SEAL)
                  a Maryland corporation, general partner

                  By:_________________________
                  Its:________________________

                                       80
<PAGE>

                                   EXHIBIT F

                               GROUND LEASE RENT
                               -----------------

     This Acknowledgment, dated ________________, 2000, is given by ARE-104
ALEXANDER ROAD, LLC, a Delaware limited liability company ("Landlord"), and
PARADIGM GENETICS, INC., a North Carolina corporation ("Tenant"), and is
attached to and made a part of the Lease Agreement dated July ___, 1999 (the
"Lease"), between Landlord and Tenant.  Any initially capitalized terms used but
not defined herein shall have the meanings given them in the Lease.

     Tenant and Landlord hereby acknowledge and agree that, for all purposes
related to the Lease, the initial annual "Ground Lease Rent" shall be
$__________.

     IN WITNESS WHEREOF, Tenant and Landlord have executed this Acknowledgment
as of the date first above written.

         TENANT:

         PARADIGM GENETICS, INC.,  (SEAL)
         a North Carolina corporation

         By: ____________________________________
         Its:____________________________________


         LANDLORD:

         ARE-104 ALEXANDER ROAD, LLC,  (SEAL)
         a Delaware limited liability company

             By:  ALEXANDRIA REAL ESTATE EQUITIES, L.P.,  (SEAL)
             a Delaware limited partnership, managing member

             By:  ARE-QRS CORP., (SEAL)
                  a Maryland corporation, general partner

                  By:____________________________
                  Its:___________________________

                                       81
<PAGE>

                                   EXHIBIT G

                            ORIGINAL SECURITY AMOUNT
                            ------------------------

     This Acknowledgment, dated ________________, 2000, is given by ARE-104
ALEXANDER ROAD, LLC, a Delaware limited liability company ("Landlord"), and
PARADIGM GENETICS, INC., a North Carolina corporation ("Tenant"), and is
attached to and made a part of the Lease Agreement dated July,1999 (the
"Lease"), between Landlord and Tenant. Any initially capitalized terms used but
not defined herein shall have the meanings given them in the Lease.

     Tenant and Landlord hereby acknowledge and agree that, for all purposes
related to the Lease, the "Original Security Amount" shall be $___________.

     IN WITNESS WHEREOF, Tenant and Landlord have executed this Acknowledgment
as of the date first above written.

         TENANT:

         PARADIGM GENETICS, INC.,  (SEAL)
         a North Carolina corporation

         By: ___________________________________
         Its:___________________________________

         LANDLORD:

         ARE-104 ALEXANDER ROAD, LLC,  (SEAL)
         a Delaware limited liability company

           By:  ALEXANDRIA REAL ESTATE EQUITIES, L.P.,  (SEAL)
                a Delaware limited partnership, managing member

                By:  ARE-QRS CORP., (SEAL)
                     a Maryland corporation, general partner

                     By:________________________
                     Its:_______________________


                                       82
<PAGE>

                                   EXHIBIT H

                             RULES AND REGULATIONS
                             ---------------------

          (a) The sidewalk, entries, and driveways of the Project shall not be
obstructed by Tenant, or its agents, or used by them for any purpose other than
ingress and egress to and from the Premises.

          (b) Tenant shall not place any objects, including antennas, outdoor
furniture, etc., in the parking areas, landscaped areas or other areas outside
of its Premises, or on the roof of the Project.

          (c) No animals shall be allowed in the offices, halls, or corridors in
the Project, except for seeing-eye dogs and any other animals that may be
reasonably necessary to the Permitted Use.

          (d) Tenant shall not disturb the occupants of the Project or adjoining
buildings by the use of any radio or musical instrument or by the making of loud
or improper noises.

          (e) If Tenant desires telegraphic, telephonic or other electric
connections in the Premises, Landlord or its agent will direct the electrician
as to where and how the wires may be introduced; and, without such direction, no
boring or cutting of wires will be permitted.  Any such installation or
connection shall be made at Tenant's expense.

          (f) Tenant shall not install or operate any steam or gas engine or
boiler, or other mechanical apparatus in the Premises, except as specifically
approved in the Lease.  The use of oil, gas or inflammable liquids for heating,
lighting or any other purpose is expressly prohibited.  Explosives or other
articles deemed extra hazardous shall not be brought into the Project.

          (g) Parking any type of recreational vehicles is specifically
prohibited on or about the Project.  Except for the overnight parking of
operative vehicles, no vehicle of any type shall be stored in the parking areas
at any time.  In the event that a vehicle is disabled, it shall be removed
within 48 hours.  There shall be no "For Sale" or other advertising signs on or
about any parked vehicle.  All vehicles shall be parked in the designated
parking areas in conformity with all signs and other markings.  All parking will
be open parking, and no reserved parking, numbering or lettering of individual
spaces will be permitted except as specified by Landlord.

          (h) Tenant shall maintain the Premises free from
rodents, insects and other pests.

          (i) Landlord reserves the right to exclude or expel from the Project
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 violation
of the Rules and Regulations of the Project.

          (j) Tenant shall not cause any unnecessary labor by reason of Tenant's
carelessness or indifference in the preservation of good order and cleanliness.
Landlord shall not be

                                       83
<PAGE>

responsible to Tenant for any loss of property on the Premises, however
occurring, or for any damage done to the effects of Tenant by the janitors or
any other employee or person.

          (k) Tenant shall give Landlord prompt Notice of any defects in the
water, lawn sprinkler, sewage, gas pipes, electrical lights and fixtures,
heating apparatus, or any other service equipment affecting the Premises.

          (l) Tenant shall not permit storage outside the Premises, including
without limitation, outside storage of trucks and other vehicles, or dumping of
waste or refuse or permit any harmful materials to be placed in any drainage
system or sanitary system in or about the Premises.

          (m) All moveable trash receptacles provided by the trash disposal firm
for the Premises must be kept in the trash enclosure areas, if any, provided for
that purpose.

          (n) No auction, public or private, will be permitted on the Premises
or the Project.

          (o) No awnings shall be placed over the windows in the Premises except
with the prior written consent of Landlord.

          (p) The Premises shall not be used for lodging, sleeping, or cooking
(except to the extent contemplated in the plans and specifications for the
Premises approved by Landlord) or for any immoral or illegal purposes or for any
purpose other than that specified in the Lease.  No gaming devices shall be
operated in the Premises.

          (q) Tenant shall ascertain from Landlord the maximum amount of
electrical current that can safely be used in the Premises, taking into account
the capacity of the electrical wiring in the Project and the Premises and the
needs of other tenants, and shall not use more than such safe capacity.
Landlord's consent to the installation of electric equipment shall not relieve
Tenant from the obligation not to use more electricity than such safe capacity.

          (r) Tenant shall not install or operate on the Premises any machinery
or mechanical devices of a nature not directly related to Tenant's ordinary use
of the Premises and shall keep all such machinery free of vibration, noise and
air waves which may be transmitted beyond the Premises.

                                       84
<PAGE>

                                   EXHIBIT I

                          TENANT'S PERSONAL PROPERTY
                          --------------------------



Emergency diesel generator(s)

De-ionized water system pumps, tanks, and fixtures [point of use systems only]

Nitrogen gas system manifolds and LN2 storage tanks

Uninterruptable Power Supply [UPS] with battery array

Computer Disk arrays and support equipment

Modular Plant Growth Rooms

Modular (0-56C) environmental rooms

Autoclaves with internal steam supply [stand alone, movable, and not built in
only]

Glassware washer and dryer [stand alone, movable, and not built in only]

All incubators

All biological safety cabinets [non-ducted]

All laminar flow hoods [non-ducted]

Non-HVAC monitoring and control systems

Non-sprinkler Fire Suppression Systems

All Telephone-LAN-Video Communications Systems

                                       85
<PAGE>

                                   EXHIBIT J

                             ESTOPPEL CERTIFICATE
                             --------------------

     This TENANT ESTOPPEL CERTIFICATE ("Certificate"), dated as of ___________,
_____, is executed by PARADIGM GENETICS, INC., a North Carolina corporation
("Tenant"), in favor of _______________________________________, a
___________________________, together with its nominees, designees and assigns
(collectively, "Buyer), and in favor of _____________________________________,
a ___________________________ together with its nominees, designees and assigns
(collectively, "Lender).

                                   RECITALS
                                   --------

     A.   Buyer and ARE-104 ALEXANDER ROAD, LLC, a Delaware limited
liability company ("Landlord"), have entered into that certain Purchase and Sale
Agreement and Joint Escrow Instructions, dated as of ___________, _____ (the
"Purchase Agreement"), whereby Buyer has agreed to purchase, among other things,
the improved real property located in the City of Durham, County of Durham,
State of North Carolina, more particularly described on Exhibit A attached to
                                                        ---------
the Purchase Agreement (the "Property").

     B.   Tenant and Landlord have entered into that certain Lease Agreement,
dated as of July ___, 1999 (together with all amendments, modifications,
supplements, guarantees and restatements thereof, the "Lease"), for a portion of
the Property.

     C.   Pursuant to the Lease, Tenant has agreed that upon the request of
Landlord, Tenant would execute and deliver an estoppel certificate certifying
the status of the Lease.

     D.   In connection with the Purchase Agreement, Landlord has requested that
Tenant execute this Certificate with an understanding that Lender will rely on
the representations and agreements below in granting to Buyer a loan.

     NOW, THEREFORE, Tenant certifies, warrants, and represents to Buyer and
Lender as follows:

     Section 1.  Lease.

Attached hereto as Exhibit B is a true, correct and complete copy of the Lease,
                   ---------
including the following amendments, modifications, supplements, guarantees and
restatements thereof, which together represent all of the amendments,
modifications, supplements, guarantees and restatements thereof:

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

(If none, please state "None.")

                                       86
<PAGE>

     Section 2.  Leased Premises.

     Pursuant to the Lease, Tenant leases those certain premises (the "Leased
Premises") consisting of approximately ________________ rentable square feet
within the Property, as more particularly described in the Lease. In addition,
pursuant to the terms of the Lease, Tenant has the [non-exclusive] right to use
[_____ parking spaces/the parking area] located on the Property during the term
of the Lease. [Please cross-out the preceding sentence or portions thereof if
inapplicable.]

     Section 3.  Full Force of Lease.

     The Lease has been duly authorized, executed and delivered by Tenant,
is in full force and effect, has not been terminated, and constitutes a legally
valid instrument, binding and enforceable against Tenant in accordance with its
terms, subject only to applicable limitations imposed by laws relating to
bankruptcy and creditor's rights.

     Section 4.  Complete Agreement.

     The Lease constitutes the complete agreement between Landlord and
Tenant for the Leased Premises and the Property, and except as modified by the
Lease amendments noted above (if any), has not been modified, altered or
amended.

     Section 5.  Acceptance of Leased Premises.

     Tenant has accepted possession and is currently occupying the Leased
Premises.

     Section 6.  Lease Term.

     The term of the Lease commenced on ___________, ______,and ends on
___________, ______,subject to the following options to extend:

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

(If none, please state "None.")

     Section 7.  Purchase Rights.

Tenant has no option, right of first refusal, right of first offer, or other
right to acquire ,or purchase all or any portion of the Leased Premises or all
or any portion of, or interest in, the Property, except as follows:

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

(If none, please state "None.")

                                       87
<PAGE>

          Section 8.  Rights of Tenant.

          Except as expressly stated in this Certificate, Tenant:

          (a)  has no right to renew or extend the term of the Lease;

          (b)  has no option or other right to purchase all or any part of the
Leased Premises or all or any part of the Property;

          (c)  has no right, title, or interest in the Leased Premises, other
than as Tenant under the Lease.

          Section 9.  Rent.

          (a)  The obligation to pay rent under the Lease commenced on
___________. The rent under the Lease is current, and Tenant is not in default
in the performance of any of its obligations under the Lease.

          (b)  Tenant is currently paying base rent under the Lease in the
amount of $___________ per month. Tenant has not received and is not presently
entitled to any abatement, refunds, rebates, concessions or forgiveness of base
rent or other charges, free rent, partial rent, or credits, offsets or
reductions in base rent, except as follows:

________________________________________________________________________________
________________________________________________________________________________
_______________________________________________________________________________.

(If none, please state "None.")

          (c)  Tenant is currently paying ground lease rent under the Lease in
the amount of $___________ per month.  Tenant has not received and is not
presently entitled to any abatement, refunds, rebates, concessions or
forgiveness of ground lease rent or other charges, free rent, partial rent, or
credits, offsets or reductions in ground lease rent, except as follows:

________________________________________________________________________________
________________________________________________________________________________
_________________________________________________________________________.

(If none, please state "None.")

          (d)  Tenant is currently paying building improvement rent under the
Lease in the amount of $___________ per month.  Tenant has not received and is
not presently entitled to any abatement, refunds, rebates, concessions or
forgiveness of building improvement rent or other charges, free rent, partial
rent, or credits, offsets or reductions in building improvement rent, except as
follows:

                                       88
<PAGE>

________________________________________________________________________________
________________________________________________________________________________
_________________________________________________________________________.

(If none, please state "None.")

(e)  Tenant's estimated share of operating expenses, common area charges,
insurance, real estate taxes and administrative and overhead expenses is ______%
and is currently being paid at the rate of $___________ per month, payable to:
____________________; there currently are no existing defenses or offsets
against rent due or to become due under the terms of the Lease, and, to the best
of Tenant's knowledge, there currently is no default or other wrongful act or
omission by Landlord under the Lease or otherwise in connection with Tenant's
occupancy of the Leased Premises, nor is there a state of facts that, with the
passage of time or the giving of notice or both, could ripen into a default on
the part of Tenant, or to the best knowledge of Tenant, could ripen into a
default on the part of Landlord under the Lease, except as follows:

________________________________________________________________________________
________________________________________________________________________________
_________________________________________________________________________.

(If none, please state "None.")

          Section 10.  Security Deposit.

          The amount of Tenant's security deposit held by Landlord under the
Lease is $____.

          Section 11.  Prepaid Rent.

          The amount of prepaid rent, separate from the security deposit, is
$___________, covering the period from ___________, ______ to ___________,
_____.

          Section 12.  Insurance.

          All insurance, if any, that Tenant is required to maintain under the
Lease is presently in effect.

          Section 13.  Pending Actions.

          There is not pending or, to the knowledge of Tenant, threatened
against or contemplated by the Tenant, any petition in bankruptcy, whether
voluntary or otherwise, any assignment for the benefit of creditors, or any
petition seeking reorganization or arrangement under the federal bankruptcy laws
or those of any state.

          Section 14.  Landlord's Performance.

As of the date of this Certificate, to the best of Tenant's knowledge, Landlord
has performed all obligations required of Landlord pursuant to the Lease; no
offsets, counterclaims, or defenses of Tenant under the Lease exist against
Landlord; and no events have occurred that, with the

                                       89
<PAGE>

passage of time or the giving of notice, would constitute a basis for offsets,
counterclaims, or defenses against Landlord, except as follows:

________________________________________________________________________________
________________________________________________________________________________
_________________________________________________________________________.

(If none, please state "None.")

          Section 15.  Assignments by Landlord.

          Tenant has received no notice of any assignment, hypothecation or
pledge of the Lease or rentals under the Lease by Landlord.  Tenant hereby
consents to an assignment of the Lease and rents to be executed by Landlord to
Buyer or Lender in connection with the Loan and acknowledges that said
assignment does not violate the provisions of the Lease.  Tenant acknowledges
that the interest of the Landlord under the Lease is to be assigned to Buyer or
Lender solely as security for the purposes specified in said assignment and
Buyer or Lender shall have no duty, liability or obligation whatsoever under the
Lease or any extension or renewal thereof, either by virtue of said assignment
or by any subsequent receipt or collection of rents thereunder, unless Buyer or
Lender shall specifically undertake such liability in writing.  Tenant agrees
that upon receipt of a written notice from Buyer or Lender of a default by
Landlord under the Loan, Tenant will thereafter pay rent to Buyer or Lender in
accordance with the terms of the Lease.

          Section 16.  Assignments by Tenant.

          Tenant has not sublet or assigned the Leased Premises or the Lease or
any portion thereof to any sublessee or assignee.  No one except Tenant and its
employees will occupy the Leased Premises.  The address for notices to be sent
to Tenant is as set forth in the Lease.

          Section 17.  Environmental Matters.

          The operation and use of the Leased Premises does not involve the
generation, treatment, storage, disposal or release into the environment of any
hazardous materials, regulated materials and/or solid waste, except those used
in the ordinary course of operating a scientific research and development
facility (including laboratory, commercial greenhouse, and related
administrative space) or otherwise used in accordance with all applicable laws.

          Section 18.  Succession of Interest.

          Tenant agrees that, in the event Buyer or Lender succeeds to the
interest of Landlord under the Lease:

          (a) Buyer or Lender shall not be liable for any act or omission of any
prior landlord (including Landlord);

          (b) Buyer or Lender shall not be liable for the return of any security
deposit;

                                       90
<PAGE>

          (c) Buyer or Lender shall not be bound by any rent or additional rent
which Tenant might have prepaid under the Lease for more than the current month;

          (d) Buyer or Lender shall not be bound by any amendments or
modifications of the Lease made without prior consent of Buyer or Lender;

          (e) Buyer or Lender shall not be subject to any offsets or defenses
which Tenant might have against any prior landlord (including Landlord); or

          (f) Buyer or Lender shall not be liable under the Lease to Tenant for
the performance of Landlord's obligations under the Lease beyond Buyer or
Lender's interest in the Property.

          Section 19.  Notice of Default.

          Tenant agrees to give Buyer and Lender a copy of any notice of default
under the Lease served upon Landlord at the same time as such notice is given to
Landlord.  Tenant further agrees that if Landlord shall fail to cure such
default within the applicable grace period, if any, provided in the Lease, then
Buyer or Lender shall have an additional 30 days within which to cure such
default, or if such default cannot be cured within such 30-day period, such 30-
day period shall be extended so long as Buyer or Lender 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 the Lease shall not be terminated while such remedies
are being pursued.

          Section 20.  Notification by Tenant.

          From the date of this Certificate and continuing until ___________,
______, Tenant agrees to immediately notify Buyer and Lender, in writing by
registered or certified mail, return receipt requested, at the following
addresses, on the occurrence of any event or the discovery of any fact that
would make any representation contained in this Certificate inaccurate:

If to Buyer:                 If to Lender:

________________________     ________________________
________________________     ________________________
________________________     ________________________


With a copy to:              With a copy to:

________________________     ________________________
________________________     ________________________
________________________     ________________________

          Tenant makes this Certificate with the knowledge that it will be
relied upon by Buyer in agreeing to purchase the Property and by Lender in
agreeing to provide financing for such purchase.

          Tenant has executed this Certificate as of the date first written
above by the person named below, who is duly authorized to do so.

                                       91
<PAGE>

                                          TENANT:

                                          PARADIGM GENETICS, INC.,  (SEAL)
                                          a North Carolina corporation

                                          By:_________________________________

                                          Its:________________________________

                                       92
<PAGE>

                                   Exhibit A

                               Legal Description
                               -----------------

                                       93
<PAGE>

                                   Exhibit B

                                 Copy of Lease
                                 -------------

                                       94
<PAGE>

                                   EXHIBIT K

            SUBORDINATION.  NON-DISTURBANCE AND ATTORNMENT AGREEMENT
            --------------------------------------------------------

This SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT is made and entered
into as of ________________, _____ ("Agreement"), by and between ARE-104
ALEXANDER ROAD, LLC, a Delaware limited liability company, together with its
nominees, designees and assigns (collectively, "Landlord"), PARADIGM GENETICS,
INC., a North Carolina corporation ("Tenant"), and ___________________________,
a _________________________ ("Mortgagee").

     WHEREAS, Mortgagee is making a loan to Landlord and others evidenced
by a certain promissory note ("Note"), and secured by, among other things, a
deed of trust/mortgage to be recorded prior hereto in the public records of the
City of Durham, County of Durham, State of North Carolina ("Mortgage")
constituting a lien upon the real property interests described in Exhibit A
                                                                  ---------
hereto (the "Property"); and

     WHEREAS, Landlord and Tenant have entered into a Lease Agreement dated
as of July ___, 1999 ("Lease"), for certain leased premises located in the
Triangle Park Research Center in Research Triangle Park, Durham County, North
Carolina, containing or intended to contain a building with approximately 53,750
net rentable square feet and a greenhouse with approximately 5,000 net rentable
square feet (hereinafter collectively referred to as "Premises"); and

     WHEREAS, the Lease is subordinate to the Mortgage and to the right, title,
and interests of Mortgagee thereto and thereunder; and

     WHEREAS, Mortgagee wishes to obtain from Tenant certain assurances
that Tenant will attorn to Mortgagee in the event of a foreclosure by Mortgagee
or the exercise of other rights under the Mortgage; and

     WHEREAS, Tenant wishes to obtain from Mortgagee certain assurances
that Tenant's possession of the Premises will not, subject to the terms and
conditions of this Agreement, be disturbed by reason of a foreclosure of the
lien of the Mortgage on the Property; and

     WHEREAS, Tenant and Mortgagee are both willing to provide such
assurances to each other upon and subject to the terms and conditions of this
Agreement.

     NOW, THEREFORE, in consideration of the above, the mutual promises
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto mutually
agree as follows:

     1.  Affirmation.  Tenant hereby agrees that the
         -----------
Lease now is and shall be subject and subordinate in all respects to the
Mortgage and to all renewals, modifications and extensions thereof until such
time that the Mortgage is released, satisfied or otherwise discharged, subject
to the terms and conditions of this Agreement.  Landlord and Tenant hereby
affirm that the Lease is in full force and effect and that the Lease has not
been modified or amended.  Mortgagee hereby

                                       95
<PAGE>

confirms that it is the holder of the Note and the beneficiary of the Mortgage
and has full power and authority to enter into this Agreement.

     2.   Attornment and Non-Disturbance.
          -------------------------------

          (a)  So long as Tenant is not in default under the Lease (beyond
Tenant's receipt of notice from Landlord and any grace period granted Tenant
under the Lease to cure such default) as would entitle the Landlord to terminate
the Lease or would cause without any further action of the Landlord, the
termination of the Lease or would entitle the Landlord to dispossess Tenant
thereunder, then Mortgagee agrees with Tenant that, in the event the interest of
Landlord shall be acquired by Mortgagee or in the event Mortgagee comes into
possession of or acquires title to the Property by reason of foreclosure or
foreclosure sale or the enforcement of the Mortgage or the Note or other
obligation secured thereby or by a conveyance in lieu thereof, or as a result of
any other means, then:

               (i)   Subject to the provisions of this Agreement, Tenant's
occupancy and possession of the Premises and Tenant's rights and privileges
under the Lease or any extensions, modifications or renewals thereof or
substitutions therefor (in accordance with the Lease and the Mortgage) shall not
be disturbed, diminished or interfered with by Mortgagee during the term of the
Lease (or any extensions or renewals thereof provided for in the Lease);

               (ii)  Mortgagee will not join Tenant as a party defendant in any
action or proceeding for the purpose of terminating Tenant's interest and estate
under the Lease because of any default under the Mortgage; and

               (iii) The Lease shall continue in full force and effect and shall
not be terminated except in accordance with the terms of the Lease.

          (b)  Tenant shall be bound to Mortgagee under all of the terms,
covenants and conditions of the Lease for the balance of the term thereof
remaining (and any extensions or renewals thereof which may be effected in
accordance with any option contained in the Lease) with the same force and
effect as if Mortgagee were the landlord under the Lease, and Tenant does hereby
agree to attorn to Mortgagee as its landlord, said attornment to be effective
and self-operative without the execution of any other instruments on the part of
either party hereto immediately upon Mortgagee's succeeding to the interest of
Landlord under the Lease.  Upon request of Lender or such Purchaser, Tenant
shall execute and deliver to Lender or such Purchaser an agreement reaffirming
such attornment.  Tenant hereby agrees that any right of first refusal or right
of first offer to purchase the Property that Tenant may have pursuant to the
terms of the Lease (generally, a "Purchase Right") shall not be applicable to,
and shall not block, prevent or delay, Mortgagee's or any Purchaser's
acquisition of the Property by foreclosure, deed in lieu of foreclosure, other
transaction related thereto or in substitution thereof, trustee sale, or other
similar statutory conveyance; provided, however, that any Purchase Right shall
                              --------  -------
survive, remain valid, and be exercisable by Tenant in accordance with the terms
of the Lease at any time after any such acquisition by Mortgagee or any
Purchaser.

          (c)  In the event that the Mortgage is foreclosed and any party
("Purchaser") other than Mortgagee purchases the Premises and succeeds to the
interest of Landlord under the

                                       96
<PAGE>

Lease, Tenant shall likewise be bound to Purchaser and Tenant hereby covenants
and agrees to attorn to Purchaser in accordance with all of the provisions of
this Agreement; provided, however, that Purchaser shall have transmitted to
                --------  -------
Tenant a written document in recordable form, whereby Purchaser agrees to
recognize Tenant as its lessee under the Lease and agrees to be directly bound
to Tenant for the performance and observance of all the terms and conditions of
the Lease required to be performed or observed by Landlord thereunder, subject
to and in accordance with the terms of this Agreement.

          (d) Mortgagee agrees that if Mortgagee shall succeed to the interest
of Landlord under the Lease as above provided, Mortgagee shall be bound to
Tenant under all of the terms, covenants, and conditions of this Lease, and
Tenant shall, from and after Mortgagee's succession to the interest of Landlord
under the Lease, have the same remedies against Mortgagee that Tenant might have
had under the Lease against Landlord if Mortgagee had not succeeded to the
interest of Landlord; provided, however, that Mortgagee (and Purchaser, as the
                      --------  -------
case may be) shall not be:

               (i)   liable for any act or omission of any prior lessor
          (including Landlord) occurring prior to the date that Mortgagee or
          Purchaser acquired title to the Premises; provided, however, no
          inference shall be drawn from this clause that Mortgagee or Purchaser
          would not be liable for the same or similar act or omission occurring
          after the date that Mortgagee or Purchaser acquired title to the
          Premises; or

               (ii)  subject to any offsets, counterclaims, or defenses that
Tenant might have solely against any prior lessor (including Landlord); or

               (iii) bound by any previous payment of rent or additional rent
for a period greater than 1 month unless such prepayment shall have been
consented to in writing by Mortgagee; or

               (iv)  bound by any amendment or modification of the Lease made
after the date hereof without Mortgagee's written consent; or

               (v)   liable to Tenant for any loss of business or any other
indirect or consequential damages from whatever cause; provided, however, no
                                                       --------  -------
inference shall be drawn from this clause that Tenant would otherwise be
entitled (or not entitled) to recover for loss of business or any other indirect
or consequential damages; or

               (vi)  liable for the return of any security deposit unless such
deposit has been paid over to the Mortgagee.

The foregoing shall not be construed to modify or limit any right Tenant may
have at law or in equity against Landlord or any other prior owner of the
Property.

     3.  Notices.  All notices required or permitted to be given pursuant to
         -------
this Agreement shall be in writing and shall be sent postage prepaid, by
certified mail, return receipt requested or other nationally utilized overnight
delivery service. All notices shall be deemed delivered when received or
refused. Rejection or other refusal to accept or inability to deliver because of

                                       97
<PAGE>

changed address of which no notice has been given shall constitute receipt of
the notice, demand or request sent. Any such notice if given to Tenant shall be
addressed as follows:

                    Paradigm Genetics, Inc.,
                    104 Alexander Dr., Building 2
                    Research Triangle Park, NC 27709
                    Attention: Mr. Ian Howes
                               Chief Financial Officer

if given to Landlord shall be addressed as follows:

                    Alexandria Real Estate Equities, Inc.
                    135 N. Los Robles Ave., Suite 250
                    Pasadena, California 91101
                    Attention:  General Counsel

if given to Mortgagee shall be addressed as follows:

________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
_______________________________________________________________________________.

     4.  Successors and Assigns. This Agreement shall be binding upon and inure
         ----------------------
to the benefit of the parties hereto and their respective successors and
assigns. The words "foreclosure" and "foreclosure sale" as used herein shall be
deemed to also include the acquisition of Landlord's estate in the Property by
voluntary deed, assignment or other conveyance or transfer in lieu of
foreclosure.

     5.  Modifications to Lease. Tenant shall not modify or amend the Lease or
         ----------------------
terminate the same without Mortgagee's prior written consent. If Mortgagee fails
to provide Tenant with a written approval of the proposed modification,
amendment or termination within 10 business days after notice to Mortgagee of
such proposal, then Mortgagee shall be deemed to have rejected such proposal.

     6.  Additional Agreements. Tenant agrees that:
         ---------------------

         (a) it shall give Mortgagee copies of all notices of default and
requests for approval or consent by Landlord that Tenant gives to Landlord
pursuant to the Lease in the same manner as they are given to Landlord and no
such notice or other communication shall be deemed to be effective until a copy
is given to Mortgagee;

         (b) whenever any consent or approval by Landlord is required to be
obtained by Tenant or is requested by Tenant such consent or approval shall not
be effective until it is also confirmed by or obtained from Mortgagee, provided
that Mortgagee shall respond within 30 days after Mortgagee's receipt of
Tenant's request;

                                       98
<PAGE>

         (c)  in all provisions of the Lease where Landlord is indemnified, the
reference to Landlord as an indemnitee shall be deemed to include Mortgagee and
any Purchaser and such agreement of indemnification shall survive the repayment
of the loan secured by the Mortgage and, to the extent provided in the Lease,
the expiration or termination of the Lease;

          (d) Tenant shall name Mortgagee and any Purchaser as additional
insureds and loss payees, as applicable and appropriate, on all insurance
policies required by the Lease; and

          (e) this Agreement satisfies any condition or requirement in the Lease
relating to the granting of a non-disturbance agreement by Mortgagee, and in the
event that there are inconsistencies between the terms and provisions of this
Agreement and the terms and provisions of the Lease dealing with non-disturbance
by Mortgagee, the terms and provisions hereof shall be controlling; and

          (f) Mortgagee shall have no liability under the Lease until Mortgagee
succeeds to the rights of the Landlord under the Lease, and then only during
such period as Mortgagee is the Landlord.  At all times during which Mortgagee
is liable under the Lease, Mortgagee's liability shall be limited to Mortgagee's
interest in the Property.

     7.   Mortgagee Cure Rights. If Landlord shall have failed to cure any
          ---------------------
default within the time period provided for in the Lease (including any
applicable notice and grace periods), and thereafter Tenant exercises any right
to terminate the Lease, Mortgagee shall have an additional 30 days within which
to cure such default, or if such default cannot be cured by the payment of money
or reasonably requires more than 30 days to cure, then Mortgagee shall have such
additional time as may be reasonably necessary to complete such a cure
(including, if necessary, sufficient time to complete foreclosure proceedings)
provided that Mortgagee commences such cure within such 30-day period, Mortgagee
thereafter diligently prosecutes the same to completion, and Mortgagee completes
such cure no more than 60 days after the expiration of such 30-day period. The
Lease shall not be terminated (i) while such remedies are being diligently
pursued or (ii) based upon a default that is personal to Landlord and therefore
not susceptible to cure by Mortgagee or that requires possession of the Premises
to cure. Mortgagee shall in no event be obligated to cure any such default by
Landlord unless it forecloses. Nothing in this Section 7 shall affect any of
                                               ---------
Tenant's termination rights under the Lease due to casualty or condemnation.


     8.  Direction to Pay. Landlord hereby directs Tenant and Tenant agrees to
         ----------------
make all payments of amounts owed by Tenant under the Lease directly to
Mortgagee from and after receipt by Tenant of notice from Mortgagee directing
Tenant to make such payments to Mortgagee. (As between Landlord and Mortgagee,
the foregoing provision shall not be construed to modify any rights of Landlord
under or any provisions of the Mortgage or any other instrument securing the
Note).

     9.  Conditional Assignment.  With reference to any assignment by Landlord
         ----------------------
of Landlord's interest in the Lease, or the rents payable thereunder,
conditional in nature or otherwise, which assignment is made to Mortgagee,
Tenant agrees that the execution thereof by Landlord, and the acceptance thereof
by Mortgagee shall never be treated as an assumption by

                                       99
<PAGE>

Mortgagee of any of the obligations of Landlord under the Lease unless and until
Mortgagee shall have succeeded to the interest of Landlord. The foregoing
sentence shall not affect any of Tenant's rights against Landlord under the
Lease.

                           [Signatures on next page]

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be properly executed by their duly authorized representatives as of the date
first above written.

          LANDLORD:
          ARE-104 ALEXANDER ROAD, LLC, (SEAL)
          a Delaware limited liability company

          By:  ALEXANDRIA REAL ESTATE EQUITIES, L.P., (SEAL)
               a Delaware limited partnership, managing member

               By: ARE-QRS CORP., (SEAL)
                   a Maryland corporation, general partner

               By: _______________________________

               Its: ______________________________

          TENANT:

          PARADIGM GENETICS, INC., (SEAL)
          a North Carolina corporation

          By: ___________________________________

          Its: __________________________________

          MORTGAGEE:

          _______________________________________
          a _____________________________________

          By:  __________________________________

          Its: __________________________________

                                      100
<PAGE>

                                   Exhibit A

                               Legal Description
                               -----------------

                                      101
<PAGE>

                                   EXHIBIT L

            SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
            -------------------------------------------------------

          This SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT is made
and entered into as of ________________, ______ ("Agreement"), by and among ARE-
104 ALEXANDER ROAD, LLC, a Delaware limited liability company, together with its
nominees, designees, and assigns (collectively, "Landlord"), PARADIGM GENETICS,
INC., a North Carolina corporation ("Tenant"), and TRIANGLE SERVICE CENTER,
INC., a North Carolina corporation ("Ground Lessor").

          WHEREAS, Landlord has entered into or is entering into a Ground Lease
Agreement (the "Ground Lease") with Ground Lessor pursuant to which Landlord has
leased or is leasing approximately 5.5 acres of land more fully described in
Exhibit A (the "Site"); and
---------

          WHEREAS, Landlord and Tenant have entered into or are entering into a
Lease Agreement dated as of July _______,1999 ("Lease"), for certain premises to
be built on the Site containing or intended to contain a building with
approximately 53,750 net rentable square feet and a greenhouse with
approximately 5,000 net rentable square feet (hereinafter collectively referred
to as "Premises"); and

          WHEREAS, the Lease is intended to be subordinate to the Ground Lease
and to the right, title, and interests of Ground Lessor thereunder; and

          WHEREAS, Ground Lessor wishes to obtain from Tenant certain assurances
that Tenant will attorn to Ground Lessor in the event Ground Lessor terminates
the Ground Lease or exercises other rights under the Ground Lease; and

          WHEREAS, Tenant wishes to obtain from Ground Lessor certain assurances
that Tenant's possession of the Premises will not, subject to the terms and
conditions of this Agreement, be disturbed by reason of the termination of the
Ground Lease or the exercise of any other rights under the Ground Lease; and

          WHEREAS, Tenant and Ground Lessor are willing to provide such
assurances to each other upon and subject to the terms and conditions of this
Agreement.

          NOW, THEREFORE, in consideration of the above, the mutual promises
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto mutually
agree as follows:

          1.  Affirmation. Tenant hereby agrees that the Lease now is and shall
              -----------
be subject and subordinate in all respects to the Ground Lease and to all
renewals, modifications and extensions thereof, subject to the terms and
conditions of this Agreement. Landlord and Tenant hereby affirm that the Lease
is in full force and effect and that the Lease has not been modified or amended.
Ground Lessor hereby confirms that it is the holder of the ground lessor's
interest under the Ground Lease and has full power and authority to enter into
this Agreement.

          2.  Attornment and Non-Disturbance.
              ------------------------------

                                      102
<PAGE>

     (a) So long as Tenant is not in default under the Lease (beyond
Tenant's receipt of notice from Landlord and any grace period granted Tenant
under the Lease to cure such default) as would entitle the Landlord to terminate
the Lease or would cause without any further action of the Landlord, the
termination of the Lease or would entitle the Landlord to dispossess Tenant
thereunder, then Ground Lessor agrees with Tenant that, in the event Ground
Lessor terminates the Ground Lease or exercises other rights under the Ground
Lease that permit Ground Lessor to acquire Landlord's interest under the Lease,
then:

          (i)   Subject to the provisions of this Agreement, Tenant's occupancy
and possession of the Premises and Tenant's rights and privileges under the
Lease or any extensions, modifications or renewals thereof or substitutions
therefor (in accordance with the Lease and the Ground Lease) shall not be
disturbed, diminished or interfered with by Ground Lessor during the term of the
Lease (or any extensions or renewals thereof provided for in the Lease);

          (ii)  Ground Lessor will not join Tenant as a party defendant in any
action or proceeding for the purpose of terminating Tenant's interest and estate
under the Lease because of any default under the Ground Lease; and

          (iii) The Lease shall continue in full force and effect and shall not
be terminated except in accordance with the terms of the Lease.

     (b)  Tenant shall be bound to Ground Lessor under all of the terms,
covenants and conditions of the Lease for the balance of the term thereof
remaining (and any extensions or renewals thereof which may be effected in
accordance with any option contained in the Lease) with the same force and
effect as if Ground Lessor were the landlord under the Lease, and Tenant does
hereby agree to attorn to Ground Lessor as its landlord, said attornment to be
effective and self-operative without the execution of any other instruments on
the part of either party hereto immediately upon Ground Lessor's succeeding to
the interest of Landlord under the Lease.  Upon the request of Ground Lessor,
Tenant shall execute and deliver to Ground Lessor an agreement reaffirming such
attornment.  Tenant hereby agrees that any right of first refusal or right of
first offer to purchase Landlord's interest under the Ground Lease that Tenant
may have pursuant to the terms of the Lease (generally, a "Purchase Right")
shall not be applicable to, and shall not block, prevent or delay, Ground
Lessor's acquisition of Landlord's interest under the Lease; provided, however,
                                                             --------  -------
that any Purchase Right shall survive, remain valid, and be exercisable by
Tenant in accordance with the terms of the Lease at any time after any such
acquisition by Ground Lessor.

          (c) Ground Lessor agrees that if Ground Lessor shall succeed to the
interest of Landlord under the Lease as above provided, Ground Lessor shall be
bound to Tenant under all of the terms, covenants, and conditions of the Lease,
and Tenant shall, from and after Ground Lessor's succession to the interest of
Landlord under the Lease, have the same remedies against Ground Lessor that
Tenant might have had under the Lease against Landlord if Ground Lessor had not
succeeded to the interest of Landlord; provided, however, that Ground Lessor
                                       --------  -------
shall not be:

                                      103
<PAGE>

          (i)   liable for any act or omission of any prior lessor (including
Landlord) occurring prior to the date that Ground Lessor succeeded to the
interest of Landlord under the Lease; provided, however, no inference shall be
                                      --------  -------
drawn from this clause that Ground Lessor would not be liable for the same or
similar act or omission occurring after the date that Ground Lessor succeeded to
the interest of Landlord under the Lease; or

          (ii)  subject to any offsets, counterclaims or defenses that Tenant
might have solely against any prior lessor (including Landlord); or

          (iii) bound by any previous payment of rent, however denominated, for
a period greater than 1 month unless such prepayment shall have been consented
to in writing by Ground Lessor; or

          (iv)  bound by any amendment or modification of the Lease made after
the date hereof without Ground Lessor's written consent; or

          (v)   liable to Tenant for any loss of business or any other
indirect or consequential damages from whatever cause; provided, however, no
                                                       --------  -------
inference shall be drawn from this clause that Tenant would otherwise be
entitled (or not entitled) to recover for loss of business or any other indirect
or consequential damages; or

          (vi) liable for the return of any security deposit unless such deposit
has been paid over to the Ground Lessor.

The foregoing shall not be construed to modify or limit any right Tenant may
have at law or in equity against Landlord or any other prior owner of the
Property.

     (d)  Ground Lessor hereby acknowledges that Section 38(b) of the Lease
                                                 -------------
contains the following terms and conditions, and hereby agrees to accept
performance of the "Ground Lease Obligations" (as defined therein) from Tenant,
and to permit Tenant to enforce the "Ground Lease Rights" (as defined therein),
at the times and in the manner described therein:

     Tenant shall be responsible for, and hereby covenants to satisfy in a
     timely fashion, any and all obligations, covenants, responsibilities,
     and/or indemnities binding on Landlord as holder of the ground lessee's
     interest under the Ground Lease (collectively, the "Ground Lease
     Obligations"), including, without limitation, the payment of the annual
     rent provided for in the Ground Lease (at the times and in the manner
     specified in Section 3(b)(ii) [of the Lease]) and the payment or
                          --------
     reimbursement of all expenses to be paid or reimbursed by Landlord under
     the Ground Lease; provided, however, that the terms and conditions of this
                       --------  -------
     Lease shall control to the extent the responsibility for satisfying any
     Ground Lease Obligation is expressly conferred on Landlord and/or allocated
     between Landlord and Tenant herein.  For illustration purposes only,
     Sections 13 and 14 [of the Lease] allocate between Landlord and Tenant all
     -----------     --
     maintenance and repair obligations with respect to the Premises and the
     Project and, therefore, such provisions control.  If Tenant fails to
     satisfy, in a timely fashion, any of the Ground Lease Obligations in the
     manner required hereunder, Landlord shall have the right (but not the
     obligation) to satisfy the same, and any cost incurred by

                                      104
<PAGE>

     Landlord in doing so shall be payable to Landlord on demand as Additional
     Rent or includable by Landlord as an Operating Expense.  Further, Tenant
     shall indemnify,defend, hold, and save Landlord harmless from and against
     any and all Claims arising out of or in connection with any such failure
     by Tenant. Conversely, if Tenant gives Landlord Notice requesting Landlord
     to take affirmative action to enforce any of Landlord's rights as ground
     lessee under the Ground Lease or to enforce any obligation, covenant,
     responsibility, and/or indemnity of the Ground Lessor under the Ground
     Lease (collectively, the "Ground Lease Rights") and Landlord elects not to
     do so, Tenant shall have the right, at Tenant's sole cost and expense, to
     take affirmative action to enforce any such Ground Lease Rights, and for
     such purpose Landlord, effective as of Landlord's election not to take
     affirmative action, appoints Tenant attorney-in-fact for Landlord (such
     power of attorney being coupled with an interest); provided, however, that,
                                                        --------  -------
     notwithstanding the foregoing, the exercise of any Ground Lease Rights that
     relate to Hazardous Materials (as provided in Section 30(a) [of the Lease])
                                                   ------- -----
     shall be subject to compliance with Section 3 of [a separate] Cost Sharing
     Agreement.  Tenant shall indemnify, defend, hold, and save Landlord
     harmless from and against any and all Claims arising out of or in
     connection with any affirmative action taken by Tenant to enforce any
     Ground Lease Rights.  Tenant's rights and obligations under this Section
     shall terminate and be of no further force or effect as of the expiration
     or earlier termination of this Lease, provided that all obligations that
     have arisen and/or become binding hereunder but have not been fully
     satisfied as of the expiration or earlier termination of this Lease shall
     survive such expiration or earlier termination.

     3.  Notices.  All notices required or permitted to be given pursuant to
         -------
this Agreement shall be in writing and shall be sent postage prepaid, by
certified mail, return receipt requested or other nationally utilized overnight
delivery service. All notices shall be deemed delivered when received or
refused. Rejection or other refusal to accept or inability to deliver because of
changed address of which no notice has been given shall constitute receipt of
the notice, demand or request sent. Any such notice if given to Tenant shall be
addressed as follows:

               Paradigm Genetics, Inc.,
               104 Alexander Dr., Building 2
               Research Triangle Park, NC 27709
               Attention:  Mr.  Ian Howes
                           Chief Financial Officer

if given to Landlord shall be addressed as follows:

               Alexandria Real Estate Equities, Inc.
               135 N.  Los Robles Ave., Suite 250
               Pasadena, California 91101
               Attention:  General Counsel

if given to Ground Lessor shall be addressed as follows:

                                      105
<PAGE>

               Triangle Service Center, Inc.
               2 Hanes Drive
               Research Triangle Park, NC 27709
               Attention:  Mr. James Roberson

     4.  Successors and Assigns. This Agreement shall be binding upon and inure
         ----------------------
to the benefit of the parties hereto and their respective successors and
assigns.

     5.  Additional Agreements.  Tenant agrees that:
         ---------------------

          (a) it shall give Ground Lessor copies of all notices of default by
Landlord that Tenant gives to Landlord pursuant to the Lease in the same manner
as they are given to Landlord;

          (b) in all provisions of the Lease where Landlord is indemnified, the
reference to Landlord as an indemnitee shall be deemed to include Ground Lessor;

          (c) this Agreement satisfies any condition or requirement in the Lease
relating to the granting of a non-disturbance agreement by Ground Lessor, and in
the event that there are inconsistencies between the terms and provisions of
this Agreement and the terms and provisions of the Lease dealing with non-
disturbance by Ground Lessor, the terms and provisions hereof shall be
controlling; and

          (d) Ground Lessor shall have no liability under the Lease until Ground
Lessor succeeds to the rights of the Landlord under the Lease, and then only
during such period as Ground Lessor is the landlord thereunder.  At all times
during which Ground Lessor is liable under the Lease, Ground Lessor's liability
shall be limited to Ground Lessor's interest in the Property.

     6.   Direction to Pay.  Landlord hereby directs Tenant and Tenant agrees to
          ----------------
make all payments of amounts owed by Tenant under the Lease directly to Ground
Lessor from and after receipt by Tenant of notice from Ground Lessor directing
Tenant to make such payments to Ground Lessor. (As between Landlord and Ground
Lessor, the foregoing provision shall not be construed to modify any rights of
Landlord under or any provisions of the Ground Lease).

                           [Signatures on next page]

                                      106
<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be properly executed by their duly authorized representatives as of the date
first above written.

          LANDLORD:

          ARE-104 ALEXANDER ROAD, LLC, (SEAL)
          a Delaware limited liability company

          By:  ALEXANDRIA REAL ESTATE EQUITIES, L.P., (SEAL)
               a Delaware limited partnership, managing member

               By:  ARE-QRS CORP., (SEAL)
                    a Maryland corporation, general partner


               By: ________________________________________
               Its:________________________________________

          TENANT:

          PARADIGM GENETICS, INC, (SEAL)
          a North Carolina corporation



          By: _____________________________________________
          Its:_____________________________________________

          GROUND LESSOR:

          TRIANGLE SERVICE CENTER, INC. (SEAL)
          a North Carolina corporation



          By:  _____________________________________________
          Its: _____________________________________________

                                      107
<PAGE>

                                   EXHIBIT A

                               Legal Description
                               -----------------

                                      108
<PAGE>

                                   EXHIBIT M

                               WARRANT AGREEMENT
                               -----------------



                             [See Following Pages]

                                      109
<PAGE>

THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
STATE SECURITIES LAWS.  THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT
IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN EXEMPTION TO SUCH
ACT.

Void After ________________,2009 (the Tenth Anniversary of the Date Hereof)

                                WARRANT FOR THE

                      PURCHASE OF SHARES OF COMMON STOCK

                                      of

                            PARADIGM GENETICS INC.
          INCORPORATED UNDER THE LAWS OF THE STATE OF NORTH CAROLINA

          THIS CERTIFIES THAT, for value received, ARE-104 Alexander Road, LLC,
a Delaware limited liability company, together with its successors and assigns
(the "Investor"), is initially entitled to purchase up to One Hundred Fifty
Thousand (150,000) duly authorized, validly issued, fully paid and nonassessable
shares of Common Stock (the "Common Stock") of Paradigm Genetics Inc., a North
Carolina corporation (the "Company"), at the per share purchase price described
in Section 1.3 below, subject to the provisions and upon the terms and
conditions hereinafter set forth.

     1.  Exercise of Warrant.  The terms and conditions upon which this Warrant
         -------------------
may be exercised, and the Common Stock covered hereby (the "Warrant Stock") may
be purchased, are as follows:

         1.1  Term.  The purchase right represented by this Warrant may be
              ----
exercised in whole or in part at any time and from time to time from and after
the date hereof and on or before the earlier of (i) _______________, 2009 (the
tenth anniversary of the date hereof) or (ii) the fifth anniversary of the date
of the consummation of a bona fide, underwritten initial public offering of
Common Stock, at a public offering price equal to or exceeding $10.00 per share
(as adjusted for any stock dividends, combinations, splits or the like with
respect to such shares) and an aggregate offering price to the public of not
less than $20,000,000; provided that, if the last day on which this Warrant
                       --------
 may be exercised is a Sunday or a legal holiday or a day on which banking
institutions doing business in the State of North Carolina are authorized by law
to close, this Warrant may be exercised prior to 5:00 p.m. local time on the
next succeeding full business day with the same force and effect as if exercised
on such last day specified herein.

     1.2  Number of Shares.  This Warrant is initially exercisable for One
          ----------------
Hundred Fifty Thousand (150,000) shares of Common Stock, subject to adjustment
pursuant to Section 2 of this Warrant.

                                      110
<PAGE>

     1.3  Purchase Price.  The initial per share purchase price for the shares
          --------------
of Common Stock to be issued upon exercise of this Warrant shall be $3.00,
subject to adjustment as provided herein (the "Warrant Price").

     1.4  Method of Exercise.  The exercise of the purchase rights evidenced by
          ------------------
this Warrant shall be effected by (a) the surrender of the Warrant, together
with a duly executed copy of the form of a subscription attached hereto, to the
Company at its principal offices and (b) the delivery of the purchase price (i)
by check or bank draft payable to the Company's order or by wire transfer to the
Company's account for the number of shares for which the purchase rights
hereunder are being exercised or (ii) pursuant to the procedure set forth in
Section 1.5. Any such exercise of this Warrant may be made contingent upon the
closing of a public offering, merger, recapitalization or similar transaction.

     Each exercise of this Warrant shall be deemed to have been effected
immediately prior to the close of business on the day on which this Warrant
shall have been surrendered to the Company as provided herein or at such latter
date as may be specified in the executed form of subscription, and at such time
the person or persons in whose name or names any certificate or certificates for
shares of Common Stock shall be issuable upon such exercise as provided herein
shall be deemed to have become the holder or holders of record thereof.

     1.5  Cashless Exercise.  In addition to and without limiting the rights
          -----------------
of the holder hereof under the terms hereof, at the holder's option this Warrant
may be exercised in whole or in part at any time or from time to time prior to
its expiration for a number of shares of Common Stock having an aggregate fair
market value on the date of such exercise equal to the difference between (a)
the fair market value of the number of shares of Common Stock subject to this
Warrant designated for exercise by the holder hereof on the date of the exercise
and (b) the aggregate Warrant Price for such shares in effect at such time.

     The "fair market value" of shares of Common Stock shall be calculated
on the basis of (a) if the Common Stock is then traded on a securities exchange
or the Nasdaq National Market, the average of the closing prices of the Common
Stock on such exchange or market over the 20 trading day period ending three (3)
trading days prior to the date of exercise, (b) if the Common Stock is then
regularly traded over-the-counter, the average of the sale prices or secondarily
the closing bid of the Common Stock over the 20 trading day period ending three
(3) trading days prior to the date of exercise, or (c) if there is no active
public market for the Common Stock, the fair market value thereof shall be the
price per share that the Company could obtain from a willing buyer for shares
sold by the Company from authorized but unissued shares, as determined in good
faith by the Company's Board of Directors.  If the holder of this Warrant
exercises this Warrant contingent upon the closing of a public offering, the
"fair market value" of a share of Common Stock on the date of exercise shall be
equal to the initial price to the public specified in the final prospectus with
respect to such public offering.

     No payment of any cash or other consideration to the Company shall be
required from the holder of this Warrant in connection with any exercise of this
Warrant pursuant to this Section 1.5.  Such exercise shall be effective upon the
date of receipt by the Company of the original Warrant surrendered for
cancellation and a written request from the holder hereof that

                                      111
<PAGE>

the exercise pursuant to this Section 1.5 be made, or at such later date as may
be specified in such request.

          1.6 Issuance of Shares.  As soon as reasonably practicable after each
              ------------------
exercise of this Warrant, in whole or in part, the Company at its expense
(including the payment by it of any applicable issue taxes) will cause to be
issued in the name of and delivered to the holder hereof or as such holder (upon
payment by such holder of any applicable transfer taxes) may direct, (a) a
certificate or certificates for the number of duly authorized, validly issued,
fully paid and nonassessable shares of Common Stock to which such holder shall
be entitled upon such exercise, and (b) in case such exercise is in part only, a
new Warrant or Warrants of like tenor, calling in the aggregate on the face or
faces thereof for the number of shares of Common Stock equal (without giving
effect to any adjustment thereof) to the number of such shares called for on the
face of this Warrant minus the number of such shares designated by the holder
upon such exercise as provided herein.

     2.   Certain Adjustments.
          -------------------

          2.1 Mergers Consolidations or Sale of Assets.  If after the date
              ----------------------------------------
hereof there shall be a capital reorganization (other than a combination or
subdivision of Common Stock otherwise provided for herein), or spin-off, or a
merger or consolidation of the Company with or into another corporation, or the
sale of all or substantially all of the Company's properties and assets to any
other person, then, as a part of such transaction, lawful provision shall be
made so that the Investor shall thereafter be entitled to receive upon exercise
of this Warrant, during the period specified in this Warrant and upon payment of
the purchase price, the number of shares of stock or other securities, cash or
property of the Company or the successor corporation resulting from such
transaction, to which a holder of the Common Stock deliverable upon exercise of
this Warrant would have been entitled under the provisions of the agreement in
such transaction if this Warrant had been exercised immediately before such
transaction. In any such case, appropriate adjustment (as determined reasonably
and in good faith by the Company's Board of Directors) shall be made in the
application of the provisions of this Warrant with respect to the rights and
interests of the Investor after such transaction to the end that the provisions
of this Warrant (including adjustment of the purchase price then in effect and
the number of shares of Common Stock issuable upon exercise hereof) shall be
applicable after that event, as near as reasonably may be, in relation to any
shares or other property deliverable after that event upon exercise of this
Warrant.

          2.2 Splits and Subdivisions Dividends.  If the Company should effect
              ---------------------------------
or fix a record date for the effectuation of a split or subdivision of the
outstanding shares of Common Stock or the determination of the holders of Common
Stock entitled to receive a dividend or other distribution payable in additional
shares of Common Stock or other securities or warrants, options or other rights
convertible into, or entitling the holder thereof to receive directly or
indirectly, additional shares of Common Stock (hereinafter referred to as
"Common Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or Common Stock Equivalents (including
the additional shares of Common Stock issuable upon conversion or exercise
thereof), then, as of such record date (or the date of such distribution, split
or subdivision if no record date is fixed), the per share purchase price shall
be appropriately decreased and the number of shares of Common Stock issuable
upon

                                      112
<PAGE>

exercise hereof shall be appropriately increased in proportion to such
increase of outstanding shares.

          2.3 Combination of Shares.  If the number of shares of Common Stock
              ---------------------
outstanding at any time after the date hereof is decreased by a combination of
the outstanding shares of Common Stock, the per share purchase price shall be
appropriately increased and the number of shares of Common Stock issuable upon
exercise hereof shall be appropriately decreased in proportion to such decrease
in outstanding shares.

          2.4 Adjustments for Other Distributions.  In the event the Company
              -----------------------------------
shall declare a distribution payable in securities of the Company (other than
Common Stock Equivalents) or other persons, evidences of indebtedness issued by
the Company or other persons, assets (including cash dividends) or options or
rights not referred to in Section 2.2, then, in each such case for purposes of
this Section 2.4, upon exercise of this Warrant the holder hereof shall be
entitled to a proportionate share of any such distribution as though such holder
was the holder of the number of shares of Common Stock of the Company into which
this Warrant may be exercised as of the record date fixed for the determination
of the holders of Common Stock of the Company entitled to receive such
distribution.

          2.5 Issuance of Additional Common Stock
              -----------------------------------

              (a) If, after the date hereof, the Company shall issue
or sell

                  (i)  Additional Shares (defined below) without consideration
or for a consideration per share less than the Warrant Price, or

                  (ii) Common Stock Equivalents exercisable for Additional
Shares with a minimum exercise or exchange price less than the Warrant Price.

Then, and in each such case, the Warrant Price shall be reduced, concurrently
with such issue or sale, to a price (calculated to the nearest .001 of a cent)
determined by multiplying such Warrant Price by a fraction:

                  (i)  the numerator of which shall be (A) the number of shares
of Common Stock outstanding immediately prior to such issue or sale plus (B) the
number of shares of Common Stock that the aggregate consideration received by
the Company upon such issuance or sale (or, in the case of Common Stock
Equivalents exercisable for Additional Shares, receivable by the Company upon
exercise or exchange) would purchase at such Warrant Price, and

                  (ii) the denominator of which shall be the number of shares of
Common Stock outstanding immediately after such issue or sale (or, in the case
of Common Stock Equivalents exercisable for Additional Shares, assuming exercise
or exchange thereof).

              (b) For the purposes of this Section 2.5, the consideration for
the issue or sale of Additional Shares shall, irrespective of the accounting
treatment of such consideration, (i) insofar as it consists of cash, be computed
at the net amount of cash received by the Company, and (ii) insofar as it
consists of property (including securities) other than cash, be

                                      113
<PAGE>

computed at the fair value thereof at the time of such issue or sale as
determined in good faith by the Board of Directors.

          (c)  Notwithstanding anything contained herein to the contrary, the
consideration for any Common Stock Equivalents shall be the total amount of
consideration received by the Company for the issuance of such Common Stock
Equivalents plus the minimum amount of consideration payable to the Company upon
exercise, conversion or exchange of Common Stock Equivalents (the "Net
Consideration") determined as of the date of issuance of such Common Stock
Equivalents.  Any obligation, agreement or understanding to issue Common Stock
Equivalents at any time in the future shall be deemed to be an issuance at the
time such obligation or agreement is made or arises.  No adjustment of the
Warrant Price shall be made under this Section 2.5 upon the issuance of any
shares of Common Stock which are issued pursuant to the exercise, conversion or
exchange of any Common Stock Equivalents if any adjustment shall previously have
been made upon the issuance of any such Common Stock Equivalents.

               Should the Net Consideration for any such Common Stock
Equivalents be increased or decreased from time to time, then, upon the
effectiveness of such change, the Warrant Price will be that which would have
been obtained (i) had the adjustments made upon the issuance of such Common
Stock Equivalents been made upon the basis of the actual Net Consideration (as
so increased or decreased) of such Common Stock Equivalents, and (ii) had
adjustments to such Warrant Price since the date of issuance of such Common
Stock Equivalents been made to such Warrant Price as adjusted pursuant to (i)
above. Any adjustment of the Warrant Price with respect to this paragraph which
relates to Common Stock Equivalents shall be disregarded if, as, and when all of
such Common Stock Equivalents expire or are canceled without being exercised, so
that the Warrant Price effective immediately upon cancellation or expiration
shall be equal to the Warrant Price in effect at the time of the issuance of the
expired or canceled Common Stock Equivalents, with such additional adjustments
as would have been made to such Warrant Price had the expired or canceled Common
Stock Equivalents not been issued.

          (d) "Additional Shares" means all shares of Common Stock, whether or
not subsequently reacquired or retired by the Company other than shares of
Common Stock issued or to be issued to directors, officers, employees and
consultants of the Company or any subsidiary pursuant to any bona fide qualified
or non-qualified stock option plan or agreement, stock purchase plan or
agreement, stock restriction agreement, employee stock ownership plan (ESOP) or
other stock incentive plans or arrangements.

          (e) The number of shares of Common Stock that the holder of this
Warrant shall be entitled to receive upon each exercise hereof after any
adjustment pursuant to this Section 2.5 shall be determined by multiplying (i)
the number of shares of Common Stock that were issuable immediately prior to
such adjustment, by (ii) the fraction of which (A) the numerator is the Warrant
Price immediately prior to such adjustment and (B) the denominator is the
Warrant Price immediately following such adjustment.

          2.6  Certificate as to Adjustments.  In the case of each adjustment or
               -----------------------------
readjustment of the Warrant Price pursuant to this Section 2, the Company at its
expense will

                                      114
<PAGE>

promptly compute such adjustment or readjustment in accordance with the terms
hereof and cause a certificate, signed by the Company's Chief Financial Officer,
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based to be delivered to the
holder of this Warrant. The Company will furnish or cause to be furnished to
such holder a certificate setting forth (a) such adjustments and readjustments,
(b) the Warrant Price at the time in effect and how it was calculated and (c)
the number of shares of Common Stock issuable upon exercise hereof and the
amount, if any, of other property at the time receivable upon the exercise of
the Warrant.

          2.7  Other Dilutive Events.  If any event shall occur as to which the
               ---------------------
provisions of Section 2 are not strictly applicable but the failure to make any
adjustment would not fairly protect the purchase rights represented by this
Warrant in accordance with the essential intent and principles of such sections,
then, in each such case, the Board of Directors of the Company shall make such
adjustment, if any, on a basis consistent with the essential intent and
principles established in Section 2, necessary to preserve, without dilution,
the purchase rights represented by this Warrant. The Company will promptly
notify the Investor of any such adjustments and shall make the suggested
adjustments.

          2.8  No Dilution or Impairment.  The Company will not, by amendment
               -------------------------
of its Certificate of Incorporation or through any consolidation, merger,
reorganization, transfer of assets, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the holder of
this Warrant against dilution or other impairment.

          Without limiting the generality of the foregoing, the Company (a) will
not permit the par value of any shares of stock receivable upon the exercise of
this Warrant to exceed the amount payable therefor upon such exercise, (b) will
take all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
stock on the exercise of the Warrants from time to time outstanding; and (c)
will not take any action which results in any adjustments of the Warrant Price
if the total number of shares of Common Stock issuable after the action upon the
exercise of all of the Warrants would exceed the total number of shares of
Common Stock then authorized by the Company's certificate of incorporation and
available for the purpose of issue upon such exercise.

          2.9  Notices of Record Date etc.  In the event of:
               --------------------------

          (a)  any taking by the Company of a record of the holders of any class
of securities of the Company for the purpose of determining the holders thereof
who are entitled to receive any dividend (other than a cash dividend payable out
of earned surplus at the same rate as that of the last such cash dividend
theretofore paid) or other distribution, or any right to subscribe for, purchase
or otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right;

          (b)  any capital reorganization of the Company, any reclassification
or recapitalization of the capital stock of the Company or any transfer of all
or substantially all of

                                      115
<PAGE>

the assets of the Company to any other person or any consolidation or merger
involving the Company; or

          (c) any voluntary or involuntary dissolution, liquidation or winding-
up of the Company, the Company will mail to the holder of this Warrant at least
thirty (30) days prior to the earliest date specified below, a notice
specifying: (i) the date on which any such record is to be taken for the purpose
of such dividend, distribution or right, and the amount and character of such
dividend, distribution or right; and (ii) the date on which any such
reorganization, reclassification, transfer, consolidation, merger, dissolution,
liquidation or winding-up is expected to become effective and the record date
for determining stockholders entitled to vote thereon and the time, if any such
time is to be fixed, as of which the holders of record of Common Stock shall be
entitled to exchange their shares of Common Stock for the securities or other
property deliverable upon such reorganization, reclassification,
recapitalization, consolidation, merger, transfer, dissolution, liquidation or
winding-up.

      3.  Fractional Shares. No fractional shares shall be issued in connection
          -----------------
with any exercise of this Warrant. In lieu of the issuance of such fractional
share, the Company shall make a cash payment equal to the then fair market value
of such fractional share as determined in accordance with Section 1.5 hereof.

      4.  Representations and Warranties of the Company.
          ---------------------------------------------

          4.1  Authorization. The Company has full power and authority to enter
               -------------
into this Warrant. This Warrant has been duly authorized, executed and delivered
by the Company and constitutes its valid and legally binding obligation,
enforceable in accordance with its terms.

          4.2  Reservation of Common Stock. The Company shall at all times
               ---------------------------
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the exercise of this Warrant, such
number of its shares of Common Stock, free from preemptive rights, as shall from
time to time be sufficient to effect the exercise of this Warrant, and if at any
time the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the exercise of the entire Warrant, in addition to such
other remedies as shall be available to the holder of this Warrant, the Company
will take such action as may be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purposes. If any shares of its Common Stock to be reserved for the
purpose of issuance upon exercise of the Warrants require registration with or
approval of any governmental authority under any applicable law (other than
registration of the Common Stock under the Act) before such shares of Common
Stock may be validly issued or delivered, then it shall secure such registration
or approval, as the case may be, and maintain such registration or approval in
effect so long as so required.

          4.3  Adjustment in Number of Shares Issuable and Purchase Price. There
               ----------------------------------------------------------
has not been nor will there be any adjustment to the number of shares issuable
or the purchase price payable upon the exercise of any securities of the Company
convertible into or exchangeable for shares of Common Stock resulting from the
issuance or exercise of this Warrant.

                                      116
<PAGE>

          4.4  Valid Issuance.  This Warrant, when issued and delivered in
               --------------
accordance with the terms hereof will be duly authorized and validly issued, and
the Common Stock issuable upon the exercise hereof, when issued pursuant to the
terms hereof and upon payment of the exercise price, shall, upon such issuance,
be duly authorized, validly issued, fully paid and nonassessable.

     5. Privilege of Stock Ownership. Prior to the exercise of this Warrant, the
        ----------------------------
Investor shall not be entitled, by virtue of holding this Warrant, to any rights
of a stockholder of the Company, including (without limitation) the right to
vote, receive dividends or other distributions, exercise preemptive rights or be
notified of stockholder meetings, and such holder shall not be entitled to any
notice or other communication concerning the business or affairs of the Company.
Nothing in this Section 5, however, shall limit the right of the Investor to be
provided the notices described in Section 2 hereof or to participate in
distributions described in Section 2 hereof if the Investor ultimately exercises
this Warrant.

     6. Limitation of Liability. Except as otherwise provided herein, in the
        -----------------------
absence of affirmative action by the holder hereof to purchase the Common Stock
in accordance herewith, no mere enumeration herein of the rights or privileges
of the holder hereof shall give rise to an obligation on such holder to purchase
any securities or any liability of such holder for the purchase price or as a
stockholder of the Company, whether such obligation or liability is asserted by
the Company or by creditors of the Company.

     7. Representations and Warranties of the Investor. The Investor represents
        ----------------------------------------------
and warrants to the Company as follows:

          7.1 Investment Experience. The Investor represents that it can bear
              ---------------------
the economic risk of its investment and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the Warrant and the Common Stock issuable upon
exercise hereof. The Investor also represents it has not been organized solely
for the purpose of acquiring the Warrant or the Common Stock issuable upon
exercise hereof.

          7.2 Restricted Securities. The Investor understands that the Warrant
              ---------------------
being issued hereunder and the Common Stock issuable upon exercise hereof are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and have not been registered under the Act nor
qualified under applicable state securities laws and that under such laws and
applicable regulations such securities may not be resold without registration
under the Act, except in certain limited circumstances. In this connection, the
Investor represents that it is familiar with Rule 144 promulgated under the Act
("Rule 144"), as presently in effect, and understands the resale limitations
imposed thereby and by the Act.

          7.3 Accredited Investor. The Investor is an "accredited investor"
              -------------------
within the meaning of Rule 501 of Regulation D promulgated under the Act.

          7.4 Legends. It is understood that the certificates evidencing the
              -------
Common Stock issuable upon exercise hereof may bear the following legend:

                                      117
<PAGE>

     "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
     1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.  THEY MAY NOT BE SOLD,
     OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE
     ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE
     SECURITIES UNDER SUCH ACT OR AN EXEMPTION TO SUCH ACT"

     8.   Transfers and Exchanges.
          -----------------------

          8.1   The Investor agrees not to sell, hypothecate, pledge or
otherwise dispose of any interest in the Warrant or the Common Stock issuable
upon exercise hereof in the United States, its territories, possessions or any
area subject to its jurisdiction, or to any person who is a national thereof or
resident therein (including any estate of such person), or any corporation,
partnership or other entity created or organized therein, other than in
accordance with the Act. With respect to any offer, sale or other disposition of
this Warrant, or any shares of Common Stock acquired pursuant to the exercise of
this Warrant prior to registration of such shares, the holder hereof and each
subsequent holder of the Warrant agrees to give written notice to the Company
prior thereto, describing briefly the manner thereof, together with a written
opinion of such holder's counsel, if reasonably requested by the Company, to the
effect that such offer, sale or other disposition may be effected without
registration or qualification (under the Act as then in effect or any federal or
state law then in effect) of this Warrant or such shares of Common Stock and
indicating whether or not under the Act certificates for this Warrant or such
shares of Common Stock to be sold or otherwise disposed of require any
restrictive legend as to applicable restrictions on transferability in order to
insure compliance with the Act; provided, however, that the holder may transfer
or assign this Warrant, or any shares of Common Stock acquired pursuant to the
exercise of this Warrant prior to registration of such shares to Alexandria Real
Estate Equities, Inc., a Maryland corporation ("Alexandria") or to another
wholly-owned subsidiary of Alexandria without written notice to the Company or
an opinion of holder's counsel. Each certificate representing this Warrant or
the shares of Common Stock thus transferred (except a transfer pursuant to Rule
144) shall bear a legend as to the applicable restrictions on transferability in
order to insure compliance with the Act, unless in the aforesaid opinion of
counsel for the holder, such legend is not required in order to insure
compliance with the Act. The Company may issue stop transfer instructions to its
transfer agent in connection with the foregoing restrictions.

          8.2   Upon presentation to the Company of the form of Assignment
attached hereto, a new Warrant shall be issued to the new holder hereof. New
Warrants issued in connection with transfers or exchanges shall not require the
signature of the new holder hereof and shall be identical in form and provision
to this Warrant except as to the number of shares.

          8.3   Each certificate evidencing the shares of Common Stock issued
upon exercise of this Warrant, or upon any transfer of such shares (other than a
transfer registered under the Act or any subsequent transfer of shares so
registered) shall, at the option of the Company, contain a legend, in form and
substance reasonably satisfactory to the Company and its counsel, restricting
the transfer of such shares to sales or other dispositions exempt from the
requirements of the Act.

                                      118
<PAGE>

          8.4 Ownership of Warrants. The Company may treat the person in whose
              ---------------------
name any Warrant is registered on the register kept at the office of the Company
as the owner and holder thereof for all purposes, notwithstanding any notice to
the contrary, except that, if and when any Warrant is properly assigned in
blank, the Company may (but shall not be obligated to) treat the bearer thereof
as the owner of such Warrant for all purposes, notwithstanding any notice to the
contrary. A Warrant, if properly assigned, may be exercised by a new holder
without a new Warrant first having been issued.

          8.5 Transfer and Exchange of Warrants. Upon the surrender of any
              ---------------------------------
Warrant, properly endorsed, for registration of transfer or for exchange, the
Company at its expense will execute and deliver to or upon the order of the
holder thereof a new Warrant or Warrants of like tenor, in the name of such
holder or as such holder (upon payment by such holder of any applicable transfer
taxes) may direct, calling in the aggregate on the face or faces thereof for the
number of shares of Common Stock called for on the face or faces of the Warrant
or Warrants so surrendered.

     9.  Successors and Assigns. The terms and provisions of this Warrant
         ----------------------
shall be binding upon the Company and the Investor and their respective
successors and assigns, subject at all times to the restrictions set forth
herein.

     10. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the
         -------------------------------------------------
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to the Company,
and upon reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this Warrant, if mutilated, the
Company will make and deliver a new warrant of like tenor and dated as of such
cancellation, in lieu of this Warrant.

     11. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
         ---------------------------------
taking of any action or the expiration of any right required or granted herein
shall be a Saturday or Sunday or shall be a legal holiday, then such action may
be taken or such right may be exercised on the next succeeding day not a legal
holiday.

     12. Amendments and Waivers. Any term of this Warrant may be amended
         ----------------------
and the observance of any term of this Warrant may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and the Investor. Any such amendment or
waiver shall be binding on the parties.

     13. Governing Law. The terms and conditions of this Warrant shall be
         -------------
governed by and construed in accordance with North Carolina law, without regard
to conflict of law provisions.

     14. Notices. Except as otherwise provided in this Warrant, any requirement
         -------
for a notice, demand or request under this Warrant will be satisfied by a
writing (a) hand delivered with receipt; (b) mailed by United States registered
or certified mail or Express Mail, return receipt requested, postage prepaid; or
(c) sent by Federal Express or any other nationally recognized overnight courier
service, and addressed as follows: if to the holder, at its address as

                                      119
<PAGE>

shown on the books of the Company; and if to the Company, at the address
indicated on the signature page of this Warrant, Attn:

Chief Financial Officer, with a copy to Gerald F.  Roach, Esq., Smith, Anderson,
Blount, Dorsett, Mitchell & Jernigan, L.L.P., 2500 First Union Capital Center,
Raleigh, North Carolina 27601.  All notices that are sent in accordance with
this Section 14 will be deemed received by the holder or the Company on the
earliest of the following applicable time periods: (i) the date the return
receipt is executed; or (ii) the date delivered as documented by the overnight
courier service or the hand delivery receipt.  Either the holder or the Company
may designate a change of address by written notice to the other party.

     15. Registration Rights.
         -------------------

         (a)   The shares of Common Stock issued or issuable upon the exercise
hereof shall constitute "Registrable Securities" for purposes of this Warrant;
provided, that Registrable Securities shall not include any shares of Common
Stock that have been sold to the public either pursuant to a registration
statement or the exemption from registration under the Securities Act provided
by Rule 144.

         (b)   If at any time the Company proposes to file a registration
statement under the Act with respect to an offering of equity securities by the
Company for its own account or for the account of any securityholders of any
class of its equity securities (other than (i) a registration statement on Form
S-4 or S-8 (or any substitute form that may be adopted by the Securities and
Exchange Commission (the "Commission")) or (ii) a registration statement filed
in connection with an exchange offer or offering of securities solely to the
Company's existing securityholders) or a registration on any registration form
that does not permit secondary sales, then the Company shall give written notice
of such proposed filing to the Investor as soon as practicable (but in no event
less than 20 days before the anticipated filing date), and such notice shall
offer such Investor the opportunity to register such number of shares of
Registrable Securities as each such Investor may request in writing within 15
days after such notice from the Company (which request shall specify the
Registrable Securities intended to be disposed of and the intended method of
distribution thereof) (a "Piggy-Back Registration").

         The Company shall use its best efforts to cause the managing
Underwriter or Underwriters of a proposed underwritten public offering to permit
the Registrable Securities requested by the Investor thereof to be included in a
Piggy-Back Registration on the same terms and conditions as any similar
securities of the Company or any other securityholder included therein and to
permit the sale or other disposition of such Registrable Securities in
accordance with the intended method of distribution thereof.  The Investor shall
have the right to withdraw its request for inclusion of its Registrable
Securities in any registration statement pursuant to this Section 15 by giving
written notice to the Company of its request to withdraw.  The Company may
withdraw a Piggy-Back Registration at any time prior to the time it becomes
effective; provided that the Company shall reimburse the Investor for all
           --------
reasonable out-of-pocket expenses (including counsel fees and expenses) incurred
prior to such withdrawal.  Notwithstanding the foregoing, if the representative
of the underwriters advises the Company in writing that market factors require a
limitation on the number of shares to be underwritten, the representative may
reduce the number of Registrable Securities to be included in the registration

                                      120
<PAGE>

and underwriting (to zero, if necessary) on a pro rata basis (based on number of
                                              --- ----
shares owned) with all other secondary shares sought to be included therein.

     No failure to effect a registration under Section 15(b) and to complete the
sale of Registrable Securities in connection therewith shall relieve the Company
of any other obligation under this Agreement (including, without limitation, the
Company's obligations under Sections 15(d) and 15(e)).

           (c)   In the case of a Piggy-Back Registration:

                 (1)   The Company will, as expeditiously as possible:

                       (A)  prepare and file with the Commission such amendments
and post-effective amendments to the applicable registration statement as may be
necessary to keep the registration statement effective for as long as such
registration is required to remain effective pursuant to the terms hereof, cause
the prospectus to be supplemented by any required prospectus supplement, and, as
so supplemented, to be filed pursuant to Rule 424 under the Act;

                       (B) furnish to the Investor at least one signed copy of
the registration statement and any post-effective amendment thereto, as soon as
such documents become available to the Company, and such number of conformed
copies thereof and such number of copies of the prospectus (including each
preliminary prospectus) and any amendments or supplements thereto, and any
documents incorporated by reference therein, as the Investor may reasonably
request as soon as such documents become available to the Company;

                       (C) on or prior to the date on which the registration
statement is declared effective, qualify such Registrable Securities requested
to be included under such other securities or blue sky laws of such
jurisdictions as the Investor reasonably requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable the Investor
to consummate the disposition in such jurisdictions of such Registrable
Securities; provided, that the Company will not be required to (i) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify, (ii) subject itself to general taxation in any such
jurisdiction or (iii) consent to general service of process in any such
jurisdiction;

                       (D) notify the Investor at any time when a prospectus
relating to such Registrable Securities is required to be delivered under the
Act of the happening of any event as a result of which the prospectus included
in such registration statement contains an untrue statement of a material fact
or omits to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, and prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of such Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading;

                       (E) notify the Investor of any stop order or other
suspension of effectiveness of the registration statement; and obtain the
withdrawal of any order suspending the effectiveness of the registration
statement at the earliest possible time;

                                      121
<PAGE>

                       (F) enter into such agreements (including an underwriting
agreement in form, scope and substance as is customary in underwritten
offerings) and take all such other actions in connection therewith (including
those requested by the managing underwriters, if any, or the Investor) in order
to expedite or facilitate the disposition of such Registrable Securities and in
such connection, whether or not an underwriting agreement is entered into and
whether or not the registration is an underwritten registration, (i) make such
representations and warranties to the Investor and the underwriters, if any,
with respect to the business of the Company and its subsidiaries, the
registration statement, prospectus and documents incorporated by reference or
deemed incorporated by reference, if any, in each case, in form, substance and
scope as are customarily made by issuers to underwriters in underwritten
offerings and confirm the same if and when requested; (ii) obtain opinions of
counsel to the Company and updates thereof (which counsel and opinions in form,
scope and substance) shall be reasonably satisfactory to the managing
underwriters, if any, and the Investor addressed to the Investor and each of the
underwriters, if any, covering the matters customarily covered in opinions
requested in underwritten offerings and such other matters as may be reasonably
requested by such holders and underwriters, including without limitation the
matters referred to clause (i) above; (iii) obtain "cold comfort" letters and
updates thereof from the independent certified public accountants of the Company
(and, if necessary, any other certified public accountants of any subsidiary of
the Company or of any business acquired by the Company for which financial
statements and financial data is, or is required to be, included in the
registration statement), addressed to the Investor and each of the underwriters,
if any, such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with underwritten
offerings; and (iv) deliver such documents and certificates as may be requested
by the Investor, its counsel and the managing underwriters, if any, to evidence
the continued validity of the representations and warranties of the Company and
its subsidiaries made pursuant to clause (i) above and to evidence compliance
with any customary conditions contained in the underwriting agreement or other
agreement entered into by the Company; and notify the Investor promptly of the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Warrant and/or Common Stock for sale in any jurisdiction;
and

                       (G) take all other steps reasonably necessary to effect
the registration of the Registrable Securities contemplated hereby.

               (2)     The Company will otherwise use its best efforts to comply
with all applicable rules and regulations of the Commission, and make available
to its securityholders, as soon as reasonably practicable, an earnings statement
covering a period of 12 months, beginning within three months after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Act.

               (3)     The Company will use its best efforts (i) to cause any
class of Registrable Securities to be listed on a national securities exchange
(if such shares are not already so listed) and on each additional national
securities exchange on which similar securities issued by the Company are then
listed (if any), if the listing of such Registrable Securities is then permitted
under the rules of such exchange or (ii) to secure designation of all such
Registrable Securities covered by such registration statement as a NASDAQ
"national market system

                                      122
<PAGE>

security" within the meaning of Rule 1 lAa2-1 of the Commission or, failing
that, to secure NASDAQ authorization for such Registrable Securities.

               (d) The Company shall keep effective and maintain any
registration, qualification, approval or listing specified in this Section 15
for a period of 180 days plus the term of any lock-up or until the holders have
completed the distribution described in the registration statement, whichever
occurs first, and from time to time shall amend or supplement the prospectus
used in connection therewith to the extent necessary in order to comply with
applicable law. All expenses, disbursements and fees in connection with any
action to be taken hereunder (including, without limitation, all registration
and filing fees, fees and expenses of compliance with securities or blue sky
laws, printing expenses and fees and expenses of counsel for the Company and its
independent certified public accountants and all reasonable fees and expenses of
the Investor and one Investor's counsel and appropriate local counsel (all such
expenses being herein called "Registration Expenses") will be borne by the
Company; provided that in no event shall Registration Expenses include any
underwriting discounts, sales commissions or similar fees or transfer taxes
attributable to the sale of Registrable Securities.

               (e) The rights to cause the Company to register securities
granted to a holder under this Section 15 may be transferred or assigned by a
holder only to (i) an affiliate of such holder or (ii) a transferee or assignee
of not less than 20% of such holder's Registrable Securities (as determined on
the date of this Warrant and subject to subsequent adjustments for stock splits,
stock dividends, reverse stock splits, and the like), provided that, in either
case (A) the Company is given written notice at the time of or within 30 days
after transfer or assignment, stating the name and address of the transferee or
assignee and identifying the securities with respect to which such registration
rights are being transferred or assigned, (B) the transferee or assignee of such
rights assumes in writing the obligations of such holder under this Section 15
and (C) in the reasonable opinion of the Company, the transferee is neither a
competitor to the Company nor a party who is demonstrably hostile to the
Company.

               (f) If requested by the Company and an underwriter of Common
Stock (or other securities) of the Company, an Investor shall not sell or
otherwise transfer or dispose of any Common Stock (or other securities) of the
Company held by such Investor (other than those included in the registration)
during a period not to exceed 180 days following the effective date of a
registration statement of the Company filed under the Securities Act, provided
that all officers and directors of the Company and holders of at least five
percent of the Company's voting securities are bound by and have entered into
similar agreements. The Company may impose stop-transfer instructions with
respect to the shares of Common Stock (or other securities) subject to the
foregoing restriction until the end of such 180 day period.

               (g) The holders under this Warrant agree that, upon receipt of
any notice from the Company of the existence of any state of facts or the
occurrence of any event (including, without limitation, pending negotiations
relating to, or the consummation of, a transaction or the occurrence of any
event which, in the reasonable opinion of the Company, might require additional
disclosure of material, non-public information by the Company in any
registration statement provided for in this Warrant as to which the Company
believes in good faith that it has a bona fide business purpose for preserving
confidentiality or which renders the Company unable to comply with the published
rules and regulations of the Commission promulgated under the

                                      123
<PAGE>

Securities Act or the Exchange Act, as in effect at any relevant time) which
might reasonably result in (A) such registration statement, any amendment or
post-effective amendment thereto, or any document incorporated therein by
reference containing an untrue statement of a material fact or omitting to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (B) the prospectus issued under such
registration statement, any prospectus supplement, or any document incorporated
therein by reference including an untrue statement of material fact or omitting
to state a material fact necessary in order the make the statements therein, in
light of the circumstances under which they were made, not misleading, the
holders will forthwith discontinue disposition of the Registrable Securities
pursuant to such registration statement for a period which is the shorter of (i)
30 calendar days from the Company's notice to such holders or (ii) until the
holders receive copies of prospectus supplements or amendments prepared by or on
behalf of the Company. If so directed by the Company, the holders will deliver
to the Company all copies in their possession of the prospectus covering such
Registrable Securities current at the time of receipt of such notice. The
Company shall not be permitted to require the suspension of the disposition of
Registrable Securities for a period in excess of 90 calendar days in any 12
month period.

          (h) The rights to request registration of any Company securities
pursuant to this Section 15 shall terminate as to any holder who holds
Registrable Securities upon the earlier of (i) when a holder holds one percent
or less of the Company's Common Stock on an as-converted basis; (ii) when all of
a holder's Registrable Securities may be sold during a single three-month period
under Rule 144; (iii) when a holder's Registrable Securities may be transferred
under Rule 144(k) unless such holder later becomes an affiliate of the Company
(as defined in Rule 144), in which case such holder's rights to request
registration shall be revived until such holder's rights otherwise terminate
under this subsection (h); and (iv) three years after the closing of a firm
commitment underwritten public offering pursuant to an effective registration
statement under the Securities Act covering the offer and sale of the Company's
Common Stock at a price per share of not less than $10.00 (as adjusted for stock
splits, dividends, combinations and the like) and an aggregate offering price to
the public of not less than $20,000,000.  Such three-year period shall not
include any period of time during which adequate current public information, as
defined in Rule 144(c) promulgated under the Securities Act, is not available
with respect to the Company.

          (i) The Company hereby indemnifies, to the fullest extent permitted by
law, the Investor or each person, if any, who controls Investor within the
meaning of Section 15 of the Act, and the directors, officers, employees, agents
and representatives of each of them, against all losses, claims, damages,
liabilities, costs and expenses (including, without limitation, fees and
expenses of counsel), as incurred, arising out of, relating to, or caused by any
untrue statement or alleged untrue statement of a material fact contained in any
registration statement, prospectus or preliminary prospectus (or any amendment
or supplement thereto) or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or expenses are caused by any untrue statement contained in, or
omission from, information furnished in writing to the Company by Investor
expressly for use therein.  In connection with any registration statement in
which Investor is participating, Investor will furnish to the Company in writing
such information as shall reasonably be requested by the Company for use in any
such registration statement or prospectus and will indemnify, to the extent
permitted by

                                      124
<PAGE>

law, the Company, its directors and officers and each person, if any, who
controls the Company within the meaning of the Act against any losses, claims,
damages, liabilities and expenses resulting from any untrue statement or alleged
untrue statement of a material fact or any omission or alleged omission of a
material fact required to be stated in the registration statement or prospectus
or necessary to make the statements therein not misleading, but only to the
extent that such untrue statement of a material fact is contained in, or such
material fact is omitted from, information so furnished in writing by such
Investor expressly for use therein.

          (j) For purposes of this Section 15, the Investor shall include any
transferee of the Investor if such transfer is made in accordance herewith.

     16.  Remedies. The Company acknowledges and agrees that irreparable harm,
          --------
for which there may be no adequate remedy at law and for which the ascertainment
of damages would be difficult, would occur in the event any of the provisions of
this Warrant were not performed in accordance with its specific terms or were
otherwise breached. The Company accordingly agrees that the holders shall be
entitled to an injunction or injunctions to prevent breaches of the provisions
of this Warrant and to enforce specifically the terms and provisions hereof in
any court of the United States or any state thereof having jurisdiction, in each
instance without being required to post bond or other security and in addition
to, and without having to prove the inadequacy of other remedies at law.

     17.  Securities Matters.
          ------------------

     At such time as the Company becomes subject to the reporting requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and at
all times thereafter, the Company agrees to deliver to the Investor all such
reports, information and other documents as it shall be required to file with
the Commission pursuant to Section 13 or 15(d) of the Exchange Act within 15-
days after the date it is required to file such reports with the Commission.
Prior to such time as the Company becomes subject to the reporting requirements
of the Exchange Act, and in order to make available the benefits of certain
rules and regulations of the Commission which may at any time permit the sale of
the shares of Common Stock issuable upon exercise of the Warrant to the public
without registration, the Company agrees to deliver to the Investor all such
reports, information and other documents as it may be required to provide to any
lender or other creditor. From and after the time the Company files a
registration statement with the Commission with respect to the Warrants or the
shares of Common Stock issuable thereunder, the Company shall file such
information with the Commission; provided, that the Company shall not be in
default of the provisions of this Section 17 for any failure to file reports
with the Commission solely by refusal by the Commission to accept the same for
filing.

                  [Remainder of page intentionally left blank]

                                      125
<PAGE>

 [Warrant for the Purchase of Shares of Common Stock of Paradigm Genetics Inc.]

                                    PARADIGM GENETICS INC.,
                                    a North Carolina corporation



Address: 104 Alexander Drive        By:  ___________________________________
Building 2                          Name:
Research Triangle Park, NC 27709    Title:

                                    Dated:

ACCEPTED AND AGREED:

ARE-104 ALEXANDER ROAD, LLC,
a Delaware limited liability company

     By:  Alexandria Real Estate Equities, L.P.,
          a Delaware limited partnership,
          Its Managing Member


          By:  ARE-QRS Corp.,
          a Maryland corporation,
          Its General Partner


          By:  ________________________
          Name:
          Title:
          Dated:

                                      126
<PAGE>

                                  SUBSCRIPTION
                                  ------------

Paradigm Genetics Inc.
104 Alexander Drive
Building 2
Research Triangle Park, North Carolina 27709

Ladies and Gentlemen:

     The undersigned, ____________________, hereby elects to purchase, pursuant
to the provisions of the Warrant dated ________ , 1999 held by the undersigned,
_________shares of the Common Stock of Paradigm Genetics Inc., a North Carolina
corporation, and tenders herewith payment of the purchase price of such shares
in full.

     In exercising its rights to purchase such Common Stock, the undersigned
hereby confirms the investment representations made in Section 7.

Dated: ____________, ________.



                                _____________________________________
                                By  _________________________________


                   Address:     _____________________________________
                                _____________________________________

                                      127
<PAGE>

                             [FORM OF ASSIGNMENT]

The undersigned hereby assigns this Warrant to

_______________________________________________________________________________

_______________________________________________________________________________

_______________________________________________________________________________
             (Print or type name, address and zip code of assignee)

Please insert Social Security or other
identifying number of assignee

_____________________________

and irrevocably appoints ___________________ as agent to transfer this Warrant
on the books of the Company.  The agent may substitute another to act for him or
it.

Dated:___________________       Signed:_____________________

______________________________________________________________________________
(Sign exactly as name appears on the front of this Warrant)

Dated:___________________       Signed:_____________________
                                Name:_______________________
                                Title:______________________

                                      128
<PAGE>

                                   EXHIBIT N

                           GREENHOUSE LOAN DOCUMENTS
                           -------------------------

                             [See Following Pages]

                                      129
<PAGE>

                          LOAN AND SECURITY AGREEMENT
                          ---------------------------

     This LOAN AND SECURITY AGREEMENT (this "Agreement") is made as of
______________,1999, by and between ARE-104 ALEXANDER ROAD, LLC, a Delaware
limited liability company ("Lender"), and PARADIGM GENETICS, INC., a North
Carolina corporation ("Borrower"):

                                    RECITALS
                                    --------

     A.  Lender has entered into a Ground Lease Agreement dated as of July
____,1999 (the "Ground Lease"), with Research Triangle Service Center, Inc., a
North Carolina corporation ("Ground Lessor"), pursuant to which Lender has
leased approximately 6.084 acres of land more fully described in Exhibit A (the
                                                                 ---------
"Property").  The Property is part of the Triangle Park Research Center located
within Research Triangle Park ("RTP"), Durham County, North Carolina.

     B.  Lender and Borrower have entered into a Lease Agreement dated as of
July   , 1999 (the "Lease"), pursuant to which Tenant is leasing the Property
from Lender and Lender is causing or permitting certain improvements to be
constructed on the Property for Tenant's use and occupancy, including, but not
limited to, a first-class scientific research and development building
containing approximately 53,750 rentable square feet (the "Building") and a
commercial greenhouse, headhouse, and growth room facility containing
approximately 5,000 rentable square feet (the "Greenhouse").  The Property,
together with the Building and the Greenhouse, shall be collectively referred to
herein as the "Project".

     C.  The agreements of the parties with respect to the design, permitting,
and construction of the Greenhouse is contained in a Work Letter dated as of
July  , 1999, that is attached to and made a part of the Lease (the "Work
Letter").  In accordance with the Work Letter, (i) Borrower has the right to
select, retain, and direct (subject to the approval rights given to Lender in
the Work Letter) the "Architect" (as defined in Section 1.03 below), and (ii)
                                                ------------
Lender has the right to select, retain, and direct (subject to the approval
rights given to Borrower in the Work Letter), the "Contractor" (as defined in
Section 1.11 below).
------------

     D.  In accordance with Section 42 of the Lease, Borrower desires to borrow
                            ----------
from Lender, and Lender is willing to loan to Borrower, a loan in the maximum
principal amount of $1,200,000.00 (the "Loan") to be used solely for the
construction of the Greenhouse, upon the terms set forth herein and in the Work
Letter.

     NOW THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

                                   ARTICLE I

                              GENERAL DEFINITIONS
                              -------------------

     When used herein, the following initially-capitalized terms shall have the
following meanings:

                                      130
<PAGE>

     1.01  "Affiliate" means, with respect to any Person, any other Person that
controls, is controlled by, or is under common control with the Person in
question.  For the purposes of the foregoing definition, "controls" (and its
correlative terms "controlled by" and "under common control with") means
possession by the applicable Person of the power to direct or cause the
direction of the management and policies thereof, whether through the ownership
of voting securities, by contract, or otherwise.

     1.02  "Agreement" means this Loan and Security Agreement, together with all
supplements, amendments, and modifications hereto and all extensions and
renewals hereof.

     1.03  "Architect" means (i) Bartholomew Associates, Inc. or (ii) such other
architect for the design of the Greenhouse as may be selected by Borrower and
approved by Lender in accordance with the terms and conditions of the Work
Letter.

     1.04  "Assignment of Architect's Agreement" is defined in Section 3.01.
                                                               ------------

     1.05  "Attorneys' Fees", "Attorneys' Fees and Costs", "attorneys' fees",
and "attorneys' fees and costs" (whether or not modified by the word
"reasonable") mean the actual fees and expenses (without statutory presumption)
incurred by the applicable parties to the Loan Documents for legal services,
which may include, without limitation, (i) fees, costs, and expenses of any
engineers, accountants, appraisers, consultants, brokers, and other
professionals or experts retained or consulted by the parties, and other costs
and expenses of investigation or analysis incurred by the parties in support of
their legal position, and (ii) all such fees, costs, and expenses incurred in
any aspect of the legal process, whether out-of-court negotiations, mediation,
arbitration, commencement of suit, discovery, law and motion, trial, appellate
proceedings, post-judgment proceedings to collect any judgment, or any action or
participation in, or in connection with, any insolvency, bankruptcy,
reorganization, arrangement, or other similar case or proceeding, including any
case or proceeding under Chapter 7, 11, or 13 of the Bankruptcy Code, 11 U.S.C.
Section 101 et seq., or any successor statutes, involving Borrower or any of the
            -- ---
Principals that in any way affect the exercise by Lender of its rights and
remedies hereunder, under any of the other Loan Documents, at law, or in equity.
The recovery of post-judgment attorneys' fees and costs is separate and several
and shall survive the merger of the applicable Loan Documents into any judgment.

     1.06  "Bankruptcy Code" means Title 11 of the U.S. Code, as applicable, or
any similar federal or state laws for the relief of debtors, each as hereafter
amended.

     1.07  "Business Day" means any day other than a Saturday, a Sunday, a legal
holiday under the laws of the State of North Carolina or a day on which
commercial banks in such state are authorized or required by law or other
governmental action to be closed.

     1.08  "Cash Collateral" means the sum of $100,000.00 (or approximately
equal to the estimated total of 6 Monthly Amortization Installments), which
Borrower shall deposit in an interest bearing account (the "Account") maintained
with an FDIC-insured financial institution satisfactory to Lender, in Lender's
reasonable discretion.  Borrower shall grant Lender a security interest in and
to all-funds held in the Account from time to time, and Borrower shall execute
and deliver such further documents or instruments that may be necessary or
appropriate to

                                      131
<PAGE>

perfect or maintain such security interest or to ensure that the financial
institution at which the Account is maintained is subject to such security
interest. No funds may be disbursed from the Account without joint instructions
from Borrower and Lender.

     1.09  "Closing Date" means the date of the recordation of the Fixture
Filing in the Public Registry of the County in which the Property is situated,
but in no event later than the Termination Date.

     1.10  "Collateral" is defined in the Fixture Filing.

     1.11  "Contractor" means (i) Miller Building Corporation or (ii) such other
general contractor for the construction of the Greenhouse as may be selected by
Borrower and by Lender in accordance with the terms and conditions of the Work
Letter.

     1.12  "Contractual Obligation" as applied to any Person means any provision
of any instrument, document, or security issued by that Person or of any
indenture, mortgage, deed of trust, contract, undertaking, agreement, or other
instrument to which that Person is a party or by which any of its properties is
bound or to which it or any of its properties is subject.

     1.13  "Default Interest Rate" is defined in the Note.

     1.14  "Environmental Laws" means any and all present and future federal,
state, and local laws, ordinances, regulations, policies, and any other
requirements of any Governmental Agency relating to health, safety, the
environment, or to any Hazardous Substances, including without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
(CERCLA), the Resource Conservation Recovery Act (RCRA), the Hazardous Materials
Transportation Act, the Toxic Substance Control Act, the Endangered Species Act,
the Clean Water Act, and the Occupational Safety and Health Act, each as
hereafter amended from time to time, and the present and future rules, and
regulations promulgated under any of the foregoing.

     1.15  "Event of Default" means any of the events specified in Section 8.01.
                                                                   ------------

     1.16  "Fixture Filing" means a Fixture Filing (or Form UCC-1 Financing
Statement, as Lender may determine) of even date herewith executed by Borrower,
as debtor, in favor of Lender, as secured party, to be recorded on the Closing
Date in the Public Registry of the County in which the Property is situated.

     1.17  "Formation Documents" means (a) as to any corporation, its articles
of incorporation and bylaws, (b) as to any limited partnership, its certificate
of limited partnership and partnership agreement, (c) as to any general
partnership or joint venture, its assumed name certificate and partnership
agreement, (d) as to any limited liability company, its articles or certificate
of organization and operating agreement, and (e) as to any trust, its trust
agreement and a certification of the current trustees thereof, each of the
foregoing together with all supplements, amendments and modifications.

     1.18  "General Partner" or "general partner" means the general partners of
the partnership in question, together with any constituent general partners of
such general partners.

                                      132
<PAGE>

     1.19  "Governmental Agency" means any federal, state, municipal or other
governmental or quasi-governmental court, agency, authority or district.

     1.20  "Greenhouse Documents" means (a) all agreements now or hereafter in
effect with any contractor, architect, or engineer in connection with the
Greenhouse, including, without limitation, any design architect, landscape
architect, civil engineer, electrical engineer, environmental engineer, soils
engineer, or mechanical engineer; (b) all other agreements now or hereafter in
effect with any property manager or broker with respect to the management or
operation of the Greenhouse; (c) all as-built plans and specifications and
surveys for the Greenhouse; (d) all Permits; and (e) all renewals,
substitutions, extensions, modifications, or replacements of any of the
foregoing.

     1.21  "Hazardous Substances" means (a) any chemical, compound, material,
mixture or substance that is now or hereafter defined or listed in, or otherwise
classified pursuant to, any Environmental Laws as a "hazardous substance",
"hazardous material", "hazardous waste", "extremely hazardous waste", "acutely
hazardous waste", "radioactive waste", "infectious waste", "biohazardous waste",
"toxic substance", "pollutant", "toxic pollutant", "contaminant" as well as any
formulation not mentioned herein intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity, "EP
toxicity", or "TCLP toxicity"; (b) petroleum, natural gas, natural gas liquids,
liquefied natural gas, synthetic gas usable for fuel (or mixtures of natural gas
and such synthetic gas) and ash produced by a resource recovery facility
utilizing a municipal solid waste stream, and drilling fluids, produced waters
and other wastes associated with the exploration, development or production of
crude oil, natural gas, or geothermal resources; (c) asbestos in any form; (d)
urea formaldehyde foam insulation; (e) polychlorinated biphenyls (PCBs); (f)
radon; and (g) any other chemical, material, or substance exposure to which is
limited or regulated by any Governmental Agency because of its quantity,
concentration, or physical or chemical characteristics, or that poses a
significant present or potential hazard to human health or safety or to the
environment if released into the workplace or the environment.  "Hazardous
Substances" shall not include ordinary office supplies and repair, maintenance,
and cleaning supplies used or maintained in connection with the Greenhouse in
reasonable and necessary quantities and used in substantial accordance with
(and, if necessary to avoid the imposition of a fine or penalty or the creation
of a Lien or other rights, in strict accordance with) all Environmental Laws.

     1.22  "Improvements" is defined in the Fixture Filing.

     1.23  "Indemnitees" means, collectively and individually, Lender, its
Affiliates and its and their directors, officers, agents, employees, successors
and assigns.

     1.24  "Laws" means all federal, state, county, municipal, and other
governmental and quasi-governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees, and injunctions affecting the development,
operation, ownership, occupancy, or use of any portion of the Greenhouse,
whether now or hereafter enacted and in force including, without limitation, the
Americans With Disabilities Act, 42 U.S.C.  (S)(S) 12101-12213 (1991) and all
Environmental Laws, any zoning or other land use entitlements, and all Permits.

                                      133
<PAGE>

     1.25  "Lien" means any mortgage, deed of trust, pledge, security interest,
encumbrance, lien, charge, or claim of any kind (including any agreement to give
any of the foregoing, any conditional sale or other title retention agreement,
any lease in the nature thereof, and/or the filing of any fixture filing or
financing statement under the Uniform Commercial Code of any jurisdiction) with
respect to any portion of or interest in the Collateral or the Cash Collateral.

     1.26  "Loan Amount" means $1,200,000.00.

     1.27  "Loan Documents" means the documents described in Section 3.01, and
                                                             ------------
all other documents securing, or executed in connection with, the Loan, together
with all renewals, substitutions, extensions, modifications, or replacements
thereof.

     1.28  "Loan Year" shall mean the 12-months period commencing on the first
day of the month following the Closing Date and each 12-months period
thereafter.

     1.29  "Maturity Date" means the date upon which the entire principal amount
of the Loan, together with all other amounts owing to Lender under the Loan
Documents, shall be due and payable, which date shall be 1st calendar day of the
1st calendar month after the 10th anniversary of the Closing Date.

     1.30  "Note" means that certain Secured Promissory Note of even date
herewith that evidences the Loan, and any and all modifications, extensions,
renewals, and replacements thereof, which Note shall be in a principal amount
equal to the Loan Amount and executed by Borrower, as maker, in favor of Lender,
as holder.

     1.31  "Permits" means all permits, licenses, franchises, approvals,
variances, and land use entitlements necessary for the occupancy, operation,
ownership, and use of the Greenhouse.

     1.32  "Person" means and includes natural persons, corporations, limited
liability companies, limited liability partnerships, limited partnerships,
general partnerships, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts, real
estate investment trusts, or other organizations, whether or not legal entities,
and governments and agencies and political subdivisions thereof.

     1.33  "Potential Default" means a condition or event that, with the giving
of notice or passage of time, or both, would constitute an Event of Default
under any of the Loan Documents.

     1.34  "Principals" means individually and collectively Borrower and its
major shareholders, as applicable, and each of such parties' constituent general
partners, managing members, and major shareholders, as applicable.

     1.35  "Related Parties" means Borrower, Principals, any Affiliate of
Borrower or Principals, any partnership of which Borrower or any Principal is a
general partner, and any limited liability company of which Borrower or any
Principal is a manager or managing member.

     1.36  "Secured Obligations" is defined in the Fixture Filing.

                                      134
<PAGE>

     1.37  "Tax Identification Number" means Borrower's employer identification
number or social security number, which is _______________.

     1.38  "Termination Date" means the date before which all of the conditions
precedent set forth in Section 3.01 must be satisfied and the Closing Date for
                       ------------
the Loan must occur, which date shall be ___________________, 1999.

     1.39  "Underwriting Information" means all financial statements and other
written information submitted to Lender in connection with the negotiations for
the Loan and Lender's decision to make the Loan.

                                  ARTICLE II

                                  LOAN TERMS
                                  ----------

     2.01  Loan and Disbursements of Loan Proceeds.  Subject to the terms and
           ---------------------------------------
conditions of this Agreement, and in reliance upon the representations and
warranties of Borrower set forth in the Loan Documents, Lender agrees to make
the Loan to Borrower.  Lender shall disburse the Loan proceeds as provided in
Section 2.06 of the Note and Sections 7.6, 7.7, and 7.8 of the Work Letter.
------------                 -------- ---  ---      ---

     2.02  Evidence of Indebtedness and Maturity.  Borrower shall execute the
           -------------------------------------
Note and deliver the same to Lender on or before the Closing Date.  Borrower
agrees to repay the indebtedness evidenced by the Note in accordance with the
terms thereof and the terms hereof.  The outstanding principal balance of the
Loan, together with accrued and unpaid interest thereon and all other amounts
payable by Borrower with respect to the Loan under the Loan Documents, shall be
due and payable on the Maturity Date.

     2.03  Interest Rate.  The Loan shall bear interest at 11.50% per annum, as
           -------------
specified in the Note.

     2.04  Recourse.  The provisions of Section 4.11 of the Note, regarding the
           --------                     ------------
limitations on Lender's recourse under the Loan Documents with respect to
Borrower's obligations under the Loan, are hereby incorporated herein as if set
forth in full herein with respect to such obligations.

     2.05  Prepayment.  Borrower may prepay the outstanding principal balance of
           ----------
Loan in whole or in part at any time in accordance with the provisions of the
Note.

                                  ARTICLE III

                              CONDITIONS TO LOAN
                              ------------------

     3.01  Condition Precedent to Closing of Loan.  As a condition precedent to
           --------------------------------------
Lender's obligation to close the Loan and disburse any Loan proceeds, Borrower
must satisfy and fulfill each of the following conditions precedent to closing,
to the satisfaction of Lender, on or before the Closing Date:

                                      135
<PAGE>

     A.   Loan Documents.  Borrower shall deliver to Lender the following
documents, each duly executed and acknowledged by a notary public where
necessary, and in form and substance satisfactory to Lender:

          (i) This Agreement;

          (ii) The Note;

          (iii) The Fixture Filing;

          (iv) A North Carolina UCC-1 Financing Statement relating to the
Collateral and the Cash Collateral, to be filed with the North Carolina
Secretary of State, together with UCC-1 Financing Statements for recordation in
such other counties and States as may be reasonably required by Lender; and

          (v) An assignment of all agreements between Borrower, any Principal or
any agent or nominee thereof, and each Architect, executed by Borrower and each
Architect (the "Assignment of Architect's Agreement").

     B.   Truth of Representations and Warranties.  The representations and
warranties contained herein and in the other Loan Documents shall be true,
correct, and complete in all material respects on the Closing Date.

     C.   No Default.  As of the Closing Date, no event shall have occurred or
shall result from the funding of the Loan that would constitute a Potential
Default or an Event of Default.

     3.02 Termination of Agreement.  Lender's obligation to make the Loan and
          ------------------------
perform any of its other obligations under the Loan Documents shall terminate
unless all of the conditions precedent set forth in Section 3.01 have been
                                                    ------------
satisfied, and the Closing Date for the Loan has occurred, on or before the
Termination Date.

                                  ARTICLE IV

                      ASSIGNMENT OF GREENHOUSE DOCUMENTS
                      ----------------------------------

     4.01 Assignment of Documents.
          -----------------------

          A.  As security for the payment and performance of the Secured
Obligations, Borrower, subject to Section 4.01(B) below, hereby grants, conveys,
                                  ---------------
assigns, and transfers to Lender all of Borrower's rights and interests under
the Greenhouse Documents, together with the immediate and continuing right to
collect and receive all sums that are now or hereafter due to Borrower
thereunder or in connection therewith, and all of Borrower's rights to receive
the proceeds of any insurance, indemnity, warranty, or guaranty with respect to
any of the Greenhouse Documents.  The parties expressly acknowledge and agree
that Lender does not hereby assume any of Borrower's obligations with respect to
any of the Greenhouse Documents, including, without limitation, any obligation
to pay for any work done pursuant thereto, unless Lender expressly assumes such
obligations in accordance with Section 4.01(B).  At Lender's
                               ---------------

                                      136
<PAGE>

request from time to time, Borrower shall deliver copies of the Greenhouse
Documents to Lender as well as any consents that are required in connection with
this assignment.

          B.  Lender shall not exercise its rights under this Section 4.01 until
                                                              ------------
the occurrence of an Event of Default.  Upon the occurrence of an Event of
Default under any of the Loan Documents, Lender, at its option in its sole
discretion and without any obligation, may exercise any or all of its rights and
remedies under Section 8.04 and/or upon written notice to Borrower and the other
               ------------
parties to any or all of the Greenhouse Documents, exercise or enforce any or
all of the rights and remedies granted to Borrower under such Greenhouse
Documents as if Lender had been a party to or recipient of such Greenhouse
Documents (and Borrower hereby irrevocably constitutes and appoints Lender as
its attorney-in-fact, which power is coupled with an interest, to do so).  Upon
giving such notice Lender may elect to assume all of the obligations of Borrower
thereafter accruing under any or all of the Greenhouse Documents; provided that
in no event shall Lender be responsible for any default by Borrower or any other
party occurring prior to any election by Lender to assume such obligations.

          C.  The acceptance by Lender of the assignment contained in this
Section 4.01 and the exercise of any rights granted to Lender hereunder and
------------
under Section 8.04 shall not obligate Lender, prior to Lender's assumption of
      ------------
the obligations under the Greenhouse Documents as provided in Section 4.01(B),
                                                              ---------------
to assume any obligation or liability under the Greenhouse Documents, to expend
any money or incur any expense in connection with the Greenhouse Documents, or
to perform any undertaking or covenant under any of the Greenhouse Documents.

     4.02  Performance Under Greenhouse Documents.  At all times prior to the
           --------------------------------------
date if ever, that Lender assumes the obligations under the Greenhouse Documents
(as provided in Section 4.01 (B) above), Borrower shall perform and discharge
                ----------------
each of its obligations under the Greenhouse Documents, diligently enforce its
rights under the Greenhouse Documents unless otherwise agreed by Lender, and, at
Borrower's sole cost and expense, appear in and defend Lender in any action or
proceeding in any way related to any of the Greenhouse Documents.  Borrower,
within 10 days after demand by Lender, shall pay all reasonable costs and
expenses incurred by Lender in connection with any such action or proceeding,
including, without limitation, reasonable attorneys' fees and costs.

     4.03  Indemnification.  Borrower hereby indemnifies and agrees to defend
           ---------------
and hold the Indemnitees harmless from all expenses, losses, claims, damages, or
liabilities that the Indemnitees incur under any of the Greenhouse Documents
under or by reason of the assignment set forth in Section 4.01 or by reason of
                                                  ------------
any alleged obligation or undertaking on Lender's part to perform or discharge
any covenants or agreements contained in any of the Greenhouse Documents;
provided that such indemnity shall not apply to expenses, losses, claims,
--------
damages, or liabilities to the extent the same arise from an Indemnitee's gross
negligence or willful misconduct or arise after the date, if ever, that Lender
assumes the obligations under the Greenhouse Documents as provided in Section
                                                                      -------
4.01(B).
-------

                                      137
<PAGE>

                                   ARTICLE V

                              SECURITY AGREEMENT
                              ------------------

     5.01  Grant of Security Interest.  As security for the payment and
           --------------------------
performance of the Secured Obligations, Borrower hereby assigns, transfers, and
grants to Lender, and there is hereby created in favor of Lender, a security
interest under the North Carolina Uniform Commercial Code in and to the
Collateral and the Cash Collateral, whether now owned or hereafter acquired, and
in all proceeds thereof (and proceeds of proceeds) in whatever form.  This
Agreement shall constitute a security agreement pursuant to the North Carolina
Uniform Commercial Code with respect to the Collateral, the Cash Collateral, and
the proceeds of either, with Borrower the "debtor" and Lender the "secured
party" as such terms are used therein.

     5.02  Representations, Agreements, and Covenants Regarding Collateral.  In
           ---------------------------------------------------------------
order to induce Lender to enter into this Agreement and make the Loan, Borrower
represents, warrants, and covenants as follows:

          A.  Except for the security interest in favor of Lender, Borrower is,
and as to any of the Collateral acquired after the date hereof will be, the sole
owner of the Collateral, free from any adverse Lien.  Upon gaining knowledge
thereof, Borrower shall promptly notify Lender of and, except as may be
expressly permitted otherwise hereunder, shall defend the Collateral and the
Cash Collateral against all claims and demands of all persons at any time
claiming any interest therein adverse to the interest of Borrower or Lender
therein.

          B.  Borrower will keep the Collateral in good condition and repair,
and will not misuse, abuse, allow to deteriorate, waste, or destroy the
Collateral or any part thereof, except for ordinary wear and tear resulting from
normal and expected use in the ordinary course of Borrower's business, which
shall be promptly replaced by Borrower (unless obsolete) with property of
similar nature and of equal or greater value.

          C.  Borrower, without the prior written consent of Lender, will not
sell, offer to sell or otherwise transfer, exchange, or dispose of the
Collateral or any interest therein, unless in the normal course of business such
Collateral is being replaced by collateral of similar nature and quality.  If
the Collateral or any part thereof is sold, transferred, exchanged, or otherwise
disposed of (either with or without the written consent of Lender), the security
interest of Lender shall extend to the proceeds of such sale, transfer,
exchange, or other disposition and, at Lender's request, Borrower will transfer
such proceeds to Lender.

          D.  The Collateral will be kept on or at the Property and Borrower,
without the prior written consent of Lender, will not remove such Collateral
therefrom except such portions or items of Collateral that are consumed or worn
out in ordinary usage, which shall be promptly replaced by Borrower as provided
in Section 5.02(B).
   ---------------

          E.  Borrower will immediately notify Lender in writing of any change
in its place of business or the adoption or change of any trade name or
fictitious business name, and, within 10 Business Days after Lender's request,
will execute any additional financing statements or other certificates
reasonably requested by Lender to reflect such change.

                                      138
<PAGE>

          F.  Lender may examine and inspect the Collateral at any reasonable
time, wherever located, upon reasonable prior notice to Borrower (except in the
event of an emergency, in which event prior notice shall not be required).

     5.03  Affixed Collateral.  The inclusion in Section 5.01 of any
           ------------------                    ------------
Improvements that may now be or hereafter become affixed to or in any manner
attached to or incorporated in any portion of the Greenhouse shall be without
prejudice to Lender's right under the terms and conditions of the Lease to claim
that such Improvements are or have become a part of or an accession to the
Project and, therefore, subject to the terms and conditions of the Lease
regarding the ownership thereof.  This Section is not intended to modify any
terms or conditions of the Lease.

     5.04  Further Security Agreements.  Borrower agrees to take such actions
           ---------------------------
and, within 10 days after Lender's request, to execute, deliver, and file and/or
record such documents, agreements, and financing statements or fixture filings
as may be reasonably necessary to create, evidence, and/or perfect the security
interest set forth in Section 5.01,to establish the priority thereof, and/or to
                      ------------
carry out the intent and purpose of this Article 5.
                                         ---------

                                  ARTICLE VI

                   BORROWER'S REPRESENTATIONS AND WARRANTIES
                   -----------------------------------------

     As an inducement to Lender to execute this Agreement and make the Loan,
Borrower represents and warrants to Lender as follows.

     6.01  Organization, Power, Good Standing, and Business.  Borrower is a
           ------------------------------------------------
corporation duly formed, validly existing and in good standing under the Laws of
the State of North Carolina.  Borrower has the full corporate power and
authority to own and operate its properties, to carry on its business as now
conducted and as contemplated in the Lease, to enter into each Loan Document and
the Environmental Indemnity, and to carry out the transactions contemplated
hereby and thereby.  Borrower does not do business under any trade name or
fictitious business name other than " ".  Borrower has delivered to Lender true,
correct, and complete copies of its Formation Documents and such Formation
Documents have not been amended or modified except pursuant to agreements
delivered to Lender prior to the date hereof.

     6.02  Authorization of Borrowing, Etc.
           --------------------------------

     A.  Authorization of Borrowing.  The execution, delivery, and performance
of the Loan Documents and the Environmental Indemnity and the issuance,
delivery, and payment of the Note have been duly authorized by all necessary
corporate action of Borrower.

     B.  No Conflict.  The execution, delivery, and performance by Borrower of
each Loan Document and the Environmental Indemnity does not and will not (i)
violate in any material respect any Law applicable to Borrower, Borrower's
Formation Documents, or any order, judgment, or decree of any court or other
Governmental Agency binding on Borrower; (ii) conflict with, result in a
material breach of, or constitute (with the giving of notice or the passage of
time or both) a material default under any Contractual Obligation of Borrower;
(iii) result in or require the creation or imposition of any Lien of any nature
on Borrower's properties or assets

                                      139
<PAGE>

other than the Liens in favor of Lender under the Loan Documents; or (iv)
require any approval or consent of any Person under any Contractual Obligation
of Borrower.

     C.  Governmental Consents.  The execution, delivery, and performance by
Borrower of each applicable Loan Document and the Environmental Indemnity does
not and will not require any registration with, consent or approval of, notice
to, or other action to, with, or by, any Governmental Agency or other Person.

     D.  Binding Obligation.  The Note and the other Loan Documents are the
legally valid and binding obligations of Borrower, enforceable against Borrower
in accordance with their respective terms, except as enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating
to or limiting creditors' rights generally.  The Environmental Indemnity is the
legally valid and binding obligation of each of the parties thereto, enforceable
against such parties in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors' rights generally.

     6.03  Actions.  There is no action, suit, proceeding, or arbitration,
           -------
before or by any Governmental Agency or other Person, pending or, to Borrower's
best knowledge, threatened against or affecting Borrower, any of the Principals,
or any properties or rights of Borrower or any of the Principals, and there are
no outstanding judgments against any of the Related Parties or their property
that might materially adversely affect Lender's rights or remedies under the
Loan Documents or the Environmental Indemnity or the business, assets,
operations, or financial condition of any Borrower or its ability to perform its
obligations under the Loan Documents or the Environmental Indemnity.  As of the
date hereof, there are no outstanding judgments against Borrower, any of the
Principals, or their property in excess of $25,000 as to any individual judgment
or $50,000 in the aggregate.

     6.04  Financial Position.
           ------------------

     A.  Financial Information.  The Underwriting Information and all financial
statements and financial data delivered to Lender in connection with the Loan
and/or relating to Borrower and the Principals are true, correct, and complete
in all material respects and accurately present the financial position of such
parties as of the date thereof.  No material adverse change has occurred in the
financial position disclosed by the Underwriting Information or in any other
financial statements or financial data delivered to Lender.

        B.  Bankruptcy and Insolvency.  Neither Borrower nor any of the Related
Parties has filed or been the subject of any bankruptcy, insolvency,
reorganization, dissolution, or similar proceeding or any proceeding for the
appointment of a receiver or trustee for all or any substantial part of their
respective property.  Neither Borrower nor any of the Related Parties has
admitted in writing its inability to pay its debts when due, made an assignment
for the benefit of creditors, or taken other similar action.

        C.  Other Borrowing.  Except for the Loan, no borrowings have been made
by Borrower that are or will be secured by any portion of the Greenhouse or that
might give rise to any Lien other than the Liens created by the Loan Documents.

                                      140
<PAGE>

     6.05  Liens.  Borrower is the sole tenant of the Project and the sole owner
           -----
of the Collateral free from any adverse Liens, except for Liens in favor of
Lender.  No previous assignment, sale, pledge, encumbrance, or other
hypothecation of the Greenhouse Documents has been made (except for pledges and
encumbrances that have been released in full prior to the date hereof or will be
released in full concurrently with the funding of the Loan).

     6.06  No Defaults.  No Potential Default or Event of Default exists under
           -----------
this Agreement or any of the other Loan Documents.  No material default by
Borrower exists under any Contractual Obligation that would have a material
adverse effect on Borrower's ability to repay the Loan or to perform its
obligations under any of the Loan Documents or under the Environmental
Indemnity.

     6.07  Disclosure.  No representation or warranty of Borrower contained in
           ----------
this Agreement, any Loan Document, or any Underwriting Information contains any
untrue statement of a material fact or omits any material fact necessary in
order to make the statements contained herein or therein not misleading.

                                  ARTICLE VII

                             BORROWER'S COVENANTS
                             --------------------

     Borrower covenants and agrees that, until the Loan and all other amounts
owing to Lender under the Loan Documents have been paid in full and all Secured
Obligations have been satisfied, Borrower shall perform all of the covenants in
this Article 7.
     ---------

     7.01  No Liens.  Except as may be expressly provided otherwise in any of
           --------
the Loan Documents, Borrower shall not permit any Lien to be made or filed.
Borrower shall be the sole owner of the Collateral, free from any adverse Liens,
except for Liens in favor of Lender.  Borrower shall not assign, sell, pledge,
encumber, or otherwise hypothecate all or any portion of the Greenhouse
Documents.

     7.02  Compliance With Laws.  Borrower will substantially comply with (and,
           --------------------
if necessary to avoid the imposition of a fine or penalty or the creation of a
Lien or other rights, will strictly comply with) all Laws.

     7.03  Inspection.  Borrower will comply with all of the terms and
           ----------
conditions of Section 32 of the Lease (which governs Borrower's rights and
              -----------
obligations with respect to Lender's access to the Project) and Section 9 of the
Work Letter (which governs Borrower's rights and obligations with respect to
Borrower's access to the Project during construction).

     7.04  Leasing of Space.  Borrower will comply with all of the terms and
           ----------------
conditions of Section 22 of the Lease (which governs Borrower's rights and
              ----------
obligations with respect to assignments of the Lease or subleases of portions of
the Project).

     7.05  Environmental Matters.  Borrower will comply with all of the terms
           ---------------------
and conditions of Section 30 of the Lease (which governs Borrower's rights and
                  ----------
obligations with respect to Environmental Matters affecting the Project).

                                      141
<PAGE>

     7.06  Notice of Proceeding.  Borrower will promptly notify Lender of any
           --------------------
action, suit, proceeding, or arbitration (including, without limitation, any
judicial or nonjudicial foreclosure proceeding, any voluntary or involuntary
bankruptcy proceeding, or any proceeding for the appointment of a receiver),
commenced or, to Borrower's knowledge, threatened against Borrower, any of the
Principals, or any portion of or interest in the Collateral.  Borrower shall
deliver to Lender copies of all notices and other information in connection with
any action, suit, proceeding or arbitration promptly upon receipt or transmittal
thereof.

     7.07  Financial and Other Information.  Borrower shall maintain full and
           -------------------------------
complete books of account and other records reflecting the results of operations
of the Project in accordance with generally accepted accounting principles
consistently applied (or such other accounting method approved in writing by
Lender).  Borrower shall furnish or cause to be furnished to Lender the
financial information described in Section 44(d) of the Lease.
                                   -------------

     7.08  Representations and Warranties.  Until repayment of the Loan and all
           ------------------------------
other amounts owing to Lender under the Loan Documents and the satisfaction of
all other Secured Obligations, the representations and warranties set forth in
Article 6 shall remain true and complete.
---------

     7.09  Further Assurances.  Borrower shall execute and deliver from time to
           ------------------
time, within 10 Business Days after any request by Lender, any and all
instruments, agreements, and documents and shall take such other action as may
be reasonably necessary or desirable in the reasonable opinion of Lender to
maintain, perfect, or insure Lender's security provided for herein and in the
other Loan Documents, including, without limitation, the execution of UCC-1
renewal statements and the execution of such amendments to the Fixture Filing
and the other Loan Documents, all as Lender shall reasonably require, and shall
pay all fees and expenses (including reasonable attorney's fees) related
thereto.

     7.10  Distribution of Assets.  From and after the occurrence of an Event of
           ----------------------
Default or Potential Default and during the continuance thereof, Borrower shall
not make any distribution of its assets, directly or indirectly, to its
shareholders or other owners.  As used herein, the distribution of assets shall
include, without limitation, the repayment of any Loan made to Borrower or any
interest or other charges payable in connection therewith, the return of capital
contributions and distributions upon the termination, liquidation, or
dissolution of Borrower and the payment of fees, including management, leasing,
brokerage, and other fees to the extent such fees exceed the amounts payable in
arms' length transactions with third parties.  Borrower shall maintain and
preserve its existence and all rights and franchises material to its business.

                                 ARTICLE VIII

                          EVENTS OF DEFAULT: REMEDIES
                          ---------------------------

     8.01  Events of Default.  The occurrence of any of the following events
           -----------------
shall constitute an Event of Default under this Agreement and the other Loan
Documents:

     A.  Failure to Make Payments When Due.  Borrower's failure to pay any
principal, interest or other monies due under this Agreement or any of the other
Loan Documents within 10 days after such amount is due; provided, however, that
                                                        --------  -------
Lender will give Borrower written notice

                                      142
<PAGE>

and an opportunity to cure any such failure within 3 days of any such notice not
more than once in any 12 month period and Borrower agrees that such notice shall
be in lieu of and not in addition to any notice required by law.

     B.  Breach of Certain Covenants.  Borrower's failure to perform or comply
with any term, obligation, or condition contained in this Agreement or any of
the other Loan Documents, other than those terms, obligations, and conditions
otherwise referred to in this Section 8.01, within 30 days after the delivery of
                              ------------
written notice from Lender of such failure; provided that if such default is not
                                            --------
reasonably capable of being cured within such 30 day period, such failure shall
not constitute an Event of Default so long as Borrower commences the cure of
such default within such 30 day period and diligently prosecutes such cure to
completion within 60 days after such written notice from Lender.

     C.  Breach of Warranty.  Any representation, warranty, certification, or
other statement made by Borrower or any of the Principals herein or in any other
Loan Document or in any statement or certificate at any time given by Borrower
or any of the Principals to Lender in writing in connection with the Loan shall
be materially false or misleading.

     D.  Involuntary Bankruptcy; Appointment of Receiver, Etc.

     (i) A court having proper jurisdiction shall enter a decree or order for
relief with respect to Borrower or any of the Principals in an involuntary case
under the Bankruptcy Code or any applicable bankruptcy, insolvency, or other
similar law now or hereafter in effect, which decree or order is not stayed
within 60 days after entry and dismissed within 120 days after the entry of such
order; or any other similar relief shall be granted under any applicable federal
or state law; or

     (ii) An involuntary case is commenced against Borrower or any of the
Principals, under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect; or a decree or order of a court for the appointment of a
receiver, liquidator, sequestrator, trustee, custodian, or other officer having
similar powers over Borrower or any of the Principals or over all or a
substantial part of their respective property, shall be entered; or the
involuntary appointment of an interim receiver, trustee or other custodian of
Borrower or any of the Principals, for all or a substantial part of their
respective property; or the issuance of a warrant of attachment, execution or
similar process against any substantial part of the respective property of
Borrower or any of the Principals, and the continuance of any such event in this
clause (ii) for 120 days unless dismissed or discharged.

     E.  Voluntary Bankruptcy; Appointment of Receiver, Etc.

     (i) Borrower or any of the Principals shall have an order for relief
entered with respect to them or commence a voluntary case under the Bankruptcy
Code or any applicable bankruptcy, insolvency, or other similar law now or
hereafter in effect, or shall consent to the entry of an order for relief in an
involuntary case, or to the conversion of an involuntary case to a voluntary
case, under any such law, or shall consent to the appointment of or taking
possession by a receiver, trustee, or other custodian for all or a substantial
part of their respective property;

                                      143
<PAGE>

the making by Borrower or any of the Principals of any assignment for the
benefit of creditors; or

     (ii) The inability or failure of Borrower or any of the Principals, or the
admission by Borrower or any of the Principals in writing of its inability, to
pay their respective debts as such debts become due.

     F.  Lien Priority.  Lender fails to have a legal, valid, binding, and
enforceable first priority Lien on the Collateral.

     G.  Other Liens.  Without limiting the provisions of Section 7.01 of this
                                                          ------------
Agreement, Borrower is in default, after giving effect to any notice and/or cure
rights, under any Lien (other than the Liens created by the Loan Documents), or
foreclosure or other proceedings are commenced to enforce any Lien (other than
the Liens created by the Loan Documents).

     H.  Other Loan Documents.  The occurrence of an "Event of Default" under
any of the other Loan Documents (as "Event of Default" is defined therein,
including any notice and/or cure rights).

     I.  Cessation of Construction.  The cessation of work on construction of
the Greenhouse other than in accordance with the Work Letter.

     J.  Lease; Work Letter.  Borrower is in breach of, in default under, or
otherwise has failed to comply with the agreements, terms, covenants, and
conditions to be performed by Borrower under the Lease and/or the Work Letter,
after any applicable notice and cure periods.

     8.02  General Remedies.  Notwithstanding anything to the contrary contained
           ----------------
herein or in any of the other Loan Documents, upon the occurrence of any Event
of Default (i) automatically without notice to Borrower as to Sections 8.01 (D),
                                                              -----------------
(E) and (H), and otherwise at the option of Lender upon written notice to
---     ---
Borrower as to any other Event of Default, the unpaid principal amount of the
applicable Loan, all accrued and unpaid interest, and all other Secured
Obligations shall become immediately due and payable, without presentment,
demand, protest, further notice or other requirements of any kind, all of which
are hereby expressly waived by Borrower, (ii) Lender shall have the rights and
remedies of a secured party under the North Carolina Uniform Commercial Code,
and under any other applicable law, (iii) Lender may pursue all of its rights
and remedies hereunder, under the other Loan Documents, at law, in equity or
otherwise, [(iv) Lender may pursue any remedies available to it pursuant to
North Carolina General Statutes Sections 1-339.1 et. seq.  and/or Sections 45-
                                                 --- ---
21.1 et. seq.,] (iv)[(v)] all outstanding indebtedness and all other amounts
     --- ----
owing to Lender under the Loan Documents shall bear interest at the Default
Interest Rate, and (v)[(vi)] Lender shall have no further obligation to disburse
Loan proceeds to Borrower.

     8.03  Specific Performance.  Upon the occurrence of an Event of Default,
           --------------------
Lender may commence and maintain an action in any court of competent
jurisdiction for specific performance of any of the covenants and agreements
contained herein or in any of the other Loan Documents, may obtain the aid and
direction of the court in the performance of any of the covenants and agreements
contained herein or therein, and may obtain orders or decrees

                                      144
<PAGE>

directing the same and, in the case of any sale of the Collateral under the
Fixture Filing, directing, confirming, or approving Lender's actions.

     8.04  Remedies as to Greenhouse Documents.  Upon the occurrence of an Event
           -----------------------------------
of Default, Lender shall have the right (and Borrower hereby irrevocably
constitutes and appoints Lender as its attorney-in-fact, which power is coupled
with an interest, to do so) to (a) demand, receive, and enforce Borrower's
rights with respect to the Greenhouse Documents, (b) give appropriate receipts,
releases, and satisfactions for and on behalf of Borrower with respect to any of
the Greenhouse Documents, (c) do any and all acts in the name of Borrower or in
the name of Lender with the same force and effect as Borrower could do if the
assignment in Article 4 had not been made, and (d) perform and discharge each
              ---------
and every obligation, covenant, condition and agreement of Borrower under the
Greenhouse Documents.

                                  ARTICLE IX

                           MISCELLANEOUS PROVISIONS
                           ------------------------

     9.01  Assignments of Loan and Note.  Lender may assign its rights and
           ----------------------------
delegate its obligations under this Agreement or any of the other Loan Documents
to any person or entity that acquires Lender's interests under the Ground Lease
and the Lease, all without notice to or the consent of Borrower.  To the extent
of any such assignment, Lender shall be relieved of its obligations with respect
to the Loan and the assignee shall have the same rights, benefits, and
obligations as it would if it were Lender hereunder and a holder of the Note.
Lender may furnish any information (including, without limitation, financial
information) concerning the Project, Borrower, Principals, and any of their
assets to any such assignee.

     9.02  Expenses.  Borrower agrees to pay, within 30 days after demand by
           --------
Lender, all reasonable costs and expenses (including, without limitation,
attorneys' fees and costs, fees of any consultants, and fees for any
environmental audits, appraisal, inspections, or other review required by
Lender) incurred by Lender in connection with the Loan, the enforcement of any
of the Secured Obligations, the enforcement of any of Lender's rights and
remedies under the Loan Documents, the collection of any payments owing to
Lender hereunder or under any of the other Loan Documents, whether or not such
enforcement and collection includes the filing of a lawsuit, or the retaking,
holding, preparing for sale, or selling of the security for the Loan or any
portion thereof or any interest therein.  Notwithstanding the foregoing,
Borrower shall not be required to pay any portion of Lender's costs and expenses
in excess of $5,000.00 incurred in connection with the Loan prior to the Closing
Date.

     9.03  Joint and Several Obligations.  If Borrower is or becomes comprised
           -----------------------------
of more than one Person, the liability of each constituent Person under this
Agreement and under each of the other Loan Documents shall be joint and several.

     9.04  Indemnity.  Without in any way limiting the indemnities contained in
           ---------
the Lease (including, but not limited to, Section 16(a)), Borrower hereby
                                          -------------
indemnifies and agrees to defend and hold harmless the Indemnitees from and
against any and all expenses, losses, claims, damages, or liabilities,
including, without limitation, attorneys' fees and costs, by reason of:

                                      145
<PAGE>

(a)  any Lien or claim that may be alleged to have arisen on or against the
Collateral or any part thereof or any liability asserted against Lender with
respect thereto, (b) any tax attributable to the execution, delivery, filing, or
recording of any of the Loan Documents, or (c) any default under the Note or the
other Loan Documents.

     9.05  Waiver of Offset.  All sums payable by Borrower pursuant to any of
           ----------------
the Loan Documents shall be paid without notice, demand, counterclaim, setoff,
deduction, or defense and without abatement, suspension, deferment, diminution,
or reduction, and the obligations and liabilities of Borrower under the Loan
Documents shall in no way be released, discharged, or otherwise affected (except
as expressly provided in the Loan Documents) by reason of: (a) any damage to or
destruction of any part of the Collateral or any taking of any part of the
Collateral for any public or quasi-public use under any governmental law,
ordinance, or regulation, or by right of eminent domain, or by private purchase
in lieu thereof; (b) any restriction or prevention of or interference by any
third party with any use of the Greenhouse or any part thereof; (c) any title
defect or encumbrance or any eviction from the Project or any part thereof by
title paramount or otherwise; (d) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation, or other like proceeding
relating to Lender, or any action taken with respect to any of the Loan
Documents by any trustee or receiver of Lender, or by any court, in any such
proceeding; (e) any claim that Borrower has or might have against Lender; or (f)
any other occurrence whatsoever, whether similar or dissimilar to the foregoing.
Except as expressly provided herein, Borrower waives all rights now or hereafter
conferred by statute or otherwise to any abatement, suspension, deferment,
diminution, or reduction of any of the Secured Obligations.

     9.06  Amendments and Waivers.  This Agreement and the other Loan Documents
           ----------------------
may only be modified in writing signed by all of the parties hereto or thereto
or their respective successors and assigns.  No waiver of any provision of this
Agreement or of any of the other Loan Documents, or consent to any departure by
Borrower therefrom, shall in any event be effective without the written
agreement of Lender.  Any waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was given.  Except
as expressly required by the terms of the Loan Documents, no notice to or demand
on Borrower in any case shall entitle Borrower to any other or further notice or
demand in similar or other circumstances.

     9.07  WAIVER OF JURY TRIAL.  BORROWER AND LENDER EACH AGREE NOT TO ELECT A
           --------------------
TRIAL BY JURY, AND WAIVE ANY RIGHT TO A TRIAL BY JURY OR TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE, BETWEEN BORROWER AND LENDER ARISING OUT OF THIS AGREEMENT, ANY OF THE
OTHER LOAN DOCUMENTS, ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR
ACTIONS OF EITHER PARTY IN CONNECTION THEREWITH.  THIS WAIVER IS GIVEN KNOWINGLY
AND VOLUNTARILY, AND IS INTENDED TO ENCOMPASS EACH INSTANCE AND EACH ISSUE AS TO
WHICH THE RIGHT TO TRIAL BY JURY OTHERWISE WOULD ACCRUE.  BORROWER AND LENDER
EACH AGREE THAT THIS PROVISION CONSTITUTES A WRITTEN CONSENT TO WAIVER OF TRIAL
BY JURY, AND EACH PARTY

                                      146
<PAGE>

AUTHORIZES THE OTHER PARTY TO FILE A COPY OF THIS PROVISION, IN ANY PROCEEDING,
AS CONCLUSIVE EVIDENCE OF THIS CONSENT TO WAIVER.

     9.08  Submission of Loan Documents.  The submission of this Agreement, any
           ----------------------------
of the other Loan Documents, or the Environmental Indemnity to Borrower or its
agents or attorneys for review or signature does not constitute a commitment by
Lender to make the Loan to Borrower, and this Agreement, the other Loan
Documents, and the Environmental Indemnity shall have no binding force or effect
unless and until they are executed and delivered by Borrower and Lender and all
of the conditions set forth in Section 3.01 have been satisfied.
                               ------------

     9.09  Notices.  Any notice, or other document or demand required or
           -------
permitted under this Agreement or any of the other Loan Documents shall be in
writing addressed to the appropriate address set forth below and shall be deemed
delivered upon the earliest of (a) actual receipt, (b) the next Business Day
after the date when sent by recognized overnight courier, or (c) the third
Business Day after the date when sent by registered or certified mail, postage
prepaid.  Any party may, from time to time, change the address at which such
written notice or other documents or demands are to be sent, by giving the other
party written notice of such change in the manner hereinabove provided.

          To Borrower:   104 Alexander Dr., Building 2
                         RTP, North Carolina 27709
                         Attention: Mr. Ian Howes
                         Chief Financial Officer

          To Lender:     135 N. Los Robles Avenue, Suite 250
                         Pasadena, California 91101
                         Attention: General Counsel

     9.10  Survival of Warranties and Certain Agreements.  All agreements,
           ---------------------------------------------
indemnities, representations, and warranties made herein and in the other Loan
Documents shall survive the execution and delivery of this Agreement, the making
of the Loan hereunder, and the execution and delivery of the Note.  All
representations and warranties made in this Agreement or in any of the other
Loan Documents shall further survive any and all investigations and inquiries
made by Lender, shall remain true, correct, and complete in all material
respects, and shall remain continuing obligations so long as any portion of the
Secured Obligations remains outstanding or unsatisfied.  Notwithstanding
anything in this Agreement or the other Loan Documents or implied by law to the
contrary, any indemnities made by Borrower in the Loan Documents shall survive
the payment of the Loan, the satisfaction of the Secured Obligations, the
termination of this Agreement or the other Loan Documents, and/or the
foreclosure of the lien of the Fixture Filing or acceptance of any transfer in
lieu or in aid thereof.

     9.11  Failure or Indulgence Not Waiver: Remedies Cumulative.  No failure or
           -----------------------------------------------------
delay on the part of Lender or any holder of the Note or portion thereof in the
exercise of any power, right, or privilege hereunder or under the Note shall
impair such power, right, or privilege or be construed to be a waiver of any
default or acquiescence therein, nor shall any single or partial exercise of any
such power, right, or privilege preclude other or further exercise thereof or of
any other right, power or privilege. All rights and remedies existing under this
Agreement and the

                                      147
<PAGE>

other Loan Documents are separate, distinct and cumulative to, and not exclusive
of, any rights or remedies otherwise available at law or in equity. No act of
Lender under any of the Loan Documents shall be construed as an election to
proceed under any one provision to the exclusion of any other provision,
notwithstanding anything in the Loan Documents to the contrary. Borrower
expressly waives all right to the benefit of any moratorium, reinstatement,
marshaling, forbearance, extension, redemption, or appraisement now or hereafter
provided by federal or state law, as a defense to any demand against Borrower to
the fullest extent permitted by law.

     9.12  Survival of Obligations Upon Termination of Agreement. No termination
           -----------------------------------------------------
termination or cancellation (regardless of cause or procedure) of this Agreement
or any of the other Loan Documents shall in any way affect or impair the powers,
obligations, duties, rights, and liabilities of Borrower or Lender relating to
(a) any transaction or event occurring prior to such termination or
cancellation, or (b) any of the undertakings, agreements, covenants,
indemnities, warranties, and representations of Borrower or Lender contained in
this Agreement or any of the other Loan Documents.

     9.13  Disbursements in Excess of Loan Amount.  In the event the total
           --------------------------------------
disbursements by Lender exceed the amount of the Loan set forth herein, the
total of all disbursements shall, to the extent permitted by the laws of the
State of North Carolina, constitute part of the Secured Obligations and be
secured by the Loan Documents.  All other sums expended by Lender pursuant to
this Agreement or any of the other Loan Documents shall be deemed to have been
paid to Borrower and shall be secured by the Loan Documents.

     9.14  Severability.  If any term of this Agreement or any of the other Loan
           ------------
Documents or the application thereof to any person or circumstances, shall, to
any extent, be invalid or unenforceable, the remainder of this Agreement or
other Loan Document or the application of such term to persons or circumstances
other than those as to which it is invalid or unenforceable, shall not be
affected thereby, and each term of this Agreement or other Loan Document shall
be valid and enforceable to the fullest extent.

     9.15  Rules of Construction.  Where the identity of the parties to this
           ---------------------
Agreement or any of the other Loan Documents or the circumstances make it
appropriate, the masculine gender includes the feminine and/or neuter, and the
singular number includes the plural.  Article and Section headings in this
Agreement and the other Loan Documents are included for convenience of reference
only and shall not constitute a part of this Agreement or such other Loan
Documents for any other purpose or be given any substantive effect.  The
recitals to this Agreement and to each of the other Loan Documents are
incorporated herein and therein and made a part hereof and thereof.

     9.16  Applicable Law.  This Agreement and the other Loan Documents shall be
           --------------
governed by, and construed and enforced in accordance with, the laws of the
State of North Carolina.

     9.17  Successors and Assigns.  This Agreement shall be binding upon an
           ----------------------
shall inure to the benefit of the parties hereto and their respective permitted
successors and assigns.  Except as may be expressly provided otherwise in any of
the Loan Documents, Borrower's rights and obligations or any interest hereunder
or under any of the other Loan Documents may not be

                                      148
<PAGE>

assigned, including, without limitation, assigned for security purposes, without
the prior written consent of Lender, which may be withheld in Lender's sole
discretion, and any purported assignment shall be null and void ab initio. As
                                                                -- ------
used herein, and in the other Loan Documents, "Lender" (or similar references to
the lender) shall include all holders of the Note, whether or not named herein
or therein. In exercising any rights hereunder or under any of the other Loan
Documents or taking any actions provided for herein or therein, Lender may act
through its employees, agents, or independent contractors authorized by Lender.

     9.18  Counterparts.  This Agreement and the other Loan Documents may be
           ------------
executed in any number of counterparts, each of which when so executed and
delivered shall be deemed to be an original and all of which counterparts taken
together shall constitute but one and the same instrument.  Signature and, if
applicable, acknowledgment pages may be detached from the counterparts and
attached to a single copy of the applicable document to physically form one
document, which may be recorded if applicable.

     9.19  Entire Agreement.  The Loan Documents set forth the entire
           ----------------
understanding between Borrower and Lender relative to the Loan and the same
supersede all prior agreements and understandings relating to the subject matter
hereof or thereof.

     9.20  Inconsistencies.  In the event it is impossible to simultaneously
           ---------------
comply with the terms of this Agreement and any of the terms of any other Loan
Document, the terms of this Agreement shall control over any inconsistent term
of any other Loan Document.

     9.21  Time is of the Essence.  Time is strictly of the essence of this
           ----------------------
Agreement and the other Loan Documents.

     9.22  No Third Party Beneficiaries.  This Agreement and the other Loan
           ----------------------------
Documents are made and entered into for the sole protection and benefit of the
parties hereto, and, except as provided in Section 9.17, no other person or
                                           ------------
entity shall be a direct or indirect beneficiary of, or shall have any direct or
indirect cause of action or claim in connection with, this Agreement or any of
the other Loan Documents.

     9.23  Insurance Requirements.  The terms and conditions of the Lease
           ----------------------
(including, but not limited to, Section 17) and the Work Letter will govern any
                                ----------
insurance obtained and maintained in connection with the Project.

     9.24  Casualty Matters.  The terms and conditions of the Lease (including,
           ----------------
but not limited to, Section 18) will govern any restoration of the Greenhouse if
                    ----------
damaged by fire or other casualty, provided that casualty insurance proceeds
applicable to damage to the Greenhouse shall be applied to pay the outstanding
balance of the Loan to the extent, and only to the extent, the Lease does not
                                   ----------------------
require such proceeds to be used for (and such proceeds are not actually used
for) the restoration of the Greenhouse or for the payment of any other sums due
under the Lease.

     9.25  Condemnation Matters.  The terms and conditions of the Lease
           --------------------
(including, but not limited to, Section 19) will govern any taking of any part
                                ----------
of the Collateral for any public or quasi-public use under any governmental law,
ordinance, or regulation, or by right of eminent domain, or by private purchase
in lieu thereof.

                                      149
<PAGE>

     IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
Borrower and Lender under seal as of the date first above written.

                              BORROWER:

                              PARADIGM GENETICS, INC.,  (SEAL)
                              a North Carolina corporation

                              By: ___________________________________

                              Its: ___________________________________


ATTEST: ___________________
Its ___________________ Secretary

[CORPORATE SEAL]

                              LENDER:

                              ARE-104 ALEXANDER ROAD, LLC, (SEAL)
                              a Delaware limited liability company

                              By:  ALEXANDRIA REAL ESTATE EQUITIES, L.P., (SEAL)
                                    a Delaware limited partnership, managing
                                    member

                                    By:  ARE-QRS CORP., (SEAL)
                                         a Maryland corporation, general partner


                                         By:__________________________
                                         Its:__________________________

ATTEST: __________________
Its___________________ Secretary


[CORPORATE SEAL]

                                      150
<PAGE>

                                   EXHIBIT O

                           ENVIRONMENTAL INFORMATION
                           -------------------------

     1.   Leak Detection Test Report dated June 4,1993, prepared by Advanced
          --------------------------
Tank Certification, Inc., regarding 20,000 gallon fuel oil tank test results.

     2.   UST Closure Report National Institute of Environmental Health Sciences
          ----------------------------------------------------------------------
dated June 27, 1993, prepared by Triangle Environmental, Inc., regarding 1000
gallon gasoline UST.

     3.   Report of Environmental Services dated March 30, 1994, prepared by Law
          --------------------------------
Engineering, Inc. regarding NIEHS Facility, North Campus, Phase II Research
Triangle Park, North Carolina.

     4.   Letter dated April 13, 1994, from Law Engineering, Inc., to Mr.
          ------
William Few regarding observations of underground storage tank closure at NIEHS
Facility in Research Triangle Park, North Carolina.

     5.   Letter dated April 25, 1994, from State of North Carolina Department
          ------
of Environment, Health and Natural Resources ("DEHNR"), to Brian L. Hayes at
Southwestern Environmental Audits, Inc. regarding Well Construction Permit No.
31-0444-WM-0259.

     6.   Letter dated May 23, 1994, from Southeastern Environmental Audits,
          ------
Inc., together with UST Closure Assessment Report dated May 10, 1994, prepared
                    -----------------------------
by Southwestern Environmental Audit, Inc. regarding 20,000 gallon fuel oil UST.

     7.       Application dated June 14, 1994, from McCarthy Associates to DEHNR
              -----------
regarding Leaking Petroleum Underground Storage Tank Cleanup Funds.

     8.   Comprehensive Site Assessment dated July 6, 1994, prepared by
          -----------------------------
Southeastern Environmental Audits, Inc.

     9.   Pollution Incidental/UST Leak Reporting Form dated August 15, 1994,
          --------------------------------------------
prepared by NIEHS regarding 1,000 gallon gasoline UST and incident on May 6,
1993.

     10.  Letter dated October 27, 1994, from DEHNR to McCarthy & Associates
          ------
regarding assignment of facility identification number for one 20,000 gallon
UST.

     11.  Facsimile Cover Sheet dated December 18, 1995, from Nettie Lowery at
          ---------------------
DEHNR, to Jay Zimmerman at Raleigh Regional Office regarding denial letters,
together with Memorandum dated December 15, 1995, from DEHNR regarding Trust
              ----------
Fund Eligibility Denial.

     12.  Facsimile Cover Sheet dated January 11, 1996, from Sean Boyles of
          ---------------------
DEHNR to Fay Sweat, enclosing Pollution Incident/U.S.T.  Leak Reporting Form
                              ----------------------------------------------
dated January 10, 1996, regarding March 11, 1994, incident at NIEHS North
Campus, together with North Carolina Ground Water Contamination Incident
                      --------------------------------------------------
Management Site Priority Ranking
--------------------------------

                                      151
<PAGE>

System dated January 10, 1996, regarding March 11, 1994, incident at NIEHS North
------
Campus.

     13.  Memorandum dated January 18, 1996, from DEHNR regarding TF
          ----------
Eligibility Denial NIEHS North Campus Incident #14941.

     14.  Letter dated February 15, 1996, from DEHNR to McCarthy Associates
          ------
regarding Cleanup Funds for NIEHS North Campus Site.

     15.  Letter dated February 26,1996, from Manning, Fulton & Skinner, P.A.,
          ------
counsel for McCarthy Associates, to Ms. Liz Rooks at Research Triangle
Foundation of North Carolina regarding NPDES Permit issued to McCarthy
Associates for groundwater remediation at NIEHS North Campus.

     16.  Report dated August, 1996, prepared by Turner Environmental
          ------
Consultants, P.C., regarding Free Product Recovery and Groundwater Monitoring
Report -Former NIEHS North Campus Facility 110 TW Alexander Drive, Research
Triangle Park, NC.

     17.  Letter dated November 5,1996, from Manning, Fulton & Skinner, P.A.
          ------
counsel for McCarthy Associates, to Ms.  Elizabeth Rooks at Research Triangle
Foundation of North Carolina regarding leaking from underground storage tank at
former NIEHS North Campus Facility.

     18.  Letter dated December 9, 1996, from Manning, Fulton & Skinner, P.A.,
          ------
counsel for McCarthy Associates, to Ms. Elizabeth Rooks at Research Triangle
Foundation of North Carolina enclosing Free Product Delineation and Recovery
                                       -------------------------------------
Plan dated December 3, 1996, prepared by Turner Environmental Consultants, P.C.
----
regarding former NIEHS North Campus Facility.

     19.  Letter dated May21, 1997, from Manning, Fulton & Skinner, P.A.,
          ------
counsel for McCarthy Associates, to Ms. Elizabeth Rooks at Research Triangle
Foundation of North Carolina enclosing Letter dated May 16, 1997, from Prescott
                                       ------
Environmental Associates, Inc. enclosing Letter dated May 14, 1997, from Turner
                                         ------
Environmental Consultants, P.C. regarding Free Product Recovery Plan
Implementation.

     20.  Letter dated September 23, 1997, from by Department of Health & Human
          ------
Services, to DEHNR regarding contaminated soil from the NIEHS South Campus,
                                                                    ------
enclosing Letter dated September 12, 1997, from Prescott Environmental
Associates, Inc. to DEHNR regarding disposal of soil from the former NIEHS North
Campus Facility, together with Form #GW-71.
                               -----------

     21.  Letter dated May 4,1998, from Manning, Fulton & Skinner, P.A., counsel
          ------
for McCarthy Associates, to Ms. Elizabeth Rooks at Research Triangle Foundation
of North Carolina enclosing Letter dated April 30, 1998, prepared by Prescott
                            ------
Environmental Associates, Inc. regarding Free Product Recovery.

                                      152
<PAGE>

     22.  Letter dated August 4,1998, from Manning, Fulton & Skinner, P.A.,
          ------
counsel for McCarthy Associates to Ms. Elizabeth Rooks at Research Triangle
Foundation of North Carolina enclosing Letter Report dated July 24, 1998,
                                       -------------
prepared by Prescott Environmental Associates, Inc. regarding free product
recovery activities at the former NIEHS North Campus Facility.

     23.  Letter dated August 4,1998, from Manning, Fulton & Skinner, P.A.,
          ------
counsel for McCarthy Associates to Ms. Elizabeth Rooks at Research Triangle
Foundation of North Carolina enclosing Letter dated August 2, 1998, from
                                       ------
Prescott Environmental Associates to NC DEHNR, enclosing Letter Report dated
                                                         -------------
July 24, 1998, prepared by Prescott Environmental Associates, Inc. regarding
free product recovery activities at the former NIEHS North Campus Facility.

     24.  Letter dated November 2, 1998, from Manning, Fulton & Skinner, P.A.
          ------
counsel for McCarthy Associates, to Ms. Elizabeth Rooks at Research Triangle
Foundation of North Carolina, enclosing Letter Report dated October 27, 1998
                                        -------------
prepared by Prescott Environmental Associates, Inc. regarding free product
recovery activities at the former NIEHS North Campus Facility.

     25.  Letter dated January 12,1999, from Prescott Environmental Associates,
          ------
Inc., to NC DEHNR, Raleigh Regional Office regarding former NIEHS N. Campus
Site.

     26.  Letter dated January 27, 1999, from NC DEHNR to Prescott Environmental
          ------
Associates, Inc. regarding proposed abandonment of monitoring wells at NIEHS
North Campus Site.

     27.  Draft Phase I Environmental Site Assessment dated April 29, 1999,
          -------------------------------------------
prepared by Dames & Moore NC.

                                      153