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                                                                   EXHIBIT 10.33
                              OFFICE R & D LEASE

                             San Diego, California

                                    Between

                         Sycamore/San Diego Investors,
                        an Illinois limited partnership

                                   (Landlord)

                                      and

                       Protein Polymer Technologies, Inc.
                             A Delaware corporation
                                    (Tenant)


Printed: April 24, 1998
Lease No. 2.
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                               TABLE OF CONTENTS

           MULTI-TENANT OFFICE R & D BUILDING LEASE - MODIFIED GROSS


Article 1  LEASE OF PREMISES ...............................................  1
Article 2  DEFINITIONS .....................................................  1
Article 3  EXHIBITS AND RIDERS .............................................  2
Article 4  DELIVERY OF POSSESSION ..........................................  3
Article 5  RENT ............................................................  3
Article 6  INTEREST AND LATE CHARGES .......................................  6
Article 7  SECURITY DEPOSIT ................................................  7
Article 8  TENANT'S USE OF THE PREMISES ....................................  7
Article 9  SERVICE AND UTILITIES ...........................................  7
Article 10 CONDITION OF THE PREMISES .......................................  8
Article 11 CONSTRUCTION, REPAIRS AND MAINTENANCE ...........................  8
Article 12 ALTERATIONS AND ADDITIONS .......................................  9
Article 13 LEASEHOLD IMPROVEMENTS; TENANT'S PROPERTY ....................... 10
Article 14 RULES AND REGULATIONS ........................................... 10
Article 15 CERTAIN RIGHTS RESERVED BY LANDLORD ............................. 10
Article 16 ASSIGNMENT AND SUBLETTING ....................................... 11
Article 17 HOLDING OVER .................................................... 12
Article 18 SURRENDER OF PREMISES ........................................... 12
Article 19 DESTRUCTION OR DAMAGE ........................................... 12
Article 20 EMINENT DOMAIN .................................................. 13
Article 21 INDEMNIFICATION ................................................. 14
Article 22 TENANT'S INSURANCE .............................................. 14
Article 23 WAIVER OF SUBROGATION ........................................... 15
Article 24 SUBORDINATION AND ATTORNMENT .................................... 15
Article 25 TENANT ESTOPPEL CERTIFICATES .................................... 15
Article 26 TRANSFER OF LANDLORD'S INTEREST ................................. 16
Article 27 DEFAULT ......................................................... 16
Article 28 BROKERAGE FEES .................................................. 18
Article 29 NOTICES ......................................................... 18
Article 30 GOVERNMENT ENERGY OR UTILITY CONTROLS ........................... 18
Article 31 QUIET ENJOYMENT ................................................. 18
Article 32 FORCE MAJEURE ................................................... 18
Article 33 CURING TENANT'S DEFAULTS ........................................ 18
Article 34 SIGN CONTROL .................................................... 19
Article 35 MISCELLANEOUS ................................................... 19
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                   MULTI-TENANT OFFICE R & D BUILDING LEASE -
                                 MODIFIED GROSS

This Lease between SYCAMORE SAN DIEGO INVESTORS, an Illinois Limited Partnership
("Landlord"), and Protein Polymer Technologies, Inc. a Delaware corporation
("Tenant"), is dated April 13,1998.

1.       LEASE OF PREMISES.

         Landlord leases to Tenant and Tenant leases from Landlord the Premises
         shown by diagonal lines on the floor plan attached hereto as Exhibit A,
         and further described at Article 2.L. The Premises are located within
         the Building and Project described in Article 2.M. Tenant shall have
         the nonexclusive right (unless otherwise provided herein) in common
         with Landlord, other tenants, subtenants and invitees, to use of the
         Common Areas (as defined in Article 2.E).

2.       DEFINITIONS.

         As used in this Lease, the following terms shall have the following
         meanings:

         A.   Base Rent: $34,349.00 per month.

         B.   Base Year: The Calendar year of 1998.

         C.   Broker: Thomas M. Crowley.

         D.   Commencement Date: May 1, 1998.

         E.   Common Areas: the building lobbies, common corridors and hallways,
              restrooms, garage and parking areas, stairways, elevators and
              other generally understood public or common areas within the
              boundaries of the Project. Landlord shall have the right to
              regulate or restrict the use of the Common Areas.

         F.   Expense Stop: $ N/A.

         G.   Expiration Date: April 30, 2005, unless otherwise sooner
              terminated in accordance with the provisions of this Lease.

         H.   Index (Article 5.2): United States Department of Labor, Bureau of
              Labor Statistics Consumer Price Index for All Urban Consumers,
              subgroup "All Items" Los Angeles, Anaheim, Riverside, (Base Year
              1982-84 = 100).

         I.   Landlord's Mailing Address:  10675 Sorrento Valley Road, 
                                           Suite 201,
                                           San Diego, CA 92121 
                                           619/558-1300

         J.   Tenants's Mailing Address:   10655 Sorrento Valley Road, Suite 100
                                           San Diego, CA 92121

         K.   Parking: Tenant and it's employees and guests shall be permitted
              to park cars based on 3.26 per 1,000 square feet of Premises, on a
              non-exclusive basis in the designated parking areas of the
              Project. Tenant shall abide by any and all parking regulations and
              rules established from time to time by Landlord or Landlord's
              parking operator. Tenant shall be liable to Landlord for any cost
              reasonably incurred by Landlord if Landlord is obligated to
              enforce Tenant's compliance with the rules and regulations.

         L.   Premises: that portion of the Building containing approximately
              21,073 square feet of Rentable Area, shown by diagonal lines on
              Exhibit A located on the 1st & 2nd floors of Building 1, combined
              Premises known as Suite 100, 10655 Sorrento Valley Road, San
              Diego, 92121.

         M.   Project: the building of which the Premises are a part (the
              "Building") and any other buildings or improvements on the real
              property (the "Property") located at 10655-10675 Sorrento Valley
              Road, San Diego, California and further described at Exhibit A.
              The Project is known as Sycamore Creek Office Park and is shown on
              a site plan of the Project which is attached hereto as Exhibit A.

TENANT'S INITIALS:__                                      LANDLORD'S INITIALS:__

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         N.       Rentable Area: as to both the Premises and the Project, the
                  respective measurements of floor area as may from time to time
                  be subject to lease by Tenant and all tenants of the Project,
                  respectively, as determined by Landlord and applied on a
                  consistent basis throughout the Project consistent and in
                  accordance with BOMA Standards: provided the Rentable Area
                  shall be adjusted for increases or decreases in the Premises
                  or the Project as determined by Landlord.

         O.       Security Deposit (Article 7): $29,678.00.

         P.       State: the State of California.

         Q.       Tenant's First Adjustment Date (Article 5.2): the first day of
                  the calendar month following the Commencement Date plus 12
                  months.

         R.       Tenant's Proportionate Share: 26.8%. Such share is a fraction,
                  the numerator of which is the Rentable Area of the Premises,
                  and the denominator of which is the Rentable Area of the
                  Project, as determined by Landlord from time to time. The
                  Project currently consists of 3 building(s) containing a total
                  Rentable Area of 78,756 square feet.

         S.       Tenant's Use Clause (Article 8): Biomaterial, biomedical
                  research and development laboratory and related office uses.

         T.       Term: the period commencing on the Commencement Date and
                  expiring at midnight on the Expiration Date.

3.       EXHIBITS AND RIDERS

         The exhibits and riders listed below (unless lined out) are
         incorporated by reference in this Lease.

         Exhibit A         -     Floor Plan showing the Premises and Project
                                 site plan

         Exhibit B         -     Floor Plan showing Expansion Premises

         Exhibit C         -     None

         Exhibit D         -     Rules and Regulations

         Exhibit E         -     None

         Exhibit F         -     Hazardous Substances

         Exhibit G         -     Sample Insurance Certificate

         Rider:            -     Attached hereto and made a part hereof.


TENANT'S INITIALS: __                                   LANDLORD'S INITIALS: __

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4.       DELIVERY OF POSSESSION

The Premises shall be deemed to be suitable for possession and delivery to
Tenant and Tenant shall accept delivery on the date Landlord completes
Landlord's portion of any improvements to the Premises. Landlord shall not be
liable to Tenant if Landlord is unable for any reason to deliver possession of
the Premises to Tenant on the Commencement Date set forth in Article 2 hereof.
Landlord's failure to deliver of the Premises to Tenant on that Date shall not
impair the validity of this Lease, but the Commencement Date of the Lease and
Tenant's obligation to pay rent or other sums thereunder shall be delayed until
possession of the Premises is delivered to Tenant. However, if Landlord does not
deliver possession of the Premises to Tenant within ninety (90) days after the
Commencement Date set forth in Article 2, and if the delay is attributable to
Landlord's actions which are not beyond its control, Tenant may elect to cancel
this Lease by giving written notice to Landlord at any time between the end of
said ninety (90) day period and the date that Landlord is able to deliver
possession of the Premises to Tenant, which notice shall specify the reasons
Tenant believes Landlord is in default with respect to the delay. If Tenant
gives such notice to Landlord, this Lease shall be canceled, any refundable
deposits shall be returned to Tenant, and Landlord and Tenant shall have no
further obligations under this Lease or to each other. If Tenant does not give
such notice to Landlord, then Tenant's right to cancel this Lease shall expire
and the Lease Term shall commence upon Landlord's delivery of possession of
Premises to Tenant. If delivery of Possession of the Premises to Tenant shall
occur on a date other than the Commencement Date set forth in said Article 2,
then the date of such delivery of possession of the Premises to Tenant shall
become the Commencement Date of this Lease and Landlord and Tenant shall within
ten (10) days of such date execute a Lease Amendment to amend said Article 2
accordingly. 

5.       RENT

         5.1  Payment of Base Rent. Tenant agrees to pay the monthly
              installments of Base Rent for the Premises, in advance on the
              first day of each calendar month of the Term. If the Term begins
              (or ends) on other than the first (or last) day of a calendar
              month, the Base Rent for the partial month shall be prorated on a
              per diem basis. Tenant shall pay Landlord the first Monthly
              Installment of Base Rent when Tenant executes the Lease.

         5.2  Adjustment to Base Rent. Base Rent shall be adjusted upward on
              each Anniversary Date of this Lease (each such date being an
              "Adjustment Date") for the purpose of reflecting the increase, if
              any, of the cost of living, in the following manner:

              5.2.1  The base for computing the increase in monthly rent shall
                     be the "Index" which is published and in effect for the
                     ninetieth (90) day preceding the Commencement Date
                     ("Beginning Index"). The Index published and in effect for
                     the ninetieth (90) day preceding the each Adjustment Date
                     ("Comparison Index") shall be used in computing the amount
                     of increase. On each Adjustment Date, the Base Rent then in
                     effect shall be increased to equal the product achieved by
                     multiplying the initial Base Rent specified in Article 2A
                     by a fraction, the numerator of which is the Comparison
                     Index and the denominator of which is the Beginning Index.
                     If the Comparison Index declines, the monthly rent due
                     during the twelve (12) month period following the
                     Adjustment Date in question shall be the same amount as the
                     Monthly rent due immediately before the Adjustment Date in
                     question. No adjustment of Base Rent shall be less than
                     three percent (3%) and no more than seven percent (7%) of
                     the Base Rent payable on the Adjustment Date.

              5.2.2  As soon as the Base Rent for the next succeeding twelve
                     (12) months is set, Landlord shall give Tenant notice of
                     the amount of Base Rent for that succeeding twelve (12)
                     months indicating how the new Base Rent was computed. Upon
                     the adjustment of the Base Rent, Tenant shall, upon the
                     request of the Landlord, promptly execute an amendment to
                     this Lease setting forth the adjusted Base Rent. In no
                     event shall Base Rent be reduced below the Base Rent in
                     effect immediately preceding any such Adjustment Date.

              5.2.3  The delay or failure of Landlord to demand any adjustment
                     to Base Rent shall not constitute a waiver of Landlord's
                     right to adjust and collect the Base Rent in accordance
                     with the provisions of this Article 5.2 as to future
                     adjustments to Base Rent or for prior periods for which
                     Landlord is entitled to increase Base Rent under this
                     Article 5.2. If the new Base Rent cannot be determined on
                     the Adjustment Date in question, Tenant shall continue
                     paying the Base Rent payable immediately preceding the
                     Adjustment Date in question, until such time as the new
                     Base Rent is determined. When the new Base Rent is
                     determined, Tenant shall pay the new Base Rent retroactive
                     to the applicable adjustment date. 

5.3      Project Operating Costs.

TENANT'S INITIALS:__                                      LANDLORD'S INITIALS:__

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         A.   So that the Rent payable during the Term reflects any increase in
              Project Operating Costs, Tenant agrees to pay to Landlord as Rent,
              Tenant's Proportionate Share of all increases in costs, expenses
              and obligations attributable to the Project and its operation, all
              as provided below. 

         B.   If, during any calendar year during the Term, Project Operating
              Costs exceed the Project Operating Costs for the Base Year, Tenant
              shall pay to Landlord, in addition to the Base Rent and all other
              payments due under this Lease, an amount equal to Tenant's
              Proportionate Share of such excess Project Operating Costs in
              accordance with the provisions of this Article 5.3.B.

              (1)  The term "Project Operating Costs" shall include all those
              items described in the following subparagraphs (a) and (b).

                   (a) All taxes, assessments, water and sewer charges and other
                   similar governmental charges levied on or attributable to the
                   Building or Project or their operation, including without
                   limitation, (i) real property taxes or assessments levied or
                   assessed against the Building or Project, (ii) assessments or
                   charges levied or assessed against the Building or Project by
                   any redevelopment agency, and (iii) any tax measured by gross
                   rentals received from the leasing of the Premises, Building
                   or Project, excluding any net income, franchise, capital
                   stock, estate or inheritance taxes imposed by the State of
                   Federal government or their agencies, branches or
                   departments; provided that if at any time during the Term any
                   governmental entity levies, assesses or imposes on Landlord
                   any (1) general or special, ad valorem or specific, excise,
                   capital levy or other tax, assessment, levy or charge
                   directly on the Rent received under this Lease or on the rent
                   received under any other leases of space in the Building or
                   Project, or (2) any license fee, excise or franchise tax,
                   assessment, levy, or charge measured by or based, in whole or
                   in part, upon such rent, or (3) any transfer, transaction, or
                   similar tax, assessment, levy or charge based directly or
                   indirectly upon the transaction represented by this Lease or
                   such other leases, or (4) any occupancy, use per capita or
                   other tax, assessment, levy or charge based directly or
                   indirectly upon the use or occupancy of the Premises or other
                   premises within the Building or Project, then any such taxes,
                   assessments, levies and charges shall be deemed to be
                   included in the term Project Operating Costs.

                   (b) Operating costs incurred by Landlord in maintaining,
                   repairing, replacing and operating the Building and Project,
                   including without limitation the following: (1) utilities,
                   including all utilities and services described in Article 9
                   below; (2) supplies; (3) insurance (including public
                   liability, properly damage, earthquake, and fire and extended
                   coverage insurance for the full replacement cost of the
                   Building and Project as required by Landlord or its lenders;
                   (4) services of independent contractors; (5) compensation
                   (including employment taxes and fringe benefits) of all
                   persons who perform duties connected with the operation,
                   maintenance, repair or overhaul of the Building or Project,
                   and equipment, improvements and facilities located within the
                   Project, including without limitation engineers, janitors,
                   painters, floor waxers, window washers, security and parking
                   personnel and gardeners (but excluding persons performing
                   services not uniformly available to or performed for
                   substantially all Building or Project tenants); (6) operation
                   and maintenance of a room for delivery and distribution of
                   mail to tenants of the Building or Project as required by the
                   U.S. Postal Service (including, without limitation, an amount
                   equal to the fair market rental value of the mail room
                   premises); (7) management of the Building or Project, whether
                   managed by Landlord or an independent contractor (including,
                   without limitation, an amount equal to the fair market value
                   of any on-site manager's office); (8) rental expenses for (or
                   a reasonable depreciation allowance on) personal property
                   used in the maintenance, operation or repair of the Building
                   or Project; (9) costs, expenditures or charges (whether
                   capitalized or not) required by any governmental or
                   quasi-governmental authority; (10) amortization of capital
                   expenses (including financing costs) (i) required by a
                   governmental entity for energy conservation or life safety
                   purposes, or (ii) made by Landlord to reduce Project
                   Operating Costs; and (11) any other costs or expenses
                   incurred by Landlord under this Lease which are customarily
                   treated as

TENANT'S INITIALS:__                                      LANDLORD'S INITIALS:__

                                       4
<PAGE>
 
                   operating expenses at comparable office buildings in the
                   area. For the purposes of Article 5.3, for any period during
                   the term in which the Project is not fully occupied, Landlord
                   may adjust the "occupancy costs component" of Project
                   Operating Costs (i.e. those costs of operations which vary
                   directly with the occupancy level of the Project including,
                   but not limited to, janitorial expenses) to reasonably
                   approximate the occupancy costs which would have been
                   incurred had the Project been fully occupancy.

          (2) Tenant's Proportionate Share of Project Operating Costs shall be
          payable by Tenant to Landlord as follows:

                   (a) Beginning with the calendar year following the Base Year
                   and for each calendar year thereafter ("Comparison Year"),
                   Tenant shall pay Landlord an amount equal to Tenant's
                   Proportionate Share of the Project Operating Costs incurred
                   by Landlord in the Comparison Year which, after applying the
                   same adjustment in the index to the increase in Project
                   Operating Costs as is applied to Base Rent in the Comparison
                   Year, exceeds the total amount of Project Operating Costs
                   payable by Landlord for the Base Year. This excess is
                   referred to as the "Excess Expenses". For example, assume
                   that (i) the Project Operating Costs in the Base Year are
                   $1.00 per square foot and in the Comparison Year they are
                   $1.05 per square foot, (ii) the Index has increased 3% in the
                   Comparison Year over the prior year, and therefore (iii) the
                   Base Rent has increased by 3% over the prior year. Tenant's
                   Proportionate Share of the Project Operating Costs for the
                   Comparison Year will be $.02 per square foot [Comparison Year
                   expenses ($1.05) minus (Base Year expenses ($1.00) times
                   Index (3%) = $1.03) = $1.05 minus $1.03) = $.02].

                   (b) To provide for current payments of Excess Expenses,
                   Tenant shall, at Landlord's request, pay as additional rent
                   during each Comparison Year, an amount equal to Tenant's
                   Proportionate Share of the Excess Expenses, payable during
                   such Comparison Year, as estimated by Landlord from time to
                   time. Such payments shall be made in monthly installments,
                   commencing on the first day of the month following the month
                   in which Landlord notifies Tenant of the amount it is to pay
                   hereunder and continuing until the first day of the month
                   following the month in which Landlord gives Tenant a new
                   notice of estimated Excess Expenses.-Landlord will estimate
                   from time to time the amount of the Excess Expenses for each
                   Comparison Year and Tenant's Proportionate Share thereof, and
                   then will make an adjustment in the following year based on
                   the actual Excess Expenses incurred for the Comparison Year.

                   (c) On or before April 1 of each Comparison Year after the
                   first Comparison Year (or as soon thereafter as is
                   practical), Landlord shall deliver to Tenant a statement
                   setting forth Tenant's Proportionate Share of the Excess
                   Expenses for the preceding Comparison Year. If Tenant's
                   Proportionate Share of the actual Excess Expenses for the
                   previous Comparison Year exceed the total of the estimated
                   monthly payments made by Tenant for such year, Tenant shall
                   pay Landlord the amount of the deficiency within ten (10)
                   days for the receipt of the statement. If such total exceeds
                   Tenant's Proportionate Share of the actual Excess Expenses
                   for such Comparison Year, then Landlord shall credit against
                   Tenant's next ensuing monthly installment(s) of additional
                   rent an amount equal to the difference until the credit is
                   exhausted. If a credit is due from Landlord on the Expiration
                   Date, Landlord shall pay Tenant the amount of the credit. The
                   obligations of Tenant and Landlord to make payments required
                   under this Article 5.3 shall survive the Expiration Date.

                   (d) Tenant's Proportionate Share of Excess Expenses in any 
                   Comparison Year having less than 365 days shall be 
                   appropriately prorated.

                   (e) If any dispute arises as to the amount of any additional
                   rent due hereunder, Tenant shall have the right after
                   reasonable notice and at reasonable times to inspect
                   Landlord's accounting records at Landlord's accounting office
                   and, if after such inspection Tenant still disputes the
                   amount of additional rent owed, a certification as to the
                   proper amount shall be made by Landlord's certified public
                   accountant, which certification shall

TENANT'S INITIALS:__                                      LANDLORD'S INITIALS:__

                                       5
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                   be final and conclusive. Tenant agrees to pay the cost of
                   such certification unless it is determined that Landlord's
                   original statement overstated Project Operating Costs by more
                   than five percent (5%).

                   (f) If this Lease sets forth an Expense Stop at Article 2.F.,
                   then during the Term Tenant shall be liable for Tenant's
                   Proportionate Share of any actual Project Operating Costs per
                   rentable square foot which exceed the amount of the Expense
                   Stop per rentable square foot rather than the Base Year.
                   Tenant shall make current payments of such excess costs
                   during the Term in the same manner as is provided for payment
                   of Excess Expenses under the applicable provisions of Article
                   5.3, B(2)(b) and (c) above. 

         5.4  Definition of Rent. All costs and expenses which Tenant assumes or
              agrees to pay to Landlord under this Lease shall be deemed
              additional rent (which, together with the Base Rent is sometimes
              referred to as the "Rent"). The Rent shall be paid to the Building
              manager (or other person) and at such place, as Landlord may from
              time to time designate in writing, without any prior demand
              therefore and without deduction or offset, in lawful money of the
              United States of America.

         5.5  Rent Control. If the amount of Rent or any other payment due under
              this Lease violates the terms of any governmental restrictions on
              such Rent or payment, then the Rent or payment due during the
              period of such restrictions shall be the maximum amount allowable
              under those restrictions. Upon termination of the restrictions,
              Landlord shall, to the extent it is legally permitted, recover
              from Tenant the difference between the amounts received during the
              period of the restrictions and the amounts Landlord would have
              received had there been no restrictions.

         5.6  Taxes Payable by Tenant. In addition to the Rent and any other
              charges to be paid by Tenant hereunder, Tenant shall reimburse
              Landlord upon demand for any and all taxes payable by Landlord
              (other than net income taxes) which are not otherwise reimbursable
              under this Lease, whether or not now customary or within the
              contemplation of the parties, where such taxes are upon, measured
              by or reasonably attributable to (a) the cost or value of Tenant's
              equipment, furniture, fixtures and other personal property located
              in the Premises, or the cost or value of any leasehold
              improvements made in or to the Premises by or for Tenant, other
              than Building Standard Work made by Landlord, regardless of
              whether title to such improvements is held by Tenant or Landlord;
              (b) the gross or net Rent payable under this Lease, including,
              without limitation, any rental or gross receipts tax levied by any
              taxing authority with respect to the receipt of the Rent
              hereunder; (c) the possession, leasing, operation, management,
              maintenance, alteration, repair, use or occupancy by Tenant of the
              Premises or any portion thereof; or (d) this transaction or any
              document to which Tenant is a party creating or transfering an
              interest or an estate in the Premises. If it becomes unlawful for
              Tenant to reimburse Landlord for any costs as required under this
              Lease, the Base Rent shall be revised to give to Landlord the same
              net Rent after imposition of any tax or other charge upon Landlord
              as would have been payable to Landlord but for the reimbursement
              being unlawful.  

6.       INTEREST AND LATE CHARGES 

         If Tenant fails to pay when due any Rent or other amounts or charges
         which Tenant is obligated to pay under the terms of this Lease, the
         unpaid amounts shall bear interest at the maximum rate then allowed by
         law. Tenant acknowledges that the late payment of any monthly
         installment of Rent will cause Landlord to lose the use of that money
         and incur costs and expenses not contemplated under this Lease,
         including without limitation, administrative and collection costs and
         processing and accounting expenses, the exact amount of which is
         extremely difficult to ascertain. Therefore, in addition to interest
         calculated from the due date, if any such installment is not received
         by Landlord within ten (10) days from the date it is due, Tenant shall
         pay Landlord a late charge equal to ten percent (10%) of such
         installment. Landlord and Tenant agree that this late charge represents
         a reasonable estimate of such costs and expenses and is fair
         compensation to Landlord for the loss suffered from such nonpayment by
         Tenant. Acceptance of any interest or late charge shall not constitute
         a waiver of Tenant's default with respect to such nonpayment by Tenant
         nor prevent Landlord from exercising any other rights or remedies
         available to Landlord under this Lease.
         
7.       SECURITY DEPOSIT 

         Tenant agrees to deposit with Landlord the Security Deposit set forth
         in Article 2.O upon execution of this Lease, as security for Tenant's
         faithful performance of its obligations under this Lease. Landlord and
         Tenant agree that the Security Deposit may be commingled with funds of
         Landlord and 

TENANT'S INITIALS:__                                      LANDLORD'S INITIALS:__

                                       6
<PAGE>
 
         Landlord shall have no obligation or liability for payment of interest
         on such deposit. Tenant shall not mortgage, assign, transfer or
         encumber the Security Deposit without the prior written consent of
         Landlord and any attempt by Tenant to do so shall be void, without
         force or effect and shall not be binding upon Landlord.

         If Tenant fails to pay any Rent or other amount when due and payable
         under this Lease, or fails to perform any of the terms hereof, Landlord
         may appropriate and apply or use all or any portion of the Security
         Deposit for Rent payments or any other amount then due and unpaid, for
         payment of any amount for which Landlord has become obligated as a
         result of Tenant's default or breach, and for any loss or damage
         sustained by Landlord as a result of Tenant's default or breach, and
         Landlord may so apply or use this deposit without prejudice to any
         other remedy Landlord may have be reason of Tenant's default or breach.
         If Landlord so uses any of the Security Deposit, Tenant shall, within
         ten (10) days after written demand therefore, restore the Security
         Deposit to the full amount originally deposited; Tenant's failure to do
         so shall constitute an act of default hereunder and Landlord shall have
         the right to exercise any remedy provided for in Article 27 hereof.
         Within fifteen (15) days after the Term (or any extension thereof) has
         expired or Tenant has vacated the Premises, whichever shall last occur,
         and provided Tenant is not then in default on any of its obligations
         hereunder, Landlord shall return the Security Deposit to Tenant, or, if
         Tenant has assigned its interest under this Lease, to the last assignee
         of Tenant. If Landlord sells its interest in the Premises, Landlord may
         deliver this deposit to the purchaser of Landlord's interest and
         thereupon be relieved of any further liability or obligation with
         respect to the Security Deposit. 

8.       TENANT'S USE OF THE PREMISES 

         Tenant shall use the Premises solely for the purposes set forth in
         Tenant's Use Clause and in compliance with Article 1l.C. and Exhibit
         F.

9.       SERVICES AND UTILITIES 

         Landlord shall provide and install a separate electric meter for the
         Premises and shall distribute sufficient electric capacity to the
         Premises for normal office equipment, lighting, and HVAC (heating,
         ventilating and air-conditioning) as required in Landlord's judgement
         for the intended use and occupancy of the Premises and as customarily
         furnished at comparable office buildings in the area. Any increase of
         electric service over that provided by Landlord shall require
         Landlord's advance written permission and the costs of any such
         increase of electric service shall be the responsibility of Tenant.
         Tenant shall not connect any apparatus employing electric current
         except through existing outlets and receptacles within the Premises.

         Landlord shall furnish, to the Premises, water, sewer and elevator ser-
         vice, and janitorial service, exterior window-washing, HVAC equipment &
         filter maintenance services as required in Landlord's judgement and as
         customarily furnished at comparable office R & D buildings in the area.
         Tenant shall not consume any of the above services or utilities in
         excess of that usually furnished and supplied for use of the Premises
         as general office R & D space (as determined by Landlord) without
         Landlord's advance written permission (which may be denied) and
         Landlord may under such circumstances establish a monthly charge for
         Tenant's excess use or consumption of such services and utilities.
         Landlord shall maintain and keep lighted the common areas of the
         Project, including parking areas, building entries, lobbies, corridors,
         staircases, and restrooms, and Landlord shall furnish restroom supplies
         and lightbulb replacement for Building Standard (i.e. Landlord
         installed) light fixtures within the Premises.

         Landlord shall not be in default hereunder or be liable for any
         damages directly or indirectly resulting from, nor shall rent be abated
         by reason of (i) the installation, use or interruption of use of any
         equipment in connection with the furnishing of any of the foregoing
         services or utilities, (ii) failure to furnish or delay in furnishing
         any such services or utilities where such failure or delay is caused by
         accident or making of necessary repairs or improvements to the
         Premises, Building or Project, or (iii) the limitation, curtailment or
         rationing of, or restrictions on, use of water, electricity, gas or any
         other form of energy serving the Premises, Building or Project.
         Landlord shall not be liable under any circumstances, unless directly
         attributable to Landlord's wrongful or negligent acts, for the loss or
         damage to Tenant's property or business, through or in connection with
         or incidental to failure to furnish or delay in the furnishing of any
         of the foregoing services or utilities.

         Tenant shall arrange for the initiation of service for any separately
         metered utilities to the Premises, including telephone service,
         directly with the appropriate utility vendor or supplier, and all
         billing invoices, security deposits, and any other charges relating to
         the initiation and continued provision of such separately metered
         utilities and telephone service shall be the responsibility of and in
         the name of Tenant.

TENANT'S INITIALS:__                                      LANDLORD'S INITIALS:__

                                       7
<PAGE>
 
10.      CONDITION OF THE PREMISES

         Tenant's taking possession of the Premises shall be deemed conclusive
         evidence that as of the date of taking possession the Premises are in
         good order and satisfactory condition, except for such matters as to
         which Tenant gave Landlord notice on or before the Commencement Date.
         No promise of Landlord to alter, remodel, repair or improve the
         Premises, the Building or the Project and no representation, express or
         implied, respecting any matter or thing relating to the Premises,
         Building, Project or this Lease (including, without limitation, the
         condition of the Premises, the Building or the Project) have been made
         to Tenant by Landlord or its Broker or Sales Agent, other than as may
         be contained herein or in a separate exhibit or Rider signed by
         Landlord and Tenant.

11.      CONSTRUCTION, REPAIRS AND MAINTENANCE 

         A.   Landlord's Obligations. Landlord shall perform Landlord's Work to
              the Premises as described in Exhibit C. Landlord shall maintain in
              good order, condition and repair the Building and all other
              portions of the Premises not the obligation of Tenant or of any
              other tenant in the Building.

         B.   Tenant's Obligations.

              (1) Tenant shall perform Tenant's Work to the Premises as
              described in Exhibit C.  

              (2) Tenant at Tenant's sole expense shall, except for services
              furnished by Landlord pursuant to Article 9 hereof, maintain the
              Premises in good order, condition and repair, including the
              interior surfaces of the ceilings, walls and floors, all doors,
              all interior windows, all plumbing, pipes and fixtures, electrical
              wiring, switches and fixtures, Building Standard furnishings and
              special items and equipment installed by or at the expense of
              Tenant.

              (3) Tenant shall be responsible for all repairs and alterations in
              and to the Premises, Building and Project and the facilities and
              systems thereof, the need for which arises out of (i) Tenant's use
              or occupancy of the Premises, (ii) the installation, removal, use
              or operation of Tenant's Property (as defined in Article 13) in
              the Premises, (iii) the moving of Tenant's Property into or out of
              the Building, or (iv) the act, omission, misuse or negligence of
              Tenant, its agents, contractors, employees or invitees.

              (4) If Tenant fails to maintain the Premises in good order,
              condition and repair, Landlord shall give Tenant notice to do such
              acts as are reasonably required to so maintain the Premises. If
              Tenant fails to promptly commence such work and diligently
              prosecute it to completion, then Landlord shall have the right to
              do such acts and expend such funds at the expense of Tenant as are
              reasonably required to perform such work. Any amount so expended
              by Landlord shall be paid by Tenant promptly after demand with
              interest at the prime commercial rate then being charged by Bank
              of America NT & SA plus four percent (4%) per annum, from the date
              of such work, but not to exceed the maximum rate then allowed by
              law. Landlord shall have no liability to Tenant for any damage,
              inconvenience, or interference with the use of the Premises by
              Tenant as a result of performing any such work.

         C.   Compliance with Law. Tenant shall not use or occupy the Premises
              in violation of law or any covenant, condition or restriction
              affecting the Building or Project or the certificate of occupancy
              issued for the Building or Project, and shall, upon notice from
              Landlord, immediately discontinue any use of the Premises which is
              declared by any governmental authority having jurisdiction to be a
              violation of law or the certificate of occupancy. Tenant, at
              Tenant's own cost and expense, shall comply with all laws,
              ordinances, regulations, rules and/or any directions of any
              governmental agencies or authorities having jurisdiction which
              shall, by reason of the nature of Tenant's use or occupancy of the
              Premises, impose any duty upon Tenant or Landlord with respect to
              the Premises or its use or occupation. A judgment of any court of
              competent jurisdiction or the admission by Tenant in any action or
              proceeding against Tenant that Tenant has violated any such laws,
              ordinances, regulations, rules and/or directions in the use of the
              Premises shall be deemed to be a conclusive determination of that
              fact as between Landlord and Tenant. Tenant shall not do or permit
              to be done anything which will invalidate or increase the cost of
              any fire, extended coverage or other insurance policy covering the
              Building or Project and/or property located therein, and shall
              comply with all rules, orders, regulations, requirements and
              recommendations of the Insurance Services Office or any other
              organization performing a similar function. Tenant shall promptly
              upon demand reimburse Landlord for any additional premium charged
              for such policy by reason of Tenant's failure to comply with the
              provisions of this Article. Tenant shall not do or permit anything
              to be done in or about the Premises which will in any way obstruct
              or interfere with the rights of other tenants or occupants of the
              Building or Project, or injure or


TENANT'S INITIALS:__                                      LANDLORD'S INITIALS:__

                                       8
<PAGE>

                  annoy them, or use or allow the Premises to be used for any
                  improper, immoral, unlawful or objectionable purpose, nor
                  shall Tenant cause, maintain or permit any nuisance in, on or
                  about the Premises. Tenant shall not commit or suffer to be
                  committed any waste in or upon the Premises.

         D.       Waiver by Tenant. Tenant expressly waives the benefits of any
                  statute now or hereafter in effect which would otherwise
                  afford the Tenant the right to make repairs at Landlord's
                  expense or to terminate this Lease because of Landlord's
                  failure to keep the Premises in good order, condition and
                  repair.

         E.       Load and Equipment Limits. Tenant shall not place a load upon
                  any floor of the Premises which exceeds the load per square
                  foot which such floor was designed to carry, as determined by
                  Landlord or Landlord's structural engineer. The cost of any
                  such determination required to be made by Landlord's
                  structural engineer because of Tenant's load requirements
                  shall be paid for by Tenant upon demand. Tenant shall not
                  install business machines or mechanical equipment which cause
                  noise or vibration to such a degree as to be objectionable to
                  Landlord or other Building tenants.

         F.       Limit of Landlord's Liability. Except as otherwise expressly
                  provided in this Lease, Landlord shall have no liability to
                  Tenant nor shall Tenant's obligations under this Lease be
                  reduced or abated in any manner whatsoever by reason of any
                  inconvenience, annoyance, interruption or injury to business
                  arising from any repairs or changes which Landlord is required
                  or permitted to make in or to any portion of the Project,
                  Building or the Premises. Landlord shall nevertheless use
                  reasonable efforts to minimize any interference with Tenant's
                  business in the Premises.

         G.       Tenant Notice. Tenant shall give Landlord prompt notice of any
                  damage to or defective condition in any part or appurtenance
                  of the Building's mechanical, electrical, plumbing, HVAC or
                  other systems serving, located in, or passing through the
                  Premises.

         H.       Condition at Termination. Upon the expiration or earlier
                  termination of this Lease, Tenant shall return the Premises to
                  Landlord clean and in the same condition as on the date Tenant
                  took possession, except for normal wear and tear. Any damage
                  to the Premises, including any structural damage, resulting
                  from Tenant's use or from the removal of Tenant's fixtures,
                  furnishings, and equipment pursuant to Article 13.B. shall be
                  repaired by Tenant at Tenant's expense.

 12.     ALTERATIONS AND ADDITIONS

         A.       Tenant shall not make any additions, alterations, or
                  improvements to the Premises without obtaining the prior
                  written consent of Landlord. Landlord's consent may be
                  conditioned on Tenant's removing any such additions,
                  alterations or improvements upon the expiration of the Term
                  and restoring the Premises to the same condition as on the
                  date Tenant took possession. All work with respect to any
                  addition, alteration or improvement shall be done in a good
                  and workmanlike manner by properly qualified and licensed
                  personnel approved by Landlord, and such work shall be
                  diligently prosecuted to completion. Landlord may, at
                  Landlord's option, require that Landlord's contractor or
                  Architect supervise and/or perform that portion of any such
                  alternation or additions involving the Building's roof,
                  exterior metal siding and/or stucco surfaces, windows and/or
                  window frames, waterproofing any underground work,
                  landscaping, building entry doors and/or building security
                  systems, common area equipment or improvements, and/or any
                  item or element with the Premises, Building or Project
                  subject to a warranty to Landlord.

         B.       Tenant shall pay the costs of any work done on the Premises
                  pursuant to Article 12.A., and shall keep the Premises,
                  Building and Project free and clear of liens of any kind.
                  Tenant shall indemnify, defend against and keep Landlord free
                  and harmless from all liability, loss, damage, costs,
                  attorneys' fees and any other expense incurred on account of
                  claims by any person performing work or furnishing materials
                  or supplies for Tenant or any person claiming under Tenant.

                  Tenant shall keep Tenant's leasehold interest, and any
                  additions or improvements which are or become the property of
                  Landlord under this Lease, free and clear of all attachment or
                  judgment liens. Before the actual commencement of any work for
                  which a claim or lien may be filed, Tenant shall give Landlord
                  notice of the intended commencement date a sufficient time
                  before that date to enable Landlord to post notices of
                  non-responsibility or any other notices which Landlord deems
                  necessary for the proper protection of Landlord's interest in
                  the Premises, Building or the Project, and Landlord shall have
                  the right to enter the Premises

TENANT'S INITIALS: __                                  LANDLORD'S INITIALS:__

                                       9
<PAGE>

                  and post such notices at any reasonable time.

         C.       Landlord may require, at Landlord's sole option, that Tenant
                  provide to Landlord, at Tenant's expense, a lien and
                  completion bond in an amount equal to at least one and
                  one-half (1-1/2) times the total estimated cost of any
                  additions, alterations or improvements to be made in or to the
                  Premises, to protect Landlord against any liability for
                  mechanic's and materialmen's liens and to insure timely
                  completion of the work. Nothing contained in this Article
                  12.C. shall relieve Tenant of its obligation under Article 
                  12.B. to keep the Premises, Building and Project free of all
                  liens.

         D.       Unless removal is required by Landlord as provided in Article
                  12.A., all additions, alterations and improvements made to the
                  Premises shall become the property of Landlord and be
                  surrendered with the Premises upon the expiration of the Term;
                  provided, however, Tenant's equipment, machinery and trade
                  fixtures which can be removed without damage to the Premises
                  shall remain the property of Tenant and may be removed,
                  subject to the provisions of Article 13.B.

 13.     LEASEHOLD IMPROVEMENTS; TENANT'S PROPERTY

         A.       All fixtures, equipment, improvements and appurtenances
                  attached to or built into the Premises at the commencement of
                  or during the Term, whether or not by or at the expense of
                  Tenant ("Leasehold Improvements"), shall be and remain a part
                  of the Premises, shall be the property of Landlord and shall
                  not be removed by Tenant, except as expressly provided in
                  Article 13.B.

         B.       All moveable partitions, business and trade fixtures,
                  machinery and equipment, communications equipment and office
                  equipment located in the Premises and acquired by or for the
                  account of Tenant, without expense to Landlord, which can be
                  removed without structural damage to the Building, and all
                  furniture, furnishings and other articles of movable personal
                  property owned by Tenant and located in the Premises
                  (collectively "Tenant's Property") shall be and shall remain
                  the property of Tenant and may be removed by Tenant at any
                  time during the Term; provided that if any of Tenant's
                  Property is removed, Tenant shall promptly repair any damage
                  to the Premises or to the Building resulting from such
                  removal.

 14.     RULES AND REGULATIONS

         Tenant agrees to comply with (and cause its agents, contractors,
         employees and invitees to comply with) the rules and regulations
         attached hereto as Exhibit D and with such reasonable modifications
         thereof and additions thereto as Landlord may from time to time make.
         Landlord shall not be responsible for any violation of said rules and
         regulations by other tenants or occupants of the Building or Project.

 15.     CERTAIN RIGHTS RESERVED BY LANDLORD

         Landlord reserves the following rights, exercisable without liability
         to Tenant for (a) damage or injury to property, person or business, (b)
         causing an actual or constructive eviction from the Premises, or (c)
         disturbing Tenant's use or possession of the Premises.

         A.       To name the Building and Project and to change the name or 
                  street address of the Building or Project;

         B.       To install and maintain all signs on the exterior and interior
                  of the Building and Project;

         C.       To have pass keys and security access to the Premises and all 
                  doors within the Premises, excluding Tenant's vaults and 
                  safes;

         D.       At any time during the Term, and on reasonable prior notice to
                  Tenant, to inspect the Premises, and to show the Premises to
                  any prospective purchaser or mortgagee of the Project, or to
                  any assignee of any mortgage on the Project, or to others
                  having an interest in the Project or Landlord, and during the
                  last six months of the Term, to show the Premises to
                  prospective tenants thereof; and

         E.       To enter the Premises for the purpose of making inspections,
                  repairs, alterations, additions or improvements to the
                  Premises or the Building (including, without limitation,
                  checking, calibrating, adjusting or balancing controls and
                  other parts of the HVAC system), and to take all steps as may
                  be necessary or desirable for the safety, protection,
                  maintenance or

TENANT'S INITIALS: __                                  LANDLORD'S INITIAL: __


                                      10

<PAGE>
 
         preservation of the Premises or the Building or Landlord's interest
         therein, or as may be necessary or desirable for the operation or
         improvement of the Building or in order to comply with laws, orders or
         requirements of governmental or other authority. Landlord agrees to use
         its best efforts (except in an emergency) to minimize interference with
         Tenant's business in the Premises in the course of any such entry.


16. ASSIGNMENT AND SUBLETTING

    No assignment of this Lease or sublease of all or any part of the Premises
    shall be permitted, except as provided in this Article 16.

    A.   Tenant shall not, without the prior written consent of Landlord,
         assign, transfer, encumber or hypothecate this Lease or any interest
         herein or sublet the Premises or any part thereof, or permit the use of
         the premises by any party other than Tenant. Any of the foregoing acts
         without such consent shall be void and shall, at the option of
         Landlord, terminate this Lease. This Lease shall not, nor shall any
         interest of Tenant herein, be assignable by operation of law without
         the written consent of Landlord. "Transfer" within the meaning of this
         Article 16 shall include the transfer or transfers aggregating: (a) if
         Tenant is a corporation, more than 25% of the voting stock of Tenant;
         or (b) if Tenant is a partnership, more than 25% of the profit and loss
         participation in such partnership.

    B.   If at any time or from time to time during the Term, Tenant desires to
         assign this Lease or sublet all or any part of the Premises, Tenant
         shall give notice to Landlord setting forth the terms and provisions of
         the proposed assignment or sublease, and the identity of the proposed
         assignee or subtenant. Tenant shall promptly supply Landlord with such
         information concerning the business background and financial condition
         of such proposed assignee or subtenant as Landlord may reasonably
         request. Landlord shall have the option, exercisable by notice given to
         Tenant within twenty (20) days after Tenant's notice is given, either
         to sublet such space from Tenant at the rental and on the other terms
         set forth in this Lease for the term set forth in Tenant's notice, or,
         in the case of an assignment, to terminate this Lease. If Landlord does
         not exercise such option, Tenant may assign the Lease or sublet such
         space to such proposed assignee or subtenant on the following further
         conditions:

         (1) Landlord shall have the right to approve such proposed assignee or
         subtenant, which approval shall not be unreasonably withheld;

         (2) The assignment or sublease shall be on the same terms set forth in
         the notice given to Landlord;

         (3) No assignment or sublease shall be valid and no assignee or
         sublessee shall take possession of the Premises until an executed
         counterpart of such assignment or sublease has been delivered to
         Landlord;

         (4) No assignee or sublessee shall have a further right to assign or
         sublet except on the terms herein contained; and

         (5) Any sums or other economic consideration received by Tenant as a
         result of such assignment or subletting, however denominated under the
         assignment or sublease, which exceed, in the aggregate, (i) the total
         sums which Tenant is obligated to pay Landlord under this Lease
         (prorated to reflect obligations allocable to any portion of the
         Premises subleased), plus (ii) any real estate brokerage commissions or
         fees payable in connection with such assignment or subletting, shall be
         paid to Landlord as additional rent under this Lease without affecting
         or reducing any other obligations of Tenant hereunder.

         (6) If Tenant's obligation under this Lease have been guaranteed by
         third parties, then an assignment or sublease, and Landlord's consent
         thereto, shall not be effective unless said guarantors give their
         written consent to each assignment or sublease and the terms thereof.

    C.   Notwithstanding the provisions of paragraphs A. and B. above, Tenant
         may assign this Lease or sublet the Premises or any portion thereof,
         without Landlord's consent and without extending any recapture or
         termination option to Landlord, to any corporation which controls, is
         controlled by or is under common control with Tenant, or to any
         corporation resulting from a merger or consolidation with Tenant, or to
         any person or entity which acquires all the assets of Tenant's business
         as a going concern, provided that (i) the assignee or sublessee
         assumes, in full, the obligations of Tenant under this Lease, (ii)
         Tenant remains fully liable under this Lease, and (iii) the use of the
         Premises under Article 8 remains unchanged.


      

TENANT'S INITIALS:___                        LANDLORD'S INITIALS:___

                  


                                      11
<PAGE>
 
    D.   No subletting or assignment shall release Tenant of Tenant's
         obligations under this Lease or alter the primary liability of Tenant
         to pay the Rent and to perform all other obligations to be performed by
         Tenant hereunder. The acceptance of Rent by Landlord from any other
         person shall not be deemed to be a waiver by Landlord of any provision
         hereof. Consent to one assignment or subletting shall not be deemed
         consent to any subsequent assignment or subletting. In the event of
         default by an assignee or subtenant of Tenant or any successor of
         Tenant in the performance of any of the terms hereof, Landlord may
         proceed directly against Tenant without the necessity of exhausting
         remedies against such assignee, subtenant or successor. Landlord may
         consent to subsequent assignments of the Lease or sublettings or
         amendments or modifications to the Lease with assignees of Tenant,
         without notifying Tenant, or any successor of Tenant, and without
         obtaining its or their consent thereto and any such actions shall not
         relieve Tenant of liability under this Lease.

    E.   If Tenant assigns the Lease or sublets the Premises or requests the
         consent of Landlord to any assignment or subletting or if Tenant
         requests the consent of Landlord for any act that Tenant proposes to
         do, then Tenant shall, upon demand, pay Landlord an administrative fee
         of One Hundred Fifty and No/100ths Dollars ($150.00) plus any
         attorneys' fees reasonably incurred by Landlord in connection with such
         act or request.

17.      HOLDING OVER 

         If after expiration of the Term, Tenant remains in possession of the
         Premises with Landlord's permission (express or implied), Tenant shall
         become a tenant from month to month only, upon all the provisions of
         this Lease (except as to term and Base Rent), but the monthly
         installments of Base Rent payable by Tenant shall be increased to one
         hundred fifty percent (150%) of the Monthly Installments of Base Rent
         payable by Tenant at the expiration of the Term. Such monthly rent
         shall be payable in advance on or before the first day of each month.
         If either party desires to terminate such month to month tenancy, it
         shall give the other party not less than thirty (30) days advance
         written notice of the date of termination.
      
18.      SURRENDER OF PREMISES

         A.     Tenant shall peaceably surrender the Premises to Landlord on the
                Expiration Date, in broomclean condition and in as good
                condition as when Tenant took possession, except for (i)
                reasonable wear and tear, (ii) loss by fire or other casualty
                and (iii) loss by condemnation. Tenant shall, on Landlord's
                request, remove Tenant's Property on or before the Expiration
                Date and promptly repair all damage to the Premises or Building
                caused by such removal.

         B.     If Tenant abandons or surrenders the Premises, or is
                dispossessed by process of law or otherwise, any of Tenant's
                Properly left on the Premises shall be deemed to be abandoned,
                and, at Landlord's option, title shall pass to Landlord under
                this Lease as by a bill of sale. If Landlord elects to remove
                all or any part of such Tenant's Property, the cost of removal,
                including repairing any damage to the Premises or Building
                caused by such removal, shall be paid by Tenant. On the
                Expiration Date, Tenant shall surrender all keys to the
                Premises.
                
19.      DESTRUCTION OR DAMAGE

         A.     If the Premises or the portion of the Building necessary for
                Tenant's occupancy is damaged by fire, earthquake, act of God,
                the elements or other casualty, Landlord shall, subject to the
                provisions of this Article, promptly repair the damage, if such
                repairs can, in Landlord's opinion, be completed within ninety
                (90) days and if sufficient insurance proceeds are available to
                landlord to complete the repair. If Landlord determines that
                repairs can be completed within ninety (90) days, this Lease
                shall remain in full force and effect, except that if such
                damage is not the result of the negligence or willful misconduct
                of Tenant or Tenant's agents, employees, contractors, licensees
                or invitees, the Base Rent shall be abated to the extent
                Tenant's use of the Premises is impaired, commencing with the
                date of damage and continuing until completion of the repairs
                required by Landlord under Article 19.D.

         B.     If in Landlord's opinion, such repairs to the Premises or
                portion of the Building necessary for Tenant's occupancy cannot
                be completed within ninety (90) days, Landlord may elect, upon
                notice to Tenant given within thirty (30) days after the date of
                such fire or other casualty, to repair such damage, in which
                event this Lease shall continue in full force and effect, but
                the Base Rent shall be partially abated as provided in Article
                19.A. If Landlord does not so elect to make such repairs, this
                Lease shall terminate as of the date of such fire or other
                casualty.

         C.     If any other portion of the Building or Project is totally
                destroyed or damaged to the extent that in Landlord's opinion
                repair thereof cannot be completed within ninety (90) days, or
                if




TENANT'S INITIALS:___                        LANDLORD'S INITIALS:___     

                                      12
<PAGE>
 
         sufficient insurance proceeds are not available to Landlord to complete
         the repair. Landlord may elect upon notice to Tenant given within
         thirty (30) days after the date of such fire or other casualty, to
         repair such damage, in which event this Lease shall continue in full
         force and effect, but the Base Rent shall be partially abated as
         provided in Article 19.A. If Landlord does not elect to make such
         repairs, this Lease shall terminate as of the date of such tire or
         other casualty.

    D.   If the Premises are to be repaired under this Article, Landlord shall
         repair at its cost any injury or damage to the Building and Building
         Standard Work in the Premises. Tenant shall be responsible at its sole
         cost and expense for the repair, restoration and replacement of any
         other Leasehold Improvements and Tenant's Property. Landlord shall not
         be liable for any loss of business, inconvenience or annoyance arising
         from any repair or restoration of any portion of the Premises, Building
         or Project as a result of any damage from fire or other casualty.

    E.   This Lease shall be considered an express agreement governing any case
         of damage to or destruction of the Premises, Building or Project by
         fire or other casualty, and any present or future law which purports to
         govern the rights of Landlord and Tenant in such circumstances in the
         absence of express agreement, shall have no application.

20. EMINENT DOMAIN

    A.   If the whole of the Building or Premises is law-fully taken by
         condemnation or in any other manner for any public or quasi-public
         purpose, this Lease shall terminate as of the date of such taking, and
         Rent shall be prorated to such date. If less than the whole of the
         Building or Premises is so taken, this Lease shall be unaffected by
         such taking, provided that (i) Tenant shall have the right to terminate
         this Lease by notice to Landlord given within ninety (90) days after
         the date of such taking if twenty percent (20%) or more of the Premises
         is taken and the remaining area of the Premises is not reasonably
         sufficient for Tenant to continue operation of its business, and (ii)
         Landlord shall have the right to terminate this Lease by notice to
         Tenant given within ninety (90) days after the date of such taking. If
         either Landlord or Tenant so elects to terminate this Lease, the Lease
         shall terminate on the thirtieth (30th) day after either such notice.
         The Rent shall be prorated to the date of termination. If this Lease
         continues in force upon such partial taking, the Base Rent and Tenant's
         Proportionate Share shall be equitably adjusted according to the
         remaining Rentable Area of the Premises and Project.

    B.   In the event of any taking, partial or whole, all of the proceeds of
         any award, judgment or settlement payable by the condemning authority
         shall be the exclusive property of Landlord, and Tenant hereby assigns
         to Landlord al1 of its right, title and interest in any award, judgment
         or settlement from the condemning authority. Tenant, however, shall be
         entitled to any separate award for loss of or damage to Tenant's trade
         fixtures, removable personal property and unamortized Tenant
         improvements that have been paid for by Tenant. For that purpose, the
         cost of such improvements shall be amortized over the original term of
         the Lease, excluding any options.

    C.   In the event of a partial taking of the Premises which does not result
         in a termination of this Lease, Landlord shall restore the remaining
         portion of the Premises as nearly as practicable to its condition prior
         to the condemnation or taking, but only to the extent of Building
         Standard Work. Tenant shall be responsible at its sole cost and--
         expense for the repair, restoration and replacement of any other
         Leasehold Improvements and Tenant's Property.

21. INDEMNIFICATION

    A.   Unless caused by the negligence or willful misconduct of Landlord,
         Tenant shall indemnify and hold Landlord harmless against and from any
         and all liability and claims of any kind for loss or damage to property
         of Tenant or any other person, or for any injury to or death of any
         person, arising out of: (1) Tenant's use and occupancy of the Premises,
         or any work, activity or other things done in, on or about the Premises
         or elsewhere; (2) any breach or default by Tenant of any of Tenant's
         obligations under this Lease; or (3) any act or omission of Tenant, its
         agents, employees, invitees or contractors. Tenant shall, at Tenant's
         expense, and by counsel satisfactory to Landlord, defend Landlord in
         any action or proceeding arising from any such claim and shall
         indemnify Landlord against all costs, attorneys' fees, expert witness
         fees and any other expenses incurred in such action or proceeding. As a
         material part of the consideration for Landlord's execution of this
         Lease, Tenant hereby assumes all risk of damage or injury to any person
         or property in, on or about the Premises or Project from any




TENANT'S INITIALS:___                        LANDLORD'S INITIALS:___





                                      13
<PAGE>
 
         cause.

    B.   Unless caused by the negligence or willful misconduct of Landlord,
         Landlord shall not be liable for injury or damage to Tenant's business
         or any loss of income therefrom or for loss of or damage to the goods,
         wares, merchandise or property of Tenant, its employees, invitees or
         customers, or any other person in or about the Premises nor shall
         Landlord be liable for injury to the person of Tenant, Tenant's
         employees, agents, invitees, or contractors whether such damage or
         injury is, caused by or resulting from theft, fire, steam, electricity,
         gas, water or rain which may leak or flow from or into any part of the
         Premises or Project, or from the breakage, leakage, obstruction or
         other defects of pipes, sprinklers, wires, appliances, plumbing, air
         conditioning or lighting fixtures, or from any other cause, whether
         such damage or injury results from conditions arising upon the Premises
         or upon other portions of the Building or Project or from other
         sources. Landlord shall not be liable for any damages arising from any
         act or omission of any other tenant or occupants of the Building or
         Project.

    22.  TENANT'S INSURANCE

    A.   All insurance required to be carried by Tenant hereunder shall be
         issued by responsible insurance companies acceptable to Landlord and
         Landlord's lender and qualified to do business in the State and rated
         in "Best's Key Rating Guide" at A:IX or better. Each policy shall name
         Landlord, and at Landlord's request any mortgagee of Landlord, as an
         additional insured, as their respective interests may appear. Each
         policy shall contain (i) a cross-liability endorsement, (ii) a
         provision that such policy and the coverage evidenced thereby shall be
         primary and non-contributing with respect to any policies carried by
         Landlord and that any coverage carried by Landlord shall be excess
         insurance, and (iii) a waiver by the insurer of any right of
         subrogation against Landlord, its agents, employees and
         representatives, which arises or might arise by reason of any payment
         under such policy or by reason of any act or omission of Landlord, its
         agents, employees or representatives. A certificate (in form of Exhibit
         G) of the insurer evidencing the existence and amount of each insurance
         policy required hereunder shall be delivered to Landlord before the
         date Tenant is first given the right of possession of the
         Premises. Landlord may, at any time and from time to time, inspect
         and/or copy any insurance policies required to be maintained by Tenant
         hereunder. The certificate shall state that no such policy shall be
         cancelable except after thirty (30) days written notice to Landlord and
         Landlords lender. Tenant shall furnish Landlord with renewals
         certificates for any such policy at least thirty (30) days prior to the
         expiration thereof. Tenant agrees that if Tenant does not take out and
         maintain such insurance, Landlord may (but shall not be required to)
         procure said insurance on Tenant's behalf and charge the Tenant the
         premiums together with a handling charge of twenty-five percent (25%)
         of the premium , payable upon demand. Tenant shall have the right to
         provide such insurance coverage pursuant to blanket policies obtained
         by the Tenant, provided such blanket policies expressly afford coverage
         to the Premises, Landlord, Landlord's mortgagee and Tenant as required
         by this Lease.

    B.   Beginning on the date Tenant is given access to the Premises for any
         purpose and continuing until expiration of the Term, Tenant shall
         procure, pay for and maintain in effect policies of casualty insurance
         covering (i) all Leasehold Improvements (including any alterations,
         additions or improvements as may be made by Tenant pursuant to the
         provisions of Article 12 hereof), and (ii) trade fixtures, merchandise
         and other personal property from time to time in, on or about the
         Premises, in an amount not less than one hundred percent (100%) of
         their actual replacement cost from time to time, providing protection
         against any peril included with the classification "Fire and Extended
         Coverage" together with insurance against sprinkler damage, vandalism
         and malicious mischief. The proceeds of such insurance shall be used
         for the repair or replacement of the property so insured. Upon
         termination of this Lease following a casualty as set forth herein, the
         proceeds under (i) shall be paid to Landlord, and the proceeds under
         (ii) above shall be paid to Tenant.

    C.   Beginning on the date Tenant is given access to the Premises for any
         purpose and continuing until expiration of the Term, Tenant shall
         procure, pay for and maintain in effect workers' compensation insurance
         as required by law and Comprehensive Public Liability Insurance
         utilizing an Insurance Services Office Standard form with Broad Form
         General Liability Endorsement (GL0404) or equivalent and property
         damage insurance with respect to the construction of improvements on
         the Premises, the use, operation, maintenance and or condition of the
         Premises and the operations of Tenant in, on or about the Premises,
         providing personal injury and broad form property damage coverage for
         not less than Two Million Dollars ($2,000,000) combined single limit
         for bodily injury, death and property damage liability.




TENANT'S INITIALS:___                        LANDLORD'S INITIALS:___    





                                      14
<PAGE>
 
    D.   Not less than every three (3) years during the Term, Landlord and
         Tenant shall mutually agree to increases in all of Tenant's insurance
         policy limits for all insurance to be carried by Tenant as set forth in
         this Article. In the event Landlord and Tenant cannot mutually agree
         upon the amounts of said increases, then Tenant agrees that all
         insurance policy limits as set forth in this Article shall be adjusted
         for increases in the cost of living in the same manner as is set forth
         in Article 5.2 hereof for the adjustment of the Base Rent.

23. WAIVER OF SUBROGATION

    Landlord and Tenant each hereby waive all rights of recovery against the
    other and against the officers, employees, agents and representatives of the
    other, on account of loss by or damage to the waiving party or its property
    or the property of others under its control, to the extent that such loss or
    damage is insured against under any fire and extended coverage insurance
    policy which either may have in force at the time of the loss or damage.
    Tenant shall, upon obtaining the policies of insurance required under this
    Lease, give notice to its insurance carrier or carriers that the foregoing
    mutual waiver of subrogation is contained in this Lease.

24. SUBORDINATION AND ATTORNMENT

    Upon written request of Landlord, or any mortgage or deed of trust
    beneficiary of Landlord, or ground lessor of Landlord, Tenant shall, in
    writing, subordinate its rights under this Lease to the lien of any mortgage
    or deed of trust, or to the interest of any lease in which Landlord is
    lessee ("Security Device"), and to all advances made or hereafter to be made
    thereunder. However, before signing any subordination agreement, Tenant
    shall have the right to obtain from any lender or lessor of Landlord
    requesting such subordination, an agreement in writing providing that, as
    long as Tenant is not in default hereunder, this Lease shall remain in
    effect for the full Term. The holder of any Security Device may, upon
    written notice to Tenant, elect to have this Lease prior to its Security
    Device regardless of the time of the granting or recording of such Security
    Device.


     In the event of any foreclosure sale, transfer in lieu of foreclosure or
    termination of the lease in which Landlord is lessee, Tenant shall attorn to
    the purchaser, transferee or lessor as the case may be, and recognize that
    party as Landlord under this Lease, provided such party acquires and accepts
    the Premises subject to this Lease.

25. TENANT ESTOPPEL CERTIFICATES

    Within ten (10) days after written request from Landlord, Tenant shall
    execute and deliver to Landlord or Landlord's designee, a written statement
    certifying (a) that this Lease is unmodified and in full force and effect,
    or is in full force and effect as modified and stating the modifications;
    (b) the amount of Base Rent and the date to which Base Rent and additional
    rent have been paid in advance; (c) the amount of any security deposited
    with Landlord; (d) that Landlord is not in default hereunder or, if Landlord
    is claimed to be in default, stating the nature of any claimed default. Any
    such statement may be relied upon by a purchaser, assignee or lender and
    other matters reasonably requested by Landlord. Tenant's failure to execute
    and deliver such statement within the time required shall at Landlord's
    election be in default under this Lease and shall also be conclusive upon
    Tenant that: (1) this Lease is in full force and effect and has not been
    modified except as represented by Landlord; (2) there are no uncured
    defaults in Landlord's performance and that Tenant has no right of offset,
    counter-claim or deduction against Rent; and (3) not more than one month's
    Rent has been paid in advance.

26. TRANSFER OF LANDLORD'S INTEREST

    In the event of any sale or transfer by Landlord of the Premises, Building
    or Project, and assignment of this Lease by Landlord, Landlord shall be and
    is hereby entirely freed and relieved of any and all liability and
    obligations contained in or derived from this Lease arising out of any act,
    occurrence or omission relating to the Premises, Building, Project or Lease
    occurring after the consummation of such sale or transfer, providing the
    purchaser shall expressly assume all of the covenants and obligations of
    Landlord under this Lease. If any security deposit or prepaid Rent has been
    paid by Tenant, Landlord may transfer the security deposit or prepaid Rent
    to Landlord's successor and upon such transfer, Landlord shall be relieved
    of any and all further liability with respect thereto.

27. DEFAULT

27. I    Tenant's Default. The occurrence of any one or more of the following
         events shall constitute a default and breach of this Lease by Tenant:

         A. If Tenant abandons or vacates the Premises; or



TENANT'S INITIALS:___                        LANDLORD'S INITIALS:___    




                                      15
<PAGE>
 
    B.   If Tenant fails to pay any Rent or any other charges required to be
         paid by Tenant under this Lease and such failure continues for five (5)
         days after such payment is due and payable; or

    C.   If Tenant fails to promptly and fully perform any other covenant,
         condition or agreement contained in this Lease and such failure
         continues for thirty (30) days after written notice thereof from
         Landlord to Tenant; or


    D.   If a writ of attachment or execution is levied on this Lease or on any
         of Tenant's Property; or


    E.   If Tenant makes a general assignment for the benefit of creditors, or
         provides for an arrangement, composition, extension or adjustment with
         its creditors; or


    F.   If Tenant files a voluntary petition for relief or if a petition
         against Tenant in a proceeding under the federal bankruptcy laws or
         other insolvency laws is filed and not withdrawn or dismissed within
         forty-five (45) days thereafter, or if under the provisions of any law
         providing for reorganization or winding up of corporations, any court
         of competent jurisdiction assumes jurisdiction, custody or control of
         Tenant or any substantial part of its property and such jurisdiction,
         custody or control remains in force unrelinquished, unstayed or
         unterminated for a period of forty-five (45) days; or

    G.   If in any proceeding or action in which Tenant is a party, a trustee,
         receiver, agent or custodian is appointed to take charge of the
         Premises or Tenant's Property (or has the authority to do so) for the
         purpose of enforcing a lien against the Premises or Tenant's Property;
         or

    H.   If Tenant is a partnership or consists of more than one (1) person or
         entity, if any partner of the partnership or other person or entity is
         involved in any of the acts or events described in subparagraphs D.
         through G. above.

27.2  Remedies. In the event of Tenant's default hereunder, then in addition to
    any other rights or remedies Landlord may have under any law, Landlord shall
    have the right, at Landlord's option, without further notice or demand of
    any kind to do the following:

    A.   Terminate this Lease and Tenant's right to possession of the Premises
         and reenter the Premises and take possession thereof, and Tenant shall
         have no further claim to the Premises or under this Lease; or

    B.   Continue this Lease in effect, reenter and occupy the Premises for the
         account of Tenant, and collect any unpaid Rent or other charges which
         have or thereafter become due and payable; or

    C.   Reenter the Premises under the provisions of subparagraph B, and
         thereafter elect to terminate this Lease and Tenant's right to
         possession of the Premises.
        
    If Landlord reenters the Premises under the provisions of subparagraphs B or
    C above, Landlord shall not be deemed to have terminated this Lease or the
    obligation of Tenant to pay any Rent or other charges thereafter accruing,
    unless Landlord notifies Tenant in writing of Landlord's election to
    terminate this Lease. In the event of any reentry or retaking of possession
    by Landlord, Landlord shall have the right, but not the obligation, to
    remove all or any part of Tenant's Property in the Premises and to place
    such property in storage at a public warehouse at the expense and risk of
    Tenant. If Landlord elects to relete the Premises for the account of Tenant,
    the rent received by Landlord from such reletting shall be applied as
    follows: first, to the payment of any indebtedness other than Rent due
    hereunder from Tenant to Landlord; second, to the payment of any costs of
    such reletting including but not limited to leasing brokerage fees; third,
    to the payment of the cost of any alterations or repairs to the Premises;
    fourth to the payment of Rent due and unpaid hereunder; and the balance, if
    any, shall be held by Landlord and applied in payment of future Rent as it
    becomes due. If that portion of rent received from the reletting which is
    applied against the Rent due hereunder is less than the amount of the Rent
    due, Tenant shall pay the deficiency to Landlord promptly upon demand by
    Landlord. Such deficiency shall be calculated and paid monthly. Tenant shall
    also pay to Landlord, as soon as determined, any costs and expenses incurred
    by Landlord in connection with such reletting or in making alterations and
    repairs to the Premises, which are not covered by the rent received from the
    reletting.




TENANT'S INITIALS:______                     LANDLORD'S INITIALS:_______




                                      16
<PAGE>
 
         Should Landlord elect to terminate this Lease under the provisions of
         subparagraph A or C above, Landlord may recover as damages from Tenant
         the following:
 
         1. Past Rent. The worth at the time of the award of any unpaid Rent
            which had been earned at the time of termination; plus

         2. Rent Prior to Award. The worth at the time of the award of the
            amount by which the unpaid Rent which 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

         3. Rent After Award. The worth at the time of the award of the amount
            by which the unpaid Rent for the balance of the Term after the time
            of award exceeds the amount of the rental loss that Tenant proves
            could be reasonably avoided; plus

         4. Proximately Caused Damages. Any other amount necessary to compensate
            Landlord for all 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, including, but
            not limited to, any costs or expenses (including attorneys' fees),
            incurred by Landlord in (a) retaking possession of the Premises, (b)
            maintaining the Premises after Tenant's default, (c) preparing the
            Premises for reletting to a new tenant, including any repairs or
            alterations, and (d) reletting the Premises, including brokers'
            commissions.

         "The worth at the time of the award" as used in subparagraphs 1 and 2
         above, is to be computed by allowing interest at the rate of the
         percent (10%) per annum. "The worth at the time of the award" as used
         in subparagraph 3 above, is to be computed by discounting the amount at
         the discount rate of the Federal Reserve Bank situated nearest to the
         Premises at the time of the award plus one percent (1%).

         The waiver by Landlord of any breach of any term, covenant or condition
         of this Lease shall not be deemed a waiver of such term, covenant or
         condition or of any subsequent breach of the same or any other term,
         covenant or condition. Acceptance of Rent by Landlord subsequent to any
         breach hereof shall not be deemed a waiver of any preceding breach
         other than the failure to pay the particular Rent so accepted,
         regardless of Landlord's knowledge of any breach at the time of such
         acceptance of Rent. Landlord shall not be deemed to have waived any
         term, covenant or condition unless Landlord gives Tenant written notice
         of such waiver.

    27.3 Landlord's Default. Notwithstanding anything contained herein to the
         contrary, the obligations of Landlord (including any actual or alleged
         breach or default by Landlord) do not constitute personal obligations
         of the individual partners, directors, officers or shareholders of
         Landlord or Landlord's partners, and Tenant shall not seek recourse
         against the individual partners, directors officers or shareholders of
         Landlord or Landlord's partners, or any of their personal assets for
         satisfaction of any liability with respect to this Lease other than
         their interest in and to the project. If Landlord fails to perform any
         covenant, condition or agreement contained in this Lease within thirty
         (30) days after receipt of written notice from Tenant specifying such
         default, or if such default cannot reasonably be cured within thirty
         (30) days, if Landlord fails to commence to cure within that thirty
         (30) day period, then Landlord shall be liable to Tenant for any
         damages sustained by Tenant as a result of Landlord's breach; provided,
         however, it is expressly understood and agreed that if Tenant obtains a
         money judgment against Landlord resulting from any default or other
         claim arising under this Lease, that judgment shall be satisfied only
         out of the rents, issues, profits, and other income actually received
         on account of Landlord's right, title and interest in the Premises,
         Building or Project, and no other real, personal or mixed property of
         Landlord (or of any of the partners which comprise Landlord, if any)
         wherever situated, shall be subject to levy to satisfy such judgment.
         If, after notice to Landlord of default, Landlord (or any mortgagee or
         deed of trust beneficiary of Landlord) fails to cure the default as
         provided herein, then Tenant shall have the right to cure that default
         at Landlord's expense. Tenant shall not have the right to terminate
         this Lease or to withhold, reduce or offset any amount against any
         payments of Rent or any other charges due and payable under this Lease.

28. BROKERAGE FEES

    Tenant warrants and represents that it has not dealt with any real estate
    broker or agent in connection with this Lease or its negotiation except
    Broker and Sales Agent as set forth in Article 2.C. Tenant shall indemnify
    and hold Landlord harmless from any cost, expense or liability (including
    costs of



TENANT'S INITIALS:______                     LANDLORD'S INITIALS:_______





                                      17
<PAGE>
 
    suit and reasonable attorneys' fees) for any compensation, commission or
    fees claimed by any other real estate broker or agent in connection with
    this Lease or its negotiation by reason of any act of Tenant.

29. NOTICES 

    All notices, approvals and demands permitted or required to be given under
    this Lease shall be in writing and deemed duly served or given if personally
    delivered or sent by certified or registered U.S. mail, postage prepaid, and
    addressed as follows: (a) if to Landlord, to Landlord's Mailing Address and
    to the Building manager, and (b) if to Tenant, to Tenant's Mailing Address;
    provided, however, notices to Tenant shall be deemed duly served or given if
    delivered or mailed to Tenant at the Premises. Landlord and Tenant may from
    time to time, by notice to the other, designate another place for receipt of
    future notices.

30. GOVERNMENT ENERGY OR UTILITY CONTROLS

    In the event of imposition of federal, state or local government controls,
    rules, regulations, or restrictions on the use or consumption of energy or
    other utilities during the Term, both Landlord and Tenant shall be bound
    thereby. In the event of a difference in interpretation by Landlord and
    Tenant of any such controls, the interpretation of Landlord shall prevail,
    and Landlord shall have the right to enforce compliance therewith, including
    the right of entry into the Premises to effect compliance.

31. QUIET ENJOYMENT

    Tenant, upon paying the Rent and performing all of its obligations under
    this Lease, shall peaceably and quietly enjoy the Premises, subject to the
    terms of this Lease and to any mortgage, lease, or other agreement to which
    this Lease may be subordinate.

32. FORCE MAJEURE

    Any prevention, delay or stoppage of work to be performed by Landlord or
    Tenant which is due to strikes, labor disputes, inability to obtain labor,
    materials, equipment or reasonable substitutes therefore, acts of God,
    governmental restrictions or regulations or controls, judicial orders, enemy
    or hostile government actions, civil commotion, fire or other casualty, or
    other causes beyond the reasonable control of the party obligated to perform
    hereunder, shall excuse performance of the work by that party for a period
    equal to the duration of that prevention, delay or stoppage. Nothing in this
    Article 34 shall excuse or delay Tenant's obligation to pay Rent or other
    charges under this Lease.

33. CURING TENANT'S DEFAULTS

    If Tenant defaults in the performance of any of its obligations under this
    Lease, Landlord may (but shall not be obligated to) without waiving such
    default, perform the same for the account and at the expense of Tenant.
    Tenant shall pay Landlord all costs, plus a 10% fee on all such costs, of
    such performance promptly upon receipt of a bill therefore.

34. SIGN CONTROL

    Tenant shall not affix, paint, erect or inscribe any sign, projection,
    awning, signal or advertisement of any kind to any part of the Premises,
    Building or Project, including without limitation, the inside or outside of
    windows or doors, without the written consent of Landlord. Landlord shall
    have the right to remove any signs or other matter, installed without
    Landlord's written permission, without being liable to Tenant by reason of
    such removal, and to charge the cost of removal to Tenant as additional rent
    hereunder, payable within ten (10) days of written demand by Landlord.

35. MISCELLANEOUS

    A.   Accord and Satisfaction; Allocation of Payments. No payment by Tenant
         or receipt by Landlord of a lesser amount than the Rent provided for in
         this Lease shall be deemed to be other than on account of the earliest
         due Rent, nor shall any endorsement or statement on any check or
         letter accompanying any check or payment as Rent be deemed an accord
         and satisfaction, and Landlord may accept such check or payment without
         prejudice to Landlord's right to recover the balance of the Rent or
         pursue any other remedy provided for in this Lease. In connection with
         the foregoing, Landlord shall have the absolute right in its sole
         discretion to apply any payment received from Tenant to any account or
         other payment of Tenant then not current and due or delinquent.

    B.   Riders. If any provision contained in a rider to this Lease is
         inconsistent with any other



TENANT'S INITIALS:___                      LANDLORD'S INITIALS:___

                                      18
<PAGE>
 
       provision herein, the provision contained in the rider shall control,
       unless otherwise provided in the rider.

C.     Attorneys' Fees. If any action or proceeding is brought by either party
       against the other pertaining to or arising out of this Lease, the finally
       prevailing party shall be entitled to recover all costs and expenses,
       including reasonable attorneys' fees, incurred on account of such action
       or proceeding.

D.     Captions, Articles and Section Numbers. The captions appearing within the
       body of this Lease have been inserted as a matter of convenience and for
       reference only and in no way define, limit or enlarge the scope or
       meaning of this Lease. All references to Article and Section numbers
       refer to Articles and Sections in this Lease.

E.     Changes Requested by Lender. Tenant shall not unreasonably withhold its
       consent to changes or amendments to this Lease requested by Landlord's
       lender, so long as these changes do not alter the basic business terms of
       this Lease or otherwise materially diminish any rights or materially
       increase any obligations of the Tenant.

F.     Choice of Law. This Lease shall be construed and enforced in accordance
       with the laws of the State.

G.     Consent. Notwithstanding anything contained in this Lease to the
       contrary, Tenant shall have no claim, and hereby waives the right to any
       claim against Landlord for money damages by reason of any refusal,
       withholding or delaying by Landlord of any consent, approval or statement
       of satisfaction, and in such event, Tenant's only remedies therefore
       shall be an action for specific performance, injunction or declaratory
       judgment to enforce any right to such consent, etc.

H.     Corporate Authority. If Tenant is a corporation, each individual signing
       this Lease on behalf of Tenant represents and warrants that he is duly
       authorized to execute and deliver this Lease on behalf of the
       corporation, and that this Lease is binding on Tenant in accordance with
       its terms. Tenant shall, at Landlord's request, deliver a certified copy
       of a resolution of its board of directors authorizing such execution.

I.     Counterparts. This Lease may be executed in multiple counterparts, all of
       which shall constitute one and the same Lease.

J.     Execution of Lease; No Option. The submission of this Lease to Tenant
       shall be for examination purposes only, and does not and shall not
       constitute a reservation of or option for Tenant to lease, or otherwise
       create any interest of Tenant in the Premises or any other premises
       within the Building or Project. Execution of this Lease by Tenant and its
       return to Landlord shall not be binding on Landlord notwithstanding any
       time interval, pending Landlord's Lender's approval of this Lease and
       that Landlord has executed and delivered this Lease to Tenant.

K.     Furnishing of Financial Statements; Tenant's Representations. To induce
       Landlord to enter into this Lease or any extension thereof, Tenant agrees
       that it shall promptly furnish Landlord, for Landlord's review and
       approval, upon Landlord's written request, with financial statements
       reflecting Tenant's current financial condition. Tenant represents and
       warrants that all financial statements, records and information furnished
       by Tenant to Landlord in connection with this Lease are true, correct and
       complete in all respects.

L.     Further Assurances.  The parties agree to promptly sign all documents  
       reasonably requested to give effect to the provisions of this Lease.

M.     Mortgagee Protection. Tenant agrees to send by certified or registered
       mail to any mortgagee or deed of trust beneficiary of Landlord whose
       address has been furnished to Tenant, a copy of any notice of default
       served by Tenant on Landlord. If Landlord fails to cure such default
       within the time provided for in this Lease, such mortgagee or beneficiary
       shall have an additional thirty (30) days to cure such default; provided
       that if such default cannot reasonably be cured within that thirty (30)
       day period, then such mortgagee or beneficiary shall have such additional
       time to cure the default as is reasonably necessary under the
       circumstances. 

N.     Prior Agreements; Amendments. This Lease contains all of the agreements
       of the parties with respect to any matter covered or mentioned in this
       Lease, and no prior agreement or understanding pertaining to any such
       matter shall be effective for any purpose.  No provisions


TENANT'S INITIALS: __                                    LANDLORD'S INITIALS: __


                                      19
<PAGE>
 
of this Lease may be amended or modified except by an agreement in writing
signed by the parties or their respective successors in interest.

O.     Severability. A final determination by a court of competent jurisdiction
       that any provision of this Lease is invalid shall not affect the
       validity of any other provision, and any provision so determined to be
       invalid shall, to the extent possible, be construed to accomplish its
       intended effect.

P.     Successors and Assigns. This Lease shall apply to and bind the heirs,
       personal representatives, and permitted successors and assigns of the
       parties.

Q.     Time of the Essence. Time is of the essence of this Lease. 

R.     Waiver. No delay or failure to exercise any right or remedy of Landlord
       upon any default by Tenant shall impair such right or remedy or be
       construed as a waiver of such default.

       No act or conduct of Landlord, including, without limitation, the
       acceptance of keys to the Premises, shall constitute an acceptance of the
       surrender of the Premises by Tenant before the expiration of the Term.
       Only a written notice from Landlord to Tenant shall constitute acceptance
       of the surrender of the Premises and accomplish a termination of the
       Lease.

       Landlord's consent to or approval of any act by Tenant requiring
       Landlord's consent or approval shall not be deemed to waive or render
       unnecessary Landlord's consent to or approval of any subsequent act by
       Tenant.

The parties hereto have executed this Lease as of the date set forth on page 1.


LANDLORD:
Sycamore San Diego Investors
By: Shell Properties Corporation, Agent

By:  /s/ Jeffrey P. Server
     -------------------------------------
     Jeffrey P. Server, President

TENANT:
Protein Polymer Technologies, Inc.

By:  /s/ J. Thomas Parmeter
     --------------------------------------
     J. Thomas Parmeter, President


TENANT'S INITIALS: __                                    LANDLORD'S INITIALS: __

                                      20
<PAGE>
 
                      RIDER TO LEASE DATED April 13, 1998,
                                 BY AND BETWEEN
                          Sycamore/San Diego Investors
                  an Illinois Limited Partnership, as Landlord
                                      AND
                       Protein Polymer Technologies, Inc.
                       A Delaware corporation, as Tenant

      Landlord and Tenant hereby agree that notwithstanding anything contained
in the Lease to the contrary, the provisions set forth below will be deemed to
be a part of the Lease and shall supersede, to the extent appropriate, any
contrary provision in the Lease. All references in the Lease and in this Rider
to "Lease" shall be construed to mean the Lease, as amended and supplemented by
this Rider. All terms used in this Rider, unless specifically defined in this
Rider, shall have the same meaning as the terms used in the Lease.

1.    TENANT IMPROVEMENTS 
      -------------------

      Within 180 days of the commencement date, Landlord shall re-carpet the
Premises at a total cost not to exceed $25,000.00 and replace all existing roof
mounted package and split system HVAC equipment with like-kind or better
equipment at a total cost not to exceed $75,000.00. Landlord and Tenant agree
that in the event there are excess funds remaining from the recarpeting and
installation of the HVAC system all such remaining funds shall be held in escrow
for the benefit of Tenant to make any other necessary improvements as Tenant
deems `reasonably necessary to the Premises. Tenant shall maintain all
bookkeeping records of such remaining excess funds and Landlord shall have the
right to review such account.

2.    RENT ABATEMENT 
      --------------

      For and in consideration of Tenant's execution of this Lease, Landlord
hereby grants to Tenant the full abatement of the Base Rent due under this Lease
for the month of May, 1998.

3.    EXPANSION  PREMISES  
      -------------------

      Commencing September 1, 1999, that portion of the second floor at 10655
Sorrento Valley Road, commonly known as Suite 200, containing approximately
6.183 rentable square feet and shown by diagonal lines on the floor plan
appearing as Exhibit B hereto shall be incorporated within the Premises and
become subject to the same prevailing Lease terms and conditions for the initial
Premises including but not limited to the payment of rent at the same adjusted
rate per square foot at the time (and with the anniversary date adjustments
thereafter per Article 5.2) and the obligation to share, if any, pro rata excess
operating expenses (prorated for any partial year) but excluding tenant
improvements, if any, the cost of which shall be borne solely by the Tenant.

4.    LANDLORD'S REPRESENTATION 
      -------------------------

      Landlord hereby represents and warrants that to the best of Landlord's
knowledge, the use by Tenant of the Premises for the purposes set forth in the
Tenant Use Clause is not, as of  

                                   -1-


TENANT'S INITIALS: __                                    LANDLORD'S INITIALS: __
<PAGE>
 
the date of this Lease, in violation of any law or covenant, condition or
restriction affecting the Building or Project or the certificate of occupancy
issued for the Building or Project. Landlord further represents and warrants
that to the best of Landlord's knowledge, Tenant's use of the Premises for the
purposes set forth in the Tenant Use Clause will not, as of the date of this
Lease, invalidate any fire, extended coverage or other insurance policy covering
the Building or Project and/or property located therein, and to the best of
Landlord's knowledge complies with all rules, orders, regulations, requirements
and recommendations of the Insurance Services Office or any other organization
performing a similar function.

5.    PROJECT OPERATING COSTS EXCLUSIONS
      ----------------------------------

      Article 5.3 B(1)(b)(10)(1) is amended by deleting the words "or life
safety purposes." 
      
      Notwithstanding anything to the contrary set forth in Article 5 of the
Lease, Project Operating Costs shall not include the following:

      (i)     Any ground lease rental;  

      (ii)    Any principal, interest, points or other fees on debts or
amortization on any mortgage or mortgages or any other debt instrument with
regard to the Project;

      (iii)   That portion of any costs of capital repairs, replacements,
improvements or equipment, including interest thereon, if any, which would
result in Tenant's pro rata share (for such capital items) exceeding the hereby
agreed upon amount of $3,200.00 per month during the Lease Term where such items
are described as those having a useful life in excess of one (1) year and where
the cost of such items are amortized over their reasonably anticipated lives
pursuant to generally accepted accounting principles consistently applied;

      (iv)    Rentals for items not directly required or involved in Landlord's
performance of its obligations pursuant to this Lease;

      (v)     Costs incurred by Landlord for the repair of damage to the Project
to the extent that Landlord is reimbursed by insurance proceeds;

      (vi)    Costs incurred by Landlord with respect to the negotiation or
installation of past, present, future or prospective tenants or occupants within
the Project including tenant improvement and refurbishment costs, space
planning, leasing commissions and other marketing costs, attorney costs and
other fees, and any other costs and expenses connected therewith;

      (vii)   Expenses for items and services not offered to Tenant, or for
which Tenant or any other tenant or occupant directly reimburses Landlord (other
than through Tenant's Proportionate Share of Project Operating Cost Increases);

      (viii)  Costs incurred by Landlord due to the violation by Landlord and/or
any other tenant or occupant of the terms and conditions of any other lease
agreement; 

                                      -2-


TENANT'S INITIALS: __                                    LANDLORD'S INITIALS: __
<PAGE>
 
      (ix)    Overhead and profit increments paid to Landlord or to subsidiaries
or affiliates of Landlord for goods and/or services in the Project to the extent
the same exceeds the costs of such goods and/or services rendered by
unaffiliated third parties on a competitive basis; 

      (x)     Landlord's general corporate overhead and administrative expenses;

      (xi)    Electric or gas power costs for which any tenant or occupant
directly contracts with the local public service company or private energy
company;

      (xii)   Governmental fines and/or tax penalties incurred as a result of
Landlord's negligence, inability or unwillingness to make payments when due;

      (xiii)  Landlord's charitable or political contributions; 

      (xiv)   Costs, attorney's fees, judgments and payments arising from
claims, disputes, arbitration, litigation or the threat of litigation pertaining
to the Landlord and/or the Building and/or the Project or any other tenant or
occupant therein except where the tenants of the project would receive benefits
if Landlord prevails;

      (xv)    Costs incurred by Landlord which are not customarily treated as
"operating expenses" or "operating costs" at comparable research and development
office buildings;

      (xvi)   Costs, including permit, license and inspection costs, incurred
with respect to the installation of tenant improvements made for tenants in the
Building or incurred in renovating or otherwise improving, decorating, painting
or redecorating vacant space for tenants or other occupants of the Building; and

      (xvii)  Advertising and promotional expenditures.

6.    ABATEMENT OF RENT WHEN TENANT IS PREVENTED FROM USING PREMISES 
      --------------------------------------------------------------

      Notwithstanding anything to the contrary contained in the Lease, in the
event that Tenant is prevented from using, and does not use, the Premises or any
portion of the Premises greater than five percent (5%) of the Rentable Area of
the Premises for ten (10) consecutive days (the "Eligibility Period") as a
result of any damage or destruction to the Premises, or the taking of all or any
part of the Premises by eminent domain, or any failure on the part of Landlord
or Landlord's agents, employees, contractors or representatives, to provide
services or access to the Premises, except for those provided by public
utilities or other public entities over which Landlord has no control, then
Tenant's obligation to pay Rent shall be abated or reduced, as the case may be,
after expiration of the Eligibility Period, for such time that Tenant continues
to be so prevented from using, and does not use, the Premises or a portion
thereof, in the proportion that the Rentable Area of the portion of the Premises
that Tenant is prevented from using, and does not use, bears to the total
Rentable Area of the Premises. If Tenant's right to abatement occurs because of
an eminent domain taking and/or because of damage or destruction to the Premises
or Tenant's personal property, Tenant's abatement period shall commence
immediately and shall continue until Tenant has been given sufficient time (as
reasonably determined by 

                                      -3-


TENANT'S INITIALS: __                                    LANDLORD'S INITIALS: __
<PAGE>
 
Landlord and Tenant), and sufficient access to the Premises (as reasonably
determined by Landlord and Tenant), to rebuild the portion of the Premises it is
required to rebuild, to install its property, furniture, fixtures, and
equipment, and to move in over a weekend.

7.    LIMITATION ON TENANT'S INDEMNITY
      --------------------------------

      Notwithstanding anything to the contrary contained in the Lease, Tenant
shall not be required to indemnify and hold harmless from any loss, cost,
liability, damage and expense, including, but not limited to, penalties, fines
and actual attorneys' fees and costs, (collectively "Claims"), to any person,
property, or entity resulting from any breach of the Lease by Landlord or any
default by Landlord thereunder or from the negligence or the willful misconduct
of Landlord or its agents, employees, in connection with Landlord's activities
in the Project and/or the Building (except for damage to the Tenant improvements
and Tenant's personal property, fixtures, furniture and equipment in the
Premises as to which Tenant is required to obtain the requisite insurance
coverage) and Landlord hereby so indemnifies and saves Tenant harmless from any
such Claims. However, Tenant's agreement to indemnify and hold harmless pursuant
to Article 21 of the Lease, and the agreement by Landlord to indemnify and hold
Tenant harmless set forth above are not intended to, and shall not relieve any
insurance carrier of its obligations under policies required to be carried by
Landlord or Tenant, respectively, pursuant to the provisions of the Lease to the
extent that such policies cover the results of such acts or conduct. The parties
hereby agree that if either party breaches this Rider provision by its failure
to carry required insurance, such failure shall automatically be deemed to be
the covenant and agreement by such party to self-insure said required coverage,
with full waiver of subrogation in favor of the other party. The parties further
agree that to the extent any damage or repair obligation of Tenant is covered by
insurance obtained by Landlord or would have been covered by insurance had
Landlord maintained the insurance required to be maintained by Landlord under
the Lease as part of the Project Operating Costs, but is not covered by
insurance obtained by Tenant, then Tenant shall be relieved of its indemnity
obligation up to the amount of the insurance proceeds which the Landlord
actually receives (or would have received had Landlord maintained insurance as
aforesaid).

8.    RECIPROCAL INDEMNITY  
      --------------------

      Notwithstanding anything contained in this Lease to the contrary, Landlord
hereby indemnifies and holds Tenant harmless from any loss, cost, liability,
damage or expense (including, but not limited to, penalties, fines, and
reasonable actual attorneys' fees and costs) to any person or property outside
of the Premises or unrelated to the Premises, (except if resulting from the sole
or joint and several negligent acts or omissions of Tenant or those of its
employees, licensees or agents) to the extent such loss, costs, liability,
damage or expenses are covered by the insurance obtained by Landlord. In the
event the Premises, the Building or the Project are damaged or destroyed and
such damage or destruction is covered by insurance' obtained by Landlord but not
covered by insurance obtained by Tenant, and further, that Tenant is not in
default hereunder and Tenant has fully complied with all insurance required to
be carried by Tenant hereunder, Landlord shall use the proceeds of its insurance
to repair the damage or destruction to the Premises, the Building and/or the
Project, subject to any rights either Landlord or Tenant may have to terminate
this Lease in the event such damage or destruction occurs.

                                      -4-


TENANT'S INITIALS: __                                    LANDLORD'S INITIALS: __
<PAGE>
 
9.    RULES AND REGULATIONS
      ---------------------

      Landlord agrees that the Rules and Regulations of the Project, attached to
and made a part of this Lease as Exhibit "D" shall not be changed or revised at
Landlord's will in a manner which materially interferes with the purposes
permitted under Tenant's Use Clause and Landlord agrees to give Tenant thirty
(30) days prior written notice of any changes to the Rules and Regulations.

10.   NON-DISTURBANCE AGREEMENTS
      --------------------------

      Landlord also agrees (a) to provide Tenant with commercially reasonable
Non-Disturbance Agreements in favor of Tenant from any ground lessors, mortgage
holders or lien holders of Landlord in existence as of the date of this Lease on
or before ninety (90) days after Commencement Date, and (b) to provide Tenant
with commercially reasonable Non-Disturbance Agreements in favor of Tenant from
any ground lessors, mortgage holders or lien holders of Landlord who later come
into existence at any time during the term of the Lease in consideration of, and
as a condition precedent to, Tenant's agreement to be bound by Article 24 of the
Lease. Such Non-Disturbance Agreement(s) shall provide that such Holders shall
be responsible for fulfilling all of Landlord's obligations pursuant to the
Lease.

11.   LANDLORD'S ESTOPPEL CERTIFICATES
      --------------------------------

      Provided that Tenant is not at the time in default hereunder, then
Landlord within ten (10) days after written request from Tenant, Landlord shall
execute and deliver to Tenant or Tenant's designee, a written statement
certifying (a) this Lease is unmodified and in full force and effect, or in full
force and effect as modified in stating the modifications; (b) the amount of
Base Rent and date to which Base Rent and additional rent have been paid in
advance; (c) the amount of any security deposit held by Landlord; and (d) that
Tenant is not in default hereunder or, if Tenant is claimed in default, stating
the nature of any claim default. Any such statement may be relied upon by any
assignee, sublessee or lender. Landlord's failure to execute and deliver such
statement within the time required shall at Tenant's election be a default under
this Lease and shall be conclusive upon Landlord that: (1) this Lease is in full
force and effect and has not been modified except as represented by Tenant; and
(2) there are no uncured defaults in Tenant's performance.

12.   ALTERATIONS  AND  ADDITIONS
      ---------------------------

      Notwithstanding any limitations set forth in Article 12 of the Lease,
Tenant shall have the right to make minor, non-structural interior alterations,
improvements and additions to the Premises which are not visible from the
exterior of the Building, except for any life safety systems, without obtaining
Landlord's prior written consent where the cost of each such alteration,
improvement and addition does not exceed $2,500.00 so long as Tenant meets all
of the other requirements of said Article 12. 

                                      -5-


TENANT'S INITIALS: __                                    LANDLORD'S INITIALS: __
<PAGE>
 
13.   DAMAGE AND DESTRUCTION
      ----------------------

      Notwithstanding any language to the contrary in Article 19 of the Lease,
if the Premises or the portion of the Building or parking areas necessary for
Tenant's occupancy is damaged by fire, earthquake, act of God, the elements, or
other casualty, Landlord shall notify Tenant within thirty (30) days of said
casualty if Landlord, in its reasonable judgment, believes that the repairs will
take longer than sixty (60) days to complete, which notice shall include
Landlord's best estimate of the total time that said repairs will take to
complete (the "Estimate"). If the Estimate exceeds ninety (90) days, then Tenant
shall have the right to terminate the Lease by providing Landlord written notice
of Tenant's election to terminate within thirty (30) days of Tenant's receipt of
the Estimate, in which case the Lease shall terminate as of the date of the
casualty.

14.   CONSENTS  
      --------

      Except as provided to the contrary in this Lease, all consents to be given
by either party shall be reasonably and timely given.

15.   SERVICES AND UTILITIES  
      ----------------------

      Landlord shall furnish to the Premises, subject to the provisions of
paragraph 5.3 of the Lease, utilities as specified in Article 9. All utilities,
including, without limitation, water, electricity, gas and sewer, shall be
available to the Premises 24 hours per day, every day throughout the term, in
quantities sufficient for Tenant's normal business operations. Landlord shall
also provide to Tenant access to the Premises 24 hours per day, every day
throughout the term. In the event that Tenant consumes services or utilities in
excess of that usually supplied to the Premises for use of the Premises as
general office space, as reasonably determined by Landlord, and such services or
utilities are not separately metered or otherwise directly paid for by Tenant,
then Landlord may under such circumstances establish a monthly pro rata charge
for Tenant's excess use or consumption of such services and utilities.

      Notwithstanding any provisions of Article 9 of the Lease to the contrary,
Landlord shall provide natural gas and electricity, including steam generator,
vacuum, reverse osmosis/deionized water treatment system, uninterrupted power
supply, and emergency generator to the Premises. Landlord, Tenant and Tenant's
second floor co-tenant, shall cooperate to establish fair and equitable methods
for the proration of second floor costs of the natural gas and electricity
supplied by Landlord. Such agreed upon methods shall be in writing and
incorporated within the Lease. If no such methods can be agreed upon, the costs
of such utilities shall be prorated by Landlord on a straight square-footage
basis; provided, however, in the event that said formula does not lead to a fair
and equitable proration because the second floor tenants do not use electricity
or other utilities in proportionally equal amounts, Landlord shall adjust said
formula as necessary to lead to such fair and equitable proration. Any such
proration shall be reviewed from time to time so that it accomplishes the
purposes intended hereby. In either case, the prorated costs of such utilities
shall be additional rent due under the Lease.

                                      -6-


TENANT'S INITIALS: __                                    LANDLORD'S INITIALS: __
<PAGE>
 
16.   INSURANCE
      ---------

      Beginning on the Commencement Date, and continuing until expiration of the
Term, Landlord shall procure, maintain in effect, pay for and be reimbursed as a
part of Project Operating Costs Commercial General Comprehensive Public
Liability Insurance or equivalent and property damage insurance with respect to
the use, operation, maintenance and condition of the Building and the Property
and the operations of Landlord in or about the Property and the Building
providing personal injury and broad form property damage coverage for not less
than Two Million Dollars ($2,000,000) combined single limit for bodily injury,
death and property damage liability.

17.   ADDITIONAL MODIFICATIONS TO LEASE
      ---------------------------------

      (i)     Interest and Late Charges. The third sentence of Article 6 is
amended by deleting the words "ten percent (10%)" and inserting in lieu thereof
the words "five percent (5%)".

      (ii)    Services and Utilities. Article 9 is amended by adding the
following at the end thereof: "Tenant may supply its own janitorial service
provided the identity of the janitorial company and the specifications of its
work are approved in writing in advance by Landlord and, provided, in all events
the level of janitorial service provided by such company will be at least equal
to the level of the janitorial service provided to the balance of the Project,
in which event the standard janitorial charge shall not be included in Tenant's
Project Operating Costs."

      (iii)   Construction, Repairs and Maintenance. Article 11.A. is amended by
deleting at the first sentence the words "Exhibit C" and inserting in lieu
thereof "paragraph 1 of this Rider". Article 11.C. is amended at the first
sentence by deleting the words "or any covenant, condition or restriction".

      (iv)    Assignment and Subletting. Article 16.A, is amended by deleting at
the second from the last line where it first appears "twenty-five percent 
(25%)" and inserting in lieu thereof "a controlling interest". The following is
added at the end of Article 16.A.: "Controlling interest means the ownership of
and the right to vote stock possessing at least fifty-one percent (51%) of the
total combined voting power of all classes of Tenant's capital stock issued,
outstanding and entitled to vote for the election of directors. "Article 16.B.
(5) is amended as follows: At the sixth line after the words "shall be paid to"
insert the words "one-half (1/2) to". The following is added at the end of
Article 16.B.(5): "Notwithstanding the foregoing, Landlord shall retain all of
such additional rent if Landlord releases Tenant from liability under this Lease
in connection with an assignment of the Lease provided Landlord may withhold
consent to release of Tenant from liability under this Lease for any reason or
for no reason whatsoever in Landlord's sole and absolute discretion."

      (v)     Destruction or Damage. Article 19.D. is amended by adding the
following at the end thereof: "... except where such damages are the result of
the gross negligence or willful misconduct of Landlord or Landlord's agents and
employees or is covered by Landlord's insurance.

                                      -7-


TENANT'S INITIALS: __                                    LANDLORD'S INITIALS: __
<PAGE>
 
      (vi)    Indemnification. Article 21.A. is amended by adding the following
at the end thereof: "... for which Tenant is liable or which is covered by the
insurance which Tenant is required to provide pursuant to the terms of this
Lease.

      (vii)   Tenant's Insurance. Article 22.A. is amended by deleting at the
fifth line from the bottom of this section the following words "together with a
handling charge of twenty-five percent (25%) of the premium."

      (viii)  Default. Article 27.1.B. is amended by deleting the words "five
(5)" and inserting in lieu thereof the words "ten (10)".


      The last sentence of Article 27.3 is deleted and the following sentence is
inserted in lieu thereof: "Tenant shall not have the right to terminate this
Lease but may withhold, reduce or offset the amount of any money judgment amount
against any payments of Rent or any other charges due and payable under this
Lease. "
 
      (ix)    Sign Control. Article 34 is amended by inserting at the third line
after the words "without the" the word "prior".


      (x)     Miscellaneous. Article 35.R. is amended by deleting at the first
line the word "Landlord" and inserting the words "a party" in lieu thereof and
by deleting at the second line the word "Tenant" and inserting in lieu thereof
the words "the other party".

      (xi)    Exhibit F is amended by adding at the end of section 3.B. the
following: "to the extent possible and only with regard to the observation of
the effluent.

      The parties hereto have executed this Rider as of the date set forth
hereinabove.

                                        LANDLORD:

                                        SYCAMORE SAN DIEGO INVESTORS
                                        By:  Shell Properties Corporation, Agent



                                        By:  /s/ Jeffrey P. Server
                                             -----------------------------------
                                             Jeffrey P. Server


                                        TENANT:

                                        PROTEIN POLYMER TECHNOLOGIES, INC.



                                        By:  /s/ J. Thomas Parmeter
                                             -----------------------------------
                                             J. Thomas Parmeter, President

                                      -8-
<PAGE>
 
                                  EXHIBIT "A"
                                  -----------



                                  First Floor

                           10655 Sorrento Valley Road


                        [FIRST FLOOR PLAN APPEARS HERE]
<PAGE>
 
                                  EXHIBIT "A"
                                  -----------





                                  Second Floor

                           10655 Sorrento Valley Road



                       [SECOND FLOOR PLAN APPEARS HERE]
<PAGE>
 
                                  EXHIBIT "A"
                                  -----------


                         SYCAMORE CREEK OFFICE R&D PARK

                     10655 10665 10675 Sorrento Valley Rd.
                                 San Diego, CA






                        [PROPERTY GRAPHIC APPEARS HERE]

                                      -3-
<PAGE>
 
                                  EXHIBIT "B"




                               Expansion Premises

                                   Suite 201

                           10655 Sorrento Valley Road


                            [GRAPHIC APPEARS HERE]
                              




                                   EXHIBIT B
<PAGE>
 
                                  "EXHIBIT D"

                              RULES & REGULATIONS
                              -------------------

1.   No sign, placard, picture, advertisement, name or notice shall be
     inscribed, displayed or printed or affixed on or to any part of the outside
     or inside of the Building or the Premises, other than the building standard
     sign installed by Landlord at the time tenant occupies the Premises,
     without the written consent of Landlord first had and obtained and Landlord
     shall have the right to remove any such sign, placard, picture,
     advertisement, name or notice erected without written permission of
     Landlord without notice to and at the expense of Tenant. All approved signs
     or lettering on doors shall be printed, painted, affixed or inscribed at
     the expense of Tenant by a person approved by Landlord. The bulletin board
     or directory of the Building will be provided exclusively for the display
     of the name and location of Tenants of the Building and only Landlord
     reserves the right to exclude any other names therefrom. Landlord shall not
     place anything or allow anything to be placed near the glass of any window,
     door, partition or wall which may appear unsightly from outside the
     Premises. No awnings or other projection shall be attached to the outside
     walls of the Building without the prior written consent of the Landlord. No
     curtains, blinds, shades or screens shall be attached to or hung in, or
     used in connection with, any window or door of the Premises visible from
     the exterior of the building without the prior consent of the Landlord.

2.   The sidewalks, halls, passages, exits, entrances, elevators, and stairways
     shall not be obstructed by any of the tenants or used by them for any
     purpose other than for ingress to and egress from their respective
     Premises. The halls, passages, exits, entrances,elevators, stairways,
     terraces, wharf and roof are not for the use of the general public, and the
     Landlord shall in all cases retain the right to control and prevent access
     thereto by all persons whose presence in the judgment of the Landlord shall
     be prejudicial to the safety, character, reputation and interest of the
     Building and its tenants, provided that nothing herein contained shall be
     construed to prevent such access to persons with whom Tenant normally deals
     in the ordinary course of business unless such persons are engaged in
     illegal activities. No Tenant and no employee or invitees of any Tenant
     shall go upon the roof of the Building.

3.   No additional locks or bolts of any kind except for a Tenant-provided
     security system shall be placed upon any of the doors or windows by Tenant,
     nor shall any changes be made in existing locks or the mechanism thereof.
     Landlord will furnish two keys to the Premises without charge to Tenant.
     Landlord will make a reasonable charge for additional keys requested by
     Tenant. Tenant shall, upon the termination of this tenancy, restore to
     Landlord all keys of stores, offices, and toilet rooms, either furnished to
     or otherwise procured by such Tenant, and in the event of the loss of any
     keys so furnished, Tenant shall pay Landlord the cost of replacing the same
     or of changing the lock or locks opened by such lost key if Landlord shall
     deem it necessary to make such change.

4.   The toilets and wash basins and other plumbing fixtures shall not be used
     for any purpose other than those for which they were constructed, and no
     sweepings, rubbish, rags or other foreign substances shall be thrown
     therein. All damage resulting from any misuse of the fixtures shall be
     borne by Tenant who, or whose employees, agents, visitors or licensees,
     shall have caused the same.

5.   No Tenant shall lay linoleum, tile, carpet or other similar floor covering
     so that the same shall be affixed to the floor of the Premises in any
     manner except by paste, or other material, which may easily be removed with
     water; the use of cement or other similar adhesive materials being
     expressly prohibited. The method of affixing any such linoleum, tile,
     carpet, or other similar floor covering shall be subject to the approval of
     Landlord. The expense of repairing any damage resulting from a violation of
     this rule shall be borne by any Tenant by whom, or by whose contractors,
     employees, or invitees, the damage shall have been caused.

     No painting shall be done, nor shall any alterations be done to any part of
     the Building or Premises by butting up or changing any partition or
     partitions, door or doors, window or windows, nor shall there be any
     nailing, boring or screwing into the walls, woodwork or plastering without
     the consent of Landlord or its agent. Landlord shall not permit any
     contractor or other person making any alterations, additions or
     installations within the Premises to use the hallways, lobby, or corridors
     as storage or work areas without the prior written consent of Landlord.
     Tenant shall be liable for and shall pay the expense of any additional
     cleaning or other maintenance required to be performed by Landlord as a
     result of the transportation or storage of materials or work performed
     within the Building by or for Tenant.

6.   Landlord shall have the right to prescribe the weight, size and position of
     all safes and other heavy equipment brought into the Building and also the
     times and manner of moving the same in and out of the Building. Safes or
     other heavy objects shall be placed as directed by Landlord to properly
     distribute the weight. Landlord will not be responsible for loss of or
     damage to any such safe or property from any cause, and all damage done to
     the Building by moving or maintaining any such


TENANT'S INITIALS:___                      LANDLORD'S INITIALS:___

                                      -1-
<PAGE>
 
     safe or other property shall be repaired at the expense of Tenant. There
     shall not be used in any space, or in the public halls of the Building,
     either by Tenant or others, any hand trucks except those equipped with
     rubber tires and side guards.

7.   Tenant shall not employ any person or persons other than the janitor of
     Landlord for the purpose of cleaning the Premises unless otherwise agreed
     to by Landlord. Except with the written consent of Landlord, no person or
     persons other than those approved by Landlord shall be permitted to enter
     the Building for the purpose of cleaning the same. Tenant shall not cause
     any unnecessary labor by reason of its carelessness or indifference in the
     preservation of good order and cleanliness. Landlord shall in no way be
     responsible to any Tenant for any loss of property on the Premises, however
     occurring, or for any damage done to the effects of any Tenant by the
     janitor or any other employee or any other person. Janitor service shall
     include ordinary dusting and cleaning by the janitor assigned to do such
     work and shall not include cleaning of carpets or rugs, except normal
     vacuuming, or moving of furniture and other special services.

8.   Tenant shall not permit or suffer the Premises to be occupied or used in a
     manner offensive or objectionable to Landlord or other occupants of the
     Building by reason of noise, odors and/or vibrations, or interfere in any
     way with other tenants or those having business therein. No Tenant shall
     make or permit to be made any unseemly or disturbing noises or disturb or
     interfere with occupants of this or neighboring Buildings or Premises of
     those having business with them whether by the use of any musical
     instrument, radio, phonograph, unusual noise, or in any other way.

9.   Landlord reserves the right to exclude or expel from the Building 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 any of the rules and regulations of the Building.

10.  The requirements of Tenant will be attended to only upon application at the
     Office of the Building. Employees of Landlord shall not perform any work or
     do anything outside of their regular duties unless under special
     instructions from Landlord, and no employee will admit any person (Tenant
     or otherwise) to any office without specific instructions from Landlord.
         
11.  Tenant agrees that it shall comply with all fire and security regulations
     issued by responsible governmental agency and also shall provide Landlord
     with the name of a designated responsible employee to represent Tenant in
     all matters pertaining to such fire or security regulations.

12.  Landlord reserves the right by written notice to Tenant, to rescind, alter
     or waive any rule or regulation at any time prescribed for the Building
     when, in Landlord's judgment, it is necessary, desirable or proper for the
     best interest of the Building, unless it constitutes a material
     interference with Tenant's business.

13.  Tenant shall not disturb, distribute, solicit, or canvass any occupant of
     the Building and shall cooperate to prevent same.

14.  No Tenant shall permit or suffer any window to be opened in Tenant's
     Premises while the airconditioning is in operation except at the Direction
     of Landlord.



TENANT'S INITIALS:___                      LANDLORD'S INITIALS:___

                                      -2-
<PAGE>
 
                                   EXHIBIT F

                              HAZARDOUS SUBSTANCES
                              --------------------


1.  HAZARDOUS SUBSTANCES

    A.  Reportable Uses Require Consent. The term "Hazardous Substance" as used
        in this Lease shall mean any product, substance, chemical, material or
        waste whose presence, nature, quantity and/or intensity of existence,
        use manufacture, disposal, transportation, spill, release or effect,
        either by itself or in combination with other substances expected to be
        on the Premises, is either: (i) potentially injurious to the public
        health, safety or welfare, the environment, or the Premises; (ii)
        regulated or monitored by any governmental authority; or (iii) a basis
        for potential liability of Landlord to any governmental agency or third
        party under any applicable statute or common law theory. Hazardous
        Substance shall include, but not be limited to, hydrocarbons, petroleum,
        gasoline, crude oil or any products or by-products thereof. Tenant shall
        not engage in any activity in or about the Premises which constitutes a
        Reportable Use (as hereinafter defined) of Hazardous Substances without
        the express prior written consent of Landlord (which consent shall not
        be unreasonably delayed or withheld) and compliance in a timely manner
        (at Tenant's sole cost and expense) with all Applicable Requirements as
        defined in Paragraph D hereunder. "Reportable Use" shall mean (i) the
        installation or use of any above or below ground storage tanks, (ii) the
        generation, possession, storage, use, transportation, or disposal of a
        Hazardous Substance that requires a permit from, or with respect to
        which a report, notice, registration or business plan is required to be
        filed with, any governmental authority, and (iii) the presence in, on or
        about the Premises of a Hazardous Substance with respect to which any
        Applicable Laws require that a notice be given to persons entering or
        occupying the Premises or neighboring properties. Notwithstanding the
        foregoing, Tenant may, without Landlord's prior consent, but upon notice
        to Landlord and in compliance with all Applicable Requirements, use any
        ordinary and customary material reasonably required to be used by Tenant
        in the normal course of the Permitted Use, so long as such use is not a
        Reportable Use and does not expose the Premises or neighboring
        properties to any meaningful risk of contamination or damage or expose
        Landlord to any liability therefore. In addition, Landlord may (but
        without any obligation to do so) condition its consent to any reportable
        Use of any Hazardous Substance by Tenant upon Tenant's giving Landlord
        such additional assurances as Landlord, in its reasonable discretion,
        deems necessary to protect itself, the public, the Premises, this
        Project and the environment against damage, contamination or injury
        and/or liability therefore, including but not limited to the
        installation (and, at Landlord's option, removal on or before Lease
        expiration or earlier termination) of reasonably necessary protective
        modification to the Premises (such as concrete encasements) and/or the
        deposit of an additional Security Deposit under Article 7 of the Lease.

    B.  Duty to Inform Landlord. If Tenant knows or he has the reasonably cause
        to believe, that a Hazardous Substances has come to be located in, on,
        under or about the Premises or the Building other than as previously
        consent to by Landlord, which consent shall not be unreasonably delayed
        or withheld, Tenant shall immediately give Landlord written notice
        thereof, together with a copy of any statement, report, notice,
        registration, application, permit, business plan, license, claim,
        action, or proceeding given to, or received from, any governmental
        authority or private party concerning the presence, spill, release,
        discharge of, or exposure to, such Hazardous Substance including but not
        limited to all such documents as may be involved in any Reportable Use
        involving the Premises. Tenant shall not cause or permit any Hazardous
        Substance to be spilled or released in, on, under or about the Premises
        (including, without limitation, through the plumbing or sanitary sewer
        system).

    C.  Indemnification. Tenant shall indemnify, protect, defend and hold
        Landlord, its agents, employees, lenders and ground lessor, if any, and
        the Premises, harmless from and against any and all damages,
        liabilities, judgements, costs, claims, liens, expenses, penalties, loss
        of permits and reasonable attorneys' and consultants' fee arising out of
        or involving any Hazardous Substance brought onto the Building and
        Project by or for Tenant or by anyone under Tenant's control. Tenant's
        obligations under this Paragraph 1.C. shall include, but not be limited
        to, the effects of any contamination or injury to person, property or
        the environment created or suffered by Tenant, and the cost of
        investigation (including reasonable consultants' and attorneys' fees and
        testing), removal, Remedial Work, restoration and/or abatement thereof,
        or of any contamination therein involved, and shall survive the
        expiration or earlier termination of this Lease. No termination,
        cancellation or release agreement entered into by Landlord and Tenant
        shall release Tenant from its obligations under this Lease with respect
        to Hazardous Substances, unless specifically so agreed by Landlord in
        writing at the time of such agreement. Neither the consent by Landlord
        to the use, generation, storage, release, disposal or transportation of
        Hazardous Substances nor the strict compliance with all Applicable
        Requirements shall excuse Tenant from Tenant's


TENANT'S INITIALS:___                      LANDLORD'S INITIALS:___ 

                                      -1-
<PAGE>
 
        indemnification obligations. Landlord shall indemnify, protect, defend
        and hold Tenant, its agents and employees harmless from and against any
        and all damages, liabilities, judgements, costs, claims, liens,
        expenses, penalties, loss of permits and reasonable attorneys' and
        consultants' fees arising out of or involving any Hazardous Substance
        brought on the Building and Project by or for Landlord or by anyone
        under Landlord's control. Landlord's obligations under this Paragraph
        1.C. shall include, but not be limited to, the effects of any
        contamination or injury to person, property or the environment created
        or suffered by Landlord, and the cost of investigation (including
        reasonable consultants' and attorneys' fees and testing), removal,
        remediation, restoration and/or abatement thereof, or of any
        contamination therein involved, and shall survive the expiration or
        earlier termination of this Lease. No termination, cancellation or
        release agreement entered into by Landlord and Tenant shall release
        Landlord from its obligations under this Lease with respect to Hazardous
        Substances, unless specifically so agreed by Tenant in writing at the
        time of such agreement.

D.      Tenant's Compliance with Requirements. Tenant shall, at Tenant's sole
        cost and expense, fully, diligently and in a timely manner, comply with
        all "Applicable Requirements", which term is used in this Lease to mean
        all laws, rules, regulations, ordinances, directives, covenants,
        easements and restrictions of record, permits, the requirements of any
        applicable fire insurance underwriter or rating bureau, and the
        reasonable recommendations of Landlord's engineers and/or consultants,
        relating in any manner to the Premises, Building or Project or the
        activities of Tenant or anyone under Tenant's control in the Premises,
        Building and Project (including, but not limited to matters pertaining
        to (i) industrial hygiene, (ii) environmental conditions on, in, under
        or about the Premises, including soil and groundwater conditions, and
        (iii) the use, generation, manufacture, production, installation,
        maintenance, removal, transportation, storage, spill, or release of any
        Hazardous Substance), now in effect or which may hereafter come into
        effect. Tenant shall, within five (5) days after receipt of Landlord's
        written request, provide Landlord with copies of all documents and
        information, including but not limited to permits, registrations,
        manifests, applications, reports and certificates, evidencing Tenant's
        compliance with any Applicable Requirements specified by Landlord, and
        shall immediately upon receipt, notify Landlord in writing (with copies
        of any documents involved) of any threatened or actual claim, notice,
        citation, warning, complaint or report pertaining to or involving
        failure by Tenant or the Premises to comply with any Applicable
        Requirements.

E.      Inspection; Compliance with Law. Landlord, Landlord's agents, employees,
        contractors and designated representatives, and the holders of any
        Security Device ("Lenders") shall have the right to enter the Premises
        at any time in the case of an emergency (provided that Landlord shall be
        given Tenant notice of Landlord's entry into the Premises promptly after
        such entry), and otherwise at reasonable times and upon reasonable
        advance notice, for the purpose of inspecting the condition of the
        Premises and for verifying compliance by Tenant with this Lease and all
        Applicable Requirements, and Landlord shall be entitled to employ
        experts and/or consultants in connection therewith to advise Landlord
        with respect to Tenant's activities relating to Tenant's installation,
        operation, use, monitoring, maintenance, or removal of any Hazardous
        Substance on or from the Premises. Except the case of any emergency,
        Tenant shall be permitted to have a representative of Tenant accompany
        such inspections, provided that the non-availability of a Tenant
        representative shall not delay or prevent Landlord from performing such
        an inspection. The costs and expenses of any such inspections shall be
        paid by the party requesting the same, unless a default or breach of
        this Lease by Tenant or a violation of Applicable Requirements or
        contamination, caused or materially contributed to by Tenant, is found
        to exist or to be imminent, or unless the inspection is required or
        ordered by a governmental authority as the result of any such existing
        or imminent violation or contamination, In such case, Tenant shall upon
        request reimburse Landlord or Landlord's Lender, as the case may be, for
        Landlord's actual costs and expenses of such inspections reasonably
        incurred by Landlord.

F.      Environmental Assessment. Prior to the Commencement date, Landlord shall
        have conducted (or received from the immediately preceding tenant of the
        Premises) and "Entrance Assessment", consisting of an updated Phase 1
        Environmental Assessment and such other tests as listed in the
        "Assessment Criteria" set forth in Paragraph 3 below, by an
        environmental consultant reasonably acceptable to Landlord. A copy of
        such Entrance Assessment shall be delivered to Tenant as soon as
        available and said Assessment shall be deemed to be the baseline
        environmental condition of the Premises upon Tenant's occupancy. To the
        extent such Entrance Assessment indicates the existence of any Hazardous
        Substances in the Premises in violation of Applicable Requirements,
        remediation of such Hazardous Substance condition shall be performed at
        Landlord's cost and shall be remediated as soon as possible after the
        date Landlord receives notice of such Hazardous substance condition. The
        cost of the Entrance Assessment shall be paid by Landlord. Prior to
        Tenant's surrender of the Premises, Tenant shall conduct an "Exit
        Assessment", consisting of an updated Phase 1 Environmental Assessment
        and such other tests as listed in the Assessment Criteria, by an

TENANT'S INITIALS:___                      LANDLORD'S INITIALS:___ 

                                      -2-
<PAGE>
 
        environmental consultant selected by Tenant and reasonably acceptable to
        Landlord and shall include Tenant's Storage Units, if any. Landlord
        shall receive a copy of the report(s) of the Exit Assessment, and said
        report(s) shall be deemed the environmental condition of the Premises
        upon Tenant's surrender of the Premises. The cost of the Exit Assessment
        shall be paid by Tenant. The Entrance and Exit Assessments shall be
        performed by an independent environmental consultant with expertise in
        performing environmental analyses of biotechnology laboratory and
        manufacturing facilities.

    G.  Remedial Work. Tenant shall perform any monitoring, testing,
        investigation, clean up, removal, detoxification, preparation of closure
        or other required plans and any other remedial work required by any
        governmental agency or reasonably recommended by Landlord or the
        environmental consultants performing the Exit Assessment, as a result of
        any release or discharge or potential release or discharge of Hazardous
        Substances and resulting in contamination or any violation or potential
        violation of Applicable Requirements by Tenant or any successor or
        subtenant of Tenant or their respective agents, contractors, employees,
        licensees or invitees (collectively "Remedial Work"). Landlord shall
        have the right to intervene in any governmental action or proceeding
        involving any Remedial work and to approve performance of the work
        (which approval shall not be unreasonably delayed or withheld), to
        reasonably protect Landlord's interests. Tenant shall not enter into any
        settlement agreement, consent decree or other compromise with respect to
        any claims relating to Hazardous Substances without notifying Landlord
        and providing ample opportunity for Landlord to intervene.

    H.  Compliance with Insurance Requirements. Tenant shall comply with the
        requirements of Landlord's and Tenant's Insurers regarding Hazardous
        Substances and with such insurers' recommendations based upon prudent
        industry practices regarding management of Hazardous Substances.

    I.  Default. The release or discharge of any Hazardous Substance in
        violation of Applicable Requirements or the violation of any Applicable
        Requirements by Tenant or any successor or subtenant of Tenant shall be
        a Default by Tenant under this Lease. In addition to or in Lieu of the
        remedies available under the Lease as a result of such Default (after
        the applicable notice and cure periods, if any), Landlord shall have the
        right, without terminating the Lease, to require Tenant to suspend its
        operations and activities on the Premises to the extent reasonably
        necessary to protect Landlord's interest in the Building and Project and
        until Landlord is satisfied that appropriate Remedial Work has been or
        is being adequately performed; Landlord's election of this remedy shall
        not constitute a waiver of Landlord's right thereafter to declare a
        Default and pursue other remedies set forth in the Lease.

2.  HAZARDOUS SUBSTANCES STORAGE 

    A.  Storage Units 

        In addition to its Lease of the Premises and nonexclusive rights to the
        common areas, Tenant shall have the exclusive right to use, in
        accordance with all Applicable Requirements, an area designated by
        Landlord in the common area in which Tenant may place a Hazardous
        Substance Storage Unit ("Storage Unit"), for the temporary storage of
        Hazardous Substances. The specific location shall be mutually agreed
        upon by Landlord and Tenant; provided that Landlord shall have the right
        to relocate any Storage Units within the Project from time to time, as
        Landlord may reasonably determine is necessary for safe and efficient
        operation of the Project. Tenant shall, at its sole cost and expense
        (including, without limitation, licensing and permitting fees), keep the
        Storage Units in good order, condition and repair (including, without
        limitation, repairing and maintaining all safety and security systems
        associated with such Storage Units) in accordance with all Applicable
        Requirements.

    B.  Surrender 

        At the earlier of the termination of the Lease or Tenant's termination
        of its use of any of the Storage Units, Tenant will retain a qualified
        environmental consultant, at its sole cost, who is acceptable to
        Landlord to perform an Exit Assessment of the Storage Units and those
        portions of the common areas; (a) where the Storage Units were located
        prior to its removal or lease termination, and (b) over which the path
        of access between the Premises and the Storage Units was located. Such
        Exit Assessment shall consist of, at a minimum, Paragraph A and D of the
        Assessment Criteria in Paragraph 3 below, and all additional sampling
        and surveys necessary to assure that all Hazardous Substances, including
        but not limited to any radioactive materials, have been removed from the
        Storage Units and Project. Tenant shall be required to perform at its
        sole cost and expense all Remedial Work in connection

TENANT'S INITIALS:___                      LANDLORD'S INITIALS:___

                                      -3-
<PAGE>
 
        therewith. Landlord shall be provided with a copy of the such Exit
        Assessment as prepared by Tenant's consultant.

3.  ENTRANCE/EXIT ASSESSMENT CRITERIA 

    For purposes of compliance with requirements of this Exhibit F, the term
    "Assessment Criteria" with respect to the Premises shall refer to, and
    include, the following studies and assessments:

    A.  Interior Site Assessment consisting of a visual inspection of all
        surfaces (floors, walls, ceiling tiles, benches, interior of cabinets
        and fume hoods) for signs of contamination and deterioration. Visual
        inspection of all bench and hood sinks and readily accessible drain
        lines for signs of deterioration, loss of integrity and leakage. The
        Interior Site Assessment shall include detailed written documentation of
        all observations and dated photos to document the existing condition
        thereof.

    B.  Wastewater Collection System Assessment consisting of a flush and clean-
        out of all discharge piping and traps with observation of effluent
        during the clean-out.

    C.  To verify that there is no contamination of the laboratory hoods and
        exhaust system, an inspection shall be made consisting of an inspection
        of the laboratory hoods and exhaust system with detailed documentation
        of all observances, including without limitation, observed solids,
        liquids, odors or Hazardous Substances entrapment. Such inspect shall
        include inspection of the roof area to determine the existence of any
        deterioration from condensation of hazardous materials in the exhaust
        system.

    D.  The Assessment Criteria shall also include such sampling and testing as
        the consultant reasonably recommends based upon his/her observations.

TENANT'S INITIALS:___                      LANDLORD'S INITIALS:___

                                                                                

                                      -4-
<PAGE>
 
                                  EXHIBIT "G"
                                  -----------

--------------------------------------------------------------------------------
       CERTIFICATE OF INSURANCE                          ISSUE DATE (MM/DD/YY)
                                                       [_]     4/30/97
--------------------------------------------------------------------------------
PRODUCER

                               E X H I B I T   G


--------------------------------------------------------------------------------
INSURED




--------------------------------------------------------------------------------
THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS
UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER 
THE COVERAGE AFFORDED BY THE POLICIES BELOW
--------------------------------------------------------------------------------
                         COMPANIES AFFORDING COVERAGE
--------------------------------------------------------------------------------
COMPANY
LETTER  A
--------------------------------------------------------------------------------
COMPANY 
LETTER  B
--------------------------------------------------------------------------------
COMPANY 
LETTER  C
--------------------------------------------------------------------------------
COMPANY
LETTER  D
--------------------------------------------------------------------------------
COMPANY
LETTER  E
--------------------------------------------------------------------------------
COVERAGES
--------------------------------------------------------------------------------
THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED 
TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY 
REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO
WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY 
THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND 
CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.
<TABLE> 
<CAPTION> 
------------------------------------------------------------------------------------------------------------------------------------

CO      TYPE OF INSURANCE              POLICY NUMBER          POLICY EFF.      POLICY EXP.                    LIMITS
TR                                                          DATE (MM/DD/YY)    DATE (MM/DD/YY)
------------------------------------------------------------------------------------------------------------------------------------

<C>  <S>                               <C>                  <C>                <C>              <C> 
A    GENERAL LIABILITY                                                                          GENERAL AGGREGATE       2000000
                                                                                                ------------------------------------

     [X] COMM. GENERAL LIABILITY                                                                PROD-COMP/OP ACC.       XCLUDED 
                                                                                                ------------------------------------

     [_] CLAIMS MADE  [X] OCC.                                                                  PERS. & ADV. INJURY     XCLUDED
                                                                                                ------------------------------------

     [_] OWNERS & CONTRACTS PROT                                                                EACH OCCURRENCE         1000000
                                                                                                ------------------------------------

     [_] _______________________                                                                FIRE DAMAGE (One Fire)   50000
                                                                                                ------------------------------------
                                                                                                MED. EXP. (One Per)       1000
------------------------------------------------------------------------------------------------------------------------------------

     AUTOMOBILE LIABILITY                                                                       COMBINED SINGLE
     [_] ANY AUTO                                                                               LIMIT
                                                                                                ------------------------------------

     [_] ALL OWNED AUTOS                                                                        BODILY INJURY
                                                                                                (Per person)
     [_] SCHEDULED AUTOS                                                                        ------------------------------------

                                                                                                BODILY INJURY
     [_] xxxx AUTOS                                                                             (Per accident)

     [_] NON-OWNED AUTOS                                                                        

     [_] GARAGE LIABILITY                                                                       ------------------------------------

     [_]                                                                                        PROPERTY DAMAGE
------------------------------------------------------------------------------------------------------------------------------------
     EXCESS LIABILITY                                                                           EACH OCCURRENCE
                                                                                                ------------------------------------

     [_] UMBRELLA FORM                                                                          AGGREGATE
                                                                                                ------------------------------------
     [_] OTHER THAN UMBRELLA FORM                                                          
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                    STATUTORY LIMITS
       WORKERS' COMPENSATION                                                                    ------------------------------------

                                                                                                EACH ACCIDENT
              AND                                                                               ------------------------------------

                                                                                                DISEASE-POLICY LIMIT
       EMPLOYER'S LIABILITY                                                                     ------------------------------------

                                                                                                DISEASE-EACH EMP.
------------------------------------------------------------------------------------------------------------------------------------

     OTHER



------------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OPERATIONS/LOCATIONS/XXXXXXXXX/SPECIAL ITEMS
   CERTIFICATE HOLDER NAMED AS ADDITIONAL INSURED AS INTEREST MAY APPEAR
   IN LOCATION AT 10655 SORRENTO VALLEY ROAD, SUITE #200, SAN DIEGO, CA.

     10 DAY CANCELLATION NOTICE FOR NON-PAYMENT OF THE PREMIUM.
------------------------------------------------------------------------------------------------------------------------------------
CERTIFICATE HOLDER                                    CANCELLATION
------------------------------------------------------------------------------------------------------------------------------------

                                                      SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE
     SYCAMORE/SAN DIEGO INVESTORS                     EXPIRATION DATE THEREOF, THE ISSUING COMPANY WILL
        C/O SHELL PROPERTIES CORP.                    MAIL 30 DAYS WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT.
        SUITE #101
        10665 SORRENTO VALLEY ROAD
        SAN DIEGO, CA 92121                           ------------------------------------------------------------------------------
                                                      AUTHORIZED REPRESENTATIVE
                                                     
                                                      /s/ [SIGNATURE APPEARS HERE]
------------------------------------------------------------------------------------------------------------------------------------
ACORD 25-S (7/90)
------------------------------------------------------------------------------------------------------------------------------------

</TABLE> 

                                  EXHIBIT "G"